Agriculture Flourishes amidst Rocks, Water and Sun of Herzegovina

The World Bank Vice President for Europe and Central Asia Mr Shigeo Katsu, and Country Director and Regional Coordinator for Southeastern Europe, Ms Jane Armitage have recently visited Bosnia and Herzegovina (BiH) to assess the current situation and World Bank portfolio in the country.

After discussions with the Government officials about the current and future partnership between BiH and the World Bank, the delegation had the opportunity to visit Herzegovina region and personally witness the direct impact of the World Bank support to agriculture sector.

The World Bank has been supporting the agriculture sector since 1996, first through emergency programs and later with support to sector reforms. To date, the Bank supported projects in this sector amount to US$ 58 million.

The Small Scale Commercial Agriculture Development Project, supported with IDA credit of US$ 12 million, aims to help develop private, market-integrated commercial agriculture in selected low-income, high potential areas of BiH. It aims at creating the opportunities for small scale investment and job creation in these areas. 

”We need to have a strategy where more young people stay in Bosnia and Herzegovina and also stay in rural areas. It is essential that they have opportunities for employment and income generation, otherwise they will leave,” Ms Jane Armitage said.

This project has stimulated farming and agriculture in the Herzegovina region, has improved income generating opportunities for the people of the area and increased employment in this part of the country.

After 5 years of its implementation, the project helped to increase the area under horticulture by 25%, double sales of milk and increase the number of cattle by 30%.   Among other, this was achieved thanks to a total of 3,442 micro-credits to local farmers in the total amount of 12 million KM (including loans made out of reflows). In addition, a total of 107 commercial bank credits were provided in the total amount of 5 million KM.

"We certainly do hope that these successful examples will demonstrate to people – not just in this area but in the whole  Bosnia and Herzegovina, that indeed there is very, very good, successful future in agriculture and agriculture related businesses” said Mr. Katsu during the visit.

During the visit to Herzegovina, the Bank team encountered a different, much more optimistic reality than it was few years ago. Already in early morning, the sun was mercilessly scorching hills surrounding Trebinje, yet the town was alive and vibrant. Most of the people gathered either at early morning chat at Platane cafe, or at the nearby local market, where one can meet some of the project beneficiaries such as local beekeepers, who were selling honey and honey-based products.

The beekeeping cooperative “Zalfija” was established in 2006 with the help of the project, and currently has 54 members from the Trebinje region. Yet its premises are already way too small for this bustling business. Production of the bee cakes and wax frames– which has been financed through the project – is already spreading to the markets in BiH, Croatia and Montenegro. Current production is expected to double or even triple, once the cooperative builds its new building, said the head of the cooperative Mr. Rade Kozjak.

After the visit to the beekeeping cooperative, the World Bank delegation met some of the most famous eastern Herzegovina vine-makers, in the newly established Andjelic Vinery. Herzegovina vine-makers have also used the project to upgrade their production and promotion. As a result, 15 new wine cellars were registered in Republika Srpska (RS) since the start of the project implementation. The total area under vineyards in the RS increased from 60ha in 2003 to 340 ha in 2007, while in the Federation of Bosnia and Herzegovina (FBH) 300 ha of new vineyards were planted. 

RS Minister for Agriculture and Forestry Radivoje Bratic, who was the official host of the meeting in the RS part of Herzegovina, expressed his satisfaction with the recent progress in this sector, but stressed that much more can be done to fully utilize eastern Herzegovina’s grapes, sun and water – which all together result in the ample production of local vines.

“We have to change our mindset and general attitude towards agriculture. We have to understand that modern agriculture is not plowing but a business like any other” Mr. Bratic said.

The next stop in the visit was in Stolac, where FBH Minister of Agriculture Damir Ljubic and other local partners presented results from the reconstruction of the local irrigation system.

The  Small  Scale Commercial Agriculture Development Project’ funds have been used to support the  rehabilitation of irrigation systems, water management, water quality monitoring, which was in turn supposed to increase private farmers’ productivity and quality of commercial production. As a result of the rehabilitation of several such irrigation systems across the region, the area of arable land in the project area of the FBH has increased by 30% and yields increased by 30-40%. The project also promoted establishment of Water User Associations, through which water users were able to join their efforts and improve water management and maintenance.

During the meeting, minister Ljubic stressed that – aside from high-level politics – there is good cooperation and communication between the two entity ministries of agriculture. Farmers in both entities face similar everyday challenges and problems, such as the fragmented  nature of rural ownership, outdated cadastre and land books, fragmented institutional  framework, weak coordination  between the agencies, and weak water management for irrigation.

Some of these challenges need to be addressed jointly in order to allow increase of competitiveness  and productivity levels across the country, thus ensuring viability of agriculture sector and improved livelihoods. This is crucial within BiH’s long-term objectives of EU and WTO membership, Vice President Katsu and Country Director Armitage stressed repeatedly during the recent visit to Herzegovina. They also pledged continued World Bank support for this strategic area for the future of BiH. 

“On the ground, when you kick politics aside, everybody wants to move on and look forward and create a good life. Our projects, the projects through which the World Bank supports the government, are doing their part and trying to make this possible,” Mr. Katsu said.

Agriculture remains a key sector in BiH. Agriculture and forestry sectors accounted for 8.7% of GDP in 2006 and officially employed 7.4 % of total labor force in 2006. Yet the Labor Force Survey in 2007 showed that as much as 20% of the population is employed in agriculture. Like many other sectors, agriculture too was demolished during the war. Despite reforms competitiveness and productivity of BiH farmers remains low.