The Context

Bosnia and Herzegovina is an upper-middle-income country with an estimated 3.8 million people, more than half of them living in rural areas.

The country has more than 500,000 smallholder-owned farms and about a third of the population is in some way engaged in agriculture. Agriculture remains one of the most important sectors of the country economy and a major contributor to food and nutrition security. Yet with agriculture accounting for only 7 per cent of GDP, labour productivity in rural areas is relatively low.

Poverty in the country as a whole reached 16.9 per cent in 2015 and 18 per cent in 2007. Recent analysis indicates that there is little or no extreme (food) poverty in Bosnia and Herzegovina. Rather, poverty arises from social exclusion and poor access to basic services needed for an acceptable standard of living.

Against that backdrop, farming and livestock production have been held back by inadequate investment in rural infrastructure and the breakdown of links to established markets.

Low yields, a relatively lack of mechanization, limited access to affordable credit, and unreliable wholesale linkages for processing, bulking, storage and marketing further constrain farmers’ ability to expand their businesses.

Smallholders and processors also face increased risks because of climate change, more variable weather and a changing operating environment.

Farming in Bosnia and Herzegovina has good potential, but is failing to fully benefit from ongoing trade liberalization or European Union pre-accession assistance.

The Strategy

In Bosnia and Herzegovina, IFAD loans enable poor rural people to improve their food security and increase their incomes by supporting subsistence and commercial farmers, and on- and off-farm enterprises.

IFAD is one of the few agencies in the country working on a substantial scale with smallholders and with entrepreneurs in underdeveloped towns and villages.

In particular, IFAD activities target men and women smallholder subsistence farmers and young commercial smallholder farmers; producer associations and agricultural cooperatives; women and unemployed young people interested in non-farm wage employment and enterprise development; and on-farm and off-farm small enterprises with the potential to grow, improve productivity and contribute to rural employment.

Our country programme strategy (COSOP), focuses on the most vulnerable, aims to reduce poverty, encourage efficient use of natural resources, diversify and improve rural livelihoods and mitigate climate change risks, whilst improving gender equity and environmental sustainability.

Key activities include:

• ensuring producer associations and cooperatives support farmers effectively as they transition to commercial agriculture;
• ensuring smallholders, farmers’ organizations and small and medium enterprises can sustainably access technological innovation, business development and financial services to achieve long-term competitiveness; and up-grading marketing infrastructure to improve access for smallholders and off-farm entrepreneurs.

The overall portfolio has so far comprised of six projects valued at US$234.2 million with IFAD's funding amounting to US$83.3 million. IFAD projects have directly benefited over 145,000 households or some 480,000 people, representing nearly 20 per cent of the country’s rural population and resulted in an annual increase of income of over 30 per cent.