Prior to the war, former Yugoslavia had a strong agricultural tradition. In Bosnia and Herzegovina crop and animal production are largely separated into regions and are exported to those areas were production is low. For example the area that is now Republika Srpska has good arable land, its southern region produces fruits and wines, and cattle production yields potential exports both for the local and foreign markets. As a result of the war, however, both production and distribution of food produce has been greatly impeded. It is estimated that 70% of farm equipment was damaged during the war and more than 40% of livestock and crops were lost over that period. In addition to direct war damage and mined farmland, the displacement of the rural population has greatly affected the rural economy. Rehabilitation of the agricultural sector and its economy is essential to encourage refugees and displaced persons to return to rural areas, and for the process of economic regeneration in the country.

The EC natural resources programme has been allocated approximately 57 MEURO since 1996. It aims to improve availability and quality of locally produced food, create a sustainable level of income for farmers, generate employment in rural areas, and assist in the transformation of the natural resources industry into a viable market economy.

In 1996 the EC allocated almost 15 MEURO through the Essential Aid Programme (EAP) and provided equipment, seeds, fertilizers, veterinary equipment, agricultural processing equipment, i.e. dairies, and breeding stock of sheep and cattle.

3 MEURO from the EAP was allocated to farm machinery rings that provide equipment that can be rented on an hourly basis by each farmer in the ring. The rental income is then used to purchase spare parts and replacement equipment. Eight machinery rings were set up in this way in the Una Sana region and six in the Banja Luka region. Ten percent of the rental income is then used to set up future machinery rings in other regions. 3.7 MEURO was allocated to the regeneration of livestock, including the provision of pregnant heifers for farmers returning to the Una Sana Canton and the Banja Luka region. The breed of cattle was specifically selected for suitability to the regional environmental conditions and for both dairy and beef production.

In 1997 the EC agricultural programme set up a Project Coordination Unit (PCU) to provide working structures for the reconstruction of the agricultural sector in the Una Sana and Banja Luka regions. The EC allocated 10 MEURO for the regeneration of livestock (including sheep, pigs and poultry) and to economic regeneration within the sector. The aim is to encourage the return of populations to rural areas and reduce the move to urban areas. The 1997 programme is assisting the farmers in helping themselves with very visible results. The EC has provided supplies, livestock, equipment and planning strategies with the objective of increasing general production for a growing demand, creating sustainable agricultural practices, and consequently encouraging the return process and reducing the reliance on aid.

The 1998 EC agriculture and forestry programs total 32MEURO. This amount includes the Agriculture Sector Development PHARE Programme (20 Meuros), the Rapid Agriculture Initiative for Brcko Region (4 Meuros, 1998 OBNOVA) and the 1998 Forestry Programme (8 Meuros, 1998 PHARE).

This amount has been allocated to the following areas in the Agriculture Sector of BiH:

• Livestock regeneration - 10,5 MEURO (which includes: pregnant heifers, sheep, pig breeding units)
• Access to machinery & equipment - 4, 25
• Seed capital and Rural Credit - 6 MEURO (a rural credit scheme for small private farming enterprises)
• Support to R&D and Extension Service - 2 MEURO (provide technical assistance to establish national extension services in BiH).
• Institutional Support and Monitoring - 1 MEUROS- (providing assistance in the creation of agricultural policy and programming for the Ministries of Agriculture, Water Management and Forestry in BiH)
• Land information system - 0,25 MEUROS

The Forestry Programme (8 MEURO) provides technical assistance in forestry management, protection, rehabilitation, and monitoring, including provision of equipment.

In 1999 a further 1 MEURO has been allocated toward the environment.