documents.worldbank.orgdocuments.worldbank.org/.../en/...final-12272016.docx · web viewthe...

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 PracticeSouth East Europe Country UnitEurope and Central Asia Region

CURRENCY EQUIVALENTS(Exchange Rate Effective November 28, 2016)

Currency Unit = SDR 1.00 SDR = US$1.35US$1.00 = 0.74 SDR

FISCAL YEAR

ABBREVIATIONS AND ACRONYMSAPPH Administration of Bosnia and Herzegovina for the Protection of Plant HealthARDP Agriculture and Rural Development ProjectBATA National Accreditation BodyBiH Bosnia and HerzegovinaCAS Country Assistance StrategyCPF Country Partnership FrameworkCSF Classical Swine FeverEMF Environmental Management FrameworkEU European UnionFADN Farm Accountancy Data NetworkFBiH Federation of Bosnia and HerzegovinaFSA Food Safety AgencyFY Fiscal YearGMO Genetically Modified OrganismHACCP Hazard Analysis and Critical Control PointsIPARD Instrument for Pre-Accession Assistance for Rural DevelopmentM&E Monitoring and EvaluationMAFWM Ministry of Agriculture, Forestry and Water ManagementMAWMF Ministry of Agriculture, Water Management and ForestryMoA Ministry of AgricultureMoFTER Ministry of Foreign Trade and Economic RelationsMTDS Medium-Term Development StrategyPCU Project Coordinating UnitRS Republika SrpskaSAA Stabilization an Association AgreementSAFRD Sector for Agriculture, Food, Forestry and Rural DevelopmentSIDA Swedish International Development Cooperation AgencySPIRA Streamlining Permits and Inspection Regimes ActivitySVO State Veterinary OfficeSWA Sector Wide ApproachUSAID United States Agency for International Development WTO World Trade Organization

Country Director: Ellen GoldsteinCountry Manager: Tatiana Proskuryakova

Senior Global Practice Director: Juergen Voegele

Sector Manager: Julian LampiettiProject Team Leader: Daniel Gerber

ICR Team Author: Jeren Kabayeva

BOSNIA AND HERZEGOVINAAGRICULTURE AND RURAL DEVELOPMENT PROJECT

CONTENTS

Data Sheet:A. Basic InformationB. Key DatesC. Ratings SummaryD. Sector and Theme CodesE. Bank StaffF. Results Framework AnalysisG. Ratings of Project Performance in ISRsH. Restructuring (if any)I. Disbursement Profile

1. Project Context, Development Objectives and Design................................................................12. Key Factors Affecting Implementation and Outcomes...............................................................43. Assessment of Outcomes...........................................................................................................124. Assessment of Risk to Development Outcome.........................................................................205. Assessment of Bank and Borrower Performance......................................................................216. Lessons Learned........................................................................................................................237. Comments on Issues Raised by Borrower/Implementing Agencies/Partners...........................24

Annex 1. Project Costs and Financing...........................................................................................25Annex 2. Outputs by Component..................................................................................................26Annex 3. Economic and Financial Analysis..................................................................................32Annex 4. Revised Results Framework...........................................................................................35Annex 5. Bank Lending and Implementation Support/Supervision Processes.............................40Annex 6. Beneficiary Survey Results............................................................................................42Annex 7. Stakeholder Workshop Report and Results...................................................................43Annex 8. Summary of Borrower's ICR and/or Comments on Draft ICR......................................44Annex 9. Comments of Cofinanciers and Other Partners/Stakeholders........................................46Annex 10. List of Supporting Documents.....................................................................................47

MAP

BOSNIA AND HERZEGOVINAAGRICULTURE 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-90773ICR 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 13.80MEnvironmental Category: BImplementing 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):

06/16/201007/12/201104/25/201205/21/201306/17/2015

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

Bank Ratings Borrower Ratings

Quality at Entry: Moderately Unsatisfactory Government: Moderately

Unsatisfactory

i

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 IndicatorsImplementation

Performance Indicators QAG Assessments (if any) Rating

Potential Problem Project at any time (Yes/No):

YesQuality at Entry (QEA):

None

Problem Project at any time (Yes/No):

YesQuality 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

ii

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


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


Date achieved 07/12/2011 06/30/2016 06/30/2016Comments (incl. %

A new PDO indicator added after restructuring in July 2011

iii

achievement)

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


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 06/30/2016Comments (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


No systematic registry and reporting capacity in place

Link various registries for Farm Information System



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


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.


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

iv


Some 15% of community assets destroyed

Execution of works and goods contracts

Fully achieved. See the details in section 3.2 of the ICR.


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


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


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


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

APPH only recently established and not fully

Phytosanitary inspection shifts to

80% of seed and plant

Fully achieved

v

or Qualitative) staffed or operational risk mostly based inspection system

material producers/importers are registered, potato pest survey repeated yearly

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


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


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)


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


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


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


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%

vi

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


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.


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


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


No coherent agricultural information collection at State level

Begin interface of various entity level and State agency databases for AIS



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


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


Indicator 10 : Market and results-oriented Entity extension systems operational and effective in accordance with clearly defined policy objectives

Value (quantitative

Few public/private extension partnerships

On-farm extension delivery primarily

The indicator was dropped after

vii

or Qualitative)

through contracted private sector and civil society extension agent

restructuring in July 2011


Indicator 11 : No of contracted extension/advisory service providers accredited with specific competencies


0 100



Indicator 12 : No of extension packages prepared and disseminated


0 50



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


0 3000



Indicator 14 : B1: Transparency Entity level paying systems established


Un-transparent, manual paying system operating

100% of Entity payments made through the accredited paying

Not achieved

viii

system


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


No BIH rural development plan

Monitoring Committee reformulating RD program based on M&E report

Partially achieved, about 50%.


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


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


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


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 restructuring in July 2011


Indicator 18 : B4: Rehabilitation investments completed before end of construction and farming season in October, 2011

Value (quantitative

Some 15 of community assets destroyed

All rehabilitation completed


ix

or Qualitative) Date achieved 07/12/2011 06/30/2016 06/30/2016


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 2 11/30/2007 Satisfactory Satisfactory 0.00 3 05/29/2008 Satisfactory Satisfactory 0.00 4 12/30/2008 Satisfactory Moderately Satisfactory 1.47 5 08/07/2009 Moderately Satisfactory Moderately Satisfactory 2.85 6 12/02/2009 Moderately Satisfactory Moderately Satisfactory 3.54 7 06/10/2010 Moderately Satisfactory Moderately Unsatisfactory 4.08 8 02/25/2011 Moderately Satisfactory Moderately Unsatisfactory 5.75 9 10/23/2011 Moderately Satisfactory Moderately Unsatisfactory 7.46

10 04/24/2012 Moderately Satisfactory Moderately Satisfactory 9.06 11 11/27/2012 Moderately Satisfactory Moderately Satisfactory 11.54 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 15 07/03/2014 Moderately Satisfactory Moderately Satisfactory 16.17 16 12/22/2014 Moderately Satisfactory Moderately Satisfactory 17.40 17 06/10/2015 Moderately Satisfactory Moderately Satisfactory 17.89 18 09/17/2015 Moderately Satisfactory Moderately Satisfactory 17.89 19 04/27/2016 Moderately Satisfactory Moderately Satisfactory 18.51

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 MadeDO 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%.

x

Restructuring Date(s)

Board Approved PDO

Change

ISR Ratings at Restructuring

Amount Disbursed at

Restructuring in USD millions

Reason for Restructuring & Key Changes MadeDO IP

07/12/2011 MS MU 6.96

Restructuring 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 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


06/17/2015 N MS MS 17.89


I. Disbursement Profile

xi

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

1

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

2

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

3

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.

4

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.

5

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

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.

6

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, 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

Brcko District was later added to the BiH governance structure.

7

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 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

8

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 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.

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.

9

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 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

10

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.

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.

11

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 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-

12

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. 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.

13

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 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.

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.

14

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.

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

15

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

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.

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

16

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 RatingRating: 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).

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:

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

17

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

Original PDO indicators

Revised PDO Indicators 2011 Overall

Rating Moderately Unsatisfactory

Moderately Satisfactory

Rating value 3 4Disbursement US$6.96 US$12.41 US$21.00

18

Weight (% disbursed after PDO change)

30% 70% 100%

Weighted value 0.9 2.8 3.7Final 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 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

19

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 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

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.

20

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 Rating: Moderately Unsatisfactory

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 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

21

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 PerformanceRating: Moderately Unsatisfactory

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.

5.2 Borrower Performance(a) Government PerformanceRating: Moderately Unsatisfactory

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

22

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 PerformanceRating: 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, n o 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 PerformanceRating: Moderately Unsatisfactory

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.

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

23

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

24

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%

25

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 achievementA1: 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

26

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

27

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 achievementB1: 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

28

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


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,

29

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 achievementC1: 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.

30

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.

31

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

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

32

statistics, this figure has dropped to some 460 by 2010 and continues to fall to the long term average over 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 174Salmonella in humans (14 cases/100,000 people) cases 266 266 266 266Ovine/caprine brucellosis in animals 2.5% 2.55% 2.6% 2.65%Actual Situation Yr 1 Yr 2 Yr 3 Yr 4

Change in disease incidence

Ovine/caprine brucellosis in animals 4.6% 14.5% 0.5% 0.07%cases 6830 22122 2426 294

Brucellosis in humans cases 994 458 168 72Salmonella 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 brucellosisDestruction and compensation of infected animal 100.0Destruction of milk from infected animal 15.0Hospitalization and treatment of human case 1,150.0Difference in price between old and new testing methodology* 1.4

33

Bovine brucellosis and tuberculosisDestruction and compensation of infected animal 200.0Destruction of milk from infected animal 270.0

SalmonellaHospitalization 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 to the EU from a food safety perspective. The Bank project had a significant role in this realization due to

7 GAIN REPORT, USDA Foreign Agriculture Service, July 08, 2016

34

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, 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.

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

35

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 5Hungary 5,854 38,713 7Poland 18,413 171,603 9Slovakia 2,441 18,606 8Slovenia 518 6,447 12Estonia 986 12,347 13Latvia 2,485 22,226 9Lithuania 3,489 30,345 9Bulgaria 5,582 53,026 9Romania 14,857 153,243 10Average 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.

36

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* C

ore

D=DroppedC=ContinueN= New

R=Revised

Unit of Measure Baseline

Cumulative Target Values** Frequency

Data Source/Method

ology

Responsibility 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 inspectorate reports

SVO, APPH, FSA and entity inspectorate reports

Pluralistic, stakeholder driven and outcome based contracted extension services operational at the level of each entity and benefitting twenty percent of commercial farmers

D Yes/No Limited public extension services in the RS and none in the FBiH. Few public private extension partnerships

Extension Departments established and staffed

Extension agencies established/restructured and regional offices established. Extension contracting formats finalized and tenders

Extension Board elected. Outcome based, contracted extension delivery operational

Stakeholder managed contracted, public/private extension service reaching 20% of commercial farmers

35

advertised.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



PIU and APCU quarterly status reports

PIU and APCU

INTERMEDIATE RESULTS

Intermediate Result (Component One): Agricultural Information and Institutional Capacity Buildinga) 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.

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

36

Intermediate Result indicator 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 monitoring reports

SVO with entities MoA

Intermediate Result indicator 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/importers are registered potato pest survey repeated yearly

Annual APPH pest monitoring reports

APPH with entities MoA

Intermediate Result indicator 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

Quarterly progress reports

APPH &P IU

APPH & PIU

Intermediate Result indicator 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

Intermediate Result indicator Entity-level Inspection Directorates are implementing BiH plant health, animal health and food safety laws and

Regulations

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

Annual Inspection Statistics

Entity Inspectorates

Intermediate Result indicator RS MAFWM/ FBiH MAWMF agricultural information units and databases and FADN pilot established assembling farm

R Yes/No Adhoc record keeping and no M&E for formulation of policy for support

Develop FADN survey and implement

Implement FADN survey for 120 farms

Implement FADN survey for 180 farms, establish agricultural information

Integrate FADN survey data in entity MoA information system

6 months progress reports

RS AND FBiH MoA

Reports submitted to PIU and APCU

37

level information. programs databaseIntermediate Result indicator 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 MOFTER PIU

Intermediate Result indicator 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

Intermediate Result indicator 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.

Intermediate Result indicator Number of contracted extension/advisory service providers accredited with specific competencies.

D None 30 50 80

Intermediate Result indicator Number of extension packages prepared and disseminated.

D None 15 20 30

Intermediate Result indicator Number 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.

D None 300 800 1,500

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

38

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.

Intermediate Result indicator 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

Intermediate Result indicator 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

Intermediate Result indicator 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



quarterly

Procurement plan

PIU & APCU

39

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 ECCU3Supervision/ICR Jeren Kabayeva ICR Author GFA03 Samra Bajramovic Program Assistant ECCBMAma 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

40

(b) Staff Time and Cost

Stage of Project CycleStaff 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: 289.20Supervision/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 78FY17 6.69 21

Total: 148.90

41

Annex 6. Beneficiary Survey Results

No Beneficiary Survey was produced.

42

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.

43

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

44

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.

45

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.

46

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

47

MAP

48