September 3, 2007

Bosnia corn production seen lower

Corn production in Bosnia is expected to be around 600,000 tonnes, which is 30 percent lower than an average yield because of severe drought that affected corn during July. Decreased production and a constant increase in consumption because of the developing livestock and poultry industries could result in increased corn imports from an average 130,000 tonnes to most likely double in 2007/2008. Due to the fact that most European countries report grain shortages, imports from the US appear to be very desirable, according to a US Department of Agriculture attache report posted Friday (August 31) on the Foreign Agricultural Services Web site.

The wheat area in 2006/2007 was approximately 60,000 hectares (ha), which is almost the same as in the previous season, with a total yield of around 150,000 tonnes Usually, the wheat area is deceasing every year because grain production is less profitable than for some other production (e.g. fruit and vegetable); however, due to increased wheat prices, an increase in wheat area of approximately 20 percent is likely to occur in 2007/2008.

Corn area is approximately 220,000 hectares, and an expected total yield is around 600,000 tonnes. Yield is expected to be 30 percent lower than an average yield because of severe drought that affected corn during July. Decreased production and constant increases in consumption because of the developing livestock and poultry industries could result in increased corn imports from an average 130,000 tonnes to most likely double in 2007/2008.

Total winter barley area was 20,000 hectares with a yield of 50,000 tonnes; therefore an additional 20,000 tonnes will be needed for import.

Currently, there are no quotas or quantitative restrictions for grain imports into the country. An additional 1 percent customs fee is applied on all imported goods. Bosnia has free trade agreements with the following countries for which zero-duty tariffs apply: Croatia, Serbia and Monte Negro, FYR Macedonia, Albania, Romania, Bulgaria, Moldova, and Turkey.

Due to the fact that most of European countries also announce grain shortages, Bosnian millers are considering importing grain from some other countries like the US Bosnia-Herzegovina usually imports around 350,000 tonnes of wheat in a marketing year. More than 180,000 MT of wheat was imported in the first half of Crop year 2007 mainly from Hungary, Serbia, and Croatia. Reportedly, high global wheat prices are affecting the local milling and baking industry and bakers are raising bread prices throughout the country from 20 to 50 percent.

The Government of the Federation of Bosnia and Herzegovina (FBiH) tried to reach an agreement with the millers and bakers association in order to keep the price at the same level, but the effort seems unsuccessful. The Federation government even offered to distribute 13,500 tonnes of wheat from the commodity reserves to the millers as a loan (they should return the wheat after a period of time) and in addition to suggest to the state-level government to reduce the import duty for wheat from 5 to 0 percent, but it wasn't good enough for local millers and bakers. An average price per ton of wheat reaches KM2 450 (US$ 300) these days. Stocks are estimated to be around 100,000 MT.

BiH usually imports around 130,000 tonnes of corn in a marketing year. This year imports will be much higher because of the reduced crop that is expected due to the drought. Livestock feed shortages are already reported. Most of the imported corn comes from Hungary and Serbia. However, Serbia has banned export of major grains for the next three months effective August 3, and this will further disturb Bosnian imports and contribute to the shortage in livestock feed. An average price per tonne of corn goes for more than KM 500 or US$350. The Republika Srpska (RS) requested a loan of 5,000 tonnes of corn from the Serbian Government, to be paid in the next six months.