SLI has been commissioned by the Swedish International Development Cooperation Agency, Sida, to analyse competitiveness of the agricultural sector in Bosnia and Herzegovina. The study includes a general description of the competitiveness of the sector as well as an in depth analysis of the three key products milk, raspberries and peppers. Potential and constraints to efficient performance are also analysed. The agricultural sector has experienced a slow recovery during the ten years since the end of the war. Bosnia has always been a net importer of agricultural and food products. However, the current trade deficit is the largest ever. For a country in transition it is appropriate to discuss potential rather than revealed competitiveness. The quantitative measure used in the analysis of potential competitiveness of the three commodities is the Domestic Resource Costs (DRC) ratio, which compares the opportunity costs of domestic production to the value added it generates. The results indicate that both pepper and milk production are internationally competitive as well as privately profitable for the farmer. Raspberry production is neither internationally competitive nor privately profitable as long as the cost of labour is included in the calculations.