A Climate for Change

Human Development Report - Croatia 2008 Agriculture^123

The GVA produced by people not included in the
mainstream economic and administrative systems
still adds value to the economy but is not counted in
national statistics. Their products are mainly for their
own and (extended) family consumption, are bartered
or sold directly on farms or at farmers’ markets for cash,
without receipts or VAT charges. These farmers are not
obliged to practise bookkeeping or pay income tax.
More than 90% of agricultural holdings inscribed in
the Farm Register do not practise any bookkeeping
and their economic size is unknown.^19 This means that
a fairly large amount of agricultural production is not
being accounted for. Additionally, the agriculture sec-
tor is important for the balance of trade and food self-
sufficiency. Since independence in 1991, Croatia has
been facing an increasing agricultural negative trade
balance.

8.2.3. Role of agriculture related to

employment and vulnerable people

A significant amount of the Croatian population lives

in rural areas. Generally, rural households are more

vulnerable in a variety of ways, which tend to be char-

acterised by poorer access to basic infrastructure, such

as roads, connections to the public water supply, pub-

lic sewage systems, telephones and central heating

systems. They also have poorer housing conditions

(electricity, water supply, sewage systems, central

heating, kitchens, toilets and bathing facilities in the

house) than households in urban areas.^29

The agricultural labour force is decreasing and many

people engaged in the sector are not employed full-

time. However it is unclear what percentage of the

part-time workers’ income comes from agricultural

III Although this may appear very unlikely, these figures are probably more reliable than those of the CBS, which calculates farming GVA using 3.13
million hectares (instead of the 1.2 million hectares actually in use). The CBS suggests that on the per hectare basis Croatia generates some 20%
higher GVA than the EU-15 or 40% higher than the EU-25. Taking into account the overall structure and development of the Croatian agriculture sec-
tor this is very unlikely. The CBS also applies a flat rate for the costs of production – extrapolated from a survey of 25 years ago. This means that each
year they assume a fixed percentage of the cost of the crops to be the production cost, of regardless the actual cost of production for farmers.
IV One ESU is equal to EUR 1,200 of standard gross margin.

While GVA and GDP

from agriculture are

important, it is not

clear how much

they contribute

to the Croatian

economy

• The GVA of the agricultural sector in the period 2000-2005 increased from EUR 1.50 to 1.76 billion per year, yet its
  share in total GDP decreased from 7.4% to 5.8%.^20


• Some recent calculations question the validity of the official figures of annual GVA from agriculture, suggesting
  instead an annual GVA of EUR 395 million during 2000-2003,^21 EUR 623 million in 2005^22 and EUR 626 million dur-
  ing 2001-2005.^23


• If these estimates are correct, farming makes up just 2.5% of GDP instead of the 5-7% reported by the Central
  Bureau of Statistics (CBS). III
  Much of the
  value of farms is not
  captured by official
  statistics


• In 2007, 176,027 agricultural households were registered.^24 However, the number of commercially viable farms
  was about 50% lower and in the same year only about 86,000 farms received production subsidies.^25


• There are estimates that nearly 60% of holdings that are commercially oriented have gross margins below EUR 7200
  per year.IV
  Direct payments/
  subsidies are quite
  large and compa-
  rable to EU levels


• The share of direct payments (subsidies) from the Government in the total gross output is very similar in Croatia
  (37%) and in the EU-27 (38%).


• In 2005 Croatian farmers received just 6% less in direct payments per hectare than their colleagues in the EU-15
  (EUR 238 vs. EUR 253).^26
  Croatia’s food self-
  sufficiency has
  been decreasing
  over time.


• In the period 2000-2005, Croatia was self-sufficient in only five products: wheat, maize, eggs, poultry, meat
  and wine.^27


• In the period 2001-2005, imports of agricultural goods increased from EUR 287 million to EUR 377 million (an
  equivalent of EUR 85 per capita). For the same period, agricultural exports decreased from EUR 70 million to
  EUR 57 million.^28


• In the period 2001-2005 the deficit increased dramatically from EUR -217 million to EUR -320 million.

Table 8-2: Economic importance of agriculture in Croatia

The agricultural

labour force is

decreasing and

many people

engaged in the

sector are not

employed full-

time