Progress of the Milk Industry in Bosnia and Herzegovina

To understand how far the milk industry in Bosnia and Herzegovina has come, it helps to picture the country’s landscape.  Rolling pastures surround remote villages where family farms still coax milk from modest herds of cows and sheep.  For centuries milk has been a staple of Bosnian cuisine, whether sipped fresh, fermented into kiselo mlijeko or churned into kajmak (a clotted cream).  Yet for most of the last three decades the country’s dairy sector has been defined by recovery and adaptation.  The disintegration of Yugoslavia, war and prolonged political fragmentation left the dairy value‐chain fractured.  Farmers struggled to rebuild herds, outdated infrastructure hampered processing, and the country remained dependent on imports for most high‑value dairy products.

Today the story is changing.  Bosnia and Herzegovina (BiH) still faces serious challenges—small farms with low yields, thin margins and stiff competition from duty‑free EU products—but the sector is modernising and gradually closing its self‑sufficiency gap.  This article traces that journey, drawing on official statistics, trade data and the voices of farmers.  It highlights how investments in genetics and farm management are boosting productivity, explains why exports are finally rising and identifies what must happen next for Bosnia to become a net exporter of dairy products.

From household subsistence to commercial dairying

After the war ended in 1995, Bosnia’s dairy industry had to be rebuilt almost from scratch.  Production was dominated by subsistence farms; most households kept only a handful of cows and sold milk through informal channels.  A 2017 Agro‑knowledge study examined data from the country’s largest dairies and found that in 2015 only 3.5 % of farms had more than twenty cows; the average number of cows per producer was 5.05 and average yields reached 4 149 litres per cow.  Feed costs made up 45–60 % of total production costs, limiting farmers’ ability to invest in better genetics or housing.

These structural weaknesses meant Bosnia remained reliant on imports, particularly for value‑added products.  USDA’s 2023 GAIN report noted that domestic production focuses on fluid milk, yoghurt and fresh/soft cheese, while most hard cheeses and butter are imported from the EU.  Domestic consumption of milk and dairy products is roughly 500 000 metric tons per year, with fresh milk production valued at about 300 million KM (≈ US$162 million) and around 13 000 farmers delivering milk to processors.  Cow milk accounts for 96 % of total milk production, yet yields are low: the average cow produces 2 500–3 000 litres per lactation, far below the European Union average of 7 500 litres.

Industry consolidation has been slow but steady.  About 20 large dairy plants now collect and process 95 % of purchased milk.  Many small farms have exited dairying, while larger commercial farms have improved yields.  The number of dairy cows is estimated at 250 000 with about 13 000 farms delivering milk to dairies.  Large farms achieve 6 000 litres per lactation, illustrating what better genetics, feeding and housing can accomplish.

Production trends: signs of recovery

2018–2022: declining collections and shifting product mix

Official statistics show that the quantity of raw milk collected by dairies declined by about 9 % between 2018 and 2022.  Production of drinking milk fell from 163 216 tonnes in 2020 to 130 086 tonnes in 2022 as consumers shifted towards UHT milk and plant‑based beverages.  Meanwhile, production of fermented products, cream and cheese remained relatively stable, though butter production declined due to expensive cream and low domestic demand.

2023–2024: a turnaround

The first broad signs of recovery appeared in 2023.  An article published by The Region reported that BiH’s dairy exports reached 131 million BAM (≈ US$75 million) in 2023, an increase of 14.38 % over 2022.  Imports rose only 2.29 % to 230.5 million BAM, meaning exports covered 57 % of imports.  The growth was not just in volume: butter exports skyrocketed 70.09 %, fermented products rose 18.34 %, and cheese exports grew 7.55 %.  Key export markets were neighbouring Montenegro, Croatia, Serbia and North Macedonia, while imports mostly came from Germany, Croatia, Serbia, Slovenia and Hungary.

Behind these trade figures was a rebound in milk collections.  The Agency for Statistics of Bosnia and Herzegovina (BHAS) reported that in 2024 the total amount of cow’s milk collected increased by 6.5 % to 277 812 tonnes, compared with 260 763 tonnes in 2023.  Drinking milk production rose 12.1 % to 139 256 tonnes, while cream production increased 1.4 %, butter and yellow‑fat products 1.8 % and cow’s cheese 0.2 %.  Acidified milk products (yoghurt, kiselo mlijeko) decreased slightly, indicating that processors responded to market demand for long‑life milk.  The same bulletin showed that milk fat and protein contents improved, implying better feed and genetics.

The Statistical Institute of the Federation of BiH confirmed similar trends.  In 2024 the Federation recorded a 5.9 % increase in collected milk, while drinking milk production surged 14.1 %.  Butter production leapt 39.3 %, kaymak rose 4.6 % and cheese rose 0.6 %.  Fermented products grew 8.1 %, signalling that processors are diversifying.

2025: monthly data indicate continued growth

Monthly bulletins provide the first look at 2025.  In April 2025 the Federation of BiH reported that collected cow’s milk increased 6.3 % versus April 2024 and was 12.7 % higher than the 2024 average.  The fat and protein content of milk rose by 1.9 % and 0.6 %, respectively.  Production of kaymak grew 20.3 %, cheese 10 % and fermented products 3.4 %, while drinking milk and cream declined.  In June 2025 the Federation recorded a 5.7 % increase in collected milk compared to June 2024 and an 8 % increase over the 2024 average.  Production of kaymak grew 26.4 %, fermented products 22 %, butter 63.8 % and cheese 12.5 %, but drinking milk fell 14.4 %.  These monthly data suggest that processors are focusing more on value‑added products, as butter and specialty cheeses deliver higher margins.

BHAS bulletins show similar patterns.  In May 2025 the total collected milk increased 6.1 % compared to May 2024; acidified products increased 6.4 %, cream 12.3 %, cheese 6.1 % and butter 14.9 %, while drinking milk fell 5.4 %.  In June 2025 collected milk grew 2.9 %, drinking milk production rose 9.9 %, acidified products 14.1 %, cream 5.8 %, cheese 11.3 %, and butter 27.1 %.  These increases reflect both better milk yields and improved processing capacity.

Long‑term projections

Market analysts expect modest growth in the coming years.  According to a ReportLinker forecast, Bosnian dairy products production will increase from €187 million in 2023 to €196 million by 2028 with supply growing roughly 2 % per year.  Sales may stagnate around €175 million as domestic consumption matures, but rising exports could offset flat domestic demand.  The Organisation for Economic Co‑operation and Development (OECD) forecasts that global milk output will grow 0.9 % per year through 2034, so Bosnia’s modest expansion is in line with regional trends.

Trade dynamics: narrowing deficits but still dependent on imports

Bosnia’s dairy trade balance has long been negative.  Between 2018 and 2022, annual imports ranged from 154 to 224 million KM while exports fluctuated between 88 and 113 million KM, resulting in persistent deficit.  In 2022 Bosnia imported $123.3 million worth of dairy products and exported $62.1 million, resulting in a $61 million trade deficit.

The 2023 export surge improved the ratio but did not eliminate the deficit.  Exports covered 57 % of imports, and the trade gap narrowed as Bosnia sold more milk, cheese and butter to neighbouring markets.  High‑value exports such as butter (up 70 %) and fermented products (up 18 %) demonstrate that processors are beginning to move beyond low‑margin pasteurised milk.  Nevertheless, Bosnia still imports most hard cheeses, butter and milk powders, reflecting limited domestic capacity for long‑maturing cheeses and high‑fat dairy products.

The country’s trade regime allows duty‑free imports from the EU under Stabilisation and Association Agreement quotas.  BHAS lists quotas for cream, butter and various cheeses; these are usually fully utilised by EU exporters.  Because EU products enter without tariffs, U.S. exporters struggle to compete. Becoming a EU candidate (December 2022) means Bosnia must further harmonise food safety and quality standards; once aligned, local producers may access EU markets more easily but will face stricter competition.

Challenges: weather, feed costs and farm structure

The progress described above belies persistent obstacles.  Farmers and dairy processors frequently cite low farm‑gate prices, high feed costs and climate variability as threats to profitability.  A September 2024 article from DairyNews reported that extreme heat reduced milk yields on the Semberija agricultural estate from 10 000 litres per day to 8 000 litres despite the use of cooling systems.  Producers warned that a poor corn harvest would reduce feed supplies and force many to sell cattle and reduce production.  While processors insisted that retail milk prices would stay stable, they acknowledged that the industry was under pressure.

Structural issues further limit productivity.  More than 80 % of farms still keep fewer than 10 cows, making it difficult to invest in mechanisation.  Average yields remain 4 000 litres per cow, half the EU average, due to poor genetics, inadequate housing and inconsistent nutrition.  The 2022 UNDP impact assessment noted that total raw milk production declined roughly 25 % between 2015 and 2021, even though average yields increased from 2.814 t per cow to 3.386 t.  Only about half of raw milk is delivered to dairies; the rest is consumed on farms or sold informally.

Bosnia’s administrative structure complicates matters.  Agricultural policy is largely devolved to the two entities—the Federation of Bosnia and Herzegovina (FBiH) and Republika Srpska (RS), which run separate subsidy schemes.  The 2024 EU enlargement report noted that Bosnia is at an early stage in preparing for EU Common Agricultural Policy (CAP) alignment; a Strategic Plan for Rural Development 2023–2027 was adopted but a nationwide strategy and laws on organic production and quality policy still need to be implemented.  Without harmonised support measures and reliable data, strategic investments remain ad hoc.

Modernisation and investment

Despite these challenges, modernisation initiatives are gaining momentum.  Several programs financed by the European Union and implemented by UNDP are injecting capital and expertise into the sector.  The EU4AGRI and EU4AGRI‑Recovery projects have invested nearly 7 million BAM in grants and leveraged 2.8 million BAM in co‑financing to support over 180 farmers and processors.  These projects support primary production, agro‑processing, marketing, digitalisation and climate resilience  The programmes fund the introduction of ICT tools, the modernisation of cold‑chain infrastructure, farm water‑supply systems and solar panels, enabling producers to reduce energy costs and improve milk quality.

Farmers are also investing privately.  A December 2024 Farm Euro analysis noted that  80 % of farms still have fewer than 10 cows but emphasised that farmers are adopting automated milking systems, improving genetics and implementing ration‑balancing software.  The article estimated that Bosnia produces ≈ 600 million litres of milk per year, meeting only 40 % of domestic demand and implying that about 900 million litres are imported.  To close this gap, it urged diversification into higher‑margin cheeses, yoghurts and butter, pointing to growing domestic and regional demand.

EU recognition of geographical indications (GI) further improves prospects.  In December 2024 the European Commission granted Protected Geographical Indication (PGI) status to Livanjski sir, a semi‑hard cheese made from cow’s and sheep’s milk on the pastures of Livno.  The cheese’s unique flavour comes from the region’s aromatic herbs and centuries‑old maturation techniques; PGI protection helps small producers by safeguarding authenticity and adding value.  Another GI product, Romanija skorup kajmak, has also gained recognition.  These designations allow dairies to command premium prices in domestic and export markets.

A notable investment on the horizon is the Prnjavor milk processing plant planned by the Dairy Farmers Association of Republika Srpska.  The association’s 440 members produced 45 million litres of milk in 2022, about a fifth of the country’s total supply, and intend to build their own plant to secure better margins and control quality.  Although still at the project stage, this illustrates farmers’ determination to add value through processing rather than selling raw milk.

Outlook: towards a competitive and sustainable dairy sector

Bosnia’s milk industry has made measurable progress in recent years.  Milk collections are rising, exports are growing faster than imports, and processors are shifting towards higher‑margin products.  Modernisation programmes funded by the EU and domestic incentives are helping farmers improve genetics, adopt automation and build new processing capacities.  Recognition of traditional cheeses like Livanjski sir via PGI status enhances the sector’s international profile.

However, the industry remains fragile.  Yields are still low by European standards, farm structures are fragmented, and climate risks expose farmers to feed shortages and financial stress.  Without a unified agricultural policy and better price signals, many smallholders will continue to exit dairying.  The most promising path forward is to accelerate the transition from commodity milk production to value‑added dairy specialities, coupled with agritourism and direct sales.  By connecting dairy farms to tourists seeking authentic rural experiences, through cheese tastings, farm stays and workshops, Bosnia can transform its dairy sector into a driver of rural development.  In the meantime, continued investment in genetics, infrastructure, and training will be essential to close the productivity gap and ensure that Bosnia’s milk industry not only survives but thrives.