WORKING DOCUMENT ASSESSMENT OF AGRICULTURAL SECTOR AND RURAL DEVELOPMENT IN BOSNIA AND HERZEGOVINA Sarajevo/Banja Luka April 2017 1 WORKING DOCUMENT Table of Contents ABBREVIATIONS AND ACRONYMS .................................................................................... 5 Introduction ..................................................................................................................... 6 General information about Bosnia and Herzegovina ......................................................... 8 1. Importance of agriculture in Bosnia and Herzegovina economy ..................................... 9 1.1. Gross added value from agricultural sector ......................................................................... 9 1.2. Contribution of agriculture to employment ...................................................................... 10 2. Natural resources as the basis of agricultural production ............................................ 15 2.1. Climate characteristics ..................................................................................................... 15 2.2. Climate changes and their consequences on agriculture ................................................... 16 2.3. Agricultural land .............................................................................................................. 18 2.3.1 Water resources ................................................................................................................... 27 2.3.2. Forest resources .................................................................................................................. 29 3. Agricultural production ............................................................................................... 34 3.1. Plowland ......................................................................................................................... 34 3.2. Plant production .............................................................................................................. 35 3.2.1. Arable crop production ....................................................................................................... 35 3.2.2. Production of industrial crops ............................................................................................. 38 3.2.3. Production of fodder crops ................................................................................................. 40 3.2.4. Vegetable production ......................................................................................................... 42 3.2.5. Production of fruits ............................................................................................................. 46 3.2.6. Wine growing and grape production .................................................................................. 52 3.2.7. Meadows and pastures ....................................................................................................... 53 3.3. Livestock production ........................................................................................................ 54 3.3.1. Milk production ................................................................................................................... 56 3.3.2. Meat production ................................................................................................................. 59 3.4. Poultry farming................................................................................................................ 65 3.4.1. Meat production ................................................................................................................. 65 3.4.2. Egg production .................................................................................................................... 66 3.5. Beekeeping ...................................................................................................................... 68 3.5.1. Honey production ............................................................................................................... 68 3.5.2. Production of other bee products ...................................................................................... 69 3.6 Fisheries ........................................................................................................................... 70 3.7 Organic farming ................................................................................................................ 72 3.8. Medicinal, aromatic and wild herbs .................................................................................. 74 3.9. Production of flowers and ornamental plants ................................................................... 75 3.10. Production of cultivated mushrooms .............................................................................. 76 3.11. Wool production ............................................................................................................ 76 3.12. Other unconventional productions ................................................................................. 76 4. Efficiency and competitiveness of agriculture .............................................................. 78 4.1. Efficiency of agricultural production ................................................................................. 78 4.2. Competitiveness of agricultural production ...................................................................... 78 4.2.1. Average yield generated ..................................................................................................... 78 4.2.2. Index of relative import to export ratio .............................................................................. 80 4.2.3. Net export index ................................................................................................................. 82 5. Food industry ............................................................................................................. 85 2 WORKING DOCUMENT 6. Foreign trade in agricultural and food products ........................................................... 92 6.1. Trade of important groups of agricultural and food products ............................................ 93 6.2. Foreign trade of certain agricultural products ................................................................... 97 6.2.1. Milk and dairy products ...................................................................................................... 97 6.2.2. Beef ..................................................................................................................................... 97 6.2.3. Chicken meat and eggs ....................................................................................................... 97 6.2.4. Pork ..................................................................................................................................... 98 6.2.5. Wheat .................................................................................................................................. 99 6.2.6. Maize (grain) ....................................................................................................................... 99 6.2.7. Potato (mercantile) ........................................................................................................... 100 6.2.8. Apple ................................................................................................................................. 100 6.3. Important BiH foreign trade partners in the sector of agricultural and food products ...... 100 7. Market infrastructure ............................................................................................... 104 8. Agricultural producers .............................................................................................. 107 8.1. Business entities ............................................................................................................ 107 8.2. Agricultural holdings ...................................................................................................... 108 9. Policy and legal environment .................................................................................... 110 9.1. Legal framework for agricultural policy .......................................................................... 111 9.2. Budgetary transfers for agricultural policy ...................................................................... 116 9.2.1. Direct producer support ................................................................................................... 120 9.2.2. Support to rural development .......................................................................................... 124 9.2.3. General measures in agriculture ....................................................................................... 125 9.2.4. Budgetary support compared to countries in the region ................................................. 127 9.2.5. Concluding remarks .......................................................................................................... 129 10. Institutional environment ....................................................................................... 131 10.1. Institutions competent for agriculture and rural development in BiH ............................ 131 10.2. BiH in international and regional trade and economic integrations ................................ 134 10.2.1. BiH and World Trade Organization ................................................................................