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Document of

The World Bank

Report No: ICR00003639

IMPLEMENTATION COMPLETION AND RESULTS REPORT

(IDA-43250 TF-90773)

ON A

CREDIT

IN THE AMOUNT OF SDR13.8 MILLION

(US$21.0 MILLION EQUIVALENT)

TO BOSNIA AND HERZEGOVINA

FOR AN

AGRICULTURE AND RURAL DEVELOPMENT PROJECT

December 21, 2016

Agriculture Global Practice

South East Europe Country Unit

Europe and Central Asia Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective November 28, 2016)

Currency Unit = SDR

1.00 SDR = US$1.35

US$1.00 = 0.74 SDR

FISCAL YEAR

ABBREVIATIONS AND ACRONYMS

APPH Administration of Bosnia and Herzegovina for the Protection of Plant Health

ARDP Agriculture and Rural Development Project

BATA National Accreditation Body

BiH Bosnia and Herzegovina

CAS Country Assistance Strategy

CPF Country Partnership Framework

CSF Classical Swine Fever

EMF Environmental Management Framework

EU European Union

FADN Farm Accountancy Data Network

FBiH Federation of Bosnia and Herzegovina

FSA Food Safety Agency

FY Fiscal Year

GMO Genetically Modified Organism

HACCP Hazard Analysis and Critical Control Points

IPARD Instrument for Pre-Accession Assistance for Rural Development

M&E Monitoring and Evaluation

MAFWM Ministry of Agriculture, Forestry and Water Management

MAWMF Ministry of Agriculture, Water Management and Forestry

MoA Ministry of Agriculture

MoFTER Ministry of Foreign Trade and Economic Relations

MTDS Medium-Term Development Strategy

PCU Project Coordinating Unit

RS Republika Srpska

SAA Stabilization an Association Agreement

SAFRD Sector for Agriculture, Food, Forestry and Rural Development

SIDA Swedish International Development Cooperation Agency

SPIRA Streamlining Permits and Inspection Regimes Activity

SVO State Veterinary Office

SWA Sector Wide Approach

USAID United States Agency for International Development

WTO World Trade Organization

Country Director: Ellen Goldstein

Country Manager: Tatiana Proskuryakova

Senior Global Practice Director: Juergen Voegele

Sector Manager: Julian Lampietti

Project Team Leader: Daniel Gerber

ICR Team Author: Jeren Kabayeva

BOSNIA AND HERZEGOVINA AGRICULTURE AND RURAL DEVELOPMENT PROJECT

CONTENTS

Data Sheet:

A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff

F. Results Framework Analysis G. Ratings of Project Performance in ISRs

H. Restructuring (if any) I. Disbursement Profile

1. Project Context, Development Objectives and Design ............................................................... 1

2. Key Factors Affecting Implementation and Outcomes .............................................................. 4 3. Assessment of Outcomes .......................................................................................................... 12 4. Assessment of Risk to Development Outcome ......................................................................... 20

5. Assessment of Bank and Borrower Performance ..................................................................... 21 6. Lessons Learned........................................................................................................................ 23

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners........................... 24

Annex 1. Project Costs and Financing .......................................................................................... 25

Annex 2. Outputs by Component.................................................................................................. 26 Annex 3. Economic and Financial Analysis ................................................................................. 32

Annex 4. Revised Results Framework .......................................................................................... 35 Annex 5. Bank Lending and Implementation Support/Supervision Processes ............................. 40 Annex 6. Beneficiary Survey Results ........................................................................................... 42

Annex 7. Stakeholder Workshop Report and Results ................................................................... 43 Annex 8. Summary of Borrower's ICR and/or Comments on Draft ICR ..................................... 44 Annex 9. Comments of Cofinanciers and Other Partners/Stakeholders ....................................... 46

Annex 10. List of Supporting Documents .................................................................................... 47

MAP

i

BOSNIA AND HERZEGOVINA AGRICULTURE AND RURAL DEVELOPMENT PROJECT

A. Basic Information

Country: Bosnia and Herzegovina Project Name: Agriculture and Rural

Development Project

Project ID: P101213 L/C/TF Number(s): IDA-43250,TF-90773

ICR Date: 10/04/2016 ICR Type: Core ICR

Lending Instrument: SIL Borrower: BOSNIA AND

HERZEGOVINA

Original Total

Commitment: XDR 13.80M Disbursed Amount: XDR 12.69M

Revised Amount: XDR 13.80M

Environmental Category: B

Implementing Agencies:

FBiH MAWMF

RS MAFWM

Cofinanciers and Other External Partners:

B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 12/01/2006 Effectiveness: 02/26/2008 02/26/2008

Appraisal: 04/25/2007 Restructuring(s):

06/16/2010

07/12/2011

04/25/2012

05/21/2013

06/17/2015

Approval: 06/19/2007 Mid-term Review: 10/11/2010 10/11/2009

Closing: 06/30/2012 06/30/2016

C. Ratings Summary

C.1 Performance Rating by ICR

Outcomes: Moderately Unsatisfactory

Risk to Development Outcome: Moderate

Bank Performance: Moderately Unsatisfactory

Borrower Performance: Moderately Unsatisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)

Bank Ratings Borrower Ratings

Quality at Entry: Moderately

Unsatisfactory Government:

Moderately

Unsatisfactory

ii

Quality of Supervision: Moderately Satisfactory Implementing

Agency/Agencies: Moderately Satisfactory

Overall Bank

Performance:

Moderately

Unsatisfactory Overall Borrower

Performance:

Moderately

Unsatisfactory

C.3 Quality at Entry and Implementation Performance Indicators

Implementation

Performance Indicators

QAG Assessments (if

any) Rating

Potential Problem Project

at any time (Yes/No): Yes

Quality at Entry

(QEA): None

Problem Project at any time

(Yes/No): Yes

Quality of Supervision

(QSA): None

DO rating before

Closing/Inactive status:

Moderately

Satisfactory

D. Sector and Theme Codes

Original Actual

Sector Code (as % of total Bank financing)

Agricultural extension and research 10 10

Central government administration 24 24

General agriculture, fishing and forestry sector 22 22

Sub-national government administration 44 44

Theme Code (as % of total Bank financing)

Export development and competitiveness 14 14

Regional integration 14 14

Rural markets 14 14

Rural policies and institutions 29 29

Rural services and infrastructure 29 29

E. Bank Staff

Positions At ICR At Approval

Vice President: Cyril E Muller Shigeo Katsu

Country Director: Ellen Goldstein Orsalia Kalantzopoulos

Practice Manager/Manager: Julian A. Lampietti Marjory-Anne Bromhead

Project Team Leader: Daniel P. Gerber Rita E. Cestti

ICR Team Leader: Jeren Kabayeva

ICR Primary Author: Jeren Kabayeva

iii

F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document) The Project Development Objective is to assist BiH to strengthen the capacity of its State-level and

Entity-level institutions to deliver more efficient and effective agricultural services and support programs

as well as to make a substantial contribution to an acceleration of BiH's eligibility to access support under

the European Union Instrument for Pre-Accession Assistance for Rural Development (IPARD).

Revised Project Development Objectives (as approved by original approving authority) N/A

(a) PDO Indicator(s)

Indicator Baseline Value

Original Target

Values (from

approval

documents)

Formally

Revised

Target Values

Actual Value

Achieved at

Completion or

Target Years

Indicator 1 :

Before restructuring: Sixty percent of disease and pest inspection implemented on the

basis of expected

Value

quantitative or

Qualitative)

Poor understanding of pest

and disease epidemiology.

Little risk based inspection

Sanitary inspection

is 60% risk based

Substantially

achieved, about 70%

of the target value.

See the details in

section 3.2 of the

ICR.

Date achieved 05/23/2007 06/30/2012 06/30/2016

Comments

(incl. %

achievement)

Although this indicator was dropped, it was substantially achieved. FSA, SVO and

APPH provide input at the Entity level and border inspection planning based on risk

assessment, and inspection plans are revised quarterly or more frequently.

Indicator 2 :

After restructuring: Structured disease and pest control system, informed by surveys and

supported by reliable lab diagnostic capacity and databases, are developed, coordinated

and implemented with data sharing at State and Entity level approximating EU

Value

quantitative or

Qualitative)

No systematic disease and

pest control systems for

plants, animals, and

foodstuff in place

Maintain and

monitor situation

through inspection

services, begin risk

targeting of

inspections

Substantially

achieved, about 70%


See the details in

section 3.2 of the

ICR.

Date achieved 07/12/2011 06/30/2016 06/30/2016

Comments

(incl. %

achievement)

A new PDO indicator added after restructuring in July 2011

iv

Indicator 3 :

Before restructuring: Pluralistic, stakeholder driven and outcome-based contracted

extension services operational at the level of each Entity and benefitting 20 percent of

commercial farmers

Value

quantitative or

Qualitative)

Limited public extension

services in the RS and none

in the FBiH. Few public

private extension

partnerships

Stakeholder

managed contracted,

public/private

extension service

reaching 20% of

commercial farmers

Partially achieved,

about 40% of the

target value. See the

details in section 3.2

of the ICR.

Date achieved 05/23/2007 06/30/2012 06/30/2016

Comments

(incl. %

achievement)

Although this indicator was dropped, good progress on extension services was achieved

in the RS.

Indicator 4 :

Registries and databases for the effective management of incentive payments, tracking

sanitary inspection data at Entity level with reporting capacity to State level agencies

and MOFTER are in place approximating EU systems

Value

quantitative or

Qualitative)

No systematic registry and

reporting capacity in place

Link various

registries for Farm

Information System

Substantially

achieved, about 80%


See the details in

section 3.2 of the

ICR.

Date achieved 05/23/2007 06/30/2012 06/30/2016

Comments

(incl. %

achievement)

The links at Entity and State level have been established. The outcome was affected by

the project inability to establish an agreed payment structure.

Indicator 5 :

Before restructuring: One hundred of rural development structural payments made

through harmonized, EU-IPARD compliant institutions and systems at the level of each

Entity

Value

quantitative or

Qualitative)

Un-transparent agricultural

and rural development

support targeting and

administrative procedures.

Poor monitoring and impact

evaluation

Harmonized, EU

IPARD compliant

rural development

structural payments

made at the level of

each Entity

Not achieved. See the

details in section 3.2

of the ICR.

Date achieved 05/23/2007 06/30/2012 06/30/2016

Comments

(incl. %

achievement)

The indicator was dropped after restructuring in July 2011.

Indicator 6 :

After restructuring: Flood rehabilitation grants help communities recover to pre-flood

level of economic

Value Some 15% of community Execution of works Fully achieved. See

v

quantitative or

Qualitative)

assets destroyed

and goods contracts

the details in section

3.2 of the ICR.

Date achieved 07/12/2011 06/30/2016 06/30/2016

Comments

(incl. %

achievement)

This is a new indicator added after restructuring in July 2011 to measure impact of

flood rehabilitation activities.

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target

Values (from

approval

documents)

Formally

Revised Target

Values

Actual Value

Achieved at

Completion or

Target Years

Indicator 1 : A1: State Veterinary Office of BiH implementing effective animal identification system

Value

(quantitative

or Qualitative)

Animal ID only covering

50% of cattle population

Animal

identification: 10%

of cattle and 3% of

small ruminants are

randomly checked

each year

Fully achieved

Date achieved 05/23/2007 06/30/2012 06/30/2016

Comments

(incl. %

achievement)

See the details in Annex 4 of the ICR. Bovines registered and ear tagged by >90%

across the country. Sheep/goats registered and ear tagged by >70% in FBiH and

approximately 25-30% in the RS. The campaign for sheep-goat ear tagging in the RS

was launched.

Indicator 2 : A2: SVO implementing brucellosis and CSF control programs

Value

(quantitative

or Qualitative)

Brucellosis and CSF

epidemiology data outdated.

Limited test and slaughter

program for Brucella

Risk based

inspection

operational.

Brucella incidence

in sheep reduced

30%

Partially achieved,

about 50%

Date achieved 05/23/2007 06/30/2012 06/30/2016

Comments

(incl. %

achievement)

See the details in Annex 4 of the ICR. The animal vaccination in 2015 was completed

and involved at least 75% of total number of target animals. Eradication policy has not

been established and mass preventive vaccination continues.

Indicator 3 : APPH implementing plant health monitoring and risk assessment systems

Value

(quantitative

or Qualitative)

APPH only recently

established and not fully

staffed or operational

Phytosanitary

inspection shifts to

risk mostly based

80% of seed

and plant

material

Fully achieved

vi

inspection system

producers/impo

rters are

registered,

potato pest

survey repeated

yearly

Date achieved 05/23/2007 06/30/2012 06/30/2016

Comments

(incl. %

achievement)

See the details in Annex 4 of the ICR. Potato pest survey ongoing in 2016, now for the

6-th time with funding provided by each entity. The APPH conducts ad-hoc risk

assessment, identifies priorities for enhanced control.

Indicator 4 : A4: APPH develops and implements phytosanitary and plant register database

Value

(quantitative

or Qualitative)

No centralized database for

phytosanitary or plant

production or trade

Link phyto-plant

health registry with

FSA and SVO

databases and

MOFTER farm

information system

Fully achieved (new

indicator)

Date achieved 07/12/2011 06/30/2016 06/30/2016

Comments

(incl. %

achievement)

The APPH operates a phyto register database that include plants and producers as well.

The link is accessible by entity inspections services and Ministries of Agriculture.

Indicator 5 : A5: FSA implementing a risk based food safety system

Value

(quantitative

or Qualitative)

FSA only recently

established and food

regulations and inspection

procedures incomplete

FSA performs at

least 3 risk

assessments and

coordinates a risk

communication

program

Fully achieved

Date achieved 05/23/2007 06/30/2012 06/30/2016

Comments

(incl. %

achievement)

See the details in Annex 4 of the ICR. The FSA conducts a risk assessment for

aflatoxins and phosphates in food, and commissioned a Total Diet study to assess

prevailing nutritional habits and help identify inherent risks.

Indicator 6 :

A6: Entity-level Inspection Directorates are implementing BiH plant health, animal

health and food safety laws and regulations

Value

(quantitative

or Qualitative)

No effective agricultural

inspections undertaken

All Entity

Inspectorate

reporting of food,

animal and plant

health is web-based

Apply risk

based in section

based on

regulations

from FSA, SVO

and APPH

Substantially

achieved, about 75%

vii

Date achieved 05/23/2007 06/30/2012 07/12/2011 06/30/2016

Comments

(incl. %

achievement)

Both Entity Inspectorates operate web-based databases and share data with state-level

agencies. Their IMS systems are not linked. Information is shared on a daily basis

through uploads, but not yet in a real-time manner.

Indicator 7 : A7: FBiH MAWMF/RS MAFWM agricultural information units and databases and

FADN pilot established assembling farm level information.

Value

(quantitative

or Qualitative)

Limited agricultural or farm

level information collected

Pilot FADN

program includes

>300 farmers

Integrate FADN

survey data in

entity MOA

information

system

Partially achieved

(about 50%)

Date achieved 05/23/2007 06/30/2012 07/12/2011 06/30/2016

Comments

(incl. %

achievement)

FADN pilot established in both entities however regular update of database not

maintained in FBiH once responsibility was handed down to cantons. To date in the RS

a total of 128 farms are being surveyed on an annual basis.

Indicator 8 :

A8: WAN linking MOFTER with State level agencies, entity MOAs, and Inspection

services under establishment for AIS

Value

(quantitative

or Qualitative)

No coherent agricultural

information collection at

State level

Begin interface of

various entity level

and State agency

databases for AIS

Fully achieved (new

indicator)

Date achieved 07/12/2011 06/30/2016 06/30/2016

Comments

(incl. %

achievement)

See the details in Annex 4 of the ICR.

Indicator 9 : RS MAFWM/FBiH MAWMF Department for Extension with a multi-stakeholder

governing body established

Value

(quantitative

or Qualitative)

Limited public extension

services in the RS and none

in the FBiH

Extension Boards

manage a

contracted,

pluralistic extension

system

The indicator was

dropped after

restructuring in July

2011

Date achieved 05/23/2007 06/30/2012 06/30/2016

Comments

(incl. %

achievement)

Indicator 10 :

Market and results-oriented Entity extension systems operational and effective in

accordance with clearly defined policy objectives

Value

(quantitative

or Qualitative)

Few public/private

extension partnerships

On-farm extension

delivery primarily

through contracted

The indicator was

dropped after


viii

private sector and

civil society

extension agent

2011

Date achieved 05/23/2007 06/30/2012 06/30/2016

Comments

(incl. %

achievement)

Indicator 11 :

No of contracted extension/advisory service providers accredited with specific

competencies

Value

(quantitative

or Qualitative)

0

100

The indicator was

dropped after


2011

Date achieved 05/23/2007 06/30/2012 06/30/2016

Comments

(incl. %

achievement)

Indicator 12 : No of extension packages prepared and disseminated

Value

(quantitative

or Qualitative)

0

50

Date achieved 05/23/2007 06/30/2012 06/30/2016

Comments

(incl. %

achievement)

The indicator was dropped after restructuring in July 2011

Indicator 13 :

No of commercial and semi-subsistence farmers undergoing restructuring and agro-

processors within target group who implement activities directly related to advisory

services extended with Project assistance

Value

(quantitative

or Qualitative)

0

3000

The indicator was

dropped after


2011

Date achieved 05/23/2007 06/30/2012 06/30/2016

Comments

(incl. %

achievement)

Indicator 14 : B1: Transparency Entity level paying systems established

Value

(quantitative

or Qualitative)

Un-transparent, manual

paying system operating

100% of Entity

payments made

through the

accredited paying

system

Not achieved

ix

Date achieved 05/23/2007 06/30/2012 06/30/2016

Comments

(incl. %

achievement)

All IPARD like Rural Development Grants are made through paying system. A

software application to handle direct payments remains to be developed.

Indicator 15 :

B2: Entity level rural development plans established and overseen by Monitoring

Committees

Value

(quantitative

or Qualitative)

No BIH rural development

plan

Monitoring

Committee

reformulating RD

program based on

M&E report

Partially achieved,

about 50%.

Date achieved 05/23/2007 06/30/2012 06/30/2016

Comments

(incl. %

achievement)

See the details in Annex 4 of the ICR. Both entities have developed their respective

rural development programs and agricultural strategies.

Indicator 16 :

B3: Increase in RD funding and number of grants supporting competitive agriculture

activities

Value

(quantitative

or Qualitative)

Only 10% of agricultural

subsidies are structural

More than 50% of

all payments are

structural

Partially achieved,

about 50%

Date achieved 05/23/2007 06/30/2012 06/30/2016

Comments

(incl. %

achievement)

Approximately 25% of agricultural payments are in structural form, for investments.

Ratio used to be higher before floods in 2014, but it is expected to recover to 50% over

the next couple of years.

Indicator 17 : MOFTER RD payment and registries database and reporting system established

Value

(quantitative

or Qualitative)

No central collation or

reporting of market or

structural payments

MOFTER publishes

a consolidated

report of BiH

market and rural

development

payments

This indicator was

dropped after


2011

Date achieved 05/23/2007 06/30/2012 06/30/2016

Comments

(incl. %

achievement)

Indicator 18 :

B4: Rehabilitation investments completed before end of construction and farming

season in October, 2011

Value

(quantitative

or Qualitative)

Some 15 of community

assets destroyed

All rehabilitation

completed

Fully achieved (new

indicator)

x

Date achieved 07/12/2011 06/30/2016 06/30/2016

Comments

(incl. %

achievement)

See the details in Annex 4 of the ICR. All rehabilitation completed. It should be noted

that this indicator was achieved before the end of the project, i.e. June 30, 2016 and not

in October 2011.

G. Ratings of Project Performance in ISRs

No. Date ISR

Archived DO IP

Actual Disbursements

(USD millions)

1 09/10/2007 Satisfactory Satisfactory 0.00



4 12/30/2008 Satisfactory Moderately Satisfactory 1.47

5 08/07/2009 Moderately Satisfactory Moderately Satisfactory 2.85


7 06/10/2010 Moderately Satisfactory Moderately Unsatisfactory 4.08





12 12/30/2012 Moderately Unsatisfactory Moderately Unsatisfactory 12.25

13 06/29/2013 Moderately Satisfactory Satisfactory 13.98

14 01/04/2014 Moderately Satisfactory Satisfactory 15.62






H. Restructuring (if any)

Restructuring

Date(s)

Board

Approved PDO

Change

ISR Ratings at

Restructuring

Amount

Disbursed at

Restructuring

in USD millions

Reason for Restructuring & Key

Changes Made DO IP

06/16/2010 MS MU 4.08

To allow disbursement categories

2a, 2b, 5 and 10 that had a

deadline for disbursement of June

30, 2009 to become effective; and

to increase financing percentage of

disbursement categories 7 and 12

from 15% to 85%.

07/12/2011 MS MU 6.96 Restructuring in response to (i)

xi

Restructuring

Date(s)

Board

Approved PDO

Change

ISR Ratings at

Restructuring

Amount

Disbursed at

Restructuring

in USD millions

Reason for Restructuring & Key

Changes Made DO IP

changes in the country priorities in

the pre-EU-accession context; (ii)

implementation issues identified as

part of the Bank’s Implementation

Support Activities; and (iii)

damage rehabilitation needs

pertaining to rural infrastructure

and assets following the severe

floods that hit the country during

the 2010/11 winter season.

Adjustment of the RF to reflect the

changes proposed by the

restructuring, which included (i)

redesign of Sub-component

B3 from formerly “Increasing

investment grants for target

objectives and areas” to

“Financing for flood damage

rehabilitation activities in selected

areas affected by the floods in both

Entities”; and (ii) reallocation of

funding from Sub-component A4

due to delays with implementation

of extension activities, to the flood

damage rehabilitation activities

under Sub-component 3.

04/25/2012 MS MS 9.06

Extension of the Closing Date for

12 months, i.e. from June 30, 2012

to June 30, 2013

05/21/2013 MU MU 13.83



to June 30, 2015

06/17/2015 N MS MS 17.89



to June 30, 2016

I. Disbursement Profile

1

1. Project Context, Development Objectives and Design

1.1 Context at Appraisal

1. In the early 2000s, Bosnia and Herzegovina (BiH) requested Bank support for an

Agriculture and Rural Development Project to address the challenges and constraints that existed

in the agricultural sector. The sector accounted for 10 percent of Gross Domestic Product (GDP) in

2005 and employed about 21 percent of the total labor force in 2006. The country’s agroclimatic

conditions allowed for a variety of agricultural activities ranging from intensive horticulture in the plains

and lower plateaus, to extensive livestock husbandry in the prealpine and mountainous regions of the

country. About half of the rural population (which accounted about 55 percent of the total population)

depended on crop and livestock production, agriculture and wood processing, fishery and bee-keeping for

employment. Despite comparative advantages - that included the country’s closeness to the European

Union (EU), a moderate continental climate, clean and abundant natural water resources, and abundant

labor – the country remained a net agricultural importer, and the agriculture sector was characterized by

low productivity.

2. Various challenges and constraints negatively impacted the sector’s growth. The main

structural issues faced by the agriculture sector were believed to be underdeveloped rural credit markets

and low investments; the unfavorable structure of agricultural land including multiple small plots;

deteriorating infrastructure in rural areas; and inadequate irrigation. There were critical institutional issues

– both domestically and internationally – which contributed to the poor performance of the agricultural

sector and limited the increase of its competitiveness. These included (i) the underdeveloped capacity for

standardization, certification and food quality control systems; (ii) the fragmented institutional framework

to coordinate and administrate systems that facilitated the introduction of modern technologies and

processing; (iii) the lack of appropriate advisory support services; (iv) weak organization of producers,

both regionally and on commodity lines; (v) weak integration and coordination (between producers,

processors and exports) along the value chains; and (vi) a poor knowledge base.

3. Institutional capacity at the state-level to harmonize, coordinate and monitor agriculture

and forestry policies, legislation and rural development programs was almost non-existing. Public

spending in the agriculture sector was relatively low, highly fragmented and poorly coordinated between

the various levels of government. Agricultural support programs implemented by institutions covered a

range of products and activities, but they were determined on an ad-hoc basis, sending inconsistent

signals to farmers and agro-processors. In addition, there was a lack of accurate and reliable data and

information as a basis for sound planning as well as for decision making process in the agriculture and

forestry sectors. Overcoming the abovementioned constraints called for improved policy formation and

public services support for the sector. In the context of EU integration, BiH’s priority was to move from

the status of a potential candidate to the status of a candidate country to fully utilize the Instrument for

Pre-Accession (IPA). This required (i) the appointment of a Managing Authority responsible for rural

development with the oversight of a Monitoring Committee, (ii) setting up of a paying system for rural

development, (iii) collection of reliable statistical information, and (iv) the formulation of a National

Agriculture and Rural Development Plan.

1.2 Original Project Development Objectives (PDO) and Key Indicators

4. The Project Development Objective (PDO) is to assist BiH to strengthen the capacity of its State-

level and Entity-level institutions to deliver more efficient and effective agricultural services and support

2

programs as well as to make a substantial contribution to an acceleration of BiH's eligibility to access

support under the EU Instrument for Pre-Accession Assistance for Rural Development (IPARD).

5. Key outcome indicators at appraisal included:

60 percent of disease and pest inspections implemented on the basis of expected risks;

Pluralistic, stakeholder driven and outcome based contracted extension services operational at the

level of each Entity and benefiting 20 percent of commercial farmers;

100 percent of rural development structural payments made through harmonized, EU IPARD

compliant institutions and systems at the level of each Entity.

6. Key output indicators at appraisal included:

Veterinary Office of BiH implementing effective animal identification system encompassing 70

percent of cattle, swine and small ruminants;

Classical Swine Fever (CSF) test and slaughter program established and incidence of brucellosis

reduced by 30 percent;

Administration of BiH for the Protection of Plant Health implementing plant health monitoring

and risk assessment systems;

Food Safety Agency of BiH implementing a risk based food safety system;

Entity-level Directorates effectively implementing BH plant health, animal health and food

safety laws and regulations

Entity-level Agricultural Information Units established and assembling Farm Accountancy Data

Network (FADN) information from 300 farms;

Entity-level Department for Extension with a multi-stakeholder governing body established and

approved CY2010 Entity extension work plan and budget;

At least 100 of contracted extension/advisory service providers accredited with specific

competencies implementing at least 50 outcome-based extension contracts;

Entity-level farm and entitlement registries and Paying Systems established and accredited by the

World Bank to disburse project funds;

EU IPARD compliant rural development plans established and overseen by effective Monitoring

Committees;

50 percent of agriculture and rural development funding used for structural payments through a

World Bank accredited paying system in each Entity;

100 percent of project funds disbursed according to plan, timely and accurate completion of all

annual operating, training and procurement plans;

Beneficiary surveys indicate 50 percent awareness of Project and overall satisfaction with Project

activities.

1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and

reasons/justification

7. There were no changes to the PDO. However, the Results Framework was substantially modified

through the restructuring in July 2011. This was to reflect the changes in indicators required due to (i) the

conversion of sub-component B.3. “Increasing investment grants for target objectives and areas” for

“Financing for flood damage rehabilitation activities in selected areas affected by the floods in both

Entities”; and (ii) the lack of support for the state level structures for the paying system and more

adequate reflection of activities related to the State Veterinary Office (SVO), Administration for the

Protection of Plant Health (APPH) and Food Safety Agency (FSA). In total, US$6.5 million (or around 30

3

percent of the total IDA envelope) was re-allocated towards the flood damage rehabilitation activities. See

the ICR Datasheet for more details and Annex 4 with the revised list of indicators.

1.4 Main Beneficiaries

8. Primary beneficiaries comprised a number of institutions and agencies. At the State-level, they

included the BiH Ministry of Foreign Trade and Economic Relations (including the Sector for Agriculture,

Food, Forestry and Rural Development), State Veterinary Office of BiH (SVO), Administration of BiH

for the Protection of Plant Health (APPH) and Food Safety Agency of BiH (FSA). At the level of the

Federation of Bosnia and Herzegovina (FBiH), they comprised FBiH Ministry of Agriculture, Water

Management and Forestry (including the Rural Development and Extension Services Department and

Payment System Department) and FBiH Inspection Directorate. At the level of the Republika Srpska (RS),

the beneficiary institutions and agencies were RS Ministry of Agriculture, Forestry and Water

Management (including RS Agriculture Department and RS Agricultural Payments Agency), RS Agency

for Agricultural Extension Services (later renamed as Extension Services Department), and RS Inspection

Directorate. Secondary beneficiaries included: local farmers, agricultural producers and agricultural

associations, representatives of regional development agencies, representatives from the chambers of

commerce and other non-governmental organizations in RS and FBiH as well as Municipalities.

1.5 Original Components

9. The approved project components were:

Component A: Agricultural Information and Institutional Capacity Building (total cost US$17.31

million out of which SDR5.94 million -or US$9.04 million equivalent- financed by IDA; US$2.30

million financed by SIDA; and US$5.97 million financed by the BiH counterparts). This component

aimed to support the Entity-level Ministries of Agriculture as well as the various State-level agencies

serving both Entities to fulfil their respective mandates as planning and policy making institutions. A key

objective was the harmonization of the various activities and functions at the level of both Entities to

facilitate the consolidation of State-level systems as and when such opportunity arises. This Component

comprised of the following sub-components: (A1) Improving agricultural information systems; (A2)

Strengthening veterinary, food safety and plant health protection; (A3) Strengthening inspectorate

capacity; and (A4) Strengthening agricultural advisory services.

Component B: Enhanced Agriculture and Rural Development Support Program (total cost US$17.47

million, out of which SDR7.11 million -or US$10.83 million equivalent- financed by IDA; US$3.70

million financed by SIDA and US$2.94 million financed by the BiH counterparts). The 2006 budgets of

the two Entities included about EUR13.4 million for FBiH and EUR18.6 million for the RS for

agricultural support programs, and these figures were set to increase in the next few years. This

Component aimed to provide assistance to address those constraints through the following sub-

components: (B1) Strengthening rural development program planning and coordination; (B2)

Strengthening the systems for providing rural development payments; (B3) Increasing investment grants

for target objectives and areas.

Component C: Project Coordination, Administration and Monitoring (total cost: US$1.41 million, out

of which SDR0.75 million -or US$1.13 million equivalent- and US$0.28 million financed by the BiH

counterparts). This component aimed to build capacity within the FBiH Ministry of Agriculture Water

Management and Forestry (MoAWMF) and the RS MoAFWM and within the Sector for Agriculture,

Food, Forestry and Rural Development (SAFRD) under the MoFTER to coordinate, administrate, monitor

4

and evaluate the Project. It also supported the establishment of the Project Coordination Units (PCUs)

within MoFTER, FBiH MoAWMF and RS MoAFWM.

1.6 Revised Components

10. The project components were not revised, but following the restructuring in July 2011 sub-

component B3 was changed from “Increasing investment grants for target objectives and areas” to

“Financing for flood damage rehabilitation activities in selected areas affected by the floods in both

Entities” (see details of this restructuring below).

1.7 Other significant changes

11. In June 2010, the project was restructured to introduce two changes in the Disbursement

Categories of the Financing Agreement, i.e. (i) to extend the deadline for disbursement categories 2a, 2b,

5 and 10 to be able to disburse the remaining funds in these categories; the funds were not disbursed prior

to the deadline of June 30, 2009 due to delayed effectiveness of the project; and, (ii) to increase the

financing percentage of disbursement categories 7 and 12 from 50 percent to 85 percent to synchronize

this percentage with the linked Swedish International Development Corporation Agency (SIDA) Co-

financing TF090773 that already financed the mentioned categories at 85 percent.

12. Following severe floods that hit the country during the 2010/11 winter season, the project was

restructured in July 2011 to (i) re-design sub-component B3 from “Increasing investment grants for target

objectives and areas” to “Financing for flood damage rehabilitation activities in selected areas affected by

the floods in both Entities”; (ii) re-allocate funding from sub-component A4 due to delays with

implementation of extension activities, to the flood damage rehabilitation activities under sub-component

B3; and (iii) revise the Results Framework and Monitoring to reflect the changes above and to adjust

targets given lack of progress in establishing the administration of the payment system at State level and

the agreement on a centralized payment authority and policy. In total, US$6.5 million (or around 30

percent of the total IDA envelope) was re-allocated towards the flood damage rehabilitation activities.

13. There were three extensions of this project. The first occurred in April 2012 and was for a period

of 12 months. The second occurred in May 2013 and was for a period of 24 months, while the third one

was in June 2015 for a period of 12 months. Cumulatively, the project received a 4-year extension from

the original Closing Date of June 30, 2012.

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry

14. The project was prepared at a time when the country had substantially recovered from the

physical loss and destruction after the war (1991-1995), and was optimistic about the prospect of

EU accession. The Dayton agreement had been effective in bringing peace and had been able to establish

institutions that could gradually provide the political direction in the country. This achievement was

possible despite the much decentralized governance structure composed of two Entities (FBiH and RS),

one of which (the FBiH) was further decentralized into ten cantons. However, reaching agreement over

the joint institutions remained politically controversial. The project design took note of this reality and

focused its efforts on the relevant Entity and the State level institutions.

5

15. The project was designed to help BiH with the EU and World Trade Organization (WTO)

accession and to address long-term needs for the sector that had not been covered by the Bank, EU

and other donors in the past. While two previous Bank-supported operations in the country’s

agricultural sector1 focused on emergency interventions to stabilize the sector from the effects of war, and

on developing marketing chains and improving access to agricultural credit, the Agriculture and Rural

Development Project (ARDP) was driven by its long-term development goals such as modernizing the

national agricultural research, food safety and extension systems, and harmonizing BiH’s policies and

institutions in line with the accession requirements. The ARDP design was consistent with the Entity-

level strategies for agriculture (and rural development) and the BiH’s Medium-Term Development

Strategy (MTDS), which aimed at enhancing the contribution of agriculture and rural development to

overall economic growth and poverty reduction. The project also contributed to two of the key pillars of

the Country Partnership Strategy (CPS) for the period of FY2008-2011: (i) job creation through expanded

and better targeted investments in the agriculture and rural non-farm economies, and (ii) improving public

services, including sanitary and phytosanitary protection, business inspection, farm advisory and payment

systems, under the overreaching theme of EU accession.

16. A number of alternatives were considered during the project preparation. Considerations

were given to: (i) a programmatic approach to address the remaining issues, including the outstanding

forestry agenda, affecting rural development in BiH, and (ii) an adoption of a Sector Wide Approach

(SWA). Both options were rejected due to the lack of a unified agriculture and rural development strategy

and action plan, the absence of a common policy framework, and the presence of a complex

administrative structure. Considering the lack of agreement about the level of authority to be granted at

the state-level, the project focused on strengthening and harmonizing both the State and Entity-level

capacity, as well as their programs and reporting systems to facilitate further integration between relevant

Entity and the State-level institutions.

17. This project was part of a series of Bank-funded projects that were prepared in nearly each

of the countries in the Balkan region to help with reforming institutions approximating EU

accession requirements. All these projects provided substantial support to institutions responsible for

food safety, animal health, plant health and capacity building of Ministries of Agriculture with registers,

databases and information necessary for transparent subsidy payment management approximating EU

requirements.

18. The project design reflected lessons from the experience of the Bank and other donors in

agricultural support projects in BiH and other EU accession countries. These included: (i) support

driven by private sector interest to be provided by the private sector; (ii) implementation to be done by

existing institutions; (iii) improved food quality requiring capacity building efforts in both the public and

private sectors; (iv) introduction of new programs adding complexity; and (v) sufficient beneficiary

demand and absorption capacity facilitating an effective and efficient disbursement of EU rural

development support funds in the pre-accession period. The project design was also informed by the

experiences gained from the Bank-financed Emergency Farm Reconstruction Project and Small Scale

Commercial Agriculture Project. Both of these projects focused on supporting farmers and producers at

the grassroots level and did not attempt broader policy or institutional reforms. The ARDP, in turn, was

expected to address weak public services. Finally, the project design benefitted from being prepared

shortly after a similar project in Croatia, and in parallel with similar projects in Serbia and Macedonia that

had very similar aims as mentioned in the paragraph above.

1 An Emergency Farm Reconstruction Project approved in March 1996 and a Small Scale Commercial Agriculture Development

Project approved in March 2003.

6

19. The project team ensured complementarity with the EU and other donors’ supported

activities through active participation in the EU-led Donor Coordination Group for the

Agricultural Sector in the formulation of a national agriculture and rural development strategy and

action plan. At project entry, the following specific agreements were made among the donors:

The ARDP would support the EU’s ongoing activity related to drafting of a State Agriculture Law

and a national agriculture and rural development strategy. The objective of this effort was a more

harmonized development approach across both Entities, with the State level institutions playing a

significant coordinating role. In this regard, the project would contribute to this activity by (i)

strengthening the state agencies for food safety and veterinary and plant health protection; (ii)

supporting a harmonized approach to agricultural services development at the Entity-level, and

building capacity at the State level for monitoring and reporting rural development information.

The ARDP would adhere to the three EU initiatives for agriculture and rural development,

including (i) support to implementation and enforcement of the BiH food legislation; (ii) support

to strengthening and harmonizing BiH’s agriculture and rural sector information system; and (iii)

pilot support to rural development programming in BiH.

While supporting the database management and risk assessment and mitigation, the ARDP would

complement the twinning project financed by the EU. Specifically, the project would work with

the German Technical Cooperation Agency (GTZ) along with the Bavarian Inspection services

that signed an agreement with the SVO on supporting inspection services.

The ARDP would complement the USAID-funded Streamlining Permits and Inspection Regimes

Activity (SPIRA) Project, which supported the agricultural sector with reforms in the area of food

safety, particularly in rationalizing inspection to strengthen the business environment.

20. The Swedish International Development Corporation Agency (SIDA), a key partner in BiH,

collaborated closely in project design/preparation. While the ARDP mainly supported investments in

State- and Entity-level food safety institutions and laboratories, SIDA provided grant funds of SEK$41.16

million (which became effective on October 14, 2008) to co-finance technical assistance and training

activities. Specifically, SIDA focused on training of staff in these institutions, including: (i) increasing

capacity of the national accreditation body (BATA); and (ii) supporting the FSA staff in drafting laws and

regulations; and providing the hazard analysis and critical control points (HACCP) training for the FSA

staff, industry representatives and inspection services. In addition, the SIDA program supported the

drafting and implementation of Laws and Rulebooks. Substantial SIDA resources were also allocated for

the rural development grants financing, however following the restructuring in July 2011, they were re-

allocated to the flood rehabilitation activities.

21. The project was prepared in close consultation with the broad spectrum of stakeholders.

The ARDP preparation team held several meetings with agricultural producers, agricultural associations,

representatives of regional development agencies, representatives from the chambers of commerce, and

other nongovernmental organizations in the RS and the FBiH. All groups voiced one common concern

over the difficulty for the government in determining appropriate interlocutors among the various

associations given the lack of a unified voice or representational mechanisms. A rural forum was

proposed to be included in the projects as a means to foster dialogue between the government and the

various producer associations on agriculture and rural development issues.

22. Although most critical risks and related mitigation measures were clearly assessed during

the design phase, a few were underestimated. The project ambitiously aimed at promoting institutional

7

changes in the country with a complex government structure2 comprised of a Council of Ministers at the

State level, and two Entities holding considerable powers over budgeting and resources allocation. The

assumption that harmonization of the project activities would only be challenged by cantonal objections

was overly optimistic. Ultimately, the major risks that affected the project implementation and delayed

some of its activities included: (i) fragmentation and lack of coherent vision in the Entities that posed

greater challenges due to inability by the Entities to adopt an extension law for years; (ii) challenges with

getting inspection services at the Entity and cantonal levels to establish a uniform inspection IT system;

and, (iii) extensive differences in Entities’ institutional policies to determine bodies with national

reference capacities located on their respective territories, including the agreement on the location of

livestock registration, Genetically Modified Organisms (GMO) testing capacity, and the network of

reference. Further, three project risks that were related to the implementation of the rural development

grants program did not materialize as the program was never launched. Finally, the risk of limited

institutional and human capacity that could slow or constrain implementation of the project was

adequately rated High as these two constraints contributed considerably to the delays and inefficiencies

during project implementation.

23. The PDO was broadly defined. The project development objective, i.e. “to assist BiH to

strengthen the capacity of its State-level and Entity-level institutions to deliver more efficient and

effective agricultural services and support programs as well as to make a substantial contribution to an

acceleration of BiH's eligibility to access support under the European Union Instrument for Pre-Accession

Assistance for Rural Development (IPARD)” was broad. The selected key PDO indicators clarified this

ambiguity to some extent, but there seem to be only a few factors (among many others) that could

contribute to the achievement of this PDO. On the other hand, the list of intermediate indicators was

exhaustive and covered most aspects of the PDO and components. The project could have benefitted from

a stronger Theory of Change at design stage to ensure that the PDO was not overly ambitious, and was

matched by proper PDO indicators and outcomes.

24. Proper assessment of baseline values individually for each Entity could have informed

better design of activities. Brief and generic descriptions of baseline values provided in the Results

Framework provided limited idea of ex-ante situation in each entity. Since progress on project activities

varied for each entity during project implementation (e.g. with more serious delays in launching extension

activities in the FBiH due to lack of relevant legislation), an adequate presentation of baseline values at

the onset of the project could have helped the team effectively tailor project activities for each Entity and

minimize some of the delays.

2.2 Implementation

25. The project was implemented within a complex institutional structure. Institutionally, the

project was complicated not only due to a large number of public agencies involved in the project, but

also due to the two Entities functioning as two parallel projects. There were two Ministries of Agriculture,

Water Management and Forestry at entity level with only an incipient ministry at the national level.

Further, in the FBiH, there were 10 cantons and cantonal ministries which also had responsibility for

agriculture. In the absence of a national agricultural ministry, an agricultural department supported with

EU funds was established within the MoFTER, as the nucleus for the future agricultural ministry. Finally,

2 The Dayton Peace Agreement of 1995 created a governance structure which involves a Council of Ministers at the state level

and two Entities: the Federation of Bosnia and Herzegovina and Republika Srpska, with FBiH further divided into ten cantons.

Brcko District was later added to the BiH governance structure.

8

there were three common national-level food institutions: the State Veterinary Office, the Plant Health

Administration, and the Food Safety Agency.

26. The change in the country’s mood towards EU accession accompanied by the institutional

confusion and lack of vision for sharing of responsibilities between the State and Entities hampered

the implementation of the ARDP. While BiH was eager to move from the current status of a potential

candidate country to the status of a candidate country at the design stage, this prevalent enthusiasm

vanished during the project implementation. Following signing the Stabilization and Association

Agreement (SAA) with the EU in 2008, the country’s path to EU accession has stalled. The key factor

was the failure of the main political representatives to reach consensus on how political authority and

even administrative competencies should be arranged to ensure continued progress towards the EU and to

create conditions for the country’s sustainable economic development. The strong push to build state level

bodies left the institutions at the level of Entities in somewhat of a limbo uncertain of what their mandates

were and how decision making would be organized.

27. The Bank’s role was complementary to the EU. Since various donors (with EU being the

largest) were supporting the sector and influencing its policies, the project took an opportunistic approach

to close gaps that EU and other donors did not finance. Regular donor coordination meetings were held

whenever the supervision team visited the country to discuss progress on project interventions to avoid

duplication and maximize complementarity. Therefore, the project’s successful results were possible

thanks to joint donor efforts to support the country’s sector.

28. Overall, project implementation was mostly considered Moderately Satisfactory (MS) with

a few Moderately Unsatisfactory (MU) ratings. At the Mid-Term Review (MTR) in June 2010, the

implementation progress (IP) rating was rated MU due to the low disbursement rate (30 percent) and

accumulated delays in implementation of activities related to plant health and phytosanitary services,

extension services, harmonization of rural development planning and payment systems. The delays at

APPH were caused by lack of staffing, hiring of which had to be put on hold due to the budgetary crisis at

the Institute. Furthermore, half way through the project, it was clear that given the political complexity of

reaching agreement on a single paying system and rural development program, the two EC’s requirements

to establish a joint Rural Development Grants Program and Payment system could not be met. The IP

rating was upgraded to MS in April 2012 as performance under the plant health and phytosanitary

services sub-component improved, the Rural Development Grants program and extension activities (the

weakest sub-components) were discontinued, and the project resources were reallocated to support

rehabilitation needs following the severe floods that hit the country during the 2010/11 winter season.

29. Although project suffered from a slow start and low disbursement up to the MTR stage, its

implementation accelerated after project went through a few rounds of restructuring and

extensions, and it was almost fully disbursed (92 percent) at project closing. In December 2012, both

PDO and IP ratings were again downgraded to MU due to: (i) unresolved issue of data sharing between

Entities and State-level institutions, as well as the FSA and the MoFTER; (ii) failure by the MoFTER to

secure resources for adequate maintenance of IT infrastructure provided by the project, and staffing to

operate it; and (iii) low disbursement rate (around 60 percent) with only seven months remaining before

project closure. The PDO rating was upgraded to MS and IP rating to Satisfactory in June 2013 following

the extension of the project’s closing date for an additional two years, which allowed completion of

outstanding activities.

30. The project Results Framework was substantially modified following the restructuring in

July 2011. The project was restructured in response to: (i) changes in the country priorities in the pre-EU-

accession context; (ii) implementation issues identified as part of the Bank’s Implementation Support

Activities; and (iii) damage rehabilitation needs pertaining to rural infrastructure and assets following the

9

severe floods that hit the country during the 2010/11 winter season. The RF was adjusted to reflect the

changes proposed by the restructuring, which included: (i) redesign of Sub-component B3 from formerly

“Increasing investment grants for target objectives and areas” to “Financing for flood damage

rehabilitation activities in selected areas affected by the floods in both Entities”; and (ii) reallocation of

funding from Sub-component A4 due to delays with implementation of extension activities, to the flood

damage rehabilitation activities under Sub-component 3. As a result, (i) three key PDO indicators were

replaced with three new ones; (ii) six intermediate indicators were dropped; and three intermediate

indicators were newly added; and (iii) six intermediate indicators were revised. The full list of revised

indicators is provided in Annex 4.

31. Cumulatively, the project received a four year extension to address various delays during

its implementation. In April 2012, the project was restructured to extend the Closing Date for 12 months,

i.e. from June 30, 2012 to June 30, 2013 to permit the completion of many activities that were delayed in

part due to the difficulties in getting agreement by all stakeholders on their mandates, structure of data

exchange, and ownership. In May 2013, the project was restructured to extend the Closing Date for 24

months, i.e. from June 30, 2013 to June 30, 2015 in view of delays with construction of laboratories and

certification process. Finally, in June 2015 the project was restructured to extend the Closing Date for

another extension for 12 months, i.e. from June 2015 to June 30, 2016, to complete a compatible payment

system in both RS and FBiH for agricultural subsidies. The last extension was also seen as an opportunity

for the Bank to maintain engagement in the agricultural sector with a new government (elected in April

2015), and to preserve client capacity on priorities for agriculture and rural development in the newly

prepared Country Partnership Framework.

32. Persistent legal ambiguity and lack of institutional capacity in the food safety sector,

specifically in the SVO and FSA were a challenge during project implementation. They led to

duplicating and overlapping and sometime to conflicting initiatives that hindered planning and monitoring

arrangements, and undermined the optimal utilization of resources. The Food Safety Information system

for the FSA was dropped due to the difficulties related to ownership of data among the various

stakeholder institutions notably at Entity level where food operator registration was already taking place

by the respective Ministries of agriculture and monitored by entity inspection services. Ultimately, the

FSA opted to reallocate these resources to the Butmir faculty of the Agricultural Institute in Sarajevo. The

faculty, which had already received significant investments from the Federation in the past, was expected

to house the risk assessment capacity of the FSA. This decision was also in line with discussions and

agreements at the Council of Ministers to modify legislation related to the Food Safety Agency to focus

its efforts mainly towards risk assessment and analysis while the State Veterinary office and Plant Health

and Phytosanitary Agency would take on a more direct role in ensuring food safety and interfacing Entity

inspection services.

33. The project supported the country’s capacity for GMO testing, and at appraisal the

Agricultural Institute in Banja Luka had been initially identified as the competent lab for this

function, but it was later dropped. During project implementation a competing proposal emerged from

the laboratory serving the forensic research to identify war crimes in Sarajevo. Ultimately, the Bank and

project coordinators agreed to split the resources that supported GMO testing between both facilities. A

series of events led to cancellation of project activities at the Banja Luka Agricultural Institute and

laboratory facilities. Initially, there was a one year delay in commencement of works in this Institute due

to lengthy resolution of the Bank’s resettlement policy OP 4.12.3 Later, following the subsequent

budgetary situation resulting from the floods in 2010/11, the decision was made not to reconstruct the

3 It was triggered after the project learned about two households residing in close proximity to the Institute. They were eventually

relocated to an apartment that was found in coordination with the social services and support of the city Banja Luka.

10

Institute as part of this project, but instead to support its reconstruction in a future Bank-supported project.

Despite being selected at inception to perform the GMO function, and still playing a key role as a

reference laboratory for plant based testing, the Agricultural Institute in Banja Luka was not accredited

for GMO testing, while the Sarajevo forensic Laboratory received the GMO testing accreditation.

34. Harmonization of State level Agencies legislation with Entity Legislation was delayed. Since

its inception, the project suffered from lack of clarity in some of the institutional changes related to the

conflicting mandates and authority at each government level and between the various agencies at each

level of government (State, Entity, Cantonal and Municipal functions). A full-fledged effort between the

State and Entities on legislation pertaining to Agriculture, Food Veterinary services to harmonize state

level agencies legislation with entity legislation began in spring 2013, however the process was

suspended for several years. It has only been recently revisited by both Entities and State within the

context of the determining the coordination mechanism that is part of the reform agenda.

35. Inability or lack of support by respective Ministries to address the declining schedule of cost

sharing for wage payments caused delays and undermined capacity building. There were concerns

over the substantive use of project consultants for the tasks outside of their agreed terms of reference; this

practice had particularly negative effects on the establishment and development of a functional FBiH

MAWMF Rural Development Department. Absorption of consulting positions by the civil service was

not always successful. This inability to regularize consultants into the public service led to collapse of the

FADN in Federation as there was none to survey farmers and coordinate efforts with cantonal extension

services to maintain the pilot activity.

36. The project managed to achieve impressive results in improving the quality of services

provided by the key sectoral agencies despite the range of challenges during design and

implementation. Specifically, the project strengthened capacity of the State-level agencies for veterinary

services, plant health and phytosanitary services, and food safety. In addition, inspection services were

improved, and good progress was made in the implementation of farm and client register, and livestock

identification and registration systems. However legal frameworks clarifying mandates between agencies

at State and Entity level still need harmonizing for systems to become functional and to comply with

international and EU requirements. Finally, the Entities’ policy framework was improved by adoption of

the Federation's Medium-term Development Strategy of the Agricultural Sector for 2015–2019, and of the

Strategic plan for development of agricultural and rural areas of Republika Srpska for 2016-2020. Other

project positive results are provided in detail in Annex 2.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization

37. M&E Design: The project development objective was broad. The project could have

benefitted from a stronger Theory of Change to ensure that the PDO was not overly ambitious, and was

matched by proper PDO indicators and outcomes. The selected key PDO indicators clarified this

ambiguity to some extent, but there seem to be only a few factors (among many others) that could

contribute to the achievement of this PDO. However, the list of intermediate indicators was exhaustive

and covered most aspects of the PDO and components. Finally, the baseline data was of questionable

quality mainly because it had been based on a vague explanation of an “ex ante” situation in the two

Entities, and without a proper consideration of differences in institutional methodologies and policies

between the Entities.

38. Implementation: Results Framework indicators were consistently used to measure project

progress throughout implementation in the semi-annual progress reports and Bank’s

Implementation Status and Results Reports (ISRs). Following the restructuring in July 2011, grants

11

program and extension activities were dropped due to implementation delays, and a new flood damage

rehabilitation activity was added instead. Consequently, the Results Framework was substantially

modified to reflect these changes. As a result, the following changes were made: (i) three key PDO

indicators were replaced with three new ones; (ii) six intermediate indicators were dropped; and three

intermediate indicators were newly added; and (iii) six intermediate indicators were revised. This

restructuring allowed the upgrade of the ratings of IP and PDO achievement from MU to MS. However,

in view of such substantial changes to the initial project design (cancellation of key project activities, and

consequent re-directing of 30 percent of funding) and PDO indicators, this restructuring was not used to

also revise the broad PDO. The team believed that conversion of the rural grants program into to flood

rehabilitation activities contributed to the objective to improve agricultural services. While a number of

indicators have been substantially achieved, it is still difficult to link that achievement with the broadly

defined objective of the project.

39. Utilization: The M&E of the various activities under the project was coordinated among the

Entity-level Ministries of Agriculture and the MoFTER. An M&E Specialist was recruited to work

under the MoFTER-PCU and was in charge of updating the Results Framework on a semi-annual basis.

The specialist compiled all the information obtained from the Entities and presented the data in six

monthly reports shared with the MoFTER, the FBiH MoAWMF, the RS MoAFWM, and the World Bank.

This information was reviewed and confirmed by regular World Bank supervision missions. No MTR

Progress Report and final Project Beneficiary Survey were produced by the Beneficiary, and the Bank

team did not follow-up with the Beneficiary regarding these reports.

2.4 Safeguard and Fiduciary Compliance

40. Environmental Safeguards (OP 4.01): The Project was qualified for Categories B and C.

Activities under Component A were expected to have environmental implications including

rehabilitation/refurbishing of laboratory facilities and disposal of laboratory waste. In accordance with the

Bank’s Operational Policy, this required an Environmental Management Framework (EMF) and the

accompanying Environmental Management Plan. Supervision missions were carried out regularly and

confirmed that adequate mitigation measures were implemented. The project produced additional

environmental benefits. It provided training for laboratory personnel and thus contributed to increased

environmental safety of existing laboratories. For the purposes activities on flood damage, an EMP was

prepared with disclosure and consultations prior to start of works.

41. Pest Management (OP 4.09): The EMF considered the relevance of the pest management

operational policy and identified measures to mitigate possible environmental impacts associated with the

strengthening of extension services in case they encouraged the increased use of pesticides. There were no

issues of non-compliance with this safeguard policy during project implementation.

42. Social safeguards (OP 4.12): During project preparation, social safeguards were not triggered as

envisaged activities did not require land acquisition or involuntary resettlement. However, during project

implementation, the project had to deal with the relocation of the two households from the premises of the

Agricultural Institute in Banja Luka. During the mission visit in April 2011, the team learned about the

building adjacent to the laboratory. After the Bank team received the necessary documentation confirming

the status of the tenants’ ownership rights over the apartment adjacent to the laboratory, as well as

confirmation that the bio-safety certificate for the site would allow for residence in close vicinity, the

Regional Safeguards Advisor (RSA) concluded that no further action was necessary. In coordination with

the Ministry of Health and Social Affairs, an apartment was found in the city of Banja Luka for these

residents. Both residents signed the document that had been developed in collaboration with the RSA

under which relocation took place without triggering the Bank resettlement policy OP4.12.

12

43. Financial Management: The PCUs in both entities carried financial management responsibilities

in a satisfactory manner. Quarterly financial reports were prepared and submitted on time, providing

reliable financial information. The financial statements were regularly audited by independent auditors,

resulting in unqualified opinions.

44. Procurement: Procurement was carried out in line with the applicable Procurement and

consultant Guidelines, in a diligent, professional and timely manner. There were no deviations from the

agreed provisions during the process. Procurement filing was also good. All documentation related to

each procurement procedure was duly filed and readily available. Most of the contracts were implemented

on time. The project team and the Procurement Specialist properly managed the procurement process and

contract implementation, as well as the recording of processes and file maintenance. The project benefited

from experienced project coordination bodies that have worked with Bank financed projects for years and

were well versed in Bank procedures. In the later stages of the project they alerted the Bank of a case of

suspected collusion. The case was investigated and while inconsistencies of testimony were identified,

INT closed the case without sanctioning any of the suppliers named, but it illustrated the effectiveness of

the fiduciary functions performed by both coordination Units.

2.5 Post-completion Operation/Next Phase

45. The systems and institutions that were developed and strengthened under the project, even

in their somewhat incomplete shape, are important to BiH’s progression to eventual EU and WTO

accession and will serve to improve agricultural competitiveness of the country. As neighboring

countries are now part of the EU (Croatia) or progressing towards accession (Serbia, Montenegro), the

country has a growing pressure to accelerate reforms as it risks to become a landlocked island surrounded

by EU members. There is a strong commitment by the Governments in BiH, local stakeholders and the

donor community to sustain the project efforts and build further on the basis established by the project

and other initiatives. Even though more work is needed to ensure long-term sustainability and maximum

impact, clear evidence exists that all stakeholders recognize BiH’s agricultural competiveness as a major

asset. FBiH and RS implementing agencies have already indicated need for further Bank investments in

capacity building, public awareness, trans-boundary cooperation efforts, and expansion of information

databases.

46. While the current Country Partnership Framework (CPF) FY16-20 does not provide

explicitly for a follow-on operation, there may be a need for additional technical assistance support

from the Bank and other donors to sustain the reform achievements to date, especially in the area

of food safety and improving access of BiH food products to the EU market. The Governments in

BiH secured additional support from the donor community to support the veterinary and food sector.

SIDA informed the Bank that their new regional strategy for the Western Balkans for the period of 2014-

2020 has been completed and will pursue economic development and growth, both of the public and

private sector, and place emphasis on quality infrastructure, e.g. certification and standard of products,

inspections, etc.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation

47. Relevance of objectives: Significant. Although the objectives of the project were broad and

ambiguous, they were and remain highly relevant to country priorities and sector strategies,

particularly on its path towards EU accession and its ability to integrate the agricultural sector in

the economic environment of the EU. Aligning with EU requirements and the necessary competitive

13

and structural adjustments remains the primary policy driver in the country’s agricultural sector today.

The project design was consistent with the Entity-level strategies for agriculture (and rural development)

and the Medium-Term Development Strategy (MTDS), which aimed at enhancing the contribution of

agriculture and rural development to overall economic growth and poverty reduction. The project also

contributed to two of the key pillars of the Country Partnership Strategy (CAS) for the period of FY2008-

2011: (i) job creation through expanded and better targeted investments in the agriculture and rural non-

farm economies, and (ii) improving public services, including sanitary and phytosanitary protection,

business inspection, farm advisory and payment systems, under the overreaching theme of EU accession.

The BiH’s CPF for FY16-20 continues its focus on improving sector competitiveness and alignment

towards the EU and, as such, the project remains fully in line with the current CPF.

48. The objective of “delivering more efficient and effective agricultural services” and “making

a substantial contribution to an acceleration of the country’s eligibility to access support under the

EU instrument for IPARD” were broad. Given the decentralized and fragmented nature of the country,

the PDO was not sufficiently specific as which level substantial contribution would be required to access

EU IPARD. In addition, the expected PDO target indicators were only some of the elements that could

have contributed to the achievement of the PDO. At the same time, other key sectoral challenges pointed

out by the Project Appraisal Document (PAD) including (i) an underdeveloped rural credit markets and

low investments, (ii) the unfavorable structure of agricultural land including multiple small plots, (iii)

deteriorating infrastructure in rural areas, and (iv) inadequate irrigation – which could have, in theory,

contributed to the achievement of this ambitious PDO, were not targeted by the project.

49. Relevance of design and implementation: Modest. There were, however, some weaknesses in

project design. Like all the other projects that were prepared almost simultaneously to support EU

approximation, there was insufficient recognition that institutional strengthening takes time. In BiH with

its fragmented institutional set-up, and lack of a coherent vision by the Entities, and cantons of the role of

the State and the lack of clarity for delegated functions, that oversight was even more consequential. In

part because of this lack of clear vision, and foreseeing challenges ahead, the selected PDO indicators did

not fully capture and clarify the broadly defined PDO, i.e. “to deliver more efficient and effective

agricultural services and support programs” and “to make a substantial contribution to an acceleration of

BiH’s eligibility to access support under IPARD.” As a consequence of this lack of clarity, the project

design did not sufficiently address all the challenges faced by the sector and gaps that hindered the

capacity to attract IPARD funding. Following cancellation of key project activities at the MTR stage, i.e.

extension activities and rural development grants program, and re-direction of 30 percent of IDA

proceeds toward flood damage rehabilitation activities, it appears that the project drifted further away

from its initial design which exclusively focused on strengthening institutional capacity.

50. At the same time, given that the reallocation to flood rehabilitation was in part to avoid

cancellation of concessional IDA funds and resources under the SIDA grant, this disbursement

objective was met. The conversion of rural grants to flood rehabilitation was made in the context of the

PDO relating to improved agricultural services. Considering that the MAFWM and MAWMF in both the

RS and the FBiH are responsible for water related infrastructure and forestry it was thought that

rehabilitation after floods fell under their mandates and fit within the logic of the PDO in improving

agricultural services.

3.2 Achievement of Project Development Objectives

51. The PDO was broadly stated defining two general outcomes, i.e. “more efficient and

effective agricultural services and support programs” and “substantial contribution to an

acceleration of BiH’s eligibility to access support under IPARD.” These outcomes were too broad to

be in tune with what could reasonably be achieved within the framework of a US$21 million project.

14

While many of the project activities were substantially delivered, it is somewhat difficult to claim that the

project fully contributed to achievement of these two main outcomes. However, the key PDO indicators

specify what PDO outcomes were assumed and demonstrate the level of their achievement as described

below.

52. PDO Indicator #1 before restructuring: Sixty percent of disease and pest inspection

implemented on the basis of expected risks – This indicator was substantially achieved. FSA, SVO and

APPH provide input at the Entity level and border inspection planning based on risk assessment from

prior events, and inspection plans are revised quarterly or more frequently in case of an emergency as is

the case currently with the Lumpy Skin Disease outbreak that threatens the country. There remain issues

with the proper harmonization and mandates notably as it relates to the authority of entity level inspection

services to certify products nationally. There is also a significant shortage of inspectors to fully inspect all

food operators including producers, traders, and restaurants, retailers. However inspections do take place

based on constant risk monitoring including variables with weather conditions, notifications from the

European Food Safety Network to which BiH belongs, and issues arising from typical sanitary

inspections. As such this indicator has been substantially achieved.

53. PDO Indicator #1 after restructuring: Structured disease and pest control system, informed

by surveys and supported by reliable laboratory diagnostic capacity and databases, are developed,

coordinated and implemented with data sharing at State and Entity level approximating EU standards -

This indicator involves a number of inputs that have to function in conjunction with each other at the level

of the State Veterinary Office, Food Safety Agency and Plant Health and phytosanitary agencies working

with counterparts at the Entity and cantonal levels, in order to be achieved. The list of inputs included: (i)

strengthening capacity of laboratory staff, (ii) full operability of entity Farm and Client (F&C) registers,

(iii) launch of production stage by the Agency for Animal Identification and Registration, and (iv)

ongoing work on legal framework and its adaptation as required by the EU. The livestock registration

system when combined with the disease notification system that had been supported by the Bank’s

financed HPAI (Highly Pathogenic Avian Influenza) project a few years ago has helped the SVO in

improving its disease control and animal health management capacity. Thanks in part to these systems

that help tracking animal movement combined with regular sampling and laboratory testing, as well as

coordination with neighboring country’s vet services, the Lumpy Skin Disease that has been infecting

much of the Western Balkans over the past 2 years was contained at the border.

54. Also, necessary trainings in the use of procured laboratory equipment, as well as analytical

protocols contributed towards the goal outlined by the indicator. At sub-indicators level: (i) while

some designated laboratories got accredited for a certain number of testing methods during the reporting

period (i.e. Federal Agro-Mediterranean Institute, Banja Luka Agriculture Institute)4, other laboratories

still strive to fulfil necessary preconditions for accreditation; and (ii) data sharing occurs at the entity

level, and the state is involved in the federal Farm and Client register and phyto-register exercise, but only

in terms of data replication from the FBiH MoAWMF’s server(s) to the ones belonging to MOFTER;

apart from this routine exercise, no move was made in 2016 to replicate the data from MAFWM RS to the

MOFTR server.

55. The Food Safety Agency (FSA) has performed three risk analyses (diet study, nitrate study,

aflatoxin study) as expected at project design and as reflected in indicators. It was one of the first

food safety agencies that alerted the Western Balkans about the risks of aflatoxins in milk stemming from

poorly processed corn silage. Since this revelation, the aflatoxin testing of animal fodder has become a

4 The Banja Luka Agriculture Institute was not accredited for GMO testing as indicated previously, but was eventually accredited

for reside testing and other plant related testing.

15

common practice in a greater part of the EU. The FSA effectively interacts with inspectorates and

Ministries of Agriculture at the entity level to monitor food related risks and provides policy guidance to

improve surveillance. While challenges remain notably with the introduction and integration of the

hygiene package, the FSA has been growing in its role to ensure a safe food supply.

56. The Plant Health and Phytosanitary Agency (APPH) has effectively coordinated efforts for

potato pest surveys for the past three years to ensure the export of seed, industrial and food potato

to Europe. It has implemented a phyto-register that records all plant product traders and operators

including pesticides and herbicide products. It informs inspection monitoring plans to ensure detecting

diseases at entity and border inspection posts. Recently attention has been concentrated on packaging

material to verify the kilning of wooden transport crates to reduce the risk of import of animal, plant, and

fungi based pests.

57. The outcome of the various investments have led to the acceptance for the export of honey,

heat treated milk, eggs and poultry products, potato, and other horticultural products to the EU

according to the report of the EU Food and Veterinary Office (FVO) in Dublin. Capacities of

institutions serving the agricultural sector in general have improved as reported by the EU Commission

Staff Working Document on Bosnia Herzegovina dated November 10, 2015.

58. Pluralistic, stakeholder driven and outcome-based contracted extension services operational at

the level of each Entity and benefitting 20 percent of commercial farmers – Although this indicator was

dropped following cancellation of extension activities, it should be reported that the RS was close to its

achievement, and the FBiH made a few important steps to establish extension services. The RS extension

services have acquired significant capacity since project inception including equipment for the officers as

well as a variety of training courses to help officers to provide basic advice on business development to

farmers. Recently it has established a website (www.pssrs.net-advisory), which serves for daily

publication and reporting on activities of extension services, publication of laws and bylaws, daily

publishing of various recommendations for farmers as well as a forum where counselors/advisors answer

questions of farmers. It is estimated that 80 percent in the RS&C register their personal computers. On the

other hand, with adoption of the extension law, the Federation is upgrading its extension strategy to

reflect the structure of the extension system including defining the role of cantonal services in the

structure. To further strengthen its coordination role, the Federation extension department of the Ministry

with project funding has also procured a package of basic IT equipment for cantonal offices. It is

presently in the midst of developing an extension information software identical in concept to the one

developed and used in the RS also financed with project resources. This application will help with

improving programming and delivery of services in response to farmer requests with the Federal Ministry

functioning as a coordinating body as had been envisaged at project design.

59. PDO Indicator #2: Registries and databases for the effective management of incentive

payments, tracking of sanitary inspection data at Entity levels with reporting capacity to State level

agencies and MOFTER are in place approximating EU systems – This PDO indicator was substantially

achieved. The links at entity and state level for various registries for the Farm Information System

approximating EU requirements have been established. Most of these registers are, in fact, playing a key

role in food safety and animal health. It is also worth noting that the web service is a facility that has been

reported to be ready for linking with eligible users, but has not been in use by any of the respective entity

ministries to access the Agency’s database. At sub-indicator level: (i) reportedly, both data quality and

integrity are checked upon entering into corresponding databases; and (ii) the links with entity

inspectorates have been established, but no information was received to confirm the start of risk

assessment and management in administering incentive payments at entity level.

http://www.pssrs.net-advisory/

16

60. PDO Indicator #3 before restructuring: One hundred percent of rural development structural

payments made through harmonized, EU-IPARD compliant institutions and systems at the level of

each Entity – As reflected earlier in the ICR , there was a considerable resistance by a number of donors

including the EU to disburse Rural Development Grant resources along the lines of EU IPARD principles

at Entity levels for fear that this would set a precedent that would prevent the development of a State level

paying agency. This very strong resistance waned over the years when it became clear that the political

decision for a full-fledged Paying agency handling IPARD and national funds would not emerge soon.

The Bank faced the dilemma of cancelling substantial IDA funds or directly clashing with much of the

donor community by disbursing these funds. The floods of 2010/11 ultimately affected the decision on

the use of funds. While funding for the grant program under this indicator was redirected, the institutional

capacity building support to improve entity level capacity to manage their own fund and setting up

structure substantially in compliance with IPARD was continued. The expectation is that eventually a

payment structure would become politically palatable to which the entity systems based on harmonized

process procedures, software protocols, these capacities would be linked. While with the cancellation of

rural development grants this indicator became obsolete, many pieces necessary for an EU IPARD

compliant payment structure are in place today. Since the cancellation of these funds, the donor

community has come to appreciate that in many ways the Bank’s perspective of working bottom-up has

own merits in getting institutions harmonized in the complex political environment of BiH.

61. PDO Indicator #3 after restructuring: Flood rehabilitation grants help communities recover

to pre-flood level of economic activity – The support for flood rehabilitation including delivery of

productive assets in farm to recover production as well as works to rehabilitate rural infrastructure that

was damaged during the floods were fully delivered and completed. Both entities produced final reports

of the activities providing an insight in the impact of these investments. Altogether some US$6.5 million

was disbursed benefitting over 7,000 individuals. Support has helped rebuild small rural bridges, access

roads to remote villages, as well as water supply systems for rural communities and small irrigation

systems that have been refurbished. Nearly 100 households had their greenhouses rehabilitated and 14

farms in Ravno Municipality had their orchards and vineyards replanted.

3.3 Efficiency

62. Component A aimed to improve capacity to identify and manage risks in animal and plant health

along the human food chain. The financial analysis for Component A is based on predictions of reduced

prevalence of key animal diseases, including ovine/caprine brucellosis; bovine brucellosis and

tuberculosis; and other zoonoses and zoonotic agents. The reduced prevalence predictions, and

assumptions about the costs incurred dealing with the disease, provides the basis for calculations of the

savings resulting from reductions in slaughter and compensation costs for diseased animals; destruction of

milk from infected animals; and reductions in human cases that require treatment.

63. Project analysis based on predicted prevalence/incidence rates and estimates of costs of incidence

of the diseases indicates that the financial internal rate of return (FIRR) for the support provided under the

Project to the Veterinary Office of BiH and Food Safety Agency of BiH is 14 percent. Recalculating

using the same methodology because of the difference in disease pattern relative to appraisal, the

estimated IRR is at 18 percent. This is a conservative estimate of the benefits from this investment, since

Component A also includes support to animal identification and movement control that provides un-

quantified benefits in terms of reduced identification costs through the use of electronic monitoring

systems and improved disease control and traceback, as well as increased market compliance and hence,

opportunities. The ability to track livestock movements, along with better inspection regime and border

controls is thought to have played some role in containing the Lumpy Skin Disease infection that has

recently affected a number of neighboring countries.

17

64. Support to plant health sector: The project envisaged significant benefits from the introduction

of GMO testing capacity. While only partial capacity was established, experience from the neighboring

countries shows that testing of a GMO plant material is considerably less frequent than anticipated and

never exceeds a few hundred samples per year. Rather than calculating the incremental value from the

GMO testing capacity, this analysis has estimated the potential incremental benefit from investments in

the plant health and phytosanitary sector, specifically from the investment in potato testing. Potato

production in BiH is equivalent to around 300,000 tons representing a value of some US$50.0 million

including seed as well as industrial and consumption potato. Assuming only five percent of the

production to be exported represents a value of some US$2.5 million per year compared to three seasons

of project support amounting to some US$300,000 per year and continued financing of the yearly

monitoring program. The investment rate of return over 20 years at 12 percent discount rate, assuming

no change in production volume and constant prices amounts to an IRR of 18 percent.

65. Under Component B support benefitted essentially two regions that were heavily affected by the

fall/winter 2010 floods in the Eastern and Northeastern part of the country. Support was also provided in

Popovo polje that was flooded, specifically the Municipality of Ravno where floods reached levels up to

20 meters as a consequence of poor synchronization of dam releases. Some 18 farm households in Ravno

had their permanent orchards uprooted and fully destroyed. In the RS the focus was primarily on

rehabilitating the damaged rural infrastructure under small works, while in the Federation support focused

primarily on restoring livelihoods of farmers and some smaller rural rehabilitation works. A total of 63

pieces of infrastructure including river banks, drainage canals, bridges, roads and drinking infrastructure

serving a total of some 29,000 people in rural towns were rehabilitated. Similar flood protection works in

Serbia with a similar topography to North Western BiH resulted in an estimated EIRR of some 36 percent

using Loss Avoidance Estimates modelling5

to estimates benefits from drainage infrastructure

rehabilitation.

66. Finally the establishment of systems, registers and databases at entity level based on the logic and

protocols that can be used with an EU compliant payments system will also facilitate BiH’s attainment of

candidate country status and access to future IPARD funding, estimated to range between EUR11-30

million per year and continue to serve the country in future towards the improved management of its own

subsidy resources in agriculture.

3.4 Justification of Overall Outcome Rating

Rating: Moderately Unsatisfactory

67. The overall ratings are justified on the basis of the project contribution to achieving two parts of

the PDO of “strengthening the capacity of its State-level and Entity-level institutions to deliver more

efficient and effective agricultural services and support programs” and “making a substantial

contribution to an acceleration of BiH’s eligibility to access support under the EU instrument for IPARD.”

These two sets of objectives were and remain relevant to the country, even if the initial prospects for

extension services and rural development grants were not realized. Project efficiency is assessed as

Moderately Satisfactory given the fairly good ex-post rate of return of various project activities. Two out

of three key PDO indicators were achieved, and important steps were taken towards achieving the third

PDO indicator, i.e. “Structured disease and pest control system, informed by surveys and supported by

reliable laboratory diagnostic capacity and databases, are developed, coordinated and implemented with

data sharing at State and Entity level approximating EU standards.” In addition, the intermediate

indicators were largely achieved (see Annex 2).

5 R.N. Forbes, Drainage, Flood Control and Soil Conservation Projects. Cost Benefit Procedures in New Zealand Agriculture

Economics Division, Ministry of agriculture and Fisheries new Zealand, 1977

18

68. The Moderately Satisfactory rating for the overall outcome of the first part of the PDO, i.e. “to

deliver more efficient and effective agricultural services and support programs” was confirmed through a

split evaluation exercise (based on the ICR guidelines and OPCS guidance received by email), where the

outcome rating was assessed against the original and revised PDO indicators before and after

restructuring in July 2011 as shown below:

Summary of PDO Indicators Efficacy Ratings

PDO Indicator Pre-2011 Restructuring Post-2011 Restructuring #1 before restructuring: Sixty

percent of disease and pest

inspection implemented on the

basis of expected risks

Substantial

Substantial

#1 after restructuring:

Structured disease and pest

control system, informed by

surveys and supported by

reliable laboratory diagnostic

capacity and databases, are

developed, coordinated and

implemented with data sharing

at State and Entity level

approximating EU standards

n/a

Substantial

#2 before restructuring:

Pluralistic, stakeholder driven

and outcome-based contracted

extension services operational

at the level of each Entity and

benefitting 20 percent of

commercial farmers

Negligible

Modest

#2 after restructuring:

Registries and databases for the

effective management of

incentive payments, tracking of

sanitary inspection data at

Entity levels with reporting

capacity to State level agencies

and MOFTER are in place

approximating EU systems

n/a

Modest

#3 before restructuring: One

hundred percent of rural

development structural

payments made through

harmonized, EU-IPARD

compliant institutions and

systems at the level of each

Entity

Negligible

n/a

#3 after restructuring: Flood

rehabilitation grants help

communities recover to pre-

flood level of economic activity

n/a

Substantial

Average Rating Modest Substantial

19

Original PDO

indicators

Revised PDO

Indicators 2011

Overall

Rating Moderately

Unsatisfactory

Moderately

Satisfactory

Rating value 3 4

Disbursement US$6.96 US$12.41 US$21.00

Weight (%

disbursed after

PDO change)

30%

70%

100%

Weighted value 0.9 2.8 3.7

Final Rating Moderately Satisfactory

69. As evidenced from Sections 3.2 above, the project achieved impressive results in strengthening

veterinary, food, plant and animal health capacity, and still managed to promote improved extension and

advisory services at least in the RS despite this activity being dropped following the restructuring in 2011.

However, there is no clear evidence that the project achieved the outcome of the second part of the PDO,

i.e. “making substantial contribution to an acceleration of the country to access IPARD.” In fact, due to

the lack of an agreed coordinating structure, BiH was excluded from accessing EU funds (IPA2014-2020)

for establishment of the administrative system for the use of IPARD II fund in the new financial

perspective 2014-2020 until 2017. While it is understandable that no progress was made on accelerating

access to IPARD due to a considerable resistance by number of donors including the EU to disburse Rural

Development Grants resources along the lines of EU IPARD principles at Entity level (which would have

prevented the development of a State level paying agency), the team missed the opportunity to revise this

part of the PDO during the project lifetime. Thus, the overall outcome rating for the second part of the

PDO is Unsatisfactory.

70. This project development objective was and is still relevant to the country, even if the initial

prospects for extension services and rural development grants were not realized. Project efficiency is

assessed as Moderately Satisfactory given the fairly good ex-post rate of return of various project

activities. Two out of three key PDO indicators were achieved, and important steps were taken towards

achieving the third PDO indicator, i.e. “Structured disease and pest control system, informed by surveys

and supported by reliable laboratory diagnostic capacity and databases, are developed, coordinated and

implemented with data sharing at State and Entity level approximating EU standards.” In addition, the

intermediate indicators were largely achieved (see Annex 2). However, in light of the Unsatisfactory

rating assigned to the second part of the PDO, the overall project outcome is rated as Moderately

Unsatisfactory.

3.5 Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development

71. The project mainly focused on strengthening institutional capacity, and had an indirect effect on

poverty reduction. Agriculture has traditionally been important as a social buffer in the country, absorbing

unemployment and alleviating poverty by supplementing incomes and food in rural areas, where poverty

is concentrated. Although there is no supporting evidence, the assumption is that the project contributed

to alleviate poverty by enhancing capacity of the State-level and Entity-level institutions to deliver

improved agricultural services, in particular in terms of reduction of zoonoses (diseases which affect both

animals and humans), improved phytosanitary and food safety standards, and increased agricultural

exports. It is also believed that enhanced rural sector information capacity including strengthening of the

20

rural development program laid the groundwork for determining the extent of gendered differentiation in

agricultural activities. Gender aspects were envisaged under the rural development grant program at

project design, however since this activity was cancelled, this gender-oriented objective did not

materialize.

(b) Institutional Change/Strengthening

72. The project achieved important institutional strengthening objectives. It significantly contributed

to strengthen the capacity of the MOFTER, SVO, FSA and APPH to implement effective agricultural

policies and apply EU-compliant food/plant safety standards. The MOFTER has increased its capacity to

coordinate agricultural policies nationally by regulation of trade of agro-food products and through

defining and implementing food safety rules relating to veterinary policy and plant health protection. The

governments at each Entity level prepared and adopted the Agriculture and Rural Development Strategies.

The Strategies were modeled on the principles that are compatible with IPARD and will serve a good

basis for the preparation of the IPARD program in the future. The project has also increased the capacity

of the SVO to monitor and control zoonoses, as well as to implement the national residue monitoring

plan. The range of residue tests performed in the country at present has been expanded to cover milk, and

thanks to the project, recently the FVO approved the action plan submitted by the SVO with a view to

allow export of milk and dairy products from BiH to EU.

(c) Other Unintended Outcomes and Impacts (positive or negative)

73. As mentioned earlier in the document, the outcome of the various investments have led to the

acceptance for the export of honey, heat treated milk, eggs and poultry products, potato, and other

horticultural products to the EU according to the report of the EU Food and Veterinary Office (FVO) in

Dublin. Capacities of institutions serving the agricultural sector in general have improved as reported by

the EU Commission Staff Working Document on Bosnia Herzegovina dated November 10, 2015.

74. The project aimed at “making a substantial contribution to an acceleration of BiH’s eligibility to

access support under the EU instrument for IPARD,” and made a number of important steps towards

achieving this objective. However, the lack of an agreed coordinating structure has excluded BiH from

accessing EU funds (IPA2014-2020) for establishment of the administrative system for the use of IPARD

II fund in the new financial perspective 2014-2020 until 2017. The Entities have their own strategic and

legislative frameworks, which serve them for the purposes of creating agricultural policy and support the

preparation of the IPARD program in the future. However, they still lack an effective mechanism to

coordinate and harmonize different policies, strategies, and programs between Entities, cantons and

municipalities.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops

75. No Beneficiary Survey was conducted for the project. A Stakeholder Workshop was held on

October 13, 2016. The report on the workshop is provided in Annex 7.

4. Assessment of Risk to Development Outcome

Rating: Moderate 76. Overall, risk to the development outcome varies by outcome. The risk to institutional

sustainability is low in spite of the lack of unified vision over the agricultural sector. The activities related

to the establishment of EU compliant systems have reasonable sustainability prospects simply because

21

EU accessions remains a key objective for the BiH authorities. The Bank has been taking an active role

around the reform agenda along with other donors towards reaching an agreement on a coordination

mechanism which has led to the recent signing of the Stabilization an Association Agreement (SAA).6

The Government will therefore need to continue to deliver its government assistance to the agriculture

sector in a manner consistent with the European Union's principles. Even if the EU accession process

were to falter, the Borrower is expected to continue to use the mechanisms developed under the project to

support its agricultural sector, and to continue to address food safety both for its own domestic market and

the EU market. The relationships with the EU are expected to remain strong with or without accession.

On another note, the 2015 Systematic Country Diagnostic Report stated that “BiH risks having some

trade benefits with the EU suspended—including those with Croatia, a significant export partner—if it

fails to adopt quality standards (notably in agriculture) by end of 2015. Around 19 percent of

standardization requirements needed to join the European Committee for Standardization and the

European Committee for Electrotechnical Standardization remain to be adopted.”

77. The economic and financial risk to development outcome is Moderate. As observed throughout

project implementation, inadequate budgetary resources - that led to lack of human resources and put at

risk sustainability of investments in equipment and information databases - severely affected several

project activities and outputs. Given the economic importance and potential of the agricultural sector in

the country, and the need to become competitive in the context of the EU, a significant increase in public

funding will be required for agricultural research, extension and food safety. Finally, the environmental

risk might also pose some concern to the project outcome as climate change and unpredictable natural

disasters could continue to affect the agricultural sector and rural livelihoods.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry


78. Preparation of the project was carried out by a large team of experts, providing needed technical

skills to produce a proper design. The project design was built upon key lessons learned from the Bank-

financed agricultural projects in the BiH and other EU accession countries, best international practices, as

well as broad consultations with a wide range of stakeholders and donor agencies in the country. A

number of alternatives and main risk factors were considered by the team during the preparation process

prior to finalizing the project design. In addition, the team ensured that the project design is in line with

the Government Strategy and Bank’s Country Partnership Strategy.

79. However, the project design suffered from a few shortcomings. First, the project had a very broad

objective which did not adequately reflect the fact it aimed at addressing only a few challenges faced by

the agricultural sector, and that it played only a complementary role along with the EU accession

programs. Second, an insufficient baseline assessment of an ex-ante situation in each Entity was done at

entry, which could have informed a more effective design of Entity-specific activities. At appraisal,

relatively a few risks were anticipated in the implementation of the project, and those that were

anticipated were mostly related to the rural development grants program, which never materialized during

6 The SAA constitutes the framework of relations between the EU and the Western Balkan countries for implementation of the

Stabilization and Association Process. The agreements are adapted to the specific situation of each partner country and, while

establishing a free trade area between the EU and the country concerned, they also identify common political and economic

objectives and encourage regional co-operation.

http://ec.europa.eu/enlargement/policy/glossary/terms/sap_en.htm

http://ec.europa.eu/enlargement/policy/glossary/terms/regional-cooperation_en.htm

22

implementation. The risk that was not foreseen was that such key activities as the launch of the grants

program, establishment of the payment system and extension services could be significantly delayed due

to changes in the country priorities in the pre-EU-accession context, overall political complexity in BiH,

and extensive differences in Entities’ institutional policies and legislative framework. Due to the above

listed issues, the quality of entry rating is Moderately Unsatisfactory.

(b) Quality of Supervision

Rating: Moderately Satisfactory

80. The Bank performance during project implementation was Moderately Satisfactory. Sufficient

budget and staff resources were allocated, and the project was adequately supervised and monitored. The

aide memoires provided evidence of regular supervision and professional advice was given by the Bank’s

experts throughout the project’s lifetime. Project supervision missions also facilitated communication and

resolution of inter-agency obstacles, as well properly maintained a joint donor coordination effort.

81. The Bank team was committed not only in performing close supervision of project

implementation, but also tried to overcome any shortcomings from project design, and address project

delays and low disbursement. In particular, at the MTR stage in April-May 2010, the team had to cancel a

few ill-performed activities, re-allocate the project proceeds from these activities towards flood

rehabilitation activities (to address emergency situation faced by the country), and adjust the Results

Framework to reflect these substantial changes to the initial project design. To address various delays, the

project required three extensions for a total period of four years. It is particularly worth noting that close

involvement and leadership by the CMU and sector management were instrumental in ensuring the

required adjustments. Unfortunately, despite several restructurings, the opportunity to revise the

broadly defined PDO was missed. Although there were frequent changes of the task team leaders (four in

total), they all ensured smooth transition and guaranteed continuity. Fiduciary and safeguard policies were

well managed and reported. Overall, the feedback received during the interviews with stakeholders

clearly showed the government’s appreciation of the technical skills and advice provided by the Bank’s

experts.

82. It is again worth noting that the project was implemented in an extremely difficult environment as

it solely aimed at strengthening institutional capacity in the country with the complex institutional

structure. In addition, the structure of the project itself was complicated as it was comprised of two

parallel projects implemented in Entities with different institutional set-ups and legislative frameworks.

Due to all these challenges, implementation delays and a low disbursement ratio in the first few years of

project would have been anticipated. It would have been easier for the team to drop the project altogether,

however they opted to stay even though it took a few rounds of restructuring and extensions to move the

project forward. The team, thus, should be commended for continued support of the client despite the

adverse context.

(c) Justification of Rating for Overall Bank Performance


83. The overall performance of the Bank team is rated Moderately Unsatisfactory. The quality at

project preparation was Moderately Unsatisfactory, and Bank’s performance during project supervision

was Moderately Satisfactory. Although the performance improved during project supervision, the

shortcomings from the design phase (mainly lack of proper assessment of ex-ante situation in each Entity

and risks that could affect project implementation, as well as the broadly defined PDO) could not be fully

overcome.

23

5.2 Borrower Performance

(a) Government Performance


84. While there have been several changes in Ministerial counterparts, and uncertainty in institutional

policy defining the layout of the various institutions which led to some delays, the projects’ activities

were always seen as priority by the government. The Entity government in the FBiH and RS approved

many changes to their legal frameworks and adopted the important Agriculture and Rural Development

Strategies. However, the government did not always fully seize the opportunities that the project provided

to adjust its policies towards more clarified competencies and removing duplication or overlapping, more

cost-efficient allocation of resources, ensuring complementarity of scientific inputs with executive

responses, and securing subsequent investments required for effective enforcement. Further, as described

in paragraphs #26, 32, 34 and 35, the project suffered from serious delays in its activities due to: (i) the

institutional confusion and lack of vision for sharing of responsibilities between the State and Entity level;

(ii) legal ambiguity and lack of institutional capacity in the food safety sector, specifically in the SVO and

FSA; and, (iii) inability or lack of support by state institutions to provide adequate staffing. The project’s

development outcome is also at risk as the government agencies do not have sufficient budget to sustain

human resources and maintain equipment/information databases provided by the project.

(b) Implementing Agency or Agencies Performance

Rating: Moderately Satisfactory

85. The Sector for Agriculture, Food, Forestry and Rural Development of MOFTER was responsible

for overall project coordination, monitoring and evaluation, and reporting. Implementation of project

activities were shared between MOFTER, the FBiH MAWMF and RS MAFWM and the various state-

level agencies as well as the PCUs to be established within MOFTER, FBiH MAWMF and RS MAFWM.

It is particularly worth noting that the implementation team in each PCU was very pro-active and is in

large part responsible for the overall positive outcomes achieved under “the two projects.” Both units

worked together on resolving common issues and shared experiences in resolving implementation

problems in a pragmatic fashion. Both implementation units had adequate financial management and

procurement arrangements for project implementation. However, the last Aide Memoire in 2016 noted

that the large number of projects being managed by both implementation bodies led to some delays and a

lack of problem solving that were necessary to conclude some of the project activities. In addition, no

MTR Progress Report and final Project Beneficiary Survey were produced by the Beneficiary, and the

final project progress report, prepared by the MOFTER did not offer a comprehensive and robust final

evaluation.

(c) Justification of Rating for Overall Borrower Performance


86. The Moderately Unsatisfactory performance of the government and Moderately Satisfactory

performance of the Implementing Agencies averages to a rating of Moderately Unsatisfactory for overall

Borrower performance.

6. Lessons Learned

87. A thorough baseline analysis of ex-ante situation in each entity would have been helpful prior to

designing the project activities and avoiding the risks of delay in project implementation. This would have

avoided some of serious delays in certain project activities that were caused by extensive differences in

institutional policies in each Entity at project entry.

24

88. Institutional development takes time. Given the institutional development focus of the project in

the country with a complex institutional structure and political complexity, it is reasonable to consider to

the project lifetime of more than four years. Furthermore, the EU Accession process is affected by many

variables that are beyond the reach of the client Country, and often takes longer than the typical Bank

project timeframe. To that effect, the willingness of the Bank to extend the project closing date and adjust

the procurement plan to better reflect the client Country EU requirements during implementation makes it

a valuable partner and provides continuity to the client Country.

89. Having a realistic development objective, adequate baseline and risk assessment at appraisal are

key for project success. When a project has a very broad objective that is beyond the reasonable purview

of the project, full achievement of the PDOs becomes very difficult. It is, therefore, very important to take

advantage of the MTR or a restructuring to help guide potential re-formulation of the PDO and/or Results

Framework. An adequate baseline and risk assessment at entry will be helpful in designing an effective

project and avoid serious delays during project implementation.

90. In future, the Bank needs to better assess the risk of engaging in institutional capacity building in

the agricultural sector in the BiH comprised of various number of the State and Entity level institutions

given their extensive differences in institutional set-ups and legislative frameworks. Given the complex

institutional set-up in BiH, the Bank will need to pursue a less complicated operation with a more simple

design covering a fewer institutions.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies

91. The draft ICR was shared with the implementing agencies and partners on December 1, 2016. No

comments were received by December 21, 2016. The RS PIU colleagues shared their comments by using

track changes in the file itself.

(b) Cofinanciers

92. The draft ICR was shared with the SIDA colleagues on December 1, 2016. No comments were

received by December 21, 2016.

(c) Other partners and stakeholders

93. N/A

25

Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent)

Components Appraisal Estimate

(USD millions)

Actual/Latest

Estimate (USD

millions)

Percentage of

Appraisal

Component A: Agriculture

information system and institutional

capacity building

US$9.04 US$5.84 64%

Component B: Enhanced agriculture

and rural development incentive

programs

US$l0.83 US$5.71 53%

Component C: Project coordination,

administration and monitoring US$1.13 US$1.49 131%

Total Project Costs US$21.0 US$13.05 62%

(b) Financing

Source of Funds Type of

Cofinancing

Appraisal

Estimate

(USD millions)

Actual/Latest

Estimate

(USD millions)

Percentage of

Appraisal

Borrower 9.19 0.00 .00

International Development Association

(IDA) 21.00 19.40 93%

SWEDEN: Swedish Intl. Dev.

Cooperation Agency (SIDA) 6.00 5.90 98%

26

Annex 2. Outputs by Component

With respect to outputs by component, the following results were achieved by the project:

Component A: Agricultural Information and Institutional Capacity Building

Intermediate Indicator Target Value Status of achievement

A1: State Veterinary Office of

BiH implementing effective

animal identification system

90% of cattle and 70%

of sheep and goats are

ear tagged

Fully achieved. Over 90% of

bovines are ear tagged. For

sheep, the value reaches >70% in

FBiH and 25-30% in RS. The

EU-compliant upgraded and

expanded animal I&R system

operational, software developed,

hardware (server) installed and

consumables supplied. Data for

bovines from old database and

for sheep/goats from AMI

Mostar migrated into new

database and in the process of

validation. New Rule Books

drafted and in the process of

adoption. The country-wide

census planned to establish

baseline livestock population.

Roughly 10% of flock is being

verified by the veterinarians

during the routine interventions

on an annual basis. The

campaign for sheep-goat ear

tagging in the RS was launched

in June 2015 and has been

ongoing.

A2: SVO implementing

brucellosis and CSF control

programs

Classical Swine Fewer

(CSF) test and slaughter

program established and

incidence of brucellosis

reduced by 30%

Partially achieved (about

50%). The animal vaccination in

2015 was completed and

involved at least 75% of total

number of target animals.

Eradication policy has not been

established and mass preventive

vaccination continues on grounds

of (i) occurrence of CSF in

neighboring countries, and (ii)

estimated high compensation

costs in case of outbreak(s). This

is a policy decision not supported

by results of the serological and

epidemiological survey

supported by the project,

indicating low sporadic incidence

27

of CSF in wild boar. Vaccination

against Brucellosis continued for

the 5th year, but the SVO

provided no monitoring/

surveillance data allowing an

objective estimation of the

vaccination impact on disease

prevalence.

A3: APPH implementing plant

health monitoring and risk

assessment systems

Phytosanitary inspection

shifts to risk mostly

based inspection system

Fully achieved. At present it is

mandatory for both seed and

plant material producers/

distributors to be registered; the

registration data is collected and

maintained at both entity and

APPH level. The potato pest

survey was ongoing in 2016, now

for the 6-th time with funding

provided by each entity. The

APPH conducts ad-hoc risk

assessment, identifies priorities

for enhanced control and

instructs Inspectorates

accordingly.

A4: APPH develops and

implements phytosanitary and

plant register database

Fully achieved. The APPH

operates a phyto register database

that include plants and producers

as well. The link is accessible by

entity inspections services and

Ministries of Agriculture.

A5: FSA implementing a risk

based food safety system

FSA performs at least 3

risk assessments and

coordinates a risk

communication program

Fully achieved. The FSA

conducts a risk assessment for

aflatoxins and phosphates in

food, and commissioned a Total

Diet study to assess prevailing

nutritional habits and help

identify inherent risks. The FSA

applies a public information

strategy and coordinates a risk

communication Working Group.

A6: Entity-level Inspection

Directorates are implementing

BiH plant health, animal health

and food safety laws and

regulations

All Entity Inspectorate

reporting of food, animal

and plant health is web-

based

Substantially achieved (about

75%). Both Entity Inspectorates

operate web-based databases and

share data with state-level

agencies. Their IMS systems are

not linked. Information is shared on

a daily basis through uploads, but

not yet in a real-time manner.

A7: FBiH MAWMF/RS

MAFWM agricultural

information units and

databases and FADN pilot

Partially achieved (about

50%). FADN pilot established in

both entities, however regular

update of database is not

28

established assembling farm

level information

maintained in FBiH once

responsibility was handed down

to cantons. To date in RS a total

of 128 farms are being surveyed

on an annual basis.

A8: WAN linking MOFTER

with State level agencies,

entity MOAs, and Inspection

services under establishment

for AIS

Fully achieved.

(i) Federal MoA has already

established this interface with

MOFTER and it has been

operations ever since;

(ii) Launch of web service by

AI&R Agency that would be the

interface between the Agency

itself and entity ministries of

agriculture and inspectorates,

with the door open to the

Agency’s database to be used by

MOFTER, too, although the link

has not been reported to be in use

by the eligible institutions;

(iii) Phyto register became

operational in 2013, with links

open to all key stakeholders in

the field of plant health, i.e.

entity ministries, inspectorates

and MOFTER;

(iv) VPN connection, being an

essential part of widely seen

WAN has been established for

the purpose of F&C data

replication from federal MoA to

MOFTER server. The same kind

of connection was set up with the

MAFWM RS, for test purposes,

but it never got used in terms

originally outlined.

Component B: Enhanced Agriculture and Rural Development Support Program

Intermediate Indicator Target Value Status of achievement

B1: Transparency Entity level

paying systems established

100% of RD payment at

entity level processed

through new paying

system

Not achieved. All IPARD like

Rural Development Grants are

made through paying system. A

software application to handle

direct payments remains to be

developed.

B2: Entity level rural

development plans established

Monitoring Committee

established providing Partially achieved (about

50%). Both entities have

29

and overseen by Monitoring

Committees

policy input developed their respective rural

development programs and

agricultural strategies. The

new Minister of Agriculture in

the FBiH suggested a review

and modest changes to the

recently produced agricultural

strategy to better reflect the

priorities for sector

development. In the RS, the

MAFWM is foreseeing to move

more towards area based direct

payments in the sector to

simplify the payment structure

and further foster the

emergence of larger more

competitive farms.

The RS formally established a

supervisory board; in FBiH

supervisory board was not

formalized.

B3: Increase in RD funding and

number of grants supporting

competitive agriculture

activities

More than 50% of all

payments are structural Partially achieved (about

50%). Approximately 25% of

agricultural payments are in

structural form, for

investments. Ratio used to be

higher before floods in 2014,

but it is expected to recover to

50% over the next couple of

years.

B4: Rehabilitation investments

completed before end of

construction and farming

season in October, 2011

All rehabilitation

completed

Fully achieved. It should be

noted that this indicator was

achieved before the end of the

project, i.e. June 30, 2016 and

not in October 2011. The

support for flood rehabilitation

including delivery of

productive assets in farm to

recover production as well as

works to rehabilitate rural

infrastructure that was damaged

during the floods were fully

delivered and completed. Both

entities produced final reports

of the activities providing an

insight in the impact of these

investments. Altogether some

US$6.5 million was disbursed

benefitting over 7,000

individuals. Support has helped

rebuild small rural bridges,

30

access roads to remote villages,

as well as water supply systems

for rural communities and small

irrigation systems that have

been refurbished. Nearly 100

households had their

greenhouses rehabilitated and

14 farms in Ravno Municipality

had their orchards and

vineyards replanted.

Component C: Project Coordination, Administration and Monitoring

Intermediate Indicator Target value Status of achievement

C1: Project funds disbursed

according to plan, timely and

accurate completion of all

annual operating, training and

procurement plans

100% Achieved.

C2: Beneficiary surveys

indicate awareness of Project

and overall satisfaction with

Project activities (mechanisms

in place to receive and resolve

complaints)

50% Partially achieved with a note

that beneficiary surveys were

only conducted for flood

rehabilitation activities.

Additional Outputs include:

1. FADN information was assembled only in the RS, and reportedly (i) data from 128 farms were

collected and checked as of the end of the 1st quarter of 2016; and (ii) an IT consultant recruited

through the project produced an online application for data processing as well as network across all

regions in the RS.

2. The animal identification and registration (I&R) software was provided by the project, and has been

fully functional and in production since 2014, including small ruminants and pigs under a common

set of protocols and designations.

3. The project provided equipment for residues testing;

4. The APPH compiled a country-wide phyto-registrar accessible to the Entity Inspectorates and

published a Plant Pest Diagnostic Manual (Atlas) intended to serve as a reference textbook for

phytosanitary inspectors.

5. The project conducted 3 potato pest surveys with budgets allocated from the entity level Ministries,

and reports were produced.

6. As reported previously in the ICR, the animal vaccination campaign was conducted in 2015 that

involved at least 75 percent of total number of targeted animals.

7. A computerized serum database management system (DBMS) was established through the Classical

Swine Fever (CSF) study.

8. The project conducted a workshop solely dedicated to the CSF epidemiology.

9. The FSA performed at least 3 risk assessments and coordinated a risk communication program.

10. Both Entities developed their respective rural development programs and agricultural strategies.

31

11. The Farm and Client register has been operational in both entities for over two years. To date

registers include some 58,000 farms with 98,000 ha registered in the Federation, and some 30,000

farms and 131,000 ha of land registered in the RS.

12. Advisory services unit in the RS operates within the Ministry, has a total of 7 consultants who

provide professional services and coordinate extension services delivery. The RS extension services

unit established a website www.pssrs.net-advisory, which serves for daily publication and reporting

on activities of extension services, publication of laws and bylaws, and various recommendations for

farmers as well as a forum where counselors/advisors answer questions of farmers. It is estimated that

80 percent of farmers in the register have their personal computers.

During the project implementation, the activities related to technical and material capacities of

Extension Services were carried out: the Entity Extension Services strategies were developed, the

trainings of advisors in the EU regulations, new technologies, business planning and other were

financed. These strategic documents provided a framework for the development of Extension

Services in the period from 2010-2015 and provided details of the function and organizational model

of Extension Services. At the end of 2012, the Extension Agency of RS was merged into the

Department of the MoAFWM together with Agency for Selection in Livestock Breeding.

13. Approximately US$6.5 was disbursed for flood rehabilitation activities that directly benefitted over

7,000 individuals. Support has helped rebuild small rural bridges, access roads to remote villages, as

well as water supply systems for rural communities and small irrigation systems that have been

refurbished. Nearly 100 households had their greenhouses rehabilitated and 14 farms in Ravno

Municipality had their orchards and vineyards replanted. In addition, in line with the proposals of the

RS MAFWM, 12 flood protection and 63 rural infrastructure facilities were rehabilitated in 24

municipalities.

14. 92 percent of project funds were disbursed in accordance with annual operating, training and

procurement plans.

http://www.pssrs.net-advisory/

32

Annex 3. Economic and Financial Analysis Introduction:

1. The ICR has attempted to recalculate estimates following the identical logic as was used in the

PAD. The logic, however, had to be modified to reflect the changes that were introduced at restructuring

and reflecting on the developments that have taken place in the country as it relates to the IPA program

and withdrawal of support from the EU to the Agriculture and other sectors. The analysis is based on the

impact from the various activities performed under the project, but which may have also benefited from

support from other donor programs working on strengthening capacities at the Ministries of Agriculture at

the two Entities level and MOFTER.

Estimated benefits from Component A:

2. A primary aim was to improve the capacity to identify and manage risks in animal and plant

health and along the human food chain. The financial analysis is based on reduced prevalence of key

animal diseases, including ovine/caprine brucellosis; bovine brucellosis and tuberculosis; and other

zoonoses and zoonotic agents. The reduced prevalence, and related costs incurred from dealing with the

disease, provided the basis for calculations of the savings resulting from reductions in slaughter and

compensation costs for diseased animals; destruction of milk from infected animals; and reductions in

human cases that require treatment.

3. The above savings were measured against the cost of the interventions to provide a conservative

estimate of the financial benefit from the Project, based on the assumption that there will be other

significant benefits, related to transaction costs, reduced disruption of trade, reduced working days lost to

sickness, social impact, among others.

4. Bosnia and Herzegovina’s livestock numbers at appraisal included approximately 900,000 sheep

and goats, and 350,000 heads of cattle. Animal disease prevalence in BiH for ovine and caprine

brucellosis was estimated around 2.5 percent, while and bovine brucellosis and tuberculosis was

estimated around 0.6 percent. Statistical data reflected a growth in the incidence of Brucella melitensis in

sheep rising by 200-300 cases per year at time of appraisal. Costs are incurred from the destruction of

infected animals and compensation of owners, in loss of milk from infected animals, and in testing for the

disease. These animal diseases can also spread to humans; there were nearly 1,000 reported cases of

brucellosis reported in humans in 2006. In humans the infection produces a persistent disease with acute

and chronic phases.

5. There was no monitoring of Salmonellosis in host animal populations due to lack of resources at

the time of project preparation and appraisal. There was no baseline in regards of prevalence with the

exception of the number of hospitalizations resulting from salmonella infection. In 2012, a first audit of

Salmonella in the poultry sector was undertaken by the EU’s DGSANCO. Eggs and poultry meat are the

most common infections sources for salmonella infections in humans. This led to the recommendation of

some 12 measures that the Government needed to implement to obtain an export authorization of poultry

products to the EU. The SVO provided an action plan in response to the DG SANCO report in March

2012 that was fully executed in June 2016, the export of table eggs from BiH to the EU was approved as a

consequence in 2015.

6. At appraisal, the number of human infections from Salmonella were estimated at 14 per 100,000

people, this figure would be equivalent to approximately 530 cases per year. According to the WHO

statistics, this figure has dropped to some 460 by 2010 and continues to fall to the long term average over

33

the past 25 years. Using this logic and subtracting the years during the war period where data collection

was weak a long term average of some 416 cases can be estimated, equivalent to about 11 cases per

100,000.

7. The Project activities have strengthened the overall capacity of the SVO and FSA and APPH to

undertake effective controls in the animal and public health sectors, in line with the current and relevant

EU veterinary acquis and practices, thus reducing the prevalence of animal and food diseases, including

those described above. Even if direct attribution of the project in the reduction of these numbers is

difficult to prove, certain assumptions can be made about the effect of Project activities on these

prevalence rates, which are compared with prevalence rates estimated at appraisal vs historical data

Project in Table 1.

Table 1. Disease Prevalence and Incidence relative to estimates at appraisal

Estimated impact of the Project at appraisal 2006 2007 2008 2009

Ovine/caprine brucellosis in animals 2.5% 2.55% 2.6% 2.65%

cases 22,500 22,900 23,400 23,850

Bovine brucellosis and tuberculosis 0.60% 0.60% 0.60% 0.60%

cases 2,160 2,160 2,160 2,160

Brucellosis in humans cases 174 174 174 174

Salmonella in humans (14 cases/100,000 people) cases 266 266 266 266


Actual Situation Yr 1 Yr 2 Yr 3 Yr 4

Change in disease incidence


cases 6830 22122 2426 294

Brucellosis in humans cases 994 458 168 72

Salmonella in humans cases 295 695 532 502

8. Based on the prevalence/incidence rates of the costs of incidence of the disease (Table 2), the

incremental benefit from the Project the costs of investments in the Veterinary Services and treatment

were recalculated using the same base costs estimated at appraisal to effectively compare with the

baseline.

Table 2. Assumptions of Cost of Disease Control and Treatment

Measure Cost per case ($)

Ovine/caprine brucellosis

Destruction and compensation of infected animal 100.0

Destruction of milk from infected animal 15.0

Hospitalization and treatment of human case 1,150.0

Difference in price between old and new testing

methodology* 1.4

34

Bovine brucellosis and tuberculosis

Destruction and compensation of infected animal 200.0

Destruction of milk from infected animal 270.0

Salmonella

Hospitalization and treatment of human case 300.0

9. The with/without Project analysis based on the assumptions in Tables 1 and 2 lead to an estimated

financial internal rate of return for Component A of the Project was estimated at 14 percent. In reality

based on statistical data published by the WHO and from the SVO, and in response of the vaccination

campaign the drop in the number of cases in Brucellosis has been much sharper than estimated at

appraisal. Recalculating the model using these new figures the new IRR amounts to some 18 percent

including yearly monitoring costs born by the SVO. However, it needs to be recognized that the project

only has played a partial role in this sharp reduction of cases given other donor funding in for vaccination

to control the Brucellosis outbreak that was estimated to cost at its peak some US$8.2 million per year.

10. Support to animal health sector: The Project supported the epidemiological study on CSF which

was controlled in BiH through an annual vaccination program. Such vaccination programs preclude the

export of pork and pork products to the EU and its accession countries. The SVO will use the Project

CSF program to fill gaps in the disease’s epidemiology including the role played by wild pigs. The study

found no cases of CSF in domestic animals and only a very low prevalence of the disease in wild boars

albeit based on a fairly limited sample as hunters were not systematically informing the SVO of a kill for

sampling purposes. While results would lead to conclude to plan a long term strategy for shifting from

vaccination to test and slaughter for CSF management, the decision remains pending in large part due to

the remaining prevalence of the disease in the neighboring countries. Support to the SVO also included

animal identification and movement control, which will bring substantial, un-quantified benefits in terms

of reduced identification costs through the use of electronic monitoring systems and improved disease

control and reduction in “tracing” costs and increased market compliance. It must be noted however that

thanks to the investments in SVO have allowed BiH to remain unaffected by the Lumpy Skin disease

outbreaks that have affected a number of the neighboring countries including Greece and Bulgaria, both

are EU members. There was insufficient data available to make a quantitative estimate of the economic

benefit from the successful response to the LSD disease. For comparison, the costs of containing LSD in

Serbia, a similar sized country that is however more densely populated, the Veterinary authorities

estimate between 5,000 to 6,000 cows would be infected of which treatment would amount to EUR7 to 9

million.7

11. Support to plant health sector: The project envisaged significant benefits from the introduction

of GMO testing capacity. While only partial capacity was established, experience from neighboring

countries shows that testing of GMO plant material is considerably less frequent than was estimated and

never exceeds a few hundred samples per year. Considering this reality, for the ICR rather than

calculating the incremental value from GMO testing capacity, the analysis has estimated the potential

incremental benefit from investments in the plant health and phytosanitary sector from the investment in

potato testing.

12. The introduction of the phyto register allowing for phytosanitary risk analysis has improved plant

and seed health in BiH. As of July 2015, all fruit and vegetables produced in BiH are qualified for export

7 GAIN REPORT, USDA Foreign Agriculture Service, July 08, 2016

35

to the EU from a food safety perspective. The Bank project had a significant role in this realization due to

the support to organize the regular potato testing program, the implementation of the phyto register, and

the production of the pest identification manual. Potato production in BiH is equivalent to around 300,000

tons representing a value of some US$50.0 million including seed as well as industrial and consumption

potato. Assuming only 5 percent of the production to be exported represents a value of some

US$2.5million per year compared to 3 seasons of project support amounting to some US$300,000 per

year and continued financing of the yearly monitoring program. The investment rate of return over 20

years at 12 percent discount rate, assuming no change in production volume and constant prices

amounts to an IRR of 18 percent. This analysis does not account for the economic benefits all the other

horticultural products that are complying with EU regulations that are being exported as a result of an

adequate phytosanitary and inspection regime in fruit and vegetables. While BiH remains a net importer

of food stuff, especially processed, the actual import to export ratio has dramatically shrunk over the past

decade partially of course also a consequence of sector recovery from the war.

13. Flood Rehabilitation Benefits: As reflected in previous sections, rural development grants along

with some resources for extensions were reallocated to Flood rehabilitation activities following the

restructuring in July 2011 based on a request from the Government to provide assistance to recover from

the impact of the floods. This involved some US$7.2 million and thus a sizeable share of the project

financing. The actual values disbursed in US dollars are substantially larger than allocated in the legal

amendment mainly because at the time of the reallocation the EURO was substantially stronger than it is

today, which leading to much higher expenditures in the early part of the project when the reallocation

was made. Given that the reallocation to flood rehabilitation was in part to avoid cancellation of

concessional IDA funds and resources under the SIDA grant, this disbursement objective was met. The

conversion of rural grants to flood rehabilitation was made in the context of the PDO relating to improved

services. Given that the Ministries of agriculture in BiH in both RS and Federation are responsible for

water related infrastructure and forestry it was thought that rehabilitation after floods fell under their

mandates and fit within the logic of the PDO in improving services.

14. The support under this component benefitted essentially two regions that were heavily affected by

the fall/winter 2010 floods that affected mainly the Eastern and Northeastern part of the country. Support

was also provided in Popovo polje that was flooded, specifically the Municipality of Ravno where floods

reached levels up to 20 meters as a consequence of poor synchronization of dam releases. Some 18 farm

household had their permanent orchards uprooted and fully destroyed. In the RS the focus was primarily

on rehabilitating damaged rural infrastructure, while in the Federation support focused primarily on

restoring livelihoods of farmers and some smaller rural rehabilitation works. In RS the works covered 20

municipalities rehabilitating a total of 63 pieces of infrastructure including river banks, drainage canals,

bridges, roads and drinking infrastructure serving a total of some 29,000 people in rural towns. The works

on near Derventa performed under the project substantially limited the flooding of the same town in May

2014 when the region was hit by historic rainfalls and 300 year flood levels. Similar flood protection

works in Serbia with a similar topography than North Western BiH resulted in an estimated EIRR of

some 36 percent using Loss Avoidance Estimates modelling8 to estimates benefits from drainage

infrastructure rehabilitation.

15. In the Federation resources were primarily invested in rehabilitation of on farm immovable assets

mostly orchard installations and plastic covering for green house installations benefitting some 106

farming households replanting a total of some 92.3 hectares of orchards and wine yards and 1.5 hectares

of greenhouses. Assuming average yields of higher value horticultural and orchard crops for the region,

8 R.N. Forbes, Drainage, Flood Control and Soil Conservation Projects. Cost Benefit Procedures in New Zealand Agriculture

Economics Division, Ministry of agriculture and Fisheries new Zealand, 1977

36

the rate of return of the rehabilitation of these on-farm investments is expected to approximate around 25

percent over 20 years and 12 percent discount rate.

16. Harmonized, EU IPARD compliant institutions and systems for agricultural and rural

development payments: As reflected in the document, the entry into force of the Stabilization and

Association Agreement has been delayed. When BiH will finally achieve candidate status, it may receive

each year anywhere from €5 to €13 per hectare of agricultural land in IPARD funding. This Projection is

based on the experience of the new member states, where the average SAPARD allocation from 2000 to

2004 was €9 per hectare of agricultural land (Table 3). Estonia and Slovenia received the highest

allocations and Hungary, and Slovakia received the lowest allocations.

Table 3. Annual SAPARD Allocations

Agricultural Land

('000 ha)

2000-2004 Average

Annual SAPARD

allocation (€'000)

SAPARD per ha of

agricultural land (€)

Czech Republic 4,279 22,445 5

Hungary 5,854 38,713 7

Poland 18,413 171,603 9

Slovakia 2,441 18,606 8

Slovenia 518 6,447 12

Estonia 986 12,347 13

Latvia 2,485 22,226 9

Lithuania 3,489 30,345 9

Bulgaria 5,582 53,026 9

Romania 14,857 153,243 10

Average 5,890 52,900 9

Source: Authors’ calculations based on SAPARD Annual Report (2004) and FAO Stat, 2006.

17. As reflected at project inception, in the absence of any certainty over the level of future IPARD

funding, financial and economic analysis of benefits of investment in entity level paying systems is

difficult. However, recent analysis of likely improved farmer uptake of IPARD funding in Macedonia

resulting from the accelerated development of its paying system showed an internal rate of return of 48

percent over the period 2007-2010, during which Macedonia will receive EUR31.3 million in IPARD

funding. This outcome is based on an average 25 percent improvement in IPARD disbursement over the

Project period. The pre-IPARD development of a comprehensive, EU IPARD compliant paying system

in BiH will place it in a strong position to disburse IPARD funds effectively and equitably once they

become available.

35

Annex 4. Revised Results Framework

Project Development Objective (PDO):

To assist Bosnia and Herzegovina to strengthen the capacity of its State-level and Entity-level institutions to deliver more efficient and effective agricultural services

and support programs as well as to make a substantial contribution to an acceleration of Bosnia and Herzegovina’s eligibility to access support under the European

Union Instrument for Pre-Accession Assistance for Rural Development (IPARD).

Revised Project Development Objective:

No Change

PDO Level Results

Indicators* Co

re

D=Drop

ped

C=Conti

nue

N= New

R=Revised

Unit of

Measure Baseline

Cumulative Target Values** Freque

ncy

Data

Source/

Method

ology

Respons

ibility for

Data

Collection

Quarter 1

Quarter 2

Quarter 3 June 30, 2012

Sixty-percent of disease and

pest inspections implemented

on the basis of expected risks

D Yes/No Poor

understanding of

pest and disease

epidemiology.

Little risk based

inspection

Disease and

pest incidence

and

epidemiology

studies

initiated

Disease and

pest survey

completed

and databases

established

Risk based

disease and

pest

management

control

systems

operational

Sanitary

inspection is

60% risk based

Indicator One: Structured

disease and pest control

system, informed by surveys

and supported by reliable

laboratory diagnostic capacity

and databases, are developed,

coordinated and implemented

with data sharing at State and

Entity level approximating EU

standards

N Yes/No No systematic

disease and pest

control systems

for plants,

animals, and

foodstuff in

place

Develop

regulatory

framework

Undertake

surveys and

laboratory

analysis in

line with

regulations,

Develop

registries and

reporting

systems

Maintain and

monitor

situation

through

inspection

services, begin

risk targeting

of inspections

Annual SVO,

APPH,

FSA and

entity

inspector

ate

reports

SVO,

APPH,

FSA

and

entity

inspect

orate

reports

Pluralistic, stakeholder driven

and outcome based contracted

extension services operational

at the level of each entity and

benefitting twenty percent of

D Yes/No Limited public

extension

services in the

RS and none in

the FBiH. Few

Extension

Departments

established

and staffed

Extension

agencies

established/re

structured and

regional

Extension

Board elected.

Outcome

based,

contracted

Stakeholder

managed

contracted,

public/private

extension

36

commercial farmers public private

extension

partnerships

offices

established.

Extension

contracting

formats

finalized and

tenders

advertised.

extension

delivery

operational

service

reaching 20%

of commercial

farmers

Un-transparent agricultural and

rural development support

targeting and administrative

procedures. Poor monitoring

and impact evaluation.

D Yes/No Paying System

and

Management

authority staffed

and equipped

Farm

registries

established

and used to

verify

agricultural

and rural

development

payments

Paying

system

hardware and

software

operational

and tested

Indicator Two: Registries and

databases for the effective

management of incentive

payments, tracking of sanitary

inspection data at Entity levels

with reporting capacity to State

level agencies and MOFTER

are in place approximating EU

systems.

N Yes/No No systematic

registry and

reporting

capacity in place

Develop

Farm and

client

registry

Develop an

Farm and

client, and

livestock

registry

Enter new

data and

update

information

on continuous

basis and data

auditing

Link various

registries for

Farm

information

System

Annual SVO and

I&R

Agency

Reports

and

livestock

statistics

SVO

and

I&R

Agency

Indicator Three: Flood

rehabilitation grants help

communities recover to pre-

flood level of economic

activity.

N Yes/No Some 15% of

community assets

destroyed

Assets for

replacement

adequately

recorded and

valuated

Development

of design and

technical

specifications

Execution of

works and

goods

contracts

All

rehabilitation

completed

PIU and

APCU

quarterly

status

reports

PIU

and

APCU

INTERMEDIATE RESULTS

Intermediate Result (Component One): Agricultural Information and Institutional Capacity Building a) State sanitary and phytosanitary laws, regulations and inspection systems approximate EU norms. b) Agricultural information systems support strategic planning, policy making and monitoring. c) Knowledge and technology available for agricultural producers and processors to raise competitiveness and access and make effective use of the structural support provided

by the MAFWM/MAWMF.

Revised Intermediate Result (Component One): Agricultural Information and Institutional Capacity Building a) State sanitary and phytosanitary laws, regulations and inspection systems approximate EU norms. b) Agricultural information systems support strategic planning, policy making and monitoring approximating EU requirements.

37

Intermediate Result indicator

State Veterinary Office of BiH

implementing effective animal

identification system

C Yes/No Animal ID only

covering 50% of cattle population.

TA recruited and

strategy for animal ID identified.

Animal

identification systems

upgraded and

pilot tested. 70% of cattle

ear tagged.

80 % of cattle

ear tagged. Sheep and

swine

identification system piloted.

Animal

identification: 10% of cattle and

3% of small

ruminants are randomly

checked each

year,

Annual SVO and

I&R agency

SVO &

IR agency


SVO implementing brucellosis

and CSF control programs

C Yes/No Brucellosis and CSF

epidemiology

data outdated. Limited test and

slaughter program

for Brucella.

Strategy for disease

epidemiology

work finalized.

Veterinary epidemiological

studies initiated.

Reference laboratories for

CSF and

brucellosis testing established

Animal disease database and risk

assessment

systems under development.

b) In animal health: >75% of small

ruminants are

vaccinated for Brucellosis each

year,

Annual SVO disease

monitorin

g reports

SVO with

entities

MoA


APPH implementing plant

health monitoring and risk

assessment systems.

R Yes/No APPH only

recently established and

not fully staffed

or operational.

TA recruited and

regulation for plant health

monitoring

developed.

Complete EU

required pest surveys

Upgrade

designated plant health and

Phytosanitary

laboratories

- 80% of seed and

plant material producers/importer

s are registered

potato pest survey repeated yearly

Annual APPH

pest monitorin

g reports

APPH

with entities

MoA


APPH develops and

implements phytosanitary and

plant register database

N Yes/No

No centralized

database for

phytosanitary or plant production

or trade

Develop rules and

regulations for

plant health and phytosanitary

function in

cooperation with entities MoA and

inspections

Plant health

surveys

operational. Database

design

tendered. Laboratories

upgraded.

Establish

Phyto-plant

health registry database

linking entity

MoA and Inspection

databases

Link phyto-plant

health registry

with FSA and SVO databases

and MOFTER

farm information system

Quarterl

y

progress reports

APPH &P

IU

APPH

& PIU


FSA implementing a risk based

food safety system

C Yes/No FSA only

recently established and

food regulations

and inspection procedures

incomplete

TA recruited and

strategy for food risk assessment

program

established in partnership with

EU IPA program

Food safety

surveys operational.

Database

design tendered.

Laboratories

upgraded

FSA performs

risk assessment and coordinates

a risk

communication program.

FSA performs at

least 3 risk assessments and

coordinates a risk

communication program.

Annual

progress reports

FSA FSA


Entity-level Inspection

Directorates are implementing

BiH plant health, animal

health and food safety laws and

R Yes/No No effective agricultural

inspections

undertaken

Develop inspection plans in

collaboration with

FSA, SVO and APPH

Enter inspection data

and registration

of establishments

in IMS

Apply risk based in section

based on

regulations form FSA,

SVO and APPH

c)

sa

f

e

Annual Inspection Statistics

Entity Inspecto

rates

38

Regulations

l

y


RS MAFWM/ FBiH MAWMF

agricultural information units

and databases and FADN pilot

established assembling farm

level information.

R Yes/No Adhoc record

keeping and no

M&E for formulation of

policy for

support programs

Develop FADN

survey and

implement

Implement

FADN survey

for 120 farms

Implement

FADN survey

for 180 farms, establish

agricultural

information database

Integrate FADN

survey data in

entity MoA information

system

6

months

progress reports

RS AND

FBiH

MoA

Reports

submitte

d to PIU and

APCU


WAN linking MOFTER with

Sate level agencies, Entity

MoAs, and Inspection services

under establishment for AIS

N Yes/no No coherent

agricultural information

collection at

State level

Coordinate

development of registries for

livestock, clients,

plant health and inspection services

Develop and

agree State level WAN

strategy with

entities

Develop

Software and hardware

requirements

and identify server room

Begin interface

of various entity level and State

agency databases

for AIS

6

months progress

report

MOFTER MOFTE

R PIU


RS MAFWM/ FBiH MAWMF

Department for Extension with

a multi-stakeholder governing

body established.

D Limited public

extension services in RS

and none in

FBiH.

RS MAFWM/

FBiH MAWFM Extension

Departments.

Established.

RS MAFWM/

FBiH MAWFM Extension

Departments

and Agencies trained and

operational.

Extension

Boards elected.

Extension Boards

manage a contracted,

pluralistic

extension system


Market and results-oriented

Entity extension systems

operational and effective in

accordance with clearly

defined policy objectives.

D Few

public/private

extension

partnerships.

Extension

management

system established

and contracting

systems designed.

Initial round of

30 outcome-

based extension

contracts issues.

Contract based

extension

service delivery

system fully

operational at farm level.

On-farm

extension

delivery

primarily through

contracted private sector

and civil society

extension agents.


Number of contracted

extension/advisory service

providers accredited with

specific competencies.

D None 30 50 80


Number of extension packages

prepared and disseminated.

D None 15 20 30


Number of commercial and

semi-subsistence farmers

undergoing restructuring and

agro-processors within target

group who implement activities

D None 300 800 1,500

39

directly related to advisory

services extended with Project

assistance.

Intermediate Result (Component Two): Enhanced Agriculture and Rural Development Support Program

(a) Rural Development Coordination Department/ Unit within MoFTER established and is playing an effective role in liaising with EU and in coordinating rural development activities.

(b) Systems for agricultural/rural development payments and their reporting is transparent and compatible with EU IPARD funds administration.

(c) Increased RD investment in activities and enterprises related to efficient agricultural technology and sustainable land use

Revised Intermediate Result (Component Two): Enhanced Agriculture and Rural Development Support Program

(a) Entity-level farm and entitlement registries and Paying Systems established and maintained.

(b) Thirty percent of agriculture and rural development funding used for structural payments through transparent policy based paying system in each Entity.

(c) EU IPARD Entity rural development plans established and overseen by effective Monitoring Committees.


One: Transparent Entity level

paying systems established

R %

achievement

Opaque manual

paying systems

Paying staff

appointed and

procedures developed

First

applications

received by paying system

& processed

100 % of RD

payment at

entity level processed

through new

paying system

First M%E report

on first season

payments

Annual Yearly

M&E

reports

PIU &

APCU


Two: Entity level rural

development plans established

and overseen by Monitoring

Committees

R %

achievement

No rural

development

plans

Rural development

plan at entity level

Entity rural

development

plan with harmonized

measures

Monitoring

Committee

established providing

policy input

Monitoring

Committee

reformulating RD program

based on M&E

report

Annual Plan PIU &

APCU

Increase in RD funding and

number of grants supporting

competitive agriculture activities.

R % achievement

Only 10% of agricultural

subsidies are

structural

RD plan informs RD support

priorities

30% in Federation and

50% in RS are

structural payments

More than 50% of all payments

are structural

(RD)

More than 50% of all payments

are structural

(RD)

Annual Yearly M&E

reports

MoFTER RD payment and

registries database and reporting

system established.

D No central

collation or reporting of

market or

structural payments

MoFTER

SAFFRD equipment and

staff

procurement initiated.

MoFTER

SAFFRD fully staffed including

paying system

Coordination Unit. LAN and WAN

established.

MoFTER pilot

tests a database and

coordination

and reporting system for RD

payments and

registries.

MoFTER

publishes a consolidated

report of BiH

market and rural

development

payments.

MoFTER

publishes a consolidated

report of BiH

market and rural development

payments.

Annual


Three: Rehabilitation

investments completed before

end of construction and

farming season in October,

2011

N Some 15% of

community assets

destroyed

Assets for

replacement

adequately recorded and

valuated

Development of

design and

technical specifications

Execution of

works and

goods contracts

All rehabilitation

completed

quarterl

y

Procurem

ent plan

PIU &

APCU

40

Annex 5. Bank Lending and Implementation Support/Supervision Processes

Names Title Unit Responsibility/

Specialty

Lending

Samra Bajramovic Program Assistant ECCBM

David A. Bontempo Operations Analyst GGODR

Anna Georgieva Country Sector Coordinator ECSSD -

HIS

Mirjana Karahasanovic Operations Officer GENDR

Robert Kirmse Sr Forestry Spec. ECSSD -

HIS

Ritta Cestti Practice Manager GWA04 TTL

Jolanta Kryspin-Watson Lead Disaster Risk Management

Specialist GSURR

Julian A. Lampietti Practice Manager GFA03

Paula F. Lytle Senior Social Development Spec GSU07

Erwin H. R. Tiongson Senior Economist GPVDR

Philip Van der Celen Junior Professional Associate ECSSD -

HIS

Sohaila Wali Temporary ECCU3

Supervision/ICR

Jeren Kabayeva ICR Author GFA03

Samra Bajramovic Program Assistant ECCBM

Ama Esson Program Assistant GFA03

Maria Josefina M. Gabitan Senior Executive Assistant GFADR

Daniel P. Gerber Sr. Rural Development Specialist GFA03 TTL

Mirjana Karahasanovic Sr. Operations Officer GENDR

Holger Kray Lead Agriculture Economist GFA13 TTL

Nikola Kerleta Procurement Specialist GGODR

Martin Henry Lenihan Senior Social Development Spec GSURR

Lamija Marijanovic Financial Management Specialis GGODR

Rohan G. Selvaratnam Operations Analyst GFADR

Sandra Schlosser Social Development Spec GSURR

Cora Shaw TTL

41

(b) Staff Time and Cost

Stage of Project Cycle

Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands (including

travel and consultant costs)

Lending

FY07 57.13 288.2

FY08 1.0

Total: 289.20

Supervision/ICR

FY08 37.18 122.5

FY09 30.26 113.6

FY10 23.53 147.8

FY11 23.17 97.8

FY12 21.59 182.1

FY13 22.88 160.0

FY14 17.88 101.1

FY15 19.73 85.7

FY16 .58 78

FY17 6.69 21

Total: 148.90

42

Annex 6. Beneficiary Survey Results

No Beneficiary Survey was produced.

43

Annex 7. Stakeholder Workshop Report and Results

1. A stakeholder workshop was held on October 13, 2016 in which most beneficiary

institutions participated. Each Institution presented a brief presentation of the situation before the

project started, the present situation and the gaps needing filled moving forward.

2. The institutions present were the FSA, the APPH and the SVO of BiH and MOFTER.

The meeting was similarly attended by the entity level Ministries of agriculture, the PIU for both

entities as well as the M&E consultant that had supported the project. The Inspection services of

FBiH were similarly represented.

3. The meeting did not include beneficiaries from the works related to Flood rehabilitation,

however surveys have been conducted that reflected beneficiary perspectives from work related

to flood rehabilitation works as well as direct support to families that had lost their livelihood

notably around the municipality of Ravno where some households experienced floods of nearly

20 meters that had totally devastated permanent crops and orchards as well as related installations.

4. Overall, stakeholder institutions in spite of the challenges faced due to opposing views of

the role of the state had a very positive feedback as it relates to the project impacts. For some

agencies, the project represented the first significant support in assuming their mandate including

basic information systems and databases related to the performance of their mandates, such as the

(i) establishment of a phyto register, (ii) the establishment of a functional livestock identification

and registration system, (iii) a farm and client register to identify all farms that receive incentives

from their respective ministries, (iv) as well as inspection databases to conduct risk based food

product related inspections.

44

Annex 8. Summary of Borrower's ICR and/or Comments on Draft ICR

1. The ARDP is a project with designed complex objectives which are relevant even 7 years

after beginning of its implementation, which can be interpreted also as an indication of slow

progress in political situation. The project design envisaged simultaneous work on strengthening

and development of both State and Entity institutions, which was result of consensus and political

will present at the time of project design and approval. During project implementation it was not

possible to achieve some of the planned objectives, partly due to non-conducive political climate.

As result of that, at certain periods it was simply impossible to implement certain activities.

2. Although the Project was implemented in institutions which often have different political

views, in technical terms it was implemented in the most efficient possible way under given

circumstances. The technical nature of the project was proven to be its part in which was most

often easiest to reach agreement, enabling implementation in these technical segments. The

ARDP experience showed that in a country with complex constitutional structure and political

setup, it is very difficult to achieve programmatic objectives that depend on political consensus,

however it is much easier to achieve the objectives of technical nature which do not require

consultations at higher level of authorities. In view of this reality, the Project achieved success in

its technical segment, such as IT systems, namely registries development, laboratory equipment,

quarantine pests and potato diseases monitoring, etc.

3. The implemented technical outputs improved significantly work of the institutions for

which they were designed, e.g. Inspectorate IMS. However, problems similar to the above-

described ones have emerged here as well. This is partly the result of growing needs and volume

of information to be processed, and partly due to lack of further development at technical level,

both in terms of operational modifications and maintenance.

4. Although the implementation period was characterized with some remarkable and less

remarkable technical innovations, they are nevertheless the most valuable achievements. This is

because in a situation when it is not possible to implement objectives of policy nature,

development of technical capacities built with project financing, pave the way towards

achievement of policy objectives, which would, hopefully, take place at some point.

5. Technical capacities were built and made functional early enough during implementation

period to enable testing, which concluded that the same technology with common characteristics

in all relevant institutions leads to more or less identical problems, which opens room for seeking

for mutually agreeable solutions.

6. The ARDP introduced the M&E system as an important aspect of project implementation,

where monitoring reports served as a significant input/tool for WB supervision missions. Since

such reports were intensively discussed with various project beneficiaries, M&E reports were an

important document for project management to make timely and appropriate decisions. The

monitoring system based on a typical LogFrame concept showed a number of weaknesses during

implementation period, one of which was the fact it is not possible to use such concept to monitor

changes in real time, given the fact that M&E reports are cumulative documents with value as

archive.

7. The said weakness indicates to the need to introduce an implementation monitoring with

real time elements, enabling evaluation at each implementation stage and taking necessary actions

in timely fashion which would achieve best effects, without a need for expensive ex post

45

evaluation which mainly gives material for so called “lessons learned”, which, though interesting,

are of no significant practical use.

8. The positive effects achieved by the project are result of work of all teams involved in

implementation, as well as flexibility shown by the WB team as project administrator, to

accommodate beneficiaries’ wishes and needs and to approve activities which were often

significantly different from the ones envisaged by the PAD. Implementation flexibility is one of

important characteristics of the ARDP, and it could be said that thanks to such flexibility it was

possible to “rescue” the Project, and achieve important project implementation results.

9. Besides the joint work of numerous teams with various institutional backgrounds, thanks

to which it was possible to achieve impressive project results, the ARDP was also important test

for partnership among various institutions. The project showed clearly that not only a team work,

but also a partnership, is possible during implementation which takes place in such political

climate which often does not encourage such type of relationship. Project experience shows that

in future joint activities, for achievement of optimal results, which would satisfy all the involved

stakeholders, it would be very important to ensure equal decision making power, which can be, as

in case of political decision, based on consensus principles.

46

Annex 9. Comments of Cofinanciers and Other Partners/Stakeholders

The draft ICR was shared with the Government counterparts and SIDA colleagues on December

1, 2016, but no comments were received by December 21, 2016. The team received the document

with comments in track changes from the RS PIU, and those were addressed in the final version

of the ICR.

47

Annex 10. List of Supporting Documents

Project Appraisal Document, Bosnia and Herzegovina Agriculture and Rural

Development Project; Report No.: 39384-BA;

Restructuring Project Papers (Restructuring Papers dated June 2010; July 2011; April

2012; May 2013; and June 2015);

Project Aide Memoirs and ISRs;

MOFTER BiH Project Semi-Annual Progress Reports;

Project Final Project Progress Report;

Country Partnership Strategy (FY08-FY11), World Bank, November 2007;

Draft Country Partnership Framework (FY16-FY20), World Bank, September 2015;

Agricultural Sector Policy Note for Bosnia and Herzegovina; Trade and Integration

Policy Notes, World Bank, May 2010;

Final Reports on the Agriculture and Rural Development Project activities financed by

SIDA produced by the Federal Ministry of Agriculture, Water Management and Forestry

and RS Ministry of Agriculture, Forestry and Water Management

48

MAP