Bosnian farmers brace for Croatia EU entry fallout

With milk exports to neighbouring Croatia booming, Vladimir Usorac jumped to invest more than one million euros in his dairy farm tucked away in the country's north. But to his shock Croatia's entry into the European Union on July 1 could prove his undoing. Exports of almost all products of animal origin from Bosnia to Croatia are to be suspended starting Monday. "We will be forced to sell cattle and milk production in Bosnia," Usorac told AFP at his farm, one of the best-equipped in Bosnia. "We will all go bankrupt." Despite urgent warnings from Brussels, deeply divided Bosnian authorities have yet to adopt laws needed to harmonise local production of animal products with European Union standards. "If we do not solve this problem quickly, we will be like a fish out of water," warned Usorac. Usorac's farm produces 24,000 litres of milk per month. Most goes to the nearby Mlijekoprodukt dairy plant, the biggest Bosnian exporter of milk products to Croatia. But Usorac said the suspension of milk sales to Croatia endangers "all Bosnian producers, whether they export their milk or not" with the country now facing overproduction of 100,000 to 150,000 litres per day. Bosnia's main trade partners are Croatia and Germany and any lack of profits from exports could be a major hit for the Balkan country of 3.8 million people. Igor Gavran of Bosnia's international chamber of commerce said the former Yugoslav republic exports almost 60 million litres of milk to Croatia per year and any lasting suspension of dairy exports would be "disastrous" While big producers can to some extent switch to processed dairy products and seek other export markets, the biggest danger is to 20,000 poorer farmers who produce only milk and have little funds to weather the disruption. "Damages will be far greater: cattle will be decimated as owners will not be able to feed them, lay-offs will follow, a chain of disaster will reach a scale impossible to estimate," Gavran said. Losses in revenue for these farmers, who have little funds to invest to modernise or diversify their production, could reach some 200 million euros ($260 million) a year, Gavran warned. To meet EU standards, Brussels has demanded Bosnia establish a "chain of command" to control food safety and quality. But in a country still divided along ethnic lines since the end of the 1992-1995 war, a purely technical demand has became yet another opportunity for political squabbling. Post-war Bosnia is split in two semi-independent entities -- the Serbs' Republika Srpska and the Muslim-Croat Federation -- linked only through weak central institutions. The country does not have a central agriculture ministry with each political entity seeking to run the sector independently of the other. "It is us, the authorities, who have not fulfilled all conditions set by Brussels," admitted Ljubomir Kalaba, head of the national veterinary agency. Bosnia has proposed a temporary solution to Brussels until necessary laws are adopted, Kalaba said. Though details were not forthcoming, the measures would enable exports of dairy products to restart "within two or three months after July 1." In the meantime, experts warn that poultry products and eggs, another profitable business for Bosnians, could also be banned from Croatia's markets for at least six to twelve months. The dairy plant in the southern Bosnian town of Livno exports more than 80 percent of its cheese to Croatia -- some 350 tonnes per year, worth around two million euros. "We have prepared ourselves to overcome at least three months, or until December, without halting buying milk from primary producers," dairy head Zeljko Marijan said. But after investing more than three million euros in its production chain, Marijan wondered what could happen if the problems with exports were not solved soon. "All possibilities remain open," he warned.