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PRESS RELEASE

Institutional reform and better targeted subsidies needed to stimulate agriculture production in BH

December 1, 2010



BANJA LUKA, December 1, 2010 – The World Bank in Bosnia and Herzegovina (BH) in partnership with the Faculty of Agriculture in Banja Luka convened today a round-table to discuss competitiveness in the agriculture sector in BH. The round-table gathered a broad spectrum of government officials, representatives of public agencies, private sector, and academia.

A study prepared by the World Bank titled “Agricultural Sector Policy Note for Bosnia and Herzegovina” was used as a basis for discussion about the competitiveness of agriculture sector in BH. The study highlights that the agriculture sector in BH has a clear comparative advantage over other countries and with about 20 percent of all employed in BH, the sector remains an important generator of employment.

Yet the agri-food sector is shrinking as a share of GDP and institutional constraints prevent the BH’s agri-food sector from reaching its full potential. BH is not reaping the full benefit of the favorable trade arrangements with the European Union (EU) due to the absence of EU-compliant food safety institutions and an EU-compliant regulatory framework. Consequently, a broad range of products are still banned from EU markets until these institutions are in place. Compared to other countries, public spending in BH’s agriculture sector is relatively low, and quality of spending needs to be improved to target resources toward areas that generate the most growth. Fragmented land ownership and poorly functioning land markets also pose constraints for farmers in BH. The average BH farm is 2 hectares, subdivided into 6–8 plots. The fragmentation of land hampers productivity and investment in irrigation and equipment.

Agriculture has traditionally been an important sector in BH, and today’s roundtable is an attempt to provide recommendations to policy makers about actions that will improve productivity, efficiency and generate additional employment in agri-food industry in BH,” said Marco Mantovanelli, World Bank Country Manager for Bosnia and Herzegovina. “To achieve this objective, BH will need to develop effective food safety institutions, well-functioning land administration, and increase public spending on investment subsidies instead of direct price and output subsidies,” added Mantovanelli.

Media Contacts
In Sarajevo
Jasmina Hadžić
Tel : +387-33-251-502
jhadzic@worldbank.org


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