Ambassador Cormack’s Speech on Agricultural Development

Good morning, ladies and gentlemen, and thank you for joining us today in Banja Luka to discuss a sector of the economy that is vital to the success of Bosnia and Herzegovina – Agriculture.  During my 27 year career in the Foreign Service, I have seen in countries ranging from Korea – where agriculture was still largely based on family farms — to France, sometimes called the breadbasket of Europe – that agriculture is an emotional, often very personal issue.  It is also an area with vast economic potential.

Just this past weekend, I received an email from my college roommate in Illinois.  She and her husband, both middle-class students from farming communities west of Chicago, seemed like average Americans during our school years together.  Today, they are some of the most successful farmers in America, building her husband’s struggling family farm into a global agricultural enterprise that now includes one of the largest ethanol factories in the world, a fleet of boats on the Mississippi river, and planes to transport their crops to international buyers.  Why do I mention this story?  Because I see the same potential for agriculture here in Bosnia and Herzegovina.

And so today, I would like to talk about the successes and challenges of BiH farmers, and about the solutions needed to keep BiH on its path to the EU, and on the road to significant support for the agricultural sector.

Global perspective and strength of BiH agriculture

Agriculture is a global, $4.5 trillion industry that provides food, bio-fuels, and other products to a variety of consumers.  It is one of the most dynamic and innovative areas of the global economy.  Bosnia and Herzegovina needs to – and most certainly can be — part of it.

Farming is a pillar of the BiH economy.  Food and agriculture products provide for 10 percent of the country’s exports.  Agriculture generates 7 percent of GDP.  And it provides employment for about 20 percent of the national labor force.

Not only is agriculture essential to Bosnia and Herzegovina’s economic health and future; it is also a proud tradition of families across this land, often going back many generations.  Here in Republika Srpska, more than one–third of citizens are engaged in agricultural activities.  Eighteen percent of RS citizens are involved in selling agricultural products to supplement their income.

Agriculture is clearly central to the lives and livelihoods of citizens in communities throughout Bosnia and Herzegovina.  And yet, agriculture often does not get the attention it deserves.

Agricultural successes
What is important to focus on first is that BiH has enormous potential in its agricultural sector.  I am always impressed and encouraged by farmers who manage to overcome the challenges they face, day-in and day-out.  Despite the uncertainty of droughts and floods, market fluctuations and so many other obstacles, farmers have found a way to make a living and grow your businesses.

Svaka vam cast.

I recall one of my first visits outside of Sarajevo, to dairy farmers in the Maglaj area after the devastating floods of 2014.  The estimated damage to agriculture in BiH after that terrible event was 200 million KM.  Thirty municipalities in Republika Srpska and 22 in the Federation of BiH were affected.  But farmers from both entities came together and helped each other recover.  Their commitment to working hard and working can be an example for all of us in BiH.  And talking to farmers across BiH, it was clear to me that they want a single and strong vision for BiH agriculture.  One that will allow them to meet EU standards, and transform the potential of this sector into reality — and better lives for their families.

Last year I visited a farm in Trebinje with state-of-the-art orchards, growing apples, cherries and grapes, and using advanced cooling facilities.  Managed by two diaspora-returnees, Stevan and Svjetlana, this company has invested money, know-how, hard work and passion into producing truly world-class fruit.  And they have established a firm, sustainable foundation for their business and their employees.  It can be done.

BiH farmers have gone from local to global, competing today in international markets.  Your country is one of the leading suppliers of raspberries.  BiH plums, apples and pears now reach consumers all across Europe and beyond – sometimes as fresh fruit, and sometimes as something else BiH is famous for – rakija.  BiH cheese producers have won prestigious international awards, building the reputation of your country’s brand.

These successes clearly show the potential for investment and growth in the sector.  When I drive from one end of BiH to the other, I see so many open valleys, wide areas of fertile soil.  The prospects for future growth are clearly visible.

Challenges farmers face
But there are many challenges that can and should be addressed in Bosnia and Herzegovina, and agricultural policies in BiH must adapt. These include:

Lack of access to finance inhibits the adoption of new technology and constrains innovation.

Lack of access to information, training and knowledge hinders business expansion and new investments.

And all of these problems are compounded in BiH by the fragmented regulatory environment.

Solutions needed and path to the EU
So what are the solutions to these challenges?  One of the first steps would be for Bosnia and Herzegovina to develop an agricultural plan where entities work together to develop a state-level strategy.  The strategy would include improving coordination and cooperation of the state and both entities.  It would also include having policies, laws and institutions that meet EU requirements.  BiH ultimately succeeded in doing this for transportation this year; the same approach can work for agriculture.  The key components are clear:

BiH needs to modernize its system for implementing veterinary and phytosanitary standards.  Stronger standards, along with a modern, risk-based inspection and disease surveillance system, would ensure the safety and quality of locally produced food products.

As regulations and quality standards are introduced, farmers and processors will need help upgrading their production.

And, BiH needs to adopt the EU-compliant Veterinary, Agricultural, and Food laws, and a rural development strategy that also meets EU requirements.

Faster progress in developing an EU-compliant institutional framework will enable BiH to access significant support funds through the EU’s Instrument for Pre-Accession Assistance in Rural Development.  However, failure to agree on shared structures and systems will prevent this much-needed assistance from helping BiH farmers — from helping many of you in this room.
We are talking about literally millions of KM that could be available to you – if a state-level strategy is put in place to meet EU requirements.

Emphasis on immediate government policy actions needed
I want to emphasize that there are a number of clear and immediate policy actions that can and should be taken by government authorities right now, to facilitate overdue improvements in the agriculture sector.  I call on the state and the entities to improve their coordination and cooperation.  To harmonize legislation and establish required administrative and control structures to allow for improved food safety and more exports of Bosnia and Herzegovina’s agricultural products.

The competitive pressures and opportunities of the EU market require preparation and action, and uncertainty in agricultural policy will only limit the potential for progress and growth.

Farmers need as much stability and consistency as they can get.  They have to grapple with too many other factors outside their control – from the weather and climate change, to volatile markets and fussy consumers, to name only a few.

The time is long overdue for the BiH government at all levels to develop a comprehensive and strategic approach to agricultural development.

Progress in advancing EU reforms

It is clear that BiH state institutions and representatives from both entities and the Brčko District have made progress in advancing reforms in agriculture and the food sector, improving the situation and opening new markets for BiH products.

For example, BiH companies in certain sub-sectors have secured approval to export to the EU, including dairy, honey, fish, potatoes and some fruits.  But too many products and producers do not have access to the EU market.  This is a missed opportunity that BiH cannot afford.

I am encouraged by recent steps taken by BiH leadership, in support of the Stabilization and Association Agreement and coordination mechanism.  Implementation of the SAA is a core element of your country’s commitment to the EU integration process, and an important step forward for agricultural growth and opportunity.

Benefits of EU integration
We understand that taking steps toward EU integration is not always easy.  But integration offers enormous benefits and possibilities for your country.

With the right systems and laws in place, BiH producers can gain access to an EU market of half a billion consumers.  Harmonization of BiH regulatory systems through the EU acquis process will open this huge market to the full range of products produced here.  Implementation of EU health and safety standards will improve not only the quality of products but also the competitiveness of BiH companies.  BiH citizens, in turn, will benefit from higher food standards, and an overall improved quality of life.

So the stage is set and the urgency to respond is clear.  Bosnia and Herzegovina needs stability and certainty in the agricultural sector, and government policies that facilitate both progress and access to the EU market.  Certainty in business is what American investors tell us is the critical point for them to decide to invest – and here in BiH, they are still waiting to see that.

The U.S. is your partner; we will work together
The United States Government and our development partner, the Swedish Government, stand ready to work with BiH stakeholders to help move the reform and integration process forward.
Indeed, we are ambitious.  The FARMA II Project, the host of today’s event, will engage 60 percent of the agricultural sector in BiH and work with more than 500 agricultural producers.  FARMA aims to increase their sales by 65 percent and exports by 90 percent, and create hundreds of jobs and new value chains for agricultural products.

Today we are joined by more than dozen agricultural producers who are working with FARMA II.  I see a representative from the cheese association that gathers cheese producers from both entities.  They work together and do not care about differences.  They care about being the best in their field.  Their competition is other producers of world-class cheese.  They well understand that BiH is part of a global food market.  They, too, can be an example to us all.

But we need your engagement, and success will require a pragmatic approach to policy making.  An approach that starts by pursuing effective dialogue and building practical partnerships among the public sector, the private sector and civil society organizations.

Rules and regulations must be developed, and implemented, in a transparent manner.  The agricultural system in BiH must ensure safe food, competitive production, and environmental protection.

Agriculture is an important driver of economic opportunity for BiH citizens.  But there is the potential for so much more.

So we welcome all of you to work with us.  Not to delay, but rather to move forward confidently, with determination and creativity.  BiH needs and deserves a modern, world-class environment for agricultural production and innovation.

Let’s start today.