Growing Together: Farmers, Buyers and Municipalities Thrive in Value Chains
It's harvest time in the Birač region, in the eastern part of Bosnia and Herzegovina. Farmers’ diligent hands tirelessly pick ripe fruit from the stems and arrange them in baskets, sorting fresh raspberries, cucumbers, peppers, tomatoes, chili peppers, and lettuce. It's not an easy job, especially under the blazing sun, but they have many reasons to be satisfied.
These farmers participated in the CRS Value Chains project, which provided training and equipment to support farmers in getting better results. As a result, they have adopted modern agricultural techniques, which led to significantly higher yields and better produce quality.
However, to generate income, they also need to sell their produce. By connecting small growers with buyers—private companies and cooperatives—the project has enabled farmers to sell their harvest at fair prices and with guaranteed purchase, helping them rise out of poverty.
Obstacles and Opportunities in the Agricultural Sector
CRS implemented the Value Chains project in the Birač region of Bosnia and Herzegovina as a way to to strengthen the capacity of the municipal and private sectors to create structures that connect small farmers, buyers, and local authorities.
The core of the country's agricultural sector consists of small farms with less than 5 hectares (about 12 acres) of land. Due to low productivity, most agricultural households seek off-farm employment to survive.
On the other hand, due to the proximity to EU markets and demand for specific crops, buyers from the private sector seek opportunities to expand their domestic and international markets. One of the obstacles is the insufficient number of reliable suppliers.
However, buyers often ignore or avoid small farmers, assuming they cannot produce a sufficient quantity of quality products. Municipalities view the increase in agricultural productivity as one of their priorities, but lack the capacity to create value chains and often only provide subsidies.
By promoting fruit and vegetable cultivation among the most vulnerable farmers in the community, the project has enabled households with limited land to establish profitable connections with markets and move away from poverty.
The project, which lasted from 2016 to 2019, involved four municipalities from the Birač region (Bratunac, Srebrenica, Vlasenica, and Zvornik) in the eastern part of the country. The municipalities contributed 40% of the project funding, farmers 20%, and CRS 40%.
Simple Intervention Logic
The intervention logic used in the project was fairly simple and inexpensive.
Farmers who met pre-defined criteria were selected through a public call, and after a series of assessments and analyses, crops were identified (raspberries, cucumbers, and hot peppers for conventional cultivation; and tomatoes, peppers, and lettuce for greenhouse production). The project involved farmers with less than 5 hectares of land and growers with less than 0.5 hectares of land and greenhouses covering 100 square meters.
After selecting the crops and identifying potential buyers, meetings were organized to match producers and buyers, who presented the terms and benefits of doing business with them.
CRS provided training on improved agricultural and relevant extension practices to the buyers' field staff, who then passed on the acquired knowledge to 411 farmers.
“Education of farmers by agricultural experts is crucial for the success of their ventures,” Samir Softić, CRS Project Manager, said. “The gained knowledge not only contributes to individual successes, but it is beneficial when shared with families and wider community.”
Municipalities became actively involved and assigned staff to continue working on these activities even after the project ended, which multiplies the project benefits and ensures the community ownership.
During the project's first year, field staff provided extension services to farmers, who were also provided with drip irrigation systems, fertilizers, and pesticides sufficient for 0.1 hectares of land. A detailed analysis showed that these were the main drivers of yield and quality.
Six buyers went to the Fruit Logistica agricultural fair in Berlin, where they had the opportunity to present themselves to potential international buyers and learn about global market trends and requirements. The fair visit resulted in two contracts with foreign partners.
A Win-Win Scenario
By increasing the quantity and quality of produce, the project intervention had a significant financial effect: the annual income of households per 0.1 hectares of land improved by an amount equivalent to 35% to 100% of the minimum annual salary in BiH, depending on the crop. In other words, farmers earned an annual income of 897 to 2,525 USD (national annual minimum wage) per 0.1 hectares of land, demonstrating that even small crops can significantly contribute to household incomes.
Up to 70% of small growers' produce is grade 1 now, the highest grade possible. A year after the project, all producers continued to grow their crops, and 85% of them kept selling to the buyers they were matched with.
Thanks to the project, buyers expanded their supply chains and increased profitability. They also expanded their domestic and international markets, opening doors for new farmers to commercialize their production and join the value chains.
The competitiveness of cooperatives was strengthened, as well as their roles as effective agents for linking small farmers with buyers. Between 70% and 100% of their suppliers are small growers. A year after the project, six cooperatives gained new members, and two signed export contracts with buyers from the European Union.
Over 85% of the participants rated the project implementation and results as successful or highly successful, stating that it was beneficial for them.
Extending the Value Chains
Having witnessed the quality and benefits of project activities, municipalities continued and expanded them, mobilizing their resources and personnel and securing investments for long-term support to value chains.
Around 40 households living below the poverty line used municipal funds in 2019 to enter value chains and start cucumber production, connecting with buyers. The average monthly income of these households before the intervention was around 238 USD (less than 60% of median monthly consumption costs), and for the year of the intervention, it was around 430 USD (an 81% increase).
The project resulted in another valuable outcome: a methodology for building municipal capacities to create value chains was developed and tested, including the participant selection process, a comprehensive training curriculum, and resource mobilization strategies. The methodology was made available to other municipalities, and two new municipalities replicated it.
With the success of this approach in alleviating poverty, hopefully similar initiatives will thrive in other parts of the country as well. Such informal and sustainable public-private partnerships are a simple and affordable model that can connect all the stakeholders and help them maximize their potential and promote the creation of new values.
“The crucial to this project is that we have developed the methodology to link small farmers into the agriculture value chains and transmitted the methodology to the municipalities”, said Samir.