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Make jam, not war: Bosnia’s Vegafruit jam factory

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Fadil Salihbašic in the grocery shop his firm operates next to the Vegafruit factory

Vegafruit pickles, jams and juices are sold internationally

Vegafruit buys produce from 7000 farm families.

Bosnia’s Vegafruit thrives in peace

If there was a time and a place to not be making jam, it was at the frontline of the war in Bosnia and Herzegovina in 1994. If there was a time and a place for the Salihbašic brothers and their friends to be making jam, it was at the frontline of war in their part of Bosnia-Herzegovina in 1994.

“Because of the war we had to leave our home town of Doboj and move 10 kilometers to Gracanica,” remembers Fadil Salihbašic. “We were refugees. We had to make a living. So eventually we lit some fires in the open air, put some big pots on top and started doing what we knew how to do: making jam from dried plums. We were 300 meters from the frontline so we had to keep moving our operations.”

It was the beginning of Vegafruit, a highly successful jam and juice company financed by the EBRD, USAID and others. Not only is the 'džem' maker a profitable export leader; it also plays a vital role in the Bosnian rural economy, buying fruits and vegetables from 7,000 farm families.

Moving into the future

Vegafruit is just one example of the remarkable rehabilitation of Bosnia-Herzegovina (BiH) since the devastating 1992-95 conflict. What’s most remarkable is not the company’s growth (now 25 per cent annually) nor its local economic impact (7,000 farm families depend on Vegafruit for income). What really stands out is the determination of the Salihbašic brothers, like so many Bosnians and others in ex-Yugoslavia, to get ahead by putting the past behind them.

Says Fadil Salihbašic: “We had to leave Doboj in 1994 because it was being ethnically cleansed. But now the war criminals who caused all the trouble are gone so we have no problem going back to Doboj. Our property has been returned to us, we have an office and summer place there. And we buy fruit from 2,000 farmers living in Republika Srpska (one of two ‘entities’ forming Bosnia-Herzegovina). People just want to forget the divisions of the recent past and work together to move forward.”

Getting started in jam

The brothers’ tale of entrepreneurship extraordinaire starts with the end of socialism in Yugoslavia. “In the late 1980s my brother Muharem and I were working as engineers for a thermoelectric plant near Doboj. One day my brother was assigned by the government to a failing jam factory nearby. He was to make it work or shut it down. Within two years he had made it the fourth largest agribusiness in Yugoslavia and he successfully privatised it.”

Meanwhile Yugoslavia was breaking up and in 1992, armed conflict broke out in BiH where the three main communities – Serbs, Croats and Bosniaks – had lived closely interwoven lives in cities, towns and villages. Muharem was imprisoned by the new powers in Doboj for several months, Fadil escaped to Gracanica, and the jam factory was re-nationalised.

“Lots of our ex-employees from the Doboj jam factory joined us in Gracanica,” says Fadil. “Once my brother was freed, we all started from scratch, by the roadside. After some months we were able to rent space but we had to pay five or six times what the locals paid,” he notes with a resigned shrug. The brothers supplied local markets, the military, and smuggled their jam into Sarajevo, under siege for three-and-a-half years, via the famous tunnel under the city’s airport.

Betting on a winner

“In 1997 USAID (the American donor agency) loaned us €2 million at 9.5 per cent interest, without requiring collateral, because they recognised that we had exceptional people resources and that if we could operate in a war zone, we could probably do fairly well in peace time.” Within just four months of receiving that USAID loan, Vegafruit had built a large fruit processing plant.

The company has grown from 400 tonnes of production in its first years, to 300,000 tonnes today. In 2003 Vegafruit borrowed €2.5 million from a small business lending facility the EBRD had established in Bosnia with Raiffeisen Bank. The company received further financing from UPI Banka, a local bank in which EBRD is a shareholder. Vegafruit products now meet European Union and US standards and 40 per cent of its production is exported to western Europe, the Middle East, North America and Australia.

Re-uniting for prosperity

According to the EBRD’s strategy for BiH, one of the country’s post-war reconstruction headaches is a complex political structure that slows down economic growth for the population of almost 4 million. The country consists of two main parts: the Federation of Bosnia and Herzegovina, including an array of local government cantons, and the Republika Srpska.

Like many business people, Mr Salihbašic feels that barriers set up to assert national identity when Yugoslavia broke up have to come down if the country – and region – are to prosper. The task is already underway as BiH, Serbia-Montenegro and Croatia seek to replicate the trans-border cooperation of the Yugoslav era, in part as preparation for possible European Union membership.

Mr Salihbašic shakes his head as he says, “Until recently it was easier for me to export to the United States than to the Republika Srpksa next door! There was too much paper work and taxes. However, the tax systems between the Federation and the Republika Srpska have been harmonised since January 1, 2005 so I think things will be easier now.”

He notes the Doboj jam factory that was re-nationalised during the war “now works at five per cent capacity. The people there would like us to buy it. We’ll see. There are no limits on our ability to work there or anywhere.”

Contact: Sarajevo Resident Office

25 April 2005