ECONOMY

Bosnia’s granary funds

BANJA LUKA – Bosnia’s Serb Republic agreed on Tuesday on a plan to boost spending in agriculture over the next nine years in order to revive the neglected sector and cut its trade deficit in the long term. The autonomous region, which makes up postwar Bosnia along with the Muslim Croat federation, is known as «Bosnia’s granary.» It allocates 4 percent of its 1.098-billion-marka (575-million-euro) budget to the sector which employs two-thirds of its work force. Under a development plan adopted by Parliament, the region will increase spending to 6 percent of the budget funds over the next three years and 8 percent between 2010 and 2015. «This is the strategic document that will overhaul the agricultural sector and increase its productivity,» Agriculture Minister Slaven Pekic told Parliament. «It is mainly aimed at reducing the large trade deficit.» Farming contributed less than 10 percent of Bosnia’s gross domestic product before the 1992-95 war but covered 70 percent of domestic needs. Facilities were badly damaged in the conflict and some arable land is still full of land mines. It now contributes 12 percent of GDP but covers only 35 percent of domestic demand. The imports contribute to a big foreign trade gap, which hit 2 billion marka in the first half of 2006 from 3.4 billion in the same period last year. The sector, which mostly produces and exports grains, herbs, fruits, vegetables, sugar, meat and dairy products, was also hit in 2004 by the launch of free trade deals with neighboring countries, seen by local producers as discriminating against them. Bosnia hopes to sign the Stabilization and Association Agreement with the European Union, a staging post for eventual membership, by the end of the year. The EU has warned the sector needs a major overhaul before it can satisfy its requirements, pointing mainly to the administrative split between the two regions that complicates nationwide planning. Pekic said that under the new plan 500 dairy farms would be set up and 50,000 hectares of new orchards planted, with the production of good-quality seed material and construction of small irrigation systems on 50 hectares of land. He added that Bosnia, faced with stiff competition from its Balkan neighbors, needed to boost food safety institutions that can issue licenses for export.