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Regional Office for Europe and Central Asia
FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS
EASTERN EUROPE AND
CENTRAL ASIA AGROINDUSTRY DEVELOPMENT
COUNTRY BRIEF
BOSNIA AND HERZEGOVINA
Contents
Contents .......................................................................................................................................................................................................... 1
Agro-industry national policy framework ........................................................................................................................................... 2
Economic and social development and trends ................................................................................................................................. 4
Agro-industry outlook and performance ............................................................................................................................................ 5
Trade liberalization, WTO accession and trade performance ....................................................................................................... 7
Foreign direct investments .....................................................................................................................................................................11
Food safety, certification and quality Control ..................................................................................................................................12
Ranking Bosnia and Herzegovina ........................................................................................................................................................15
Key indicators
Key Economic Indicators1
2006
2009
Food & Beverages
indicators
2011
GDP (PPP), US$ billion
27.13
32.42
34.10
Output, % of manufacturing
Manufacturing VA, % of GDP
11.89
13.00
12.50
Value Added, % of
manufactur.
Agriculture VA, % of GDP
10.42
7.84
8.70
Enterprises, % of
manufactur.
Employment in Agric., % of
total
19.8
21.2
19.6
Gross Fixed Capital F., % of
GDP
24.60
18.38
20.72
FDI net inflows, % of GDP
6.20
1.40
2.39
R&D, % of GDP
0.02
0.02
n/a
86.03
74.5
93.42
Merchandise Exports, US$
bln
3.32
3.95
5.85
Merchandise Imports, US$
bln
7.35
8.77
Exports annual growth, %
43.5
Import annual growth, %
7.2
GNI per capita, 1’000 US$
3.35
Merchandise Trade, % of
GDP
Trade per capita, US$ 20092011
Doing Business Indicators
Rank
Global Merchandise Exports
Imports Rank
87
2006
2009
2011
n/a
n/a
n/a
20.4
23.62
n/a
n/a
n/a
6.0
Employment, % of
manufactur.
15.25
16.47
n/a
Investments, % of
manufactur.
25.55
22.44
n/a
FDI inflows, % of total inflow
n/a
25.1
n/a
R&D, % of Output
n/a
n/a
n/a
Net Trade, US$ billion
-0.7
-0.81
-0.96
Exports, %of merchandise
Exp
3.6
5.5
5.0
11.05
Imports, % of merchandise
Imp
10.9
12.3
11.4
-21.3
21.8
Exports annual growth, %
16.9
-8.3
21.9
-31.4
19.8
Import annual growth, %
6.7
-14.2
17.5
4.76
4.78
Output per capita, US$
49.6
74.7
n/a
4,431
Exports per capita, US$
32.8
57.3
86.2
126
Agribusiness Indicators
Value
107
89
FDI Inward Attraction Index
Global Competitiveness
Index
3.23
150
88
Agro-industry national policy framework
National development programmes: The key documents1 that set out the Government of Bosnia and Herzegovina’s
policies for overall economic development as well as for agriculture, the agro-industry and rural development
include: (i) the Country Development Strategy for 2010–2014, and the Development Strategy of FBiH for 2010–
2020; (ii) the Rural Development Programme of BiH; (iii) the Strategic Plan for Harmonization of Agriculture, Food
and Rural Development of BiH for 2008-2011; (iv) the Agricultural Development Strategy of FBiH and of RS; (v)
the Strategy of Rural Development with a Strategic Plan for 2009–2015, which anticipates the amount of BAM
1.7 billion; (vi) the Strategy of Stimulation and Development of Foreign Investment in RS for 2009–2012; (vii) the
Strategy for Small and Medium-Sized Enterprise Development for 2009-2011; (viii) the Policy of Privatization of
the State Capital and the Privatization Plan; (ix) the State-level Employment Strategy for 2010-2014; (x) the Science
Development Strategy for 2012–2016 of RS, the Strategy of Science Development of BiH for 2010-2015, and the
Science and Research and Development System and Policy of FBiH; (xi) and the SME Strategy for 2012-2015 of RS.
1 World Bank Indicators Database and ITC accessed in October 2012. Author’s calculations
2
Under the Dayton Peace Agreement, BiH is divided into two political Entities; namely, the Federation of Bosnia
and Herzegovina (FBiH) and the Republic of Srpska (RS), as well as the self governing Brcko District. As a result,
there is a complicated and intricate multitier legal and regulatory framework (e.g. each entity has its own tax
and minimum wage laws, rural development strategy and operational programme on agriculture, food and rural
development as well as business registration and administration procedures, which are not harmonized between
RS and the state-level framework of FBiH). The privatization process of state-owned companies is underway. An
estimated 60 percent of small companies and more than 30 percent of the large ones are now privately owned
or publicly traded. Bosnia and Herzegovina is accelerating the privatization process for companies of strategic
importance in order to increase economic growth and enhance the volume of foreign investment.2
Since 2003, BiH has had the status of a potential candidate country for EU accession. In 2008, the EC and BiH
signed the Stabilisation and Association Agreement and the Interim Agreement on trade and trade-related issues
and they also signed the Financing Agreement for the Instrument for Pre-accession Assistance (IPA) 2007 National
Programme. The assistance of donor organisations is planned under eight projects related to agriculture, the
agro-industry and rural development with a total budget as of US$ 32 million over the period 2007-2012. Together
with the UN organisations the country elaborated UNDAF for 2010–2014 with the overall budget as of US$ 178.5
million, of which US$ 114 million will be mobilized from donors.
Legal framework: BiH has adopted a number of laws to encourage agricultural and agro-industry growth and
rural development, among those are: the Law on Agriculture, Food and Rural Development (2008), the Law on
Food (2004), the Law on General Safety of the Products, the Law on Market Surveillance, the Law on Payments
in Agriculture and Rural Development (2010), the Law on Agriculture (2007/2010), the Law on Agricultural Land
(2009), the Law on Freshwater Fisheries (2004), the Law on Payments in Primary Agricultural Production (2004), the
Veterinary Law (2002), the Law on Agricultural Land (1998/2009), the Law on Competition, the Law on Industrial
Property, the Law on GMO (2009), the Law on Tobacco, the Law on Cooperatives (1998/2003), Law on Organic
Production, the Law on the animal protection and welfare (2008), the Law on Seed and planting material of
agricultural plants, the Law on Plant Protection; the Law on Wine. The Law on Agricultural Advisory Services has
also been drafted.
Supporting institutions: BiH has three common national-level food institutions: the State Veterinary Office, the
Plant Health Administration and the Food Safety Agency. There is no State-level Ministry of Agriculture, Food
and Rural Development, so the Ministry of Foreign Trade and Economic Relations of BiH (MFTER BiH) has taken
the lead in food safety and it also coordinates the implementation of agricultural and forest projects in the
country. The Federal Ministry of Agriculture, Water Management and Forestry and the Ministry of Agriculture,
Forestry and Water Management of the Republika Srpska are the responsible state bodies for agriculture and food
industry development in FBiH and RS respectively. Other supporting institutions are: the Veterinary Office of BiH
(established in 2000 under the direct jurisdiction of the MFTER BiH); the Administration for Plant Health Protection
of BiH; the Foreign Trade Chamber of BiH; the Food Safety Agency of BiH, the Organic Control Agency; the Foreign
Investment Promotion Agency of BiH (established in 2004), the Foreign Investors’ Council of BiH (established in
2006). In 2007, the Foreign Investors’ Support Fund (FISF) was established at state level as an institution to support
foreign investors in BiH. Privatization is managed by the Privatization Agency, the cantonal privatization agencies
in the Federation of Bosnia and Herzegovina, and the Republic of Srpska Investment-Development Bank (IRBRS).
2 http://www.fipa.gov.ba/investiranje/privatizacija/Default.aspx?id=47&template_id=81&pageIndex=1
3
Economic and social development and trends
Economic and social development: BiH is an upper middle income country with GNI per capita of US$ 4,780 in
2011. The population is 3.75 million, of which 51.7 percent live in rural areas, and the annual population growth
was negative 0.21 percent in 2011. Between 2001 and 2008, BiH enjoyed a strong economic performance with 5.4
percent average real GDP growth. As a result of the global economic crisis, GDP growth declined to 2.7 percent
in 2009. Since then, only minimal growth has been recorded, comprising 0.7 percent in 2010 and 1.7 percent in
2011. The agricultural sector contributed 8.7 percent of value added to GDP and employed around 19.6 percent
of the total labour force in 2011. At the Entity level, the agricultural sector is more important for the economy
of Republika Srpska, where it is estimated to contribute around 13 percent of GDP (2005), than for BiH where it
stands stable at six percent. Since the end of the civil war, agriculture has tended to be subsistence rather than
market oriented. Industrial production grew by 5.6 percent in 2011, employing 21 percent of the total labour
force. The manufacturing industry contributed about 12.5 percent to GDP in 2011 with zero growth, although it
experienced strong average annual growth of 7.9 percent between 2000 and 2008 with a 15 percent decline in
2009. Manufacturing employs around six percent of the total labour force in the country.
Chart 1. Evolution of value added to GDP in BiH (percent)
Source: WBDI, accessed in October 2012; National Statistics; Author’s calculations
Growing demands and trends: The largest increase of prices (of 24.8 percent) was registered in food and nonalcoholic beverages and there was slightly slower growth in alcoholic beverages and tobacco (of 1.5 percent)
in 2007. In 2007, the average household spent 32.5 percent of their income on food and beverages3. The most
consumed food and beverage products are dairy products, meat, bakery products and pasta. The latest trend
is to develop “light”, “healthy”, “functional” and organic food products, as well as Halal food production (food
permissible under Islamic law), although standards for this kind of production have not yet been introduced.
The domestic agricultural and agro-processing sectors do not meet BiH’s food needs. Most food products are
imported, and especially wheat, meat products, milk products and fruit juices. In 2010, the five top agricultural
products in terms of values in BiH were: cow milk (ranked by commodity in the world 78), plums and sloes (ranked
3 According to the Survey 2007
4
12), vegetables fresh (ranked 40), maize (ranked 48), and chicken meat (ranked 97).4 The important commodities in
domestic production are: buckwheat, raspberries, cherries, chillies and paper.
Agro-industry outlook and performance
Agro-industry background and challenges: In monetary terms, the war-related damage to the agricultural
sector amounted to approximately EUR 4 billion and in some areas, 70 percent of the business infrastructure
and 60 percent of the livestock were lost. More than 237,000 hectares of land were mined when the war ended.
The existing structure of agriculture in BiH is characterized by small sized farms and the privatization of big
state owned companies is seen as an opportunity for further agriculture development. Permanent grass-land
dominates, accounting for over 50 percent; arable land occupies approximately 45 percent of all agricultural land,
and permanent crops approximately about five percent. Poor financial resources, needed for the modernization
of all segments of agricultural production (replacement of outdated technologies and equipment; upgrading
of the existing structure of agriculture sector, etc) are one of the main limitations on faster development of this
sector. The source of funding of the Agriculture Support Program is the allocation of BAM 55 million provided as
agricultural subsidies within the budget of FBiH in 2010. In cooperation with the Development Bank of FBiH, the
Federal Ministry of Agriculture, Water Management and Forestry established a credit line for financing agricultural
investment projects in order to support crop and vegetable production, livestock rearing, the establishment of
greenhouses, and processing capacities (packaging, sorting, finishing and processing of fruit, vegetables, milk and
fish, and cool storage facilities for fruit and vegetables). The investment project financing is as follows: 25 percent
of the investment is ensured by grant funds from the Federal Ministry of Agriculture, Water Management and
Forestry; 25 percent of the investment is ensured by the investor and 50 percent is provided by the Development
Bank loan. The loan repayment period is set at between 13 months and 10 years, depending on the type of
investment undertaken, with a grace period of up to 36 months, also depending on the type of investment
undertaken. Although the annual interest rate for this kind of loan is four percent financed from the Agriculture
Support Program.5
Bosnia and Herzegovina has a long tradition of collecting medicinal and aromatic herbs and beekeeping accounts
for one percent of total agricultural production in BiH. The share of livestock in total agricultural production is
estimated at 50 percent, which is much lower than it was and could be considering the natural preconditions
for livestock production and the level of animal production before the war. Fish farming is already developed,
especially trout and carp fishing. The most important fish species in the aquaculture sector in Bosnia and
Herzegovina are salmonid species, cyprinid species, marine species, and molluscs.
Organic products have become popular and expensive commodities in developed countries and between 2005
and 2010 the agricultural land share under organic products in BiH grew from 0.02 percent to 0.03 percent.
The number of registered producers is only 27, and they mainly concentrate on the production of cereals and
vegetables.6 The main organic products are medicinal herbs, small fruits, and mushrooms. Organic production
in BiH is still at the early stages of development, and the organics market is still underdeveloped. Since 2007,
OK (Organska kontrola- local certification body) has been accredited by IFOAM and OK standards are in use for
certifying organic production in BiH, for sales of organic products both in BiH and on the export market.
The food industry is an important sector in the economy of BiH, both for assuring food security for the country as
well as for preventing a further increase in trade deficit. The food processing industry has been using only about
4 FAOSTAT, accessed in October 2012
5 the Federal Ministry of Agriculture, Water Management and Forestry: CHALLENGES OF AGRICULTURE. Promotional brochure
6 Research Institute of Organic Agriculture FiBL and International Federation of Organic Agriculture Movements IFOAM, 2012, http://
www.organic-world.net
5
10 percent of its capacity. Currently, the food processing industry in BiH encompasses those companies engaged
in the manufacture and processing of food and beverages for human consumption, including meat, milk, fruit,
vegetables, sugar, oil and tobacco, as well as prepared feeds for animals and fowl. All previously mentioned
production capacities are still limited and cannot satisfy even local consumption requirements. In light of this there
is a great deal of room for further development and enlargement of the food processing sub-sector, following the
augmentation and development of primary production7
Food and beverage industry performance: The food and beverage industry in BiH forms a large part of the
economy, contributing 2.7 percent to GDP. In 2009, the food and beverage industry generated BAM 417 million
(US$ 28.2 million) or about 23.6 percent of the total value added by manufacturing industries with 13.2 percent
annual growth. Per capita output was US$ 74.7 in 2009.
The food and beverage industry employed 13,900 people (or 16.5 percent of manufacturing labour force) in
2009. Since 2006, employment in the sector has been growing by 1.7 percent a year on average. In 2011, there
were 1,129 enterprises operating in the food and beverage industry (or about six percent of all manufacturing
enterprises), most of which were private small or medium-scale enterprises. In 2008, there were 35 dairies
operating in BiH, of which 22 were in the FBiH and 13 in RS. Apart from the registered dairy farms, there were
a certain number of small family dairy farms, although these were exclusively focused on the immediate local
market. The agri-food processing industry is recovering after a long period of under-investment over the last
decade.
Investments in fixed capital in the food and beverage industry were increasing until 2008, although they fell
by almost 40 percent in 2009, when they amounted to US$ 91.2 million or 22.4 percent of total investments of
manufacturing industries in fixed capital.
Important subsectors include dairy, the production of fruit juices, flour, processed fruit and vegetables, processed
meat, sugar (isoglucose) and fodder.
Chart 2: Evolution of the share of the food and beverage industry in economy of BiH over time (percent of
manufacturing)
Evolution of share of Food & Beverages industry in economy of
Bosnia and Herzegovina over time (percent of Manufacturing)
30.00
25.00
20.00
15.00
10.00
5.00
0.00
%
2000 2001
2002
Value Added
2003 2004
2005
Employment
2006 2007
2008
2009
Investments
Source: Author’s calculations are based on national statistics
7 FIPA (2011) Bosnia and Herzegovina Agriculture and Food Processing Industry: Great potential for healthy food
6
Trade liberalization, WTO accession and trade performance
Trade regulation and trade unions: Bosnia and Herzegovina has adopted significant trade reforms since the end
of the civil war in 1995. It has a liberal and transparent foreign trade regime that is close to being harmonized
with the international trade rules. BiH adopted the Act on Customs Policy (2004/2011), the Law on Foreign
Trade Policy (1998/2004), the Decision on the Classification of Goods into export and import regimes (1998/2005)
and the Regulation on Custom Tariffs (2011). BiH does not apply custom duties, export quotas, prohibitions, or
any other forms of export limitation. Imports into BiH are conducted according to the Customs Tariff, which is
harmonized each year with Combined Nomenclature of EU and positive legislative regulations. The International
Convention on the Harmonized System for Names and Codes for Goods has been ratified. Rules of origin continue
to be used in accordance with the Interim Agreement. Tariff rates range from between zero percent and 15
percent. Imported goods are subject to 17 percent VAT while products such as coffee and cigarettes are subject
to excise in accordance with the Law on Excise.8 The products subject to the regime of permits for exports and
imports are listed in the Decision on Classification of Goods for export and import regimes (1998/2005).
BiH has concluded three FTAs with the CEFTA (in force since 2009), Turkey (since 2003) and the EU (since 2008
under the Interim Agreement on trade and trade-related matters). Almost all BiH exports of agricultural products
that enter the EU are duty and quota free, except for wine, some fish products, sugar and veal, on which tariff
quotas have been introduced. Import duties for primary agricultural products coming from the EU into BiH were
reduced in 2008 and abolished in 2011.
WTO accession: BiH has been negotiating accession to the WTO since May 1999, and it has gone through various
steps of the WTO accession procedure (application, Working Party creation, memorandum of external trade, no
export subsidies, 10 meetings, and agreements). The current status of BiH in the WTO is that of observer. BiH
has been steadily completing the remaining accession tasks and approaching the final goal. BiH has reported
on the progress it has made in the legislative action plan for WTO accession as well as in the implementation of
new legislation to comply with WTO rules, especially in the areas of sanitary and phytosanitary measures, and on
intellectual property rights. Bilateral market access negotiations are underway on the basis of revised offers in
goods and services. Multilateral work is proceeding on the basis of a revised draft Working Party Report circulated
in September 2012. The Working Party met for the tenth time in October 2012. The latest revision of the Working
Party report was made on 15 June 2011. The simple average of import duties for agricultural goods applied in 2011
was 11.1 percent.
Trade performance: After a drop of 21.3 percent in 2009, the value of Bosnia and Herzegovina’s exports bounced
back by 21.5 percent in 2010 and continued to rise by 21.8 percent to reach its peak of US$ 5.9 billion in 2011.
Imports also showed an increase of 19.8 percent in 2011 and amounted to US$ 11.1 billion.9
BiH remains a highly import-dependent country in terms of agricultural and food products. In 2011, the trade
balance of processed food and beverage commodities was negative, amounting to US$ 960 million. Food and
agricultural exports and imports together accounted for 6.4 percent and 16.1 percent of total merchandise exports
and imports respectively in BiH in 2011. Exports and imports of processed food and beverage products amounted
to US$ 290 million or five percent of total merchandise exports and US$ 1.26 billion or 11.4 percent of total
merchandise imports in 2011 with an annual growth of 21.9 percent and 17.5 percent respectively, compared to a
negative growth of 8.3 percent of exports and of 14.2 percent of imports in 2009. Food and beverage exports per
capita were US$ 86.2 in 2011.
Both imports and exports of food and beverage products are relatively diversified. In 2011, the major share of
8 http://ceftatradeportal.com/bosnia/index.php?option=com_k2&view=item&layout=item&id=47&Itemid=66&lang=en
9 http://comtrade.un.org/pb/CountryPagesNew.aspx?y=2011
7
exports is accounted for by sugars and the sugar confectionery product group (24 percent, ranking in world
exports 73), followed by dairy products (20 percent, ranked 64) and animal and vegetable fats and oils products
(13 percent, ranked 81). The major share of imports is accounted for by the beverage, spirit and vinegar product
group (18 percent, ranking in world imports 54); followed by sugars and the sugar confectionery product group
(15 percent, ranking in world imports 65) and miscellaneous edible preparations (12 percent, ranking in world
imports 70).10
The main export-oriented products are: raw hides, sugars (isoglucose), mushrooms, plums, frozen raspberries and
tobacco.
In 2011, the trade of food and beverages products in BiH was relatively diversified across partners for imports,
although almost half of exports were concentrated with two countries; namely, Croatia and Serbia, which are also
the leaders in terms of imports in BiH.
Top destinations for food and beverage products: Croatia (40 percent), Serbia (14 percent), Macedonia (11
percent), Slovenia (eight percent), and Albania (seven percent) in 2011;
Top origins for food and beverage products: Croatia (25 percent), Serbia (24 percent), Brazil (14 percent), Germany
(five percent) and Slovenia (4.5 percent) in 2011
10
ITC (UNCDAT/WTO)
8
Chart 3. Food and beverages and agricultural trade performance over time
Source: ITC (UNCTAD/WTO): Trade Map online, accessed in October 2012
Chart 4. Share of product groups in total exports and imports of food and beverages in 2011
Source: ITC (UNCTAD/WTO): Trade Map online, accessed in October 2012
9
Chart 5. Evolution of the top five destinations of exported food and beverage products by BiH over time
Source: ITC (UNCTAD/WTO). Data is based on the selected products’ groups. Trade Map online, accessed in October 2012
Chart 6. Growth of national supply and international demand for exports of food and beverage products by
BiH in 2011
Source: ITC (UNCTAD/WTO). Data is based on the selected products’ groups. Trade Map online, accessed in October 2012
10
Foreign direct investments
Strategies, regulations and ranking: The legal basis for foreign investment in Bosnia and Herzegovina is provided
by the Law on the Policy of Foreign Direct Investments of BiH (1998/2010), the Law on Foreign Investments of RS
(2002/2011), the Law on Foreign Investments of FBiH (2001/2003), the Law on Companies of FBiH (1999/2010),
the Law on Companies of RS (2008/2011), the Law on Free Trade Zones (1999/2009), the Law on Registration of
Business Entities (2005/2009) and the Decision on Establishment and Work of Foreign Representative Offices
(2003). No legal distinctions are made between foreign and domestic investors. Foreign investors can participate
in the privatization process. To attract and support foreign investments the Government of BiH established the
Foreign Investment Promotion Agency (FIPA), the Foreign Investors’ Council (FIC) and the Foreign Investors’
Support Fund (FISF), which has an annual budget of BAM 2 million. BiH has signed 36 Agreement on the Protection
of Foreign Investments. BiH has three Free Trade Zones, which are part of the customs territory and have legal
entity status.
According to WIR 201211, BiH was only ranked 150 (among 181 economies) by the FDI Inward Attraction Index in
2011, which is a decrease on a ranking of 108 in 2000 (among 178 economies).
According to an IAB report12, foreign investors in Bosnia and Herzegovina are entitled to invest in any sector of
the economy in the same form and under the same conditions as those defined for local residents. It takes 83
days and 14 procedures to establish a foreign-owned subsidiary that plans on engaging in international trade.
Registration is not possible online and the documents required are not available for download. Bank accounts
in foreign currencies are allowed after submitting a customs registration number certificate. There is a minimum
capital requirement of BAM 2,000 (US$ 1,300) for limited liability companies (LLCs). The statutory minimum share
capital for an LLC must be paid in before registering the company. Foreign companies have the option to purchase
either privately or publicly held land. Lease contracts can be of unlimited duration and with no restrictions on
the amount of land. There is no land information system (LIS) or geographic information system (GIS) in place
that centralizes relevant information at a single point of access. However, reforms are underway to provide such
services.
Foreign direct investments flows: According to WIR 2012, the Government of Bosnia and Herzegovina is hoping
to raise about US$ 5 billion in 2012–2013, mainly by privatizing assets in 25 large companies included in previous
privatization plans. In 2011, BiH’s FDI inflows amounted to US$ 430 million or 2.4 percent of GDP, which is almost
double 2010 figures. However, the highest amount of FDI, recorded in the last 15 years was US$ 2.1 billion in 2007,
which was the result of the privatization of certain large state-owned enterprises. The biggest share of investment
has been in the manufacturing (33 percent) and banking sectors (21 percent).
FDI inflows in the food, beverages and tobacco industries generated US$ 58.9 million or 24.5 percent of total FDI in
2009, although this declined by 14 percent in 2007. The vast majority of FDI is directed towards manufacturing (34
percent), the financial sector (22 percent), telecommunications (12 percent) and trade (11 percent).
In 2009 there were 2,269 and 381 affiliates with foreign capital registered in BiH in total and in manufacturing
respectively.
The countries that invest the most in BiH are from Europe, including: Austria, Serbia, Slovenia and Croatia. A
significant change was recorded in 2011, because the most investment came from Russia (EUR 73 million), Austria
11 UNCTAD (2012) World Investment Report 2012: Towards a New Generation of Investment Policies, UN Conference on Trade and
Development NY and Geneva, Switzerland
12 IFC/MIGA/WB (2010) Investing Across Borders: Indicators of foreign direct investment regulation in 87 economies. The World Bank
Group. Wachington
11
(EUR 54 million) and Serbia (EUR 50 million). At the same time, in 2011, the drop in investments from some
countries that were major investors in previous years was recorded.13 Foreign companies, which have invested
more than EUR 10 million in the BiH agriculture and food processing sector are: Coca Cola Beverages (Nederland),
Perutnina Ptuj (Slovenia), Kreisen Industry (Switzerland), Ledo (Croatia) and Studen-Agrana (Austria). 14
Chart 7. Foreign direct investments in BiH over time
Source: WBDI; ITC (UNCTAD/WTO); accessed in October 2012
Food safety, certification and quality Control
Food safety background and Bosnia and Herzegovina’s membership: Bosnia and Herzegovina has been a
member of the Commission Codex Alimentarius since 2007 and is a member of the International Organisation of
Standardization (ISO). Issues surrounding the protection of human health in general and especially from foodborne risks are dealt with the Law on Food Safety (2004), the Veterinary Law (2002), the Law on Protection of
Plant Health (2003), Law on Sanitary Correctness of Food and Goods of General Use (1991), the Law on General
Safety of the Products (2009), the Law on Health Protection (2010), the Law on Sanitary Appropriateness of Food
and Articles for General Use (1992/1994), the Law on Veterinary Medicaments Used (1998), the Law on Market
Surveillance (2004/2009); the Law on Consumer’s protection, the Law on Phyto-pharmaceutical Products (2004),
the Law on Mineral Fertilizers (2004), the Law on Seeds and Planting Material of Agricultural Plants (2005), the Law
on the animal protection and welfare (2008), the Law on Technical Requirements for Products and Conformity
Assessment (2004), the Law on Standardization (2001), the Law on Accreditation (2001). By adopting the Law on
Foods, BiH transposed the EC Regulation No. 178/2002 and created a legislative framework for the implementation
of food safety system per EU model and in accordance with the provisions of SPS Agreement of the World Trade
Organization. A draft state-level Consumer Protection Law aligned with the acquis has not yet been adopted. The
Republika Srpska has adopted a Consumer Protection Law.15
The quality of individual groups of products is subject to specific ordinances (e.g. Quality of Meat and Meat
Products, Quality of Milk and Milk Products, Quality of Honey and other bee products etc.) and the Rulebooks
(e.g. on General Labelling of Packaged Food, alcoholic drinks, labelling of nutritional values, use of food additives,
use of colours in food, use of sweeteners, use of other food additives, fruit juices and non-alcoholic drinks.
13 http://www.fipa.gov.ba/informacije/statistike/investicije/Default.aspx?id=180&template_id=81&pageIndex=1
14 FIPA (2011) Bosnia and Herzegovina Agriculture and Food Processing Industry: Great potential for healthy food
15
EC (2012) BOSNIA AND HERZEGOVINA 2012 PROGRESS REPORT
12
State-level legislation that transposes the fisheries acquis remains to be drafted and the legislation still needs
to be harmonized with the acquis. The other set of technical legislation in BiH consists of three framework laws
combined with BAS standards taking over European and international voluntary standards.
Quality control and certification: The Ministry of Foreign Trade and Economic Relations of BiH (MFTER BiH) has
taken the lead on food safety and also coordinates the implementation of agricultural and forest projects in the
country. The Veterinary Office of BiH, the Administration for Plant Health Protection of BiH and the BiH Food
Safety Agency are authorized to issue the required implementation measures in the areas of food safety, risk
management, risk assessment and risk information.
According to an EC progress report, there has been little progress in the fields of agriculture and rural
development, food safety, veterinary and phytosanitary policy and fisheries. A comprehensive State-level
agricultural and rural development strategy remains to be implemented throughout the whole country; the
State-level capacity for coordination and harmonisation must be strengthened, the implementation mechanisms
must be reinforced and the legislation further aligned with the acquis. Implementation of the food safety acquis
and the official control capacity needs to be stepped up and the upgrading of establishments accelerated. Overall,
preparations in these areas of the acquis remain at an early stage.
The Institute for Standardization of Bosnia and Herzegovina (BAS) has adopted 3,395 European standards (ENs)
as national standards, bringing the total to 14,005 ENs. The BAS performed the second annual check on its quality
management system and worked actively on public awareness-raising on standardization. An action plan has
been prepared with a view to becoming a full member of the European Committee for Standardization (CEN) and
of the European Committee for Electrotechnical Standardization (CENELEC). Officially, in BiH, two sets of technical
regulations are in effect; namely, legislation from the former-Yugoslavia combined with JUS standards with
mandatory application and three framework laws combined with BAS standards replacing European Voluntary
Standards. The legislation of the former-Yugoslavia, combined with JUS standards with mandatory application of
conformity assessment procedure based on those standards (mandatory attesting), are valid for those products for
which the EU technical regulations have not been applied to as yet. Altogether there are 50 technical committees
and the Institute for Accreditation of BiH granted accreditations for 51 conformity assessment bodies. Organic
Control is a certification body in BiH for the certification of organic food producers, accredited by IFOAM in 2007.
Enforcement capacity in BiH remains weak in the absence of implementing legislation on food hygiene and official
control. The BiH Food Safety Agency is responsible for food safety measures and an overlap in competences
between the veterinary and food safety sectors persists.
Business environment and competitiveness
SME development: According to the OECD SME Policy Index assessment 201216, the lack of consensus between the
entities – the Federation of Bosnia and Herzegovina and the Republika Srpska – has prevented the development
of a coherent state policy framework and effective co-ordination between entity-level policies. A state-level
entrepreneurial learning strategy has been adopted through a comprehensive state-wide Strategic Working
Group. There have been positive local policy experiences with support services such as incubators, clusters and
innovation support programmes, but these are not being transferred from the local to the state level. Only 13
percent of all SMEs (15,368) in BiH are operating in the manufacturing sector, although these SMEs account for
96.1 percent of all enterprises operating in manufacturing.
16 OECD (2012) Western Balkans and Turkey 2012. Progress in the implementation of the small business act in Europe. SME Policy Index.
Supported by EC, ETF, EBRD, CEI.
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Business environment: According to the Doing Business Report17, through business reforms Bosnia and
Herzegovina have improved the situation surrounding paying taxes by implementing electronic filing
and payment systems and by easing the administrative burden; it has made registering property easier by
computerizing the commercial registry and cutting registration time by eight days; it has made getting credit
easier by stopping the private credit bureau’s collection of credit information on individuals and it has made
obtaining construction permits easier by fully digitizing and revamping the land registry and cadastre.
The BiH economy was ranked 126 (out of 185 economies) in 2012 (2 points up compared to 2010 but 36 points
down compared to 2006). Trading across the borders is ranked at 103, paying taxes at 128, protecting investors at
100, getting credit at 70 and starting a business at 162. BiH is ranked 48 out of the top 50 overall most improved
economies (by 8.4 percent since 2005). It has also improved by 32 percent in registration property since 2005.
Improvements in getting credit such as maintaining a unified registry are some of the good practices from 2012.
BiH has made starting a business easier by replacing the required utilization permit with a simple notification of
commencement of activities and by streamlining the process for obtaining a tax identification number.
Tax relief: According to a PwC report18, the labour tax process in BiH has been simplified, employer contribution rates for
social security have been reduced and payroll tax has been abolished. A new law effective from 2011 introduced an integrated
system for the registration, monitoring and payment of Social Security Contributions. According to the Law on Excise Duties,
cigarettes will be subject to proportional duty (42 percent of the retail price) and a flat-rate duty (BAM 0.45 per packet of 20
cigarettes) from 2011. The 2008 Corporate Income Tax Law (CIT Law) of BiH reduced the CIT rate from 30 percent to 10 percent.
As of 2012, BiH is also a party to 43 double tax treaties. The standard VAT rate is 17 percent.
Retail, domestic market and international trends: The domestic retail market in BiH is underdeveloped and
fragmented across the country. Retail trade of food products generated BAM 2.6 billion (US$ 1.9 billion) in 2009,
accounting for 45.6 percent of total retail turnover in food and non-alcoholic beverages and 3.5 percent of
alcoholic beverages and tobacco sales,(out of this only 4.2 percent of food products were sold through specialized
stores). About 34 percent of shoppers in BiH claim supermarkets to be their main shopping place for food and
beverages and another 35 percent of shoppers spent most on food in hypermarkets in 2010.
Competitiveness: According to the Global Competitiveness Report 2012-2013 BiH is at the stage 2 of development
(efficiency driven), it scored 88 overall on the Global Competitiveness Index among 144 economies (102 in 20102011 among 139 countries). BiH is ranked only 80 for Innovation, 109 for Business sophistication factors, and 100
(score 3.6) for agricultural policy costs19. The five biggest barriers to doing business in Bosnia and Herzegovina are:
access to financing, policy instability, government instability/coups, inflation, and tax regulations.
17 WB/IFC (2012) Doing Business 2013: Smarter Regulations for Small and Medium-size Enterprises. 10th edition. Washington, USA
18 PwC (2012) Paying Taxes 2012. The Global Picture, PriceWaterHouseCoopers supported by WB and IFC
19 Agricultural policy costs: How would you assess the agricultural policy in your country? [1 = excessively burdensome for the economy;
7 = balances the interests of taxpayers, consumers, and producers] | 2011–12 weighted average
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Ranking Bosnia and Herzegovina
Doing Business Indicators Ranking in 2012
Agribusiness Indicators Values in 2012
Source: Author’s estimations and calculations; WB/IFC Doing Business Rankings online, accessed in October 2012
Source: EBRD database; UNCTAD; Author’s calculations of EECA average
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The designations employed and the presentation of material in this information product do not imply the expression of any opinion
whatsoever on the part of the Food and Agriculture Organization of the United Nations concerning the legal or development status
of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The mention of
specific companies or products of manufacturers, whether or not these have been patented, does not imply that these have been
endorsed or recommended by the Food and Agriculture Organization of the United Nations in preference to others of a similar
nature that are not mentioned. The views expressed in this publication are those of the author(s) and do not necessarily reflect the
views of the Food and Agriculture Organization of the United Nations.
For more information please contact:
Stjepan Tanic
Agribusiness and Enterprise Development Officer
FAO Regional Office for Europe and Central Asia
Email: [email protected]
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