SMALL BERRY FRUIT FARMS AND DIVERSIFICATION POTENTIAL ON REDUCTION OF PRODUCTION RISK

A significant number of small farms in Bosnia and Herzegovina (BiH) produce berry fruits. Some of them achieve good economic results, however many have significant potential for further improvement. Due to several beneficial factors, many farms decide for cultivation of a single berry fruit activity, however this decision implies a potential risk in case of unfavourable production or market conditions for that crop. The aim of this analysis is therefore to observe the extent of risk reduction by application of different diversification strategies, using two types of berry fruits; and the most efficient production plans for such a farm from a risk perspective. A linear program was utilized to prepare an optimal production plan, while quadratic risk programming served to analyse risk. Results show that diversification could be a significantly important possibility for risk reduction on such farm type. It is possible to reduce risk with capital and labour less intensive production activities. Production of the highly intensive strawberry variety Clery has highest Estimated Gross Margin (EGM), but is also associated with very high risk. If one includes raspberries or blueberries into the production plan, it is possible to significantly reduce risk while almost keeping EGM at the same level. On the other hand, if the farmer is risk averse, the highest opportunity cost for risk reduction on such a farm type is in production of raspberry and blueberry, where it is necessary to give up 3.25 EUR on average for decreasing risk for one EUR. In the other two scenarios, production of strawberry – blueberry and strawberry – raspberry, risk gradient values are almost the same with amount 2.57 EUR sand 2.56 EUR, respectively.&nbsp

Institutional and Strategic Dilemmas of Agricultural Policy in Bosnia and Herzegovina

Complexity of the political system in Bosnia and Herzegovina reflects to entire economy of the country, especially to sensitive sectors as agriculture. Current agricultural BIH policy managed on entity and Brcko District level faces numerous challenges and dilemmas. Apart from insufficiently clear commitment to CAP EU convergence, major dilemmas are those related to further shaping of institutional-regulatory framework as well as selection of strategic course of sector development. Having in mind lack of common BIH agricultural policy and sector institutional weaknesses, our intention is to answer following two questions: (i) does it reflect to direct support of producers and (ii) are BIH farmers in unequal and uncompetitive position? In order to analyze actual situation it was used APM tool (Agri-Policy Measures) developed within FAO-SWG project. Based on outputs of this analysis we made recommendations and suggestions on the way of proceeding in such circumstances

ECONOMIC PERFORMANCES OF DAIRY INDUSTRY IN BOSNIA AND HERZEGOVINA IN TRANSITION

Research within this paper was aimed to give picture of economic performance of the dairy industry based upon commonly used indicators calculated for each dairy plant in Bosnia and Herzegovina.In order to understand state of sector transition micro-level analysis was conducted on the basis of balance sheet and income statement, two main financial records, of all dairies in Bosnia and Herzegovina. Documents were obtained from agencies in charge of collecting annual financial reports of both entities in order to assure reliable data for analysis. Research was conducted for three years period (2009-2011). Analysis encompassed horizontal and vertical analysis of balance sheet and income statement. Indicators of financial stability (liquidity and indebtedness ration) and operating successfulness (efficiency, activity, productivity and profitability ratios) we calculated as well. All diaries were classified and analysed by entity and size. The analysis shown that BH dairies operate under very hard circumstances that negatively affects their operating performances. Low liquidity and profitability indicates both financial instability and poor business success. Situation is unsatisfactory in the whole countries, although slightly better in FBH than in RS. So, sector transition is far from completion, and its future characteristic will strongly depend on entrepreneurship (spirit and skills) as well as on ability to change and re-develop institutions both formal and informal (values, culture etc)

Implications of Current Business Environment for Farm Development and Management in Bosnia and Herzegovina

The characteristics of business environment are shaped by the applied public policies as well as by private policies within agri-food chain. Consequently, characteristics of business environment define effort necessary to manage farm and to ensure its development. Therefore, the aim of this paper was to identify total impact of public policies implemented to the competitive capacity of the sector in BH. Research was focused to selected productions with high level of export potential and/or to these ones which are extremely important for quality of life in rural areas (plum, apple, paprika, tomato, corn, milk and lamb meet). Impact of implemented public policies has been verified by set of sector protection indicators that are the most commonly used in literature (level of effective and nominal protection – NPR, EPR, and level subventions to producers SPR). The current structure of input market has been identified as one of the main constrains to apply modern technology and to improve productivity ensuring better position at the market and faster development. Impacts of output market structure were discussed as well. The research showed that analyzed productions have potential to grow and develop (DRC<1), that they are competitive, but the quality of business environment is limitation factor which prevents efficient realization of their potential