Bosnia and Herzegovina (BiH) is a predominately rural country with more than 60 percent of the population living in rural areas. Agriculture has traditionally been a key economic activity for the country. The 1992-1995 war left the sector in very poor condition and the extended period of postwar transition has not yielded a rapid recovery. More than 20 years after the war, much of the arable land remains underutilized. The labor force participation rate, already exceptionally low in BiH, is lowest in rural and semi-rural areas.

Agricultural investment is essential to stimulating rural development, generating jobs, and creating a stable foundation for broader economic growth.

USAID Assistance

USAID’s Agribusiness Development project helps generate jobs and increase household incomes in targeted rural regions of BiH by supporting the development and expansion of cornichon, vegetable, and berry production and sales for small-scale farmers. This is a 30-month, $432,000 project implemented by MKF Partner.

Implementation and Expected Results

Encouraging a network of growers who already own underutilized land activates the dormant land resources and underemployed human capital, which benefits both the landowners and their respective communities. Expanding BiH agriculture, with its base of relatively small-scale landholders, requires small farmers to focus on producing high-value crops and agricultural products. To make such a shift, however, the farmers need support in a number of areas, including the introduction of suitable inputs (seedlings) and technologies, technical assistance, new market linkages, and access to finance.

Through the Agribusiness Development project, USAID provides 667 farmers with the opportunity to try their hand at growing new, high-value crops – berries and vegetables, including small pickles for cornichons – at no additional cost. In the first year of the activity, USAID is providing the farmers with inputs for the growing season, to include healthy transplants of appropriate cultivars, crop protection, posts and trellises, drip irrigation systems, and proper fertilizers, as well as on-site technical assistance and trainings on how to produce and handle the new crops.

Fresh vegetables and soft-fruits are highly perishable and the growing season is quite short. The viability of these crops in BiH depends on stable business relationships between producers, processors, and markets. To that end, USAID helps integrate the farmers into sophisticated processing and distribution networks close to growing areas. Assistance focuses on upgrading the value chain so participants can concentrate on increasing volume and efficiency. When asked, the project helps farmers negotiate buyer contracts to ensure they obtain a fair price that reflects regional market value.

The project provides access to medium-term finance in the form of microcredit loans to participating farmers to purchase machinery on an as-needed basis. Credit and grant funds are disbursed through MKF Partner’s 60 branch offices and 150 loan officers throughout BiH. These farmers will also receive two-day training to teach them financial management skills.

Expected Results

USAID assistance over the duration of this project will make small-scale farming more dynamic and entrepreneurial, increasing its capacity and competitiveness. Specifically, the expected results are:

• Increased production of cornichons, vegetables, and berries.
• Increased employment in rural areas.
• Increased household incomes of participating farmers.
• Improved technical competence.
• Improved credit access and new credit opportunities for small-scale farmers.