State and challenges of financing family farms in Bosnia and Herzegovina

Abstract

The development of agricultural sector in Bosnia and Herzegovina (BiH) is still determined by the processes of transition of the economic system and overcoming the consequences of the last war. Therefore, it inevitably requires modernization which again requires investments. Provided financial sources are the main preconditions for investing, so the researching sources and terms of financing investments in agricultural sector in BiH are the actual subject of research. The goal of the research presented in this paper is to determine sources of financing agricultural business at the level of family farms, dominating in the agriculture of BiH, the structure of their investment, lending conditions and other sources of financing and farmers' satisfaction with those conditions. Besides the review of literature, the research has been conducted by interviewing a random sample of hundred family farms from the five different regions in BiH, in spring of 2016. The results indicate that self-financing is still a dominant source of financing agricultural businesses, which reduces and slows down level of investment. The next source by relevance is lending (the farmers are not very satisfied with the lending terms and conditions), and followed by subsidies.

Keywords

• Bosnia and Herzegovina
• family farms
• financing
• investment