May, 2011, FAO REU Jahan Kurbanova Tomasz Lonc Gabor Szentpali

Transcription

1 OVERVIEW ON VULNERABILITY TO FOOD SECURITY IN BOSNIA AND HERZEGOVINA May, 2011, FAO REU Jahan Kurbanova Tomasz Lonc Gabor Szentpali 1

2 Table of Content Table of Content...2 Introduction...3 Concept of Food Security...3 Socio-economic background...4 The agricultural sector...6 Food Availability...7 Food Accessibility...8 Wages Elderly, disable and internally displaced people Women Children Young people National minorities Food consumption/utilization Stability Vulnerability to food insecurity National Level Vulnerabilities Exposure to Natural Disasters Economic and fiscal vulnerability Social Vulnerabilities Recommendations for strengthening social food safety net Social Food Safety net instruments: References

3 Introduction The main focus of this note is to review the vulnerability of food security in Bosnia and Herzegovina (BiH) in light of recent developments in the country, and in the context of global economic trends. This note draws upon several studies and presents important data and diagnostic analyses on the overall situation in terms of food security and vulnerability in BiH. BiH is a middle income transition country which was hurt hardly by the war in 1990s. Although the country has experienced positive developments and economical growth in recent years, there are still economic and social challenges to be resolved. In BiH per capita income, measured in purchasing power standards (PPS), was 30 percent of the EU-27 average in 2009, and it remained about the same in Recent UNDP, EU, and WB reports outlined the level of poverty and inequality that are present even though BiH is a middle income country. The country has an exceptionally high unemployment rate, poverty is widespread in rural areas, and several population groups are vulnerable and face hardships. These groups are, among others: poor families with children, pensioners and elderly people, disabled people, internally displaced persons and minorities and people at risk of being trafficked. In addition to political and socio-economical issues, various natural and man-made disasters affect the country almost every year. The following factors are identified as the principal sources of BiH s vulnerability to food insecurity for the entire country: (i) (ii) (iii) (iv) (v) Economic vulnerability Fiscal vulnerability Social vulnerability Political tension Exposure to natural disasters At the individual level, a range of factors combine to negatively impact food security. These include existing poverty, unequal income distribution and increasing of inequality, which can lead to financial difficulties and ultimately to the inability of individuals to purchase food and meet other basic needs such as healthcare, education and shelter. In the short term, social safety nets need to be better targeted at vulnerable people. They need to be in the areas that vulnerable people are and they need to look at the reasons why these people are vulnerable so that appropriate interventions can be implemented. In the longer term, policies must effectively address poverty in a focused and deliberate way, especially in rural areas and among the groups who are most affected. Additionally, food and health goals are required to address prevailing public health and nutrition problems. Concept of Food Security The notion of food security has evolved through a sequence of definitions and paradigms over the years. In the 1960s the focus was on self-sufficiency, then following the Green Revolution in the 1980s, which increased food production (food availability), food security was broadened to include both physical and economic access to food supply. In the 1990s food and nutrition security was internationally reaffirmed as a human right and the 1996 World Food Summit and the 2000 Millennium Summit, at which the Millennium Development Goals (MDG) were formulated, ensured that national governments were committed to taking 3

4 a more proactive role in this area. In the 2000s, vulnerability, addressing risks, and risk management were integrated into food security. According to an often quoted definition, food security is achieved when: all people at all times, have physical, social and economic access to sufficient, safe and nutritious food which meets their dietary needs and food preferences for an active and healthy life. (World Food Summit, 1996). This concept of food security transcends the narrow vision of both food sufficiency and the physical availability of food supplies over time and space. It goes further and includes the socio-economic and nutritional aspects of having adequate economic and physical access to safe and nutritious food supplies (i.e. both external entitlements food prior to dietary intake, and the body s physiological need for food). From this perspective food security embodies several major components food availability, accessibility and consumption/utilization, and the stability of these three components. The first component is that an adequate quantity of quality food (nutritionally and culturally acceptable) must be available at all times in order for a household or community to be food secure. The second component is access to food; either by being able to produce a sufficient amount of nutritious food, or having the ability to earn enough money to purchase an adequate and nutritious amount of food on a consistent basis. The third component is about people receiving the minimum dietary caloric requirements for healthy lives. The fourth component is that households may face seasonal changes in their level of food security and they may experience internal and external shocks that can shift them from being food secure to food insecure very quickly. Self-sufficiency of production and food security are not necessarily the same, particularly among food secure individuals that do not grow any of their own food, yet who are food secure nonetheless. Finally, the definition of food and nutrition security relates to the importance of the links between each of the general elements. Socio-economic background Bosnia and Herzegovina became independent in April 1992, but shortly afterwards the country plunged into a three-year conflict. On 21 Nov 1995 a peace agreement was reached in Dayton (USA). This agreement maintained BiH s international borders and created three entities within the state; namely, the Federation of Bosnia and Herzegovina, Republika Srpska, and one self-governing administrative unit, the District of Brcko. Bosnia and Herzegovina has a territory of 51,280 km² and population of 3.8 million. The economy is improving. Following a 3.1 percent contraction in real GDP in 2009, the economy is estimated to have returned to growth of 0.8 percent in This recovery was modest due to constrained private consumption and increased unemployment. Some measures taken to control the budget deficit, including cuts in public-sector wages and social welfare benefits, are holding back growth in However, growth is expected from increased demand for Bosnian export goods in the euro zone and other regional markets, and from a rise in remittances from Western economies which will hopefully increase further in It is estimated that in 2012 an increase in demand will depend on international prices of oil, agricultural commodities and foodstuffs. Real GDP is forecast grow by 2.1% and might 4

5 accelerate to 3% in 2012, as domestic demand picks up once unemployment has started to decline. 1 The strong growth between 2000 and 2008 has led to a substantial reduction in poverty. This is illustrated by the 20 percent poverty reduction between 2004 and 2007 (from 17.7 percent to 14 percent. Differences between the overall poverty rates in the entities remain indistinguishable. Despite an overall positive performance between 1999 and 2009, during which time average growth was five percent there are several factors of concern, including increasing levels of unemployment, limited credit growth, and pressure on fiscal stability. In addition to the impact of the global financial crisis, the socio-economic situation is still fragile as a result of global market trends and the fact that BiH is a net food importer, which may in turn increase household vulnerabilities. Table1: Main socio-economic indicators in BiH Population, ,766,579 Population density, 2008, people/sq km 73.7 Rural population, ,957,868 Rural population density (arable land), 2005, people/sq km Rural population/total population, 2009, % 52.0 Mortality rate, infant/ 1,000 live births, 2009, % 12.5 Mortality rate, under-5 (per 1,000), 2009, % 14.4 Number of rural poor, 2009, approximate 389,616 Income share held by lowest 20%, 2007, % 6.7 Source, Agency of statistics of BiH, IFAD) The service industry contributes the highest share of GDP (64 percent). The other main contributors are industry with 28 percent and agriculture with 12.9 percent in EU Country profile, Jan Development Economics, LDB data base, February,

6 The agricultural sector Agriculture is still one of the most important sectors of the economy providing in terms of food security to a large part of the population. Bosnia and Herzegovina has favourable climatic conditions for agricultural production. Figure1: Dynamics of GDP, GDP p/c, and Agricultural Output, GDP GDP p/c Agriculture Source: World Bank, BIH: Country at glance The agricultural sector contributes eight percent to GDP (although there is some variation between the Republika Srpska (RS), which receives a larger share of GDP from agriculture, and the BiH Federation and district Brchko. Agriculture employs around 21.2 percent of the labour force, whereas according to Living Standards Measurement Survey LSMS 2001 it was 34.8 percent. Agriculture also provides a source of income for about 50 percent of the total population of the country. Bosnia-Herzegovina has very poor agricultural resources. Large parts of the country are mountainous, with shallow soil and less than 20 percent of the land is suitable for farming. In recent times farming has made only a limited contribution to the economy. In 2005 the economic importance of agriculture was moving back to pre-war levels and the agricultural sector was contributing about 15 per cent of GDP. The share of the agricultural output further decreased, mostly dues to strengthening in other sectors, although there was a slight weakening in Agriculture as well. Agricultural productivity is very low, even by regional standards, which accounts for the discrepancy between the small contribution it makes to GDP and the large number of people that is employs. Investment in agriculture is relatively low and there is poor liquidity on the land market, poor technology and infrastructure (the majority of farms don t have irrigation systems), relatively low levels of skills and know-how, and weak support from the public sector. All of these challenges will have to be addressed in order to make the agricultural sector more productive and to facilitate the creation of jobs in rural areas outside of primary agricultural activities. Although the country imports over 65 percent of its food, agricultural yields could be increased substantially in order to meet part of the country's food requirements. Agriculture and associated activities could also play a major role in an economic revival and poverty reduction in rural areas. Milk and meat are Bosnia's principal agricultural outputs and are produced mainly by privately owned smallholder farms. Dairy farming dominates agricultural production, and livestock production in general contributes nearly 60 percent of agricultural GDP. Other important agricultural products are wheat, maize, soybeans and tobacco

7 According to a study carried out by the Directorate General for Agriculture and Rural Development (DG-AGRI) in BiH, the number of farms is 515,000 from which 50 percent have plots smaller than 2 ha each. Only 4 percent have plots larger than 10 ha. The conclusion that can be drawn from this is that farms in BiH are too small and fragmented (divided into 7-9 smaller plots), which causes low productivity and inefficiency, especially in the production of cereals. Agricultural yields in BiH are lower than in every other European country. Increasing agricultural production especially in cereals to meet domestic needs and to decrease the food trade deficit could contribute to improving of livelihoods of the population, especially those who live in rural areas, but also other vulnerable groups. There are also a number of other factors that contribute to rural poverty. Bosnia-Herzegovina has a limited resource base. As a result of the mountainous countryside and shallow soils, good agricultural land is scarce. Also, the former Federal Republic of Yugoslavia had long neglected the smallholder farming sector. Farm holdings are limited, productivity levels are low and incomes from most farms are meagre. Although dairy farming is the main enterprise, the average number of dairy cows per farm is only two. At present most farmers are subsistence-oriented. The recovery of agriculture has been hindered by poor infrastructure, a lack of access to support services and finance, and inadequate linkages to processing industries and markets. Therefore, the country is still fragile in terms of stable livelihoods and food security and nutrition for its population. Food Availability Availability refers to the physical existence of food. Farmers may produce this food themselves, or it may come from commercial imports, food aid, or domestic food stocks. Agricultural output. Although the country is characterised by favourable climate conditions for agricultural activities, it is relatively poor in agricultural resources: Large parts of the country are mountainous (66 percent of the territory is considered mountainous or hilly) and only 20 percent of the land is suitable for intensive farming. An abundance of grassland and mountainous pastures suggests a potential advantage in terms of producing livestock and dairy products. Orchards and vineyards cover approximately 100,000 hectares. Agricultural production in Bosnia and Herzegovina is dominated by crop production, with livestock production representing less than one third of the total output. The share of production from livestock has increased slightly in recent years thanks to an increase in cow s milk production. From an economic perspective, most important sub-sector in BiH agriculture is vegetables. Fresh cow s milk, maize and potatoes are also of significant importance. Agriculture s share overall GDP is decreasing; however, agriculture remains one of the most important economic sectors in Bosnia and Herzegovina, providing food security for a significant portion of the rural population. Bearing in mind that the rural population accounts for 60 percent of the overall population, agriculture generates the basic income for the majority of this population. It also provides a foundation for political and economic stability. The agricultural sector is more important for the Republika Srpska s economny (around 13 percent of the GDP 2005) than it is for that of the Federation of Bosnia & Herzegovina where (stable at 6 percent). The agri food processing industry is recovering following a decade of under-investment and its share in GDP is increasing (8 percent in 2005). In 2006, the sector attracted the largest amount of FDI, 80 percent of the industry had been already privatised. Trade deficit and agro-food trade balance. The overall macroeconomic situation is also under pressure due to the current account and foreign trade balance deficit. During the period

8 2004/ / / / / / / , the trade deficit slightly increased, while the import of agro- food products increased steadily. The value of agro-food imports increased by 22.3 percent and reached 19.2 percent in The country is not competitive in agro-food production. In particular, it needs to import a large amount of cereals because domestic productivity in cereals is low. In spite of reducing the volume of cereal imports by 40 percent ( ) due to a slightly smaller population and changing diets, the cost of cereal imports decreased by 17 percent. In other words, the cost of cereal imports increased by 21 percent on average. At the same time the cost of imported wheat has increased by 26 percent and maize (corn) by 37 percent compared with 2005 and the pre-crisis period. Import dependency. Import costs are expected to remain largely stable in There will be no significant changes to the commodities listed above although the country remains a net food importer (in particular in terms of cereals, especially mainly wheat and wheat flour). Taking into account the wheat and wheat flour import bills, which have increased by 50 percent on average since autumn 2010, the issue of food security from the supply side is of paramount importance. Exports may continue to rebound, especially benefiting from relatively high international steel and aluminium prices, following a recovery in prices in However, the trade deficit remains at about the same level as in 2010 (6 percent of GDP). For the period , the increase in agro-food imports has been observed at 19.2 percent in 2009 and about the same in In recent years the import of agricultural and food products has increased, confirming the status of the country as a net food importer and as dependent on global food markets trends. For example the country is 42 percent short of satisfying its domestic wheat needs and 17 percent short on maize needs. High import dependency has been noted on vegetables (tomatoes: 26.5 percent short and peppers: 14 percent sort) and fruits (30 percent short on average). The main concern surrounds wheat, of which almost 60 percent is imported for total domestic needs and about 80 percent for food consumption. Figure2: Production, Import, Stocks in BiH, % 80% 60% 40% 20% 0% Improt Stocks Produciton Source: GIEWS, Wheat: Production, Stock and Import Food Accessibility Access is ensured when all households and individuals within those households have sufficient resources to obtain appropriate food for a nutritious diet. It is dependent on the level of household resources such as capital, labour, and knowledge, as well as on prices. Even 8

9 more important is the ability of households to generate sufficient income, which together with their own production, can be used to meet food needs. Poverty Line. It has been acknowledged that it is difficult to confirm poverty levels in BiH, given the apparent similarity in the income figures that are reported, which do not include informal, agricultural and overseas supplements to income. The UN Development Working Group (UNDWG) for BiH has noted these difficulties, as it would appear that: a large part of the population is living either just above or just below the poverty line. This means that if you adjust the poverty line by a few Konvertable Marks (KMs), a large group will either fall below or above the line. The majority (70 percent) of poor people live in rural areas. The factors that contribute to rural poverty are a limited resource base, scarcity of good agricultural, the neglect of the smallholder farming sector by the former Federal Republic of Yugoslavia and most farmers being subsistence-oriented. Recovery in the agricultural sector has been hindered by poor infrastructure, lack of access to support services and finance, and inadequate linkages to processing industries and markets. Figure3: Predicted poverty with a Negative Income Shock of Four Percent, BiH Prices, wages and employment. Inflation returned in 2010, with the consumer price index (CPI) rising by an estimated 2 percent, following a decline of 0.4 percent in It is expected that annual inflation will average 2.7 percent in Table2: Inflation rate in 2011 compared with 2010 (%), BiH Jan 2011/ Jan 2010 Jan 2011/ Dec 2010 Feb 2011/ Feb 2010 Feb 2011/ Dec 2010 Total CPI Food inflation Source: Statistics agency of BiH 9

10 However, the figures from autumn 2010 confirm that food prices have been increasing faster than general inflation and are contributing 70 percent of inflation. The situation is complicated due to the increased trade deficit and related food import bills since August The current socio-economic situation, although producing an overall good performance in recent years, faces macro-economic vulnerabilities. One such vulnerability is surging food prices. Inflation has accelerated sharply in the latter half of the decade, after remaining very low in the first half of 2000s. Some increase in vulnerability in the second half of the 2000s (especially in 2007 and 2008) was due to a global surge in food and fuel prices. Also, part of the increase is due to a natural convergence with the average EU price level. It is evident that increases in global food and fuel price contribute to a steady food price increase in BiH. In 2010 food prices started to increase again, impacting the amount that households spent on food. Figure 4: Inflation in 2010 by months (2005 =100), BiH Food Total Source: Statistics Bulletin, Consumer Price Index in BiH, 2010, Agency of Statistics of BiH, Sarajevo, 2011 The main concern is that domestic demand in food has risen but domestic capacity is not sufficient to cover needs inside the country. Combined with increased food prices, this puts pressure on the income expenditure of households. The World Bank estimates that the share of household expenditures going towards food is 39 percent on average. Therefore, local factors, in combination with external factors such as global increases in food prices, the cost of transportation and logistics, and the volatility of agricultural markets, intensify demand pressures as a result of growth in net wages and a larger current account deficit. Wages Wage growth has been rising rapidly and threatens external competitiveness. Some of the past wage growth has been in line with productivity growth. However, between 2007 and 2008, there was a sharp upward adjustment in public sector wages, most notably in the RS (Figure 5. Due to the relatively large public sector, this development has the potential to put further upward pressure on private sector wages and erode competitiveness. Additionally, the acceleration in wage growth puts pressure on public finances and underlying inflation via a feedback loop. 10

11 Figure5: Real net wage growth and average net wages, BiH It should be noted that wage growth differs in each entity. An accelerated increase of real wages was observed in Republika Srpska, while a slight only decline was seen in district Brcko and Federation of BiH. However, the rates of wage increase and its average level remained. The studies show that a significant minority of the population are held back by low incomes, poor diet and scarce employment opportunities. An even larger number are vulnerable to falling into this category. The long term solution to these vulnerabilities and to entrenched poverty is to build a food security system, and increase employment in rural and remote areas. This requires the right mix of economic and social policies, aimed at achieving EU poverty levels by It also requires ensuring that all BiH citizens receive a healthy and nutritional diet. The positive growth BiH is seeing must be accompanied by an equitable distribution of income and policymaking should take the interests of the poor into account. The unemployment rate in BH stood at 23 percent at the beginning of and is one of the highest in South Eastern Europe. The first quarter of 2009 showed signs that employment levels had declined (official employment data suggests a 0.1 percent drop in official employment year-on-year for January 2009 (BHAS, 2009b)). Two sectors that especially contributed to employment growth were manufacturing and wholesale and retail. These were also two of the hardest hit in the crisis and are job losses are most likely. Remittances, which constituted 15 percent of the national income of BiH on aggregate, are projected to decline by between three and five percent compared to the 2008 flows. Finally, indebtedness adds another dimension to household vulnerability. By 2007, household debt was equal to 27 percent of GDP and constituted half of all private sector debt. Most of the loans in BiH are with variable interest rates and indexed in foreign currencies. Therefore, a rise in interest rates in major loan originating countries forced by the on-going credit crunch is likely to lead to a rise in repayment costs. Several dimensions of household vulnerability remain a main problem. Although inequality has decreased in general from 34.7 to 33.3 percent; 4 taking into account social disparity, economic structure, and dependency on food imports and especially cereals, the following 3 LFS 2008 data, BHAS World Bank, Macroeconomic and Poverty Assessment, page 10-13,

12 groups are considered to be vulnerable: children, young people, disabled people, the elderly, IDPs, refuges and migrants, Roma groups, women, and smallholder farmers. Elderly, disable and internally displaced people There are approximately 415,000 registered pensioners and disabled people in BiH. The public pension is set at 50 per cent of the average net wage, which is below the official threshold of relative poverty. This makes elderly people some of the most vulnerable in the country. The World Bank study suggests that the average pensioner cannot make ends meet. The majority of pensioners that were interviewed "stressed hunger as an impact of poverty". The impact of hunger appears to be even between the cities and villages. Pensioners in Zenica and Sarajevo explicitly mentioned hunger. Even those in villages, who are perceived as having more secure food sources than city-dwellers, saw hunger as a principal impact. Employment pension entitlement in BiH is linked to the number of years worked in the formal sector, and so there is a real problem due to low rates of female employment in BiH. In addition to pensioners and disabled persons, a considerable number of traditional social welfare beneficiaries receive small state allowances, which are not enough to sustain an adequate standard of living. This puts these people in a vulnerable situation. Many people are still displaced and UNHCR reports that some 217,000 persons are of concern to the organization out of which 130,000 are internally displaced persons (IDPs) and almost 5,000 are returned IDPs. Furthermore 17 national minorities are legally recognized in BiH and the Roma are the biggest significant minority population. In the absence of a new census since 1991, estimates of the Roma population range from 30,000 to 100,000. Refugees and displaced persons and minority groups are considered as some of the most vulnerable groups in the country and face discrimination and exclusion. Therefore, the social integration of these groups is an essential issue that needs to be addressed. People trafficking has emerged as a potential risk to certain groups the recent years. Trafficking makes people, especially women, vulnerable to exploitation and suffering and thus both its causes and human consequences need to be adequately addressed. Women Female participation in the labour force is only 28 percent while overall labour force participation for the BiH workforce is at 48 percent. The gender gap is substantial as male participation rate stands at 62 percent. By international standards these numbers are very low, particularly for women, but these figures are also low as compared with other Balkan countries. The end of the conflict in Bosnia and Herzegovina marked the beginning of a double transition: the transition from war to peace, and an economic and political transition. Today, the nation s gross domestic product is only half its pre-war level, and social sector spending has dropped dramatically. After the war, the breakdown of social cohesion and the downward spiral into poverty was particularly hard on women, says Lenyara Khayasedinova, IFAD s coordinator of the Gender Mainstreaming Programme for Central and Eastern Europe and Newly Independent States. When family benefits and public social services were decreased, women s social 12

13 standing in society plunged. There was a return to more traditional attitudes towards gender, and women who once held prestigious positions in public life are now often expected to stay home engaged in domestic duties. Even so, women now count as the head of the household in about a quarter of homes in the country, largely as a result of men going abroad in search of work. In addition to having heavy economic burdens, women lack access to land, skills training, finances and equipment. They are often denied participation in political decision-making even though they assume responsibility for the survival of the family. Women make up only 35 per cent of those employed in Bosnia and Herzegovina, and those who are employed face discrimination and receive lower wages. In post-conflict Bosnia and Herzegovina, women are a driving force for change, Source, IFAD, One would expect the employment figures to be better for female heads of household. However, if we exclude pensioners, only 32 percent of the remaining female heads of household are in employment of some sort. This figure is substantially less than the 71 percent of comparable male heads of household in employment. A detailed examination of the statistics, however, throws up more surprising facts. Despite the low participation rate in absolute numbers, the share of women in formal employment has stayed remarkably stable: it was 34.6 percent in 1990 and after slightly increasing in the post-war years, reached 36.3 percent in The stability is even more surprising in the context of a significant brain drain of educated women from BiH during and after the war. Many public services that women relied upon before the war are no longer available or have become unaffordable; these include health care, social benefits, child benefits, maternity leave, and advisory and support services. Although one might have predicted that women would gravitate towards informal employment, characterized by low wages and poor job security, women appear to have even less access to this sector. One review, in interpreting the LSMS results, considered that the most over-represented groups in the informal sector are young and unskilled men, rather than women. The review noted that barriers to entry into the formal sector may have contributed to the high share of informal sector. This suggests that the barriers facing women, in terms of entry into both the formal and informal sectors are higher even than those for young and unskilled men. Children There are many deprived families and thus many children are vulnerable in a variety of ways. Along with a significant number of orphans, families with children are in need of both materials and social and educational support. Households with three or more children; in particular with children under five, are more vulnerable due to their limited budgets. In addition, if such households include two or more elderly people, and households headed by women are even more vulnerable. Children in these households or children living in poverty in general are at greater risk of food and related health deprivations. As a result a significant number of children suffer from growth deficiencies and are underweight. Young people Young people make up 17 percent of the total BiH population. Between the ages of 15 and 24 (a group, which in BiH is larger than the EU 25 average (12.7 percent) their employment rate is lower than the EU-27 average (70 percent) and Southern and Eastern Europe (SEE) (62 13

14 percent). The unemployment rate among the young population (15-24 years old) was 48.7 percent in In addition, their participation in education significantly dropped after they turned 18 which provides them with less potential to find jobs and higher income in the future. National minorities In total there are 17 minorities living in BiH. Due to statistical problems there is no exact data on their composition.. Figures for 2007 show that the Roma population represents 2.2 percent of the total population. They are socially excluded and have fewer opportunities to generate the income that they need. As a result, undernourishment low weights are higher among Roma children: The underweight rate is five times higher: 24.2 percent are moderately undernourished and 12.1 percent are severely undernourished. Food consumption/utilization Consumption refers to the socio-economic aspect of household food security. If sufficient and nutritious food is both available and accessible the household has to make decisions concerning what food they will purchase, prepare and consume and how to allocate the food within the household. In households where distribution is unequal, even if the measured aggregate access is sufficient, some individuals may suffer from food deficiency. The same is true if the composition of the food that is consumed is unbalanced. Focusing on the individual level food security also requires taking the biological utilization of food into consideration. This refers to the ability of the human body to take food and convert it into energy which is either used to undertake daily activities or stored. Utilization requires not only an adequate diet, but also a healthy physical environment, including safe drinking water and adequate sanitary facilities (so as to avoid disease) and an understanding of proper healthcare, food preparation, and storage processes. Nutrition plays a critical role in development and can influence the areas of health, education, agriculture, education and equity among others. 5 It is complicated because it can be both a cause and a result of poverty. Individuals, families and communities that suffer ongoing nutritional problems have a higher chance of remaining impoverished. Similarly, being poor means living in a poor neighbourhood, having an inadequate education, which may lead to having a low-paying job and entails eating poor food, suffering from poor health and nutrition, and living in unsanitary housing in a poor neighbourhood, and the cycle continues. Therefore, it is important that agricultural projects aimed at reducing poverty also emphasize vulnerable groups that have nutritional problems and seek to break this element of the poverty cycle. The status of nutrition in BiH shows that there are still problems with the under-five mortality rate, as well as the number of under-fives suffering from stunting (although it is lower than in other countries in the region). Figure 6: Comparison of Nutrition Indicators for BiH, 2008, UNCEF 5 UN Administrative Committee on Coordination Sub-Committee on Nutrition Nutrition: A foundation for development for an overview. This series of briefs highlights the role of nutrition in 11 areas from education to politics. 14

15 Under-5 mortality rate, 2008 % of infants with low birthweight, * % of under-fives ( *) suffering from: wasting (WHO) moderate & severe % of under-fives ( *) suffering from: stunting (WHO) moderate & severe % of under-fives ( *) underweighted (NCHS/ WHO) moderate & severe Ukraine Russian Federation Albania Bosnia and Herzegovina The nutrition status of the country is characterized by the table below. Table3: Main nutrition indicators of BiH, % Rate of infants with low birthweight, Early initiation of breastfeeding, Rate of children who are: exclusively breastfed (<6 months), Rate of children (6-9 months) who are breastfed with complementary food, Rate of children (20-23 months) who are still breastfeeding, Rate of under-fives suffering from underweight (NCHS/WHO), moderate & severe, Rate of under-fives suffering from underweight (WHO), moderate & severe, Rate of under-fives suffering from underweight (WHO), severe, Rate of under-fives suffering from: wasting (WHO), moderate & severe, Rate of under-fives suffering from: stunting (WHO), moderate & severe, Vitamin A supplementation coverage rate (6-59 months) 2009, Full coverage - Rate of households consuming iodized salt, Source: UNCEF, The figures show that the number of under-fives suffering from stunting and wasting still requires special attention. It also depends on women s access to food, especially pregnant women and nursing mothers. The overall picture of food security in the country is characterized by the level of hunger which is measured by consumption of food in kilocalories per person per day (kc p/p/d). It is considered acceptable if this level is 200kc p/p/p

16 Table4: Depth of hunger/ kilocalories/ person/ day BiH Albania Croatia Serbia FYR Macedonia Poland Bulgaria Romania Source: BiH Albania Croatia Serbia FYR Macedonia Poland Bulgaria Romania Source: World data Bank, From the figures of the above table it is clear that in BiH the level kilocalories consumption is not satisfied is lower than in Albania, Croatia, FYR Macedonia, Bulgaria and Romania. Stability The stability or sustainability of food supplies, access to that food and the utilisation of the food consumed. Anything that interrupts food supply and access or interferes with the utilisation of food will lead to food insecurity. This can be chronic or transitory. Chronic food insecurity is associated with problems of continuing or structural poverty, low incomes and health issues. Transitory food insecurity involves periods of increased pressure caused by natural disasters, economic collapse or conflict. Supply, access and utilisation are affected by: 16

17 Conditions for agricultural production including the weather, water supply, pest and disease management The economic environment including economic shocks, loss of preferences and price fluctuations Emergencies and disasters including drought, floods, pest and disease outbreaks and wars Lifestyle conditions in relation to sanitation, diet and exercise. In terms of food availability, the data surrounding several factors combines to influence the stability of food availability. To be food secure, a population, household or individual must have access to adequate food at all times. They should not risk losing access to food as a consequence of sudden shocks (e.g. an economic or climatic crisis) or cyclical events (e.g. seasonal food insecurity). The concept of stability can therefore refer to both the availability and access dimensions of food security. After signing the Dayton Agreement, the situation in the country significantly improved. However, recent events such of the global financial crisis demonstrates the increasing dependency of the food import. Current food prices have also contributed to the fragility of food security situation. Vulnerability to food insecurity BiH s economy is highly vulnerable to a wide range of shocks arising from a combination of the economy s exposure to natural disasters, the country s economic structure and policy induced vulnerabilities. The analysis of vulnerability to food insecurity is considered at both national and individual levels. National Level Vulnerabilities BiH is a European country with three parts: The Federation of BiH, Republic of Srpska, and district Brchko. In addition to political fragmentation the following four factors are identified as the principal sources of vulnerability to food insecurity at the national level: (v) (vi) (vii) (viii) Exposure to natural disasters Economic vulnerability Fiscal vulnerabilities Social vulnerabilities Exposure to Natural Disasters The country faces natural disasters and is also vulnerable to climate change. It has been identified that the country is at risk on from landslides and floods. Almost every year the country or its territories face the impact of a natural disasters. BiH suffers from weather-related shocks and this is a main source of vulnerability to the country s ability to meet the food security of its population. In recent years these shocks have mainly been floods that have affected infrastructure, crops, and farmers assets. 17

18 Figure8: Source: Prevention web, Economic and fiscal vulnerability In BiH the first negative effects were felt by the capital market and the stock exchanges at the end of The Sarajevo and Banja Luka Stock Exchanges were down 63 percent on the previous year. At the end of 2008 Export-oriented companies marked a downgrading in requirements for delivery, which effected production and employment. Early in 2009, credit funds were less accessible and announcements of layoffs occurred more frequently. The recession in developed countries affected the commodity market, which negatively affected the operations of companies in BiH. A significant reduction in foreign direct investments (FDI) was registered. The positive trend of growth in real gross domestic product (GDP) and industrial production and employment stopped in Just as in the rest of the world, the most successful year for the inflow of direct foreign investments in BiH was Unfortunately, the negative trend in foreign direct investment continued into According to a preliminary assessment by FIPA, 359 million Euros were invested in Bosnia and Herzegovina, which is 21 percent of the 2009 figure. 18

19 A decline in GDP and other economic indicators led to the budget deficit increasing and a toughening of the fiscal situation. The fiscal tension still prevents more allocation of funds to the agricultural sector being made and affects issues related with food security including social protection. Social Vulnerabilities Social vulnerability is a pre-existing condition that affects the ability of people, organizations, and societies to withstand adverse impacts to which they are exposed. These impacts are due in part to characteristics inherent in social interactions, institutions, and systems of cultural values. A major source of vulnerability to food security in BiH is the level of poverty and increasing inequality. Effective social safety nets can be an efficient tool for protecting households, especially during special periods such as crisis. However, current BiH programs have several weaknesses that make them less effective in protecting the poor and vulnerable. Firstly, despite significant fiscal outlays (four percent of GDP), coverage of non-contributory transfers is low. Secondly, targeting accuracy is fairly weak, with a higher share of benefits going to those in richer quintiles. Thirdly, the impact that non-contributory social benefits have on poverty are negligible. Finally, non-targeted programs have reached the limits of the fiscal envelope and are crowding out the targeted ones. Targeting accuracy is fairly weak overall, with a higher share of benefits going to those in richer quintiles. Overall, those in the bottom 20 percent receive 16.9 percent of total social protection benefits (similar fractions for social insurance and total social assistance benefits), The distribution of overall social assistance benefits is slightly more progressive in RS, where those in the poorest quintile receive about 25.7 percent of non-contributory social benefits, compared to 14.1 percent for those in the poorest quintile in FBH. In the short term, better targeted safety nets that sufficiently cater to vulnerable groups should be the priority. In this respect, actions are needed to rein in public finances while strengthening social protection. The current non-contributory social assistance transfers in BH are unsustainable, inefficient, and inequitable. Although public spending on such transfers is extremely high (four percent of GDP and growing), they are unsustainable in the current economic environment and given the uncertainty regarding the future in the absence of transparent and targeted delivery of services. A substantial fraction of the population of BiH receives non-contributory transfers. Overall, 12.4 percent of the population reports receiving benefits from non-contributory social assistance transfers (civilian or veteran-related). However, only a small fraction of the poor receive these benefits. The share of the population that reports receiving such benefits is slightly higher among the poorest quintile (15.1 percent) than the richest (9.7 percent). A much larger share of the population reports receiving social insurance benefits (40 percent), and about half the population reports receiving some type of benefits (contribution-based social insurance and/or non-contributory social transfers). There is evidence to show that coverage of veteran-related benefits is higher than civilian benefits, and coverage of veteranrelated benefits is highest among the middle and upper quintiles than those in the poorest quintile. Vulnerability at household level. Vulnerability has increased in the country due to high unemployment, household debt and a dependency on food imports and high food prices. It has also been affected by declining remittances in 2009 and the still slow recovery. As a result of the impact of the global financial crisis the level of poverty is predicted to increase. Although 19

20 economic growth resumed in 2010, inequality in BiH is increasing. As a result, the pace of poverty reduction has slowed, meaning that the poorest and most marginalized segments of society remain sidelined and socially excluded. Despite the lack of comprehensive data in BiH, there is a general consensus based on international reports that the effects of this negative trend are particularly felt in rural and mixed rural/urban areas. Recommendations for strengthening social food safety net. 1. Building a targeted social assistance benefit system; 2. Setting up an information system to monitor social groups and especially to identify the poor or vulnerable ones; 3. Improving the commodity reserve system by converting it into an emergency reserves system in combination with market interventions; 4. Developing and implementing a food safety system harmonized throughout the country which includes cash for food, cash for food production and a network of pubic kitchens. Local communities and NGOs should be included in this; 5. Reviewing and adopting legislation and regulations relating to the measures listed above. As part of the broader social protection agenda, safety net programmes aim to address risks, vulnerability and social exclusion. They help vulnerable households to protect themselves against risks to their livelihoods, to maintain an adequate level of food consumption and to improve food security. They also help prevent them from adopting damaging coping strategies and depleting their assets. In the context of agriculture, they might also alleviate liquidity constraints for smallholders, boost demand for farm products, foster incomegenerating strategies, and create multiplier effects throughout the local economy. 6 Social Food Safety net instruments: 1. Cash transfer or food vouchers The distribution of cash or food vouchers gives beneficiaries additional resources to purchase food and other goods, which may contribute to maintaining caloric intake and quality of diet. Food vouchers may be restricted to certain types of food for nutritional purposes (FAO 2011). Cash transfers and vouchers may be conditional or unconditional, universal or targeted to specific groups. Conditional cash transfers consist of regular payments to poor households in exchange for their compliance and participation in health, nutrition and education programmes, thus helping to improve food security while achieving other human development goals. Unconditional transfers include measures such as social pensions, child support grants or family allowances. Potentially, they have lower administrative costs and enable poor households to have full command of the resources they receive. Transfers and vouchers are appropriate when markets are functioning, and food is available, thus stimulating the local economy. However, if food is not available on the market, they can have inflationary effects (FAO 2011). 6 Devereux et al

21 2. Food distribution in kind These programmes entail the distribution of food in kind to beneficiaries. The food distributed can be locally purchased (if available), brought in from other parts of the country or imported through government purchase or food aid (FAO 2011). If food is purchased locally, it can help increase demand and stimulate agricultural production. However, when food is in short supply it can have an inflationary effect. If food is brought in from other regions or abroad, it could reduce local prices (FAO 2011). School meals have become an important component of food assistance. In times of food crisis, these programmes may discourage parents from taking children out of school (FAO 2009). 3. Universal food subsidy These interventions entail providing a subsidy on food items. Food price subsidies are generally not recommended, as they are usually costly, difficult to remove and not well targeted to the poor (WB 2008). However, costs may be reduced through indirect targeting, limiting the subsidy to the staple foods mainly consumed by the poorest households (FAO 2011). Careful monitoring is necessary to prevent the development of black markets, distortions in trade and production, and the erosion of the private sector if food is distributed through public channels (FAO 2011). 4. Employment-based safety nets Public works and employment guarantee schemes are the most common employment-based safety nets. They entail a regular payment, in cash or in kind, in exchange for work. Employment guarantee schemes generally refer to long-term rights-based programmes, in which a certain level of entitlement to work is provided 7. Public work programmes can offer short-term employment, particularly in order to help address the negative impacts of seasonality, economic shocks and cyclical downturns. They have the potential to employ poor and vulnerable workers, thus mitigating the impact of the crisis on employment, but also creating productive assets that poor people can benefit from. Public works consist mainly in labour-intensive infrastructure development projects; however, there are increasing examples of work in the social sector, environmental services and community driven programmes. In some programmes, skills and training components have been introduced. Wages in traditional public works are typically set at below market rates to ensure self targeting; however, the promotion of employment guarantee schemes that pay a minimum wage are likely to enhance decent work conditions and give rural workers more bargaining power. 8 Employment guarantee schemes refer to longer-term rights-based programmes which ensure some level of entitlement to work. These schemes can be both universal and targeted; the critical distinction is that they incorporate a guarantee that creates access to employment as a right. Many of the elements of these programmes can be incorporated into long-term employment programmes. This has implications in terms of programme planning and design, as well as on the impacts and outcomes that will be attained. Correct design of employmentbased safety nets is crucial to overcoming possible negative effects, such as the poor quality and financial sustainability of infrastructure that is created. If under-funded, public works may have a negative impact on nutrition, considering the amount of energy people expend working. They may not be appropriate for all groups such as children, the elderly and the disabled. Special attention is needed to prevent gender biases, avoiding heavy manual work 7 ILO ILO