Using Slovenian Experience in the Croatian Agricultural Policy Adjustment to EU Requirements

Strict EU requirements in politics, legislation and economics on new and future member states pose a great challenge for Croatia, which strives to become its member. Agriculture, being an important economic sector, needs to be considerably reformed in the process of adjustment to the Common Agricultural Policy (CAP). The Croatia decided to use the Slovenian case for better understanding of the requirements and their fulfilment. The Slovenian agricultural policy reform included change from market price supports towards direct payments, and implementation of different structural, environmental and rural development measures. Slovenia has implemented numerous reforms, plans and laws. Slovenian four-year pre-accession negotiations with the EU in agricultural sector comprised: implementing the acquis communitaire, exceptions from the acquis, and the financial part. To achieve the best negotiation results, Slovenia collected detailed and reliable data and engaged professionals who negotiated the most favourable position for Slovenian agriculture in the European agricultural sector. The Croatian agricultural policy reform is underway, so there is a tendency of decreasing and phasing out the system of guaranteed prices, direct payments are being introduced, Croatia is included in trade integration processes, steps need to be taken for strengthening of competitive capacity of domestic products both in domestic and foreign markets, and rural development and the whole social situation in agricultural sector needs to be improved

Premises for the inclusion of agriculture in the process of Croatian accession to the European Union

The Republic of Croatia, in comparison with most other transitional countries, is late with its preparations for future accession to the EU. The causes of this kind of situation are objectively grounded, the recent historical circumstances, as well as subjective in nature, the slowness and lack of political will to cope with this option. In recent times, particularly after the signing of the SAA, activity has been stepped up. In the adjustment process, Croatia will accept liberalisation of EU products and endeavour to retain certain privileges, depending on the sensitivity of the particular product. Further harmonisation of the agriculture legislation is required, although the major part of Croatian law relating to agriculture contains conditions and key measures found in the secondary legislation of the EU. In the paper, with the use of the methods of economic analysis and indicators of state intervention in agriculture and the costs of domestic resources, an evaluation is made of the advantages and limitations of Croatian agriculture. The results of comparative analysis give a more objective image of the domestic agricultural sector in the international environment. Adjustment of agrarian policy should lead to an improvement in the competitiveness of domestic agriculture and at the same time to a preservation of domestic natural resources

Subsidies in Croatian agriculture and adjustment to the EU

Osamostaljivanjem Hrvatske i ponovnim prihvaćanjem načela slobodne trgovine, poljoprivreda je u političkim raspravama dobila ulogu jednog od temeljnih oslonaca razvitka domaćeg gospodarstva. Domaću poljoprivredu nastoji se zaštititi od znatno razvijenije zapadnoeuropske i potaknuti njenu konkurentnost, ali uz istodobno zadovoljavanje uvjeta postavljenih međunarodnim trgovinskim sporazumima koji nalažu smanjenje domaće zaštite. Cjenovna reforma u agrarnoj politici započela je 1988. godine, u skladu s reformom trgovinske politike u okviru zahtjeva koje postavlja članstvo u u Svjetskoj trgovinskoj organizaciji. Novijim promjenama iz 2003. godine nastoji se pojednostaviti sustav potpore poljoprivredi i ujednačiti visina poticaja. Uz postojeće poticaje proizvodnji, uvode se modeli potpore dohotku, kapitalnih ulaganja i ruralnog razvitka. Reformom je predviđeno usklađivanje mjera poljoprivredne politike s politikom koja se provodi i koja će se provoditi u EU, a to znači zaokret od starog načina poticanja europskog poljoprivrednog tržišta, a prema potporama europskom poljoprivredniku i to tako da u ukupnoj potpori prevladava dohodovna, a ne proizvodna potpora.After the Croatian independence and re-adoption of the free trade principles, in political debates agriculture got the role of one of the basic pillar in economic development. There is intention to protect domestic agriculture against much more developed western European agriculture and to support its competitiveness, respecting at the same time the requirements of the international trade agreements asking for decreasing domestic protection. The reform of agricultural price policy started in 1988, due to the trade policy reform within the requirements imposed by the membership in the World Trade Organization. Recent changes from 2003 tend to simplify the system of agricultural support and to equalize the level of incentives. Together with existing production subsidies, new models of income support, capital investments and rural development are introduced. The reform predicts harmonization of domestic agricultural policy measures with those conducted or should be conducted in the EU. It means the shift from the old way of supporting European agricultural markets, toward incentives for European farmer, in the way that in total support prevails income, and not production support

RURAL DEVELOPMENT POLICY – NEW OPPORTUNITY FOR CROATIA

Promijenjeni uzorci poljoprivredne trgovine, briga o povećanim proračunskim troškovima za potporu poljoprivrednicima i potreba usklađivanja suživota starih i novih zemalja-članica EU, izazvali su potrebu temeljite reforme sustava poljoprivredne potpore u EU. Svi ti čimbenici doveli su do toga da se naglasak Zajedničke poljoprivredne politike EU (ZPP) postupno preselio u korist osnaživanja mjera za ruralni razvitak. Mjere se odnose na investiranje u poljoprivredne aktivnosti, u ljudske resurse, potpore područjima slabijih proizvodnih mogućnosti, zaštitu okoliša, preradu i marketing poljoprivrednih proizvoda, a upotpunjene su mjerama u šumarstvu, te mjerama promocije razvoja ruralnih područja. Osamostaljenjem Hrvatske započinje i proces prilagodbe domaće poljoprivredne politike novim okolnostima. Sa stajališta ruralnog razvitka, sredinom 1990-ih se počinje stvarati dobra zakonska podloga kojom se uređuje zaštita i raspolaganje resursima u poljoprivrednom sektoru. Prvi važniji zakoni (Zakon o poljoprivrednom zemljištu i Zakon o poljoprivredi) bili su početak velike akcije uređenja i usklađivanja domaćeg zakonodavstva u području poljoprivrede i seoskog razvitka prema europskim načelima i standardima. Uskoro nakon njih, zakonski je usvojen i strateški dokument Strategija poljoprivrede i ribarstva Republike Hrvatske, a mjere poljoprivredne i ruralne politike se reformiraju, pa tako Zakon o državnoj potpori u poljoprivredi, ribarstvu i šumarstvu uvodi nove modele potpore ovim sektorima, nastojeći se, novim kriterijima za ostvarivanje potpore, što više uskladiti sa standardima ZPP. Kasnije se usvajaju i zakoni utemeljeni na uvažavanju regionalnih specifičnosti, te uvode brojni programi ruralnog razvitka na državnoj i lokalnim razinama.Changed patterns in agricultural trade, care about increased budgetary costs for agricultural support and need to harmonize life of old and new EU member-states, have caused a need for fundamental reform of agricultural support in the EU. All these factors led to the shift in the emphasis of the Common Agricultural Policy of the EU (CAP) towards the strengthening of rural development measures. Measures are directed to investments into farm activities, into human resources, support to less-favoured areas, environment protection, processing and marketing of agricultural products, completed by measures in forestry sector and measures for rural area promotion. Attaining independence, the process of adjustment of agricultural policy to the new circumstances started in Croatia. From the aspect of rural development, in the middle of 1990s good legislative basis was created regulating protection and management of resources in the agricultural sector. The first important acts (The Law on agricultural land and the Law on agriculture) were the beginning of great efforts to regulate and harmonize domestic legislation in the sphere of agriculture and rural development according to the European standards and principles. Soon after that, a strategic document The Strategy of Agriculture and Fishery of the Republic of Croatia was adopted, and the measures of agricultural and rural policy were reformed, so the Law on State Support in Agriculture, Fishery and Forestry introduced new models of support to these sectors, trying to harmonize with the CAP standards as much as possible. Later on, some new legislative documents were adopted based on specific regional qualities, and numerous rural development programs were introduced at the state and at local levels

Methodology of Measuring State Intervention in Croatian Agriculture

Potreba smanjivanja državne intervencije u poljoprivredi nameće potrebu njenog mjerenja i ocjenjivanja. Statističko praćenje kretanja u domaćoj poljoprivrednoj proizvodnji, tržištu i politici ne osigurava preglednost dinamike agrarne politike, otežavajući pravilno ocjenjivanje učinaka intervencije i kvalitetno donošenje odluka. Stoga je cilj rada identificirati i preporučiti najučinkovitije metode za ocjenjivanje državne intervencije u poljoprivredi Hrvatske, uz upozorenje u njihovoj primjeni. U radu su pojašnjeni pokazatelji: nominalna i efektivna stopa zaštite, proizvođački subvencijski ekvivalent i efektivna stopa pomoći. Ovi pokazatelji mjere državnu intervenciju na različitim razinama. Svi su, u stvari, procjena, pa njihova reprezentativnost ovisi o kakvoći podataka u izračunavanju. Velika količina prikupljenih podataka o poljoprivrednm tržištu korisnija je, u ovom trenutku, od samih izračunatih pokazatelja. Suradnjom sudionika na tržištu i uređivanjem statističkog sustava koji bi jamčio pravodobno i točno objavljivanje podataka, mogao bi se, na temelju izračunatih pokazatelja intervencije, promišljeno planirati daljnji razvoj politike u sferi zaštite i podrške domaće poljoprivrede.Requirements for decreasing state intervention in agriculture impose the necessity for its measuring and evaluation. Statistical observations of domestic trends in agricultural production, markets and policies dont assure transparent insight in agricultural policy movements, distressing the correct evaluation of intervention results and quality decision making. Therefore the aim of the paper is to identify and recommend the most efficient methods for evaluation state intervention in Croatian agriculture, with caution in their use. In the paper following indicators are explained: nominal and effective rate of protection, producer subsidy equivalent and effective rate of assistance. By these indicators state intervention can be measured at different levels. Each indicator is subject to limitations and is approximation, so its reliability depends on data quality in calculation. Great amount of data gathered on agricultural markets is more useful, at this moment, than indicators themselves. Better cooperation of market participants, as well as ordered statistical system that guarantees fresh and and correct published data, together with indicators of intervention, could help in reasonable planning of further policy development in the sphere of agricultural protection and support

Proizvodnja hrane i ruralni razvoj – izgledi za Hrvatsku u europskom kontekstu

This research tries to answer three main questions: how important is agri-food sector for Croatian economy, why is Croatian agriculture uncompetitive compared to sectors in majority of the EU countries and what mechanisms of CAP could be used to improve agricultural competitiveness and sustain and develop rural life. Results show that agriculture and food processing industry are rather important for Croatian economy, contributing with more than 9% in the total GDP, with about 11% in total export and import and with more than 20% in total employment. However, within the EU context, agrifood sector is of little importance with a share of only about 1% in main economic indicators. Despite favourable natural resources, historical, organizational, economic and institutional reasons explain difficult situation in agriculture and in rural areas. Policy makers are trying to resolve these issues, now by available CAP mechanisms of income support and rural development. Despite considerable financial resources available for Croatian farmers, there is fear that the funds will not be adequately utilized. However, results of the previous research suggest that Croatian agriculture and food production still has a chance to survive and grow within European political and economic circumstances.Ovim istraživanjem pokušavamo odgovoriti na tri osnovna pitanja: koliko je važan poljoprivrednoprehrambeni sektor za hrvatsko gospodarstvo, zašto je hrvatska poljoprivreda nekonkurentna u usporedbi sa sektorima većine zemalja EU-a i koji mehanizmi ZPP-a bi se trebali koristiti za unaprjeđenje poljoprivredne konkurentnosti te održavanje i razvoj života u ruralnom području. Rezultati pokazuju da su poljoprivreda i prehrambena industrija razmjerno važne za hrvatsko gospodarstvo, pridonoseći s više od 9% ukupnom BDP-u, s oko 11% ukupnom izvozu i uvozu te s više od 20% ukupnoj zaposlenosti. Međutim, u kontekstu EU-a, poljoprivredno-prehrambeni sektor je neznatan s udjelom od oko 1% u glavnim ekonomskim pokazateljima. Unatoč povoljnim prirodnim resursima, povijesni, organizacijski, ekonomski i institucijski razlozi objašnjavanju složenu situaciju u poljoprivredi i ruralnim područjima. Kreatori politika pokušavaju riješiti te probleme, sada pomoću dostupnih mehanizama dohodovne potpore i potpore ruralnom razvoju u okviru ZPP-a. Unatoč značajnim financijskim resursima koji su na raspolaganju hrvatskim poljoprivrednicima, postoji strah da se fondovi neće iskoristiti na odgovarajući način. Međutim, rezultati prijašnjih istraživanja upućuju na to da hrvatska poljoprivreda i proizvodnja hrane i dalje imaju priliku opstati i rasti u okviru europske politike i gospodarstva

THE IMPACT OF STATE SUBSIDIES ON THE VALUE AND SELF-SUFFICIENCY IN AGRICULTURAL PRODUCTION IN CROATIA

Cilj rada je ustanoviti utjecaj isplaćenih proračunskih potpora (proizvodnih poticaja) na vrijednost proizvodnje i samodostatnost ekonomski najvažnijih proizvoda u poljoprivrednom sektoru. Provedena je vremenska i strukturna analiza ovih parametara u razdoblju od 1998. do 2008. godine i ustanovljena povezanost visine isplaćenih potpora i osnovnih proizvodnih i ekonomskih rezultata poljoprivredne proizvodnje. U istraživanju polazimo od pretpostavke da se povećani iznosi isplaćenih potpora u poljoprivrednom sektoru nisu osobito snažno odrazili na povećanje proizvodnje, njenu veću vrijednost i samodostatnost. Državne potpore u Hrvatskoj su prošle kroz određene zakonske reforme tijekom analiziranog razdoblja, na što je najviše utjecala prilagodba hrvatskog zakonodavstva legislativi Europske unije. Upravo se u čestim promjenama kriterija u isplati potpora može pronaći dio obrazloženja zašto je njihov utjecaj na proizvodne rezultate slab. Rezultati istraživanja potvrđuju kako se trendovi u isplaćenim potporama ne poklapaju s trendovima koje pokazuju vrijednost proizvodnje i samodostatnost, a velike oscilacije su zabilježene u strukturi isplaćenih potpora tijekom analiziranog razdoblja.The aim is to determine the impact of disbursed budget support (production subsidies) on production value and self-sufficiency of economically important products in agricultural sector. We conducted a time series and structural analysis of these parameters during the period from 1998 to 2008 and connection was established between the level of paid production subsidies and the basic production and economic results of agricultural production. The research is based on the assumption that the increase of paid subsidies in the agricultural sector had no particularly strong impact on production increase, such as increase of its value and self-sufficiency. State subsidies in Croatia have gone through certain legal reforms during the analyzed period, which is most affected by the adjustment of Croatian Legislation with European Union legislation. Just in these frequent changes of criteria in the payment of subsidies we may find some of the reasons why their impact on the performance was weak. The research results confirm that the trends in paid subsidies did not match with trends that show the value of production and self-sufficiency. Large fluctuations were recorded in the structure of paid support during the analyzed period

UTJEČU LI IZRAVNA PLAĆANJA I POLJOPRIVREDNO OSIGURANJE NA DOHODAK U VINOGRADARSTVU?

In the EU 7 million farmers benefit from direct payments. Direct payments represent a significant share of farmers’ income and help stabilize the farm income. Besides direct payments, the farmer can contract agricultural insurance to guarantee compensation for occurred damage on their farm. The insurance premium is a cost for farmers but provides safety in the situation of a risk occurrence. Premium can be subsidized in the frame of Common Agricultural Policy to help farmers insure their business and pre- vent climate risks and damages. The paper aims to determine the importance of direct payments and insurance in stabilizing farmers’ income using gross margin in viticulture. Both scenarios, 1st with direct payments and 2nd without direct payments with sub scenarios – 1st without risk occurrence, 2nd most probable, 3rd probable, and 4th catastrophic were calculated and discussed. Results show that in all shown scenarios/sub scenarios, farm income in viticulture is positive while only catastrophic scenario shows a negative gross margin. The decision tree shows that farmers need to insure their business in both scenarios. Limitations of the research arise from the limited access to data. To the best of our knowledge, there are no studies investigating the importance of direct payments and agricultural insurance in stabilizing the farmers’ income in Croatian agriculture.U EU sedam milijuna poljoprivrednika koristi izravna plaćanja. Izravna plaćanja predstavljaju značajan udio u dohotku poljoprivrednika i pomažu u stabilizaciji poljoprivrednog dohotka. Osim izravnih plaćanja, poljoprivrednik može ugovoriti poljoprivredno osiguranje kako bi ostvario naknadu štete na poljoprivrednom gospodarstvu. Premija osiguranja je trošak za poljoprivrednike, ali stvara sigurnost u situaciji nastanka rizika. Premija osiguranja se može subvencionirati u okviru Zajedničke poljoprivredne politike s ciljem pomoći poljoprivrednicima u osiguraju poslovanja, ali i smanjenju šteta uzrokovanih klimatskim promjenama. Cilj rada je utvrditi važnost izravnih plaćanja i mjere osiguranja u stabilizaciji dohotka vinogradara korištenjem metode pokrića varijabilnog troška. Prikazani su izračuni i rasprava za oba scenarija, 1. s izravnim plaćanjima i 2. bez izravnih plaćanja s podscenarijima – 1. bez pojave rizika, 2. najvjerojatni, 3. vjerojatan i 4. katastrofalan. Rezultati pokazuju da je u svim prikazanim scenarijima/podscenarijima dohodak u vinogradarstvu pozitivan, dok samo katastrofalni scenarij pokazuje negativno pokriće varijabilnog troška. Stablo odlučivanja u oba scenarija pokazuje kako bi poljoprivrednici trebali izabrati osiguranje. Ograničenje istraživanja ogleda se u ograničenom pristupu podacima. Prema saznanjima autora, nisu dostupna istraživanja koja ocjenjuju važnost izravnih plaćanja i poljoprivrednog osiguranja u stabilizaciji dohotka vinogradara u hrvatskoj poljoprivredi