IPARD croatia

REPUBLIC OF CROATIA

MINISTRY OF AGRICULTURE, FISHERIES AND RURAL DEVELOPMENT

IPARD PROGRAMME 2007 – 2013

AGRICULTURE AND RURAL DEVELOPMENT PLAN

DIRECTORATE FOR RURAL DEVELOPMENT

Zagreb, June 2009

IPARD PROGRAMME – Agriculture and Rural Development Plan 2007 - 2013

version of 14. 12. 2007;

mod. July, 2008; mod. June 2009 EN II

Table of content

1. EXSPLANATORY MEMORANDUM ........................................................................................... 2

2. CURRENT SITUATION IN AGRICULTURE AND THE RURAL AREAS ............................. 3 2.1. GENERAL DESCRIPTION..................................................................................................................... 3

2.1.1. Geographic regions ................................................................................................................ 3 2.1.2. Territorial organization and administrative system ............................................................ 5

2.1.2.1. Development capacities and strategy at level of local and regional self-government unit ....... 7 2.1.3. Characteristics of rural areas ................................................................................................ 9 2.1.4. Less favoured rural areas .................................................................................................... 12 2.1.5. War-affected rural areas ...................................................................................................... 13

2.2. ECONOMIC AND SOCIAL SITUATION ................................................................................................. 15 2.2.1. Economic context.................................................................................................................. 15 2.2.2. Demographic characteristics and trends ........................................................................... 17 2.2.3. Gender equality ..................................................................................................................... 19 2.2.4. Structure of agricultural population..................................................................................... 20 2.2.5. Educational situation ............................................................................................................ 21

2.2.5.1. Adult educational system................................................................................................................. 21 2.2.6. Infrastructure endowment and housing quality................................................................. 23 2.2.7. Rural tourism ......................................................................................................................... 25 2.2.8. Rural organisations and local development planning ...................................................... 28

2.2.8.1. Development of civil society in Croatia.......................................................................................... 28 2.2.8.2. The Leader – like experiences in Croatia...................................................................................... 29

2.3. SITUATION ANALYSIS IN AGRICULTURE, FISHERIES, FORESTRY AND FOOD PROCESSING INDUSTRY 30

2.3.1. Structural indicators for the agricultural, forestry, and fishery sector ............................ 30 2.3.2. Structural indicators for the food processing industry ..................................................... 35 2.3.3. Farm structure, agricultural production and land use systems ...................................... 39

2.3.3.1. Cadastral and Land Book Registers .............................................................................................. 41 2.3.3.2. Agricultural Land Market.................................................................................................................. 42 2.3.3.3. State-owned Agricultural Land Market .......................................................................................... 43 2.3.3.4. Organic farming ................................................................................................................................ 44 2.3.3.5. Irrigation ............................................................................................................................................. 45

2.3.4. Subsector analysis................................................................................................................ 46 2.3.4.1. Milk and dairy sub sector ................................................................................................................. 46 2.3.4.2. Pig meat sub sector.......................................................................................................................... 54 2.3.4.3. Beef production sub sector.............................................................................................................. 62 2.3.4.4. Poultry and eggs sub sector............................................................................................................ 68 2.3.4.5. Meat processing industry sub sector ............................................................................................. 73 2.3.4.6. Fisheries sub sector ......................................................................................................................... 78 2.3.4.7. Grains and oil crops sub sector ...................................................................................................... 91


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2.3.4.8. Fruits and vegetables sub sector ................................................................................................... 99 2.3.4.9. Wine and viticulture sub sector..................................................................................................... 115 2.3.4.10. Olives sub sector ........................................................................................................................ 124

2.3.5. Renewable energy resources ........................................................................................... 133 2.3.5.1. Biomass obtained from the wood sector ..................................................................................... 134 2.3.5.2. Cogeneration plants ....................................................................................................................... 135 2.3.5.3. Small thermal systems and systems for areas heating ............................................................. 135 2.3.5.4. Solid fuels (briquettes and pellets) ............................................................................................... 135 2.3.5.5. Renewable energy resources legislation .................................................................................... 136

2.3.6. Agriculture and environment ............................................................................................. 137 2.3.6.1. Development of an AE concept under the IPARD programme.............................................. 137 2.3.6.2. Code of Good farming practices................................................................................................... 139 2.3.6.3. Efficiency of inputs.......................................................................................................................... 139 2.3.6.4. Air and climate ................................................................................................................................ 140 2.3.6.5. Water ................................................................................................................................................ 141 2.3.6.6. Soil .................................................................................................................................................... 142 2.3.6.7. Biodiversity ...................................................................................................................................... 143 2.3.6.8. Observed climate changes............................................................................................................ 145 2.3.6.9. NATURA 2000 ................................................................................................................................ 147 2.3.6.10. Environment risks related to the food processing industry................................................... 148 2.3.6.11. Environment risks related to fish - farming ............................................................................. 148 2.3.6.12. Description of AE programme .................................................................................................. 148

2.3.7. Public services in agriculture and food industry ............................................................. 149 2.3.7.1. Veterinary institutions..................................................................................................................... 149 2.3.7.2. Croatian Livestock Centre ............................................................................................................. 150 2.3.7.3. Plant production institutions .......................................................................................................... 151 2.3.7.4. Fruit Growing Institute .................................................................................................................... 151 2.3.7.5. Croatian Institute of Viticulture and Oenology ............................................................................ 151 2.3.7.6. Food safety institutions .................................................................................................................. 152 2.3.7.7. Croatian Agricultural Extension Institute (CAEI) ........................................................................ 152 2.3.7.8. Croatian Market Information System in Agriculture (TISUP).................................................... 153 2.3.7.9. Other institutions ............................................................................................................................. 154

2.4. DISPARITY ANALYSIS ..................................................................................................................... 154 2.4.1. Regional development disparities .................................................................................... 154 2.4.2. Inequities with respect to the European Union ............................................................... 156

2.5. SWOT ANALYSIS .......................................................................................................................... 157 2.5.1. SWOT Analysis of Socio-Economic Situation in Rural Areas ...................................... 157 2.5.2. SWOT Analysis of the Agri environmental situation ...................................................... 159 2.5.3. SWOT Analysis of the Leader approach ......................................................................... 160 2.5.4. SWOT Analysis of the agriculture..................................................................................... 160 2.5.5. SWOT analysis of the fishery sector ................................................................................ 166


version of 14. 12. 2007;

mod. July, 2008; mod. June 2009 EN IV

3. OVERVIEW OF NATIONAL SUPPORT TO AGRICULTURE AND RURAL DEVELOPMENT AND PRE-ACCESSION AGREEMENTS ........................................................ 167

3.1. NATIONAL AID SYSTEM FOR AGRICULTURE AND RURAL DEVELOPMENT ....................................... 167 3.1.1. Production subsidy scheme (direct payments)............................................................... 169 3.1.2. Capital investment scheme ............................................................................................... 171 3.1.3. Income support scheme..................................................................................................... 174 3.1.4. Rural development scheme............................................................................................... 176

3.1.4.1. Programme for development of rural areas ................................................................................ 176 3.1.4.2. Programme for preservation of autochthon and protected breeds .......................................... 179 3.1.4.3. Programme for marketing preparation of agricultural food products ....................................... 180

3.1.5. Operative programmes and other models of MAFRD ................................................... 181 3.1.5.1. Operative programme for the development of the livestock production sector in the Republic of Croatia 181 3.1.5.2. Operative programme for the cultivation of permanent plantations in the Republic of Croatia 182 3.1.5.3. Operative programme for the development of the pig-breeding sector in the Republic of Croatia 182 3.1.5.4. Operative programme for the support to the production of the “kulen” from Slavonia.......... 183 3.1.5.5. Operative programme for the development of the vegetable-growing sector in the Republic of Croatia 183 3.1.5.6. Operative programme for the development of the industrial wood-processing in the Republic of Croatia 184 3.1.5.7. National project of irrigation and management of agricultural land and water ....................... 185 3.1.5.8. Programme of insurance against possible production damages in agriculture ..................... 186 3.1.5.9. Use of the “blue diesel” in agriculture and fishery...................................................................... 187

3.1.6. Other national aid programmes ........................................................................................ 187 3.1.6.1. Programmes for development of islands..................................................................................... 187 3.1.6.2. Programmes for stimulating employment implemented at the local level............................... 188 3.1.6.3. Aid to research in agriculture ........................................................................................................ 189 3.1.6.4. Programme for the stimulation of small and medium enterprises ........................................... 189 3.1.6.5. Models of aid to agriculture and rural areas on local level........................................................ 190

3.2. PRE-ACCESSION AGREEMENTS AND MEASURES .......................................................................... 191 3.2.1. Stabilisation and Association Agreement (SAA) ............................................................ 191 3.2.2. Negotiations ......................................................................................................................... 191 3.2.3. Screening process ............................................................................................................. 192 3.2.4. European partnership / pre-accession partnership........................................................ 192

3.2.4.1. European partnership priorities..................................................................................................... 193 3.2.4.2. Short-term priorities ........................................................................................................................ 193 3.2.4.3. Mid-term priorities ........................................................................................................................... 194

3.2.5. National Programme of the Republic of Croatia for Joining the European Union ..... 194 3.2.6. SAPARD programme ......................................................................................................... 195 3.2.7. CARDS programme............................................................................................................ 195 3.2.8. EVD – The Netherlands Government Agency................................................................ 196


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3.2.9. World Bank projects ........................................................................................................... 198 3.2.10. Brief assessment of previous actions .............................................................................. 199 3.2.11. Lessons learnt ..................................................................................................................... 199

3.2.11.1. SAPARD Programme ................................................................................................................ 201

4. OBJECTIVES AND STRATEGY OF THE IPARD PROGRAMME .................................... 203 4.1. BACKGROUND................................................................................................................................ 203 4.2. NATIONAL DEVELOPMENT OBJECTIVES........................................................................................ 204 4.3. GENERAL NATIONAL OBJECTIVES FOR AGRICULTURE AND RURAL DEVELOPMENT ...................... 204 4.4. GENERAL OBJECTIVES OF THE IPARD PROGRAMME.................................................................. 205 4.5. SPECIFIC OBJECTIVES AND CORRESPONDING MEASURES OF THE IPARD PROGRAMME.......... 205

5. ELIGIBLE MEASURES ............................................................................................................. 208 5.1. ELIGIBLE MEASURES UNDER PRIORITY AXIS 1 .............................................................................. 208

5.1.1. Measure 101 Investments in agricultural holdings to restructure and to upgrade to Community standards ........................................................................................................................ 208

5.1.1.1. Legal basis....................................................................................................................................... 208 5.1.1.2. Cross sector objectives.................................................................................................................. 208 5.1.1.3. Rationale and specific objectives for the intervention per sector............................................. 209 5.1.1.4. Linkage to other measures............................................................................................................ 214 5.1.1.5. Final beneficiaries........................................................................................................................... 214 5.1.1.6. Common eligibility criteria.............................................................................................................. 215 5.1.1.7. Specific eligibility criteria................................................................................................................ 216 5.1.1.8. Priority criteria ................................................................................................................................. 217 5.1.1.9. Eligible expenditure ........................................................................................................................ 218 5.1.1.10. Aid level ....................................................................................................................................... 218 5.1.1.11. Indicative budget ........................................................................................................................ 219 5.1.1.12. Allocation of funds per sector ................................................................................................... 220 5.1.1.13. Indicators ..................................................................................................................................... 220 5.1.1.14. Administrative procedures ........................................................................................................ 221 5.1.1.15. Geographical scope of the measure........................................................................................ 221

5.1.2. Measure 103 “Investments in the processing and marketing of agriculture and fishery products to restructure those activities and to upgrade them to Community standards” ......... 221

5.1.2.1. Legal basis....................................................................................................................................... 221 5.1.2.2. Cross sector objectives.................................................................................................................. 221 5.1.2.3. Rationale and specific objectives for the intervention per sector............................................. 222 5.1.2.4. Linkage to other measures............................................................................................................ 225 5.1.2.5. Final beneficiaries........................................................................................................................... 225 5.1.2.6. Common eligibility criteria.............................................................................................................. 225 5.1.2.7. Specific eligibility criteria................................................................................................................ 226 5.1.2.8. Priority criteria ................................................................................................................................. 227 5.1.2.9. Eligible expenditure ........................................................................................................................ 228 5.1.2.10. Aid level ....................................................................................................................................... 228


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5.1.2.11. Indicative budget ........................................................................................................................ 229 5.1.2.12. Allocation of funds per sector ................................................................................................... 229 5.1.2.13. Indicators ..................................................................................................................................... 230 5.1.2.14. Administrative procedures ........................................................................................................ 230 5.1.2.15. Geographical scope of the measure........................................................................................ 231

5.2. ELIGIBLE MEASURES UNDER PRIORITY AXIS 2 .............................................................................. 231 5.2.1. Measure 201.: Actions to improve the environment and the countryside................... 231

5.2.1.1. Legal basis....................................................................................................................................... 231 5.2.1.2. Background ..................................................................................................................................... 231 5.2.1.3. The scope of the measure............................................................................................................. 232 5.2.1.4. Dissemination of results and experiences................................................................................... 233 5.2.1.5. Final beneficiaries........................................................................................................................... 233 5.2.1.6. Eligible support ............................................................................................................................... 233 5.2.1.7. Proposed pilot sites and measures .............................................................................................. 233 5.2.1.8. Allocation of funds .......................................................................................................................... 242 5.2.1.9. Indicators ......................................................................................................................................... 242

5.2.2. Measure 202.: Preparation and implementation of local rural development strategies 243

5.2.2.1. Legal basis....................................................................................................................................... 243 5.2.2.2. Rationale of the intervention ......................................................................................................... 243 5.2.2.3. Objectives ........................................................................................................................................ 244 5.2.2.4. Definition of the LEADER approach............................................................................................. 244 5.2.2.5. Area covered ................................................................................................................................... 245 5.2.2.6. Division of responsibility ................................................................................................................ 245 5.2.2.7. Eligibility Criteria for LAGs............................................................................................................. 246 5.2.2.8. Procedure for selecting LAGs and approval of strategies ........................................................ 247 5.2.2.9. Indicative timetable......................................................................................................................... 247 5.2.2.10. Indicative budget ........................................................................................................................ 248 5.2.2.11. Sub-measure 1: “Acquisition of skills, animating the inhabitants of LAG territories” ........ 249 5.2.2.12. Sub-measure 2: “Implementation of local development strategies” .................................... 251 5.2.2.13. Sub-measure 3: Cooperation projects..................................................................................... 254

5.3. ELIGIBLE MEASURES UNDER PRIORITY AXIS 3 .............................................................................. 256 5.3.1. Measure 301.: Improvement and development of rural infrastructure ........................ 256

5.3.1.1. Legal basis....................................................................................................................................... 256 5.3.1.2. Cross sector bjectives .................................................................................................................... 256 5.3.1.3. Linkage to other measures............................................................................................................ 256 5.3.1.4. Rationale and specific objectives for the intervention per sector............................................. 257 5.3.1.5. Final beneficiaries........................................................................................................................... 258 5.3.1.6. Common eligibility criteria.............................................................................................................. 258 5.3.1.7. Specific eligibility criteria................................................................................................................ 258 5.3.1.8. Priority criteria ................................................................................................................................. 259 5.3.1.9. Eligible expenditure ........................................................................................................................ 259


version of 14. 12. 2007;

mod. July, 2008; mod. June 2009 EN VII

5.3.1.10. Aid level ....................................................................................................................................... 259 5.3.1.11. Indicative budget ........................................................................................................................ 260 5.3.1.12. Allocation of funds per sector ................................................................................................... 260 5.3.1.13. Indicators ..................................................................................................................................... 260 5.3.1.14. Administrative procedures ........................................................................................................ 261 5.3.1.15. Geographical scope of the measure........................................................................................ 261

5.3.2. Measure 302.: Diversification and development of rural economic activities ............ 261 5.3.2.1. Legal basis....................................................................................................................................... 261 5.3.2.2. Objectives ........................................................................................................................................ 262 5.3.2.3. Rationale and specific objectives for the intervention per sector............................................. 262 5.3.2.4. Linkage to other measures............................................................................................................ 264 5.3.2.5. Final beneficiaries........................................................................................................................... 264 5.3.2.6. Common eligibility criteria.............................................................................................................. 264 5.3.2.7. Specific eligibility criteria................................................................................................................ 265 5.3.2.8. Priority criteria ................................................................................................................................. 266 5.3.2.9. Eligible expenditures ...................................................................................................................... 266 5.3.2.10. Aid level ....................................................................................................................................... 267 5.3.2.11. Indicative budget ........................................................................................................................ 267 5.3.2.12. Allocation of funds per sector ................................................................................................... 267 5.3.2.13. Indicators ..................................................................................................................................... 268 5.3.2.14. Administrative procedures ........................................................................................................ 269 5.3.2.15. Geographical scope of the measure........................................................................................ 269

5.4. MEASURE 501: TECHNICAL ASSISTANCE...................................................................................... 269 5.4.1.1. Legal basis....................................................................................................................................... 269 5.4.1.2. Objective .......................................................................................................................................... 269 5.4.1.3. Linkage to other measures............................................................................................................ 269 5.4.1.4. Eligible expenditures (actions) ...................................................................................................... 270 5.4.1.5. Final beneficiary.............................................................................................................................. 270 5.4.1.6. Eligibility criteria .............................................................................................................................. 270 5.4.1.7. Financial disposition ....................................................................................................................... 271 5.4.1.8. Indicative budget............................................................................................................................. 271 5.4.1.9. Indicators ......................................................................................................................................... 271

6. ADMINISTRATIVE SETUP AND PROCEDURES ................................................................ 274 6.1. IPARD OPERATING STRUCTURE................................................................................................... 275

6.1.1. Managing Authority............................................................................................................. 275 6.1.2. Paying Agency (IPARD Agency) ...................................................................................... 276

6.1.2.1. Description of the procedures within the DMSSA ...................................................................... 277 6.2. ADMINISTRATIVE MEASURES AIMED AT AVOIDING DOUBLE FINANCING ........................................ 278

7. FINANCIAL PLAN, SUBSIDY LEVEL AND THE LEVEL OF EU CONTRIBUTION ...... 282

8. INFORMATION AND PROMOTION....................................................................................... 285


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mod. July, 2008; mod. June 2009 EN VIII

9. MONITORING AND EVALUATION ........................................................................................ 287 9.1. MONITORING.................................................................................................................................. 287

9.1.1. Monitoring Committee ........................................................................................................ 287 9.1.2. Data collection ..................................................................................................................... 288

9.2. EVALUATION .................................................................................................................................. 288

10. PARTNERSHIP ...................................................................................................................... 290

11. PRIOR ASSESSMENTS ....................................................................................................... 295 11.1. EX ANTE EVALUATION ............................................................................................................... 295 11.2. EXTERNAL EVALUATION OF SECTORAL ANALYSIS ..................................................................... 304

12. ANNEX ..................................................................................................................................... 312 12.1. NATIONAL LEGISLATION............................................................................................................. 312

12.1.1. Agriculture, fishery and forestry ........................................................................................ 312 12.1.2. The environmental protection............................................................................................ 318 12.1.3. Physical planning and infrastructure ................................................................................ 319 12.1.4. Other legal provisions......................................................................................................... 321 12.1.5. Less favoured areas ........................................................................................................... 324

12.2. ANNEX ....................................................................................................................................... 328 12.3. ANNEX ....................................................................................................................................... 330 12.4. ANNEX ....................................................................................................................................... 332 12.5. ANNEX ....................................................................................................................................... 334 12.6. ANNEX ....................................................................................................................................... 337 12.7. ANNEX ....................................................................................................................................... 340 12.8. ANNEX ....................................................................................................................................... 344 12.9. ANNEX ....................................................................................................................................... 345 12.10. ANNEX ....................................................................................................................................... 346 12.11. ANNEX ....................................................................................................................................... 347 12.12. ANNEX ..................................................................................................................................... 350 12.13. ANNEX ..................................................................................................................................... 352 12.14. ANNEX ..................................................................................................................................... 354 12.15. ANNEX ..................................................................................................................................... 355 12.16. ANNEX ..................................................................................................................................... 356 12.17. ANNEX ....................................................................................................................................... 357 12.18. ANNEX ....................................................................................................................................... 358 12.19. ANNEX ..................................................................................................................................... 359 12.20. ANNEX ..................................................................................................................................... 375 12.21. ANNEX ....................................................................................................................................... 377 12.22. ANNEX ....................................................................................................................................... 379 12.23. ANNEX ..................................................................................................................................... 380


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mod. July, 2008; mod. June 2009 EN IX

12.24. ANNEX ..................................................................................................................................... 382 12.25. ANNEX ..................................................................................................................................... 383 12.26. ANNEX ..................................................................................................................................... 385 12.27. ANNEX ..................................................................................................................................... 387 12.28. ANNEX ..................................................................................................................................... 389 12.29. ANNEX ..................................................................................................................................... 390 12.30. ANNEX ..................................................................................................................................... 403 12.31. ANNEX ..................................................................................................................................... 405

List of tables

TABLE 2-1: LAND USE CATEGORIES.................................................................................................................. 3 TABLE 2-2: REGIONAL OPERATION PROGRAMMES IN RC ............................................................................... 7 TABLE 2-3: RURAL AND URBAN AREAS, POPULATION AND SETTLEMENTS ACCORDING TO OECD CRITERION

................................................................................................................................................................. 11 TABLE 2-4: DISTRIBUTION OF RURAL AREAS ACCORDING TO OECD CRITERIA ............................................ 11 TABLE 2-5: MAIN MACROECONOMIC INDICATORS 2000 - 2005..................................................................... 15 TABLE 2-6: EMPLOYMENT AND INCOME SITUATION 2000 – 2005 (PER EMPLOYEE) ..................................... 16 TABLE 2-7: CHANGE IN AGRICULTURAL POPULATION (1991–2001) ............................................................. 20 TABLE 2-8: DISTRIBUTION OF TSOG, NUMBER OF BEDS AND OFFERING BY COUNTY (2007) ...................... 26 TABLE 2-9: DEVELOPMENT OF FARM TOURISM UNITS (FT) (2000 – 2007) .................................................. 27 TABLE 2-10: THE SHARE OF THE AGRICULTURAL SECTORS IN THE GROSS DOMESTIC PRODUCT (2000-

2005)....................................................................................................................................................... 31 TABLE 2-11: EMPLOYMENT STRUCTURE IN AGRICULTURE, FISHERY AND FORESTRY (2000 – 2005) .......... 31 TABLE 2-12: ACTIVE PERSONS AND EMPLOYMENT IN AGRICULTURE ACCORDING TO SEX ............................ 32 TABLE 2-13: AVERAGE SALARIES IN BUSINESS ENTITIES IN THE AGRICULTURE AND FOOD PROCESSING

INDUSTRY, 2000 - 2005 (IN EUR) .......................................................................................................... 33 TABLE 2-14: SELF-SUFFICIENCY OF SELECTED AGRICULTURAL AND FOOD PRODUCTS IN PERCENTAGES

(2001 - 2003) ......................................................................................................................................... 33 TABLE 2-15: IMPORTS-EXPORTS BALANCE IN AGRICULTURE (1991 - 2004) IN THOUSAND DOLLARS .......... 34 TABLE 2-16: PROCESSING INDUSTRY AND SHARE IN GDP (2000 - 2004) ................................................... 35 TABLE 2-17: AVERAGE SALARIES IN PROCESSING INDUSTRY (2000-2005) ................................................. 36 TABLE 2-18: NUMBER OF EMPLOYEES IN FOOD AND BEVERAGE PROCESSING INDUSTRY (2001 – 2004)

(LEGAL PERSONS).................................................................................................................................... 36 TABLE 2-19: INDUSTRIAL PRODUCTION PHYSICAL VOLUME INDEX (2002 - 2005) ......................................... 37 TABLE 2-20: TRADE VALUES OF PROCESSING INDUSTRY, ‘000 USD............................................................ 38 TABLE 2-21: NUMBER AND SIZE OF FARMS IN CROATIA IN 2003 ................................................................... 39 TABLE 2-22: LAND FRAGMENTATION OF FAMILY HOLDINGS AND LEGAL ENTITIES (2003) ............................. 40 TABLE 2-23: DISPOSAL OF STATE-OWNED AGRICULTURAL LAND IN THE PERIOD 1994 - 2007 (IN HA) ........ 43 TABLE 2-24: STRUCTURE OF AGRICULTURE LAND IN ORGANIC AGRICULTURE.............................................. 45 TABLE 2-25: CHANGES IN NUMBER OF CATTLE AND BREEDING COWS/HEIFERS (1991 - 2005) ................... 46 TABLE 2-26: CHANGES IN RAW MILK PRODUCTION LEVEL (1990 - 2005) ..................................................... 47


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mod. July, 2008; mod. June 2009 EN X

TABLE 2-27: CHANGES IN THE NUMBER OF PRODUCERS AS TO THE VOLUME OF ANNUAL PRODUCTION (2003 - 2005) .................................................................................................................................................... 47

TABLE 2-28: OVERVIEW OF THE PURCHASED MILK QUANTITIES ACCORDING TO QUANTITY CLASSES (2003 - 2005)....................................................................................................................................................... 48

TABLE 2-29: GEOGRAPHICAL DISTRIBUTION OF RAW MILK PRODUCTION BY COUNTIES (2005) ................... 49 TABLE 2-30: OVERVIEW OF PURCHASED AND PROCESSED MILK BY DAIRIES ................................................ 51 TABLE 2-31: VOLUME AND STRUCTURE OF THE MOST IMPORTANT DAIRY PRODUCTS MANUFACTURED IN

DAIRY PLANTS (2002 - 2005, IN TONS)................................................................................................... 52 TABLE 2-32: CLASS DISTRIBUTION OF THE MILK SUPPLIED............................................................................ 53 TABLE 2-33: IMPORT AND EXPORT OF MILK AND MILK PRODUCTS (2003 - 2005, IN TONS) .......................... 53 TABLE 2-34: NUMBER OF PIGS AT HOLDINGS PER COUNTIES (2003) ............................................................ 55 TABLE 2-35: TRENDS IN PIG MEAT PROCESSING INDUSTRY (1997 - 2005) IN TONS..................................... 58 TABLE 2-36: DEMAND - SUPPLY BALANCE (2002 – 2004)............................................................................. 59 TABLE 2-37: AVERAGE WEIGHT OF SLAUGHTERED PIGS IN KG (2002 - 2004).............................................. 60 TABLE 2-38: OVERVIEW OF THE FOREIGN TRADE EXCHANGE OF PIGS, PIG MEAT AND PRODUCTS (IN TONES)

................................................................................................................................................................. 61 TABLE 2-39: BREED STRUCTURE OF COWS (2000 - 2005) IN %................................................................... 63 TABLE 2-40: EVOLUTION OF THE NUMBER OF CATTLE ('000 HEADS, 1987 - 2005)...................................... 63 TABLE 2-41: NUMBER OF SLAUGHTERED CATTLE ('000 HEADS) ................................................................... 65 TABLE 2-42: MEAT CONSUMPTION PER CAPITA (2002 - 2004) ..................................................................... 65 TABLE 2-43: PRODUCTION OF CERTAIN PRODUCTS AND PROCESSED PRODUCTS OF BEEF (2000 - 2005 IN

TONS)....................................................................................................................................................... 66 TABLE 2-44: BALANCE SHEET - CARCASE WEIGHT EQUIVALENT (CWE)......................................................... 66 TABLE 2-45: TRADE OF CATTLE, BEEF AND PROCESSED PRODUCTS (TONS) ................................................ 67 TABLE 2-46: AVERAGE PRICE ON CATTLE FAIRS ............................................................................................ 68 TABLE 2-47: NUMBER OF POULTRY IN CROATIA ............................................................................................ 69 TABLE 2-48: BALANCE OF EGG PRODUCTION IN 2004, IN TONS .................................................................... 69 TABLE 2-49: ANNUAL PRODUCTION OF EGGS FOR CONSUMPTION ................................................................ 70 TABLE 2-50: NUMBER OF POULTRY FARMS AND STRUCTURE OF OWNERSHIP .............................................. 70 TABLE 2-51: STRUCTURE OF OWNERSHIP AND THE NUMBER OF POULTRY FOR THE PRODUCTION OF MEAT

AND EGGS, ACCORDING TO FARM SIZE.................................................................................................... 70 TABLE 2-52: WAYS OF KEEPING LAYING HENS ............................................................................................... 71 TABLE 2-53: IMPORT AND EXPORT OF EGGS (2002 - 2004).......................................................................... 71 TABLE 2-54: CLASSIFICATION OF THE EGGS FOR CONSUMPTION .................................................................. 72 TABLE 2-55: APPROVED ESTABLISHMENTS BY THE MAFRD, CLASSIFIED ACCORDING TO PROCESSING

ACTIVITIES, EXPORT APPROVAL AND EVALUATION, MARCH 2009 .......................................................... 74 TABLE 2-56: LIST OF SLAUGHTERHOUSES PER COUNTY................................................................................ 74 TABLE 2-57: SIGNIFICANCE OF FISHERIES SECTOR EXPRESSED THROUGH GVA......................................... 79 TABLE 2-58: NUMBER OF FISHING VESSEL (2000 - 2004)............................................................................. 80 TABLE 2-59: TRENDS IN CATCH OF MARINE FISHING 2000 - 2005 ................................................................ 80 TABLE 2-60: CATCH IN SPORTS FISHING FROM 2000 - 2005 ........................................................................ 80


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TABLE 2-61: TOTAL CATCH IN COMMERCIAL FRESHWATER FISHERIES IN KG ................................................ 81 TABLE 2-62: PRODUCTION TRENDS IN MARINE AQUACULTURE FROM 2000 - 2005...................................... 81 TABLE 2-63: PRODUCTION TRENDS IN FRESHWATER FARMING (2000 - 2005) IN TONS ............................... 82 TABLE 2-64: PRODUCTION AREAS OF FRESHWATER FISHPONDS (2000 - 2005) .......................................... 83 TABLE 2-65: FISHERY LEGAL ENTITIES BY COUNTY AND SIZE (2000 - 2006)................................................ 84 TABLE 2-66: GEOGRAPHICAL DISTRIBUTION AND NUMBER OF EXPORTERS OF FISH PRODUCTS .................. 85 TABLE 2-67: NUMBER OF REGISTERED FARMERS (2006).............................................................................. 86 TABLE 2-68: GEOGRAPHICAL DISTRIBUTION OF TROUT AND CARP FARMS (2006) ....................................... 86 TABLE 2-69: GEOGRAPHICAL DISTRIBUTION AND NUMBER OF COMPANIES REGISTERED FOR FISH

PROCESSING............................................................................................................................................ 87 TABLE 2-70: TRENDS IN FISH - PROCESSING (IN TONS, 1999 - 2005) .......................................................... 87 TABLE 2-71: DISTRIBUTING CENTRES AND CENTRES FOR SHELLFISH PURIFICATION (2006) ....................... 88 TABLE 2-72: PRICES OF MOST SIGNIFICANT FISH SPECIES - MARINE FISHERIES CATCH IN EUR (2000 -

2006)....................................................................................................................................................... 88 TABLE 2-73: IMPORT AND EXPORT OF FISH AND FISH PRODUCTS VOLUME AND VALUE (2000 - 2005) ........ 89 TABLE 2-74: SHARE OF EXPORTED FISH AND FISH PRODUCTS OF TOTAL VALUE (2004, %) ........................ 89 TABLE 2-75: SITUATION IN THE REGISTER OF AGRICULTURAL HOLDINGS REGARDING APPLICATIONS FOR

GRAIN SUBSIDIES ..................................................................................................................................... 92 TABLE 2-76: STORAGE CAPACITIES AND GEOGRAPHICAL DISTRIBUTION ...................................................... 92 TABLE 2-77: PROCESSING CAPACITIES - GRAIN SECTOR............................................................................... 93 TABLE 2-78: SUPPLY - DEMAND BALANCE SHEET OF CEREALS PRODUCTION (2000 - 2004) ....................... 94 TABLE 2-79: GRAIN MARKET PRICE OSCILLATIONS (2001 - 2005)................................................................ 95 TABLE 2-80: OIL CROPS PRODUCTION IN THE PERIOD 2000 - 2005 ............................................................. 97 TABLE 2-81: SITUATION IN REGISTER OF AGRICULTURAL HOLDINGS REGARDING APPLICATIONS FOR OIL

CROPS SUBSIDIES 2003 - 2005 .............................................................................................................. 97 TABLE 2-82: SUPPLY - DEMAND BALANCE FOR OIL CROP PRODUCTION (2000 - 2004)................................ 98 TABLE 2-83: PRICE FLUCTUATIONS IN THE OIL CROP MARKET (2001 - 2005) .............................................. 99 TABLE 2-84: PRODUCTION OF SELECTED FRUIT TYPES AND NUMBER OF PLANTED FRUIT TREES (2000 -

2005)..................................................................................................................................................... 100 TABLE 2-85: TOTAL TREE NUMBER OF SELECTED FRUIT KIND AND SHARE OF PLANTATION ORCHARDS..... 101 TABLE 2-86: FRUIT IMPORT SHARE ON THE MARKET OF CROATIA FROM 1997 - 2003 ............................... 101 TABLE 2-87: TRENDS IN VEGETABLES PRODUCTION 1999 - 2004 .............................................................. 103 TABLE 2-88: PRODUCTION OF CERTAIN VEGETABLES TYPES ...................................................................... 104 TABLE 2-89: DISTRIBUTION OF GREENHOUSE PRODUCTION OF SOME VEGETABLE TYPES, ESTIMATION.... 106 TABLE 2-90: TREND IN AVERAGE VEGETABLE YIELDS, T/HA 1998-2002 .................................................... 107 TABLE 2-91: VEGETABLES PRICES ON THE GROSS MARKETS, 1998 - 2003 (EUR/KG) ............................. 108 TABLE 2-92: VEGETABLES PRICES ON THE LOCAL GREEN MARKETS, 1998 - 2003 (EUR/KG) .................. 108 TABLE 2-93: TRENDS IN IMPORT - EXPORT BALANCE OF VEGETABLES, 1999 – 2003, USD...................... 109 TABLE 2-94: MUSHROOM EXPORT - IMPORT VALUE ..................................................................................... 110 TABLE 2-95: FOREIGN TRADE BALANCE (1997 - 2003) ............................................................................... 112 TABLE 2-96: IMPORT - EXPORT BALANCE OF FRUIT PRODUCTS (2000 - 2004)........................................... 113


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TABLE 2-97: PRODUCTION, IMPORT AND EXPORT OF FRUIT PRODUCTS (2001 - 2004) ............................. 114 TABLE 2-98: PRODUCTION OF GRAPE (1999 - 2004) .................................................................................. 116 TABLE 2-99: VINEYARDS IN HA AND BY OWNERSHIP PER COUNTY (2003) .................................................. 117 TABLE 2-100: AVERAGE NATIONAL YIELD PER HECTARE ............................................................................. 117 TABLE 2-101: NUMBER OF HOUSEHOLDS AND LEGAL ENTITIES WITH VINEYARDS, BY COUNTIES (2003)... 118 TABLE 2-102: NUMBER OF PRODUCERS (GRAPE, WINE AND FRUIT WINE) WHO SELL THEIR WINE ON THE

MARKET, BY COUNTIES, 2003-2005 ..................................................................................................... 120 TABLE 2-103: WINE PRODUCTION IN ,000 HL (2000-2005) ........................................................................ 121 TABLE 2-104: IMPORT OF GRAPE AND WINE................................................................................................. 123 TABLE 2-105: EXPORT OF GRAPE AND WINE................................................................................................ 123 TABLE 2-106: NUMBER OF OLIVE TREES AND AREA UNDER OLIVE TREES PER COUNTY (2003) ................. 124 TABLE 2-107: GEOGRAPHICAL DISTRIBUTION OF OLIVE PRODUCERS ......................................................... 126 TABLE 2-108: SIZE OF OLIVE VARIETIES IN HA AND % OF TOTAL AREA (2000 - 2005) ............................... 126 TABLE 2-109: OLIVE PRODUCTION TRENDS, CULTIVATED AREA AND YIELD (2000 - 2005) ........................ 127 TABLE 2-110: TRENDS IN DOMESTIC PRODUCTION (2000 - 2005) ............................................................. 128 TABLE 2-111: GEOGRAPHICAL DISTRIBUTION OF OLIVE MILLS (NUMBER AND CAPACITY)........................... 128 TABLE 2-112: SHARE OF OLIVE OIL P–ROCESSING AND TABLE OLIVES OUT OF TOTAL PRODUCTION ......... 129 TABLE 2-113: TRENDS IN OLIVE OIL PRODUCTION; IMPORT – EXPORT; CONSUMPTION AND SELF

SUFFICIENCY RATIO (2000 – 2005) ...................................................................................................... 130 TABLE 2-114: TABLE OLIVES PRODUCTION, IMPORT - EXPORT; CONSUMPTION AND SELF - SUFFICIENCY

RATIO (2000 - 2005) ............................................................................................................................. 130 TABLE 2-115: AVERAGE PRODUCTION PRICES (EUR/L) OF RAW AND NON - REFINED OLIVE OIL (2000 -

2005)..................................................................................................................................................... 131 TABLE 2-116: QUANTITIES OF WOOD WASTE IN DISPOSAL IN THE WOOD INDUSTRY................................... 134 TABLE 2-117: THEORETICAL POWER POTENTIAL OF USABLE BIOMASS AS A RESULT OF FOREST

MANAGEMENT ........................................................................................................................................ 134 TABLE 2-118: TIMETABLE FOR ACCREDITATION AND IMPLEMENTATION OF PILOT AE MEASURES.............. 138 TABLE 2-119: NITROGEN BUDGET OF CROATIAN AGRICULTURE IN PERIOD 2001 - 2003 .......................... 140 TABLE 2-120: DEVELOPMENT DISPARITIES AMONG CROATIA'S COUNTIES ................................................. 155 TABLE 2-121: CROATIA - INEQUITIES WITH RESPECT TO THE EUROPEAN UNION ....................................... 156 TABLE 3-1: MAFWM BUDGET (1998 - 2007).............................................................................................. 168 TABLE 3-2: AID STRUCTURE, 2001 - 2005 IN % .......................................................................................... 170 TABLE 3-3: SHARE OF CERTAIN PRODUCTION TYPES IN TOTAL DIRECT PAYMENTS .................................... 170 TABLE 3-4: DIRECT PAYMENTS FOR ORGANIC PRODUCTION (2003 - 2005) ............................................... 171 TABLE 3-5: OVERVIEW OF THE IMPLEMENTATION OF THE MODEL OF CAPITAL INVESTMENTS IN 2003 ....... 172 TABLE 3-6: OVERVIEW OF REQUEST FOR INCOME AID IN 2003 PER COUNTY.............................................. 175 TABLE 3-7: OVERVIEW OF AID FOR AGRICULTURAL ASSOCIATIONS, 2003 - 2006 ...................................... 177 TABLE 3-8: OVERVIEW OF AID FOR AGRICULTURAL SECONDARY SCHOOLS, 2001 - 2005 ......................... 178 TABLE 3-9: OVERVIEW OF AUTOCHTHON AND PROTECTED BREEDS AID REQUEST, 2001 - 2004 .............. 179 TABLE 3-10: OVERVIEW OF SUBSIDIES PAID FOR AUTOCHTHON AND PROTECTED BREEDS, 2001 - 2004 IN

HRK AND EUR...................................................................................................................................... 179


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TABLE 3-11: OVERVIEW OF AID FOR MARKETING PREPARATION OF AGRICULTURAL FOOD PRODUCTS, 2001 - 2006 ...................................................................................................................................................... 180

TABLE 3-12: OVERVIEW OF THE AID TO INSURANCE PER YEARS AND COUNTIES (2003 - 2005) ................ 186 TABLE 3-13: LIST OF PSO PROJECTS .......................................................................................................... 196 TABLE 3-14: WB PROJECTS IN THE REPUBLIC OF CROATIA........................................................................ 198 TABLE 4-1: SPECIFIC OBJECTIVES PER SELECTED PRIORITY ....................................................................... 206 TABLE 5-1: OCCUPATIONAL SKILLS AND COMPETENCE CRITERIA................................................................ 215 TABLE 5-2: ALLOCATION OF FUNDS FOR MEASURE 101. ............................................................................ 219 TABLE 5-3: ALLOCATION OF FUNDS PER SECTOR ........................................................................................ 220 TABLE 5-4: EXPECTED NUMBER OF ELIGIBLE INVESTMENTS PER SECTOR .................................................. 220 TABLE 5-5: OUTPUT, RESULT AND IMPACT INDICATORS............................................................................... 220 TABLE 5-6: INDICATIVE BUDGET FOR MEASURE 103. .................................................................................. 229 TABLE 5-7: ALLOCATION OF FUNDS UNDER MEASURE 103. ........................................................................ 229 TABLE 5-8: EXPECTED NUMBER OF ELIGIBLE INVESTMENTS PER SECTOR .................................................. 230 TABLE 5-9: OUTPUT, RESULT AND IMPACT INDICATORS............................................................................... 230 TABLE 5-10: PILOT AREAS AND MEASURES.................................................................................................. 233 TABLE 5-11: ALLOCATION OF FUNDS FOR MEASURE 201 ........................................................................... 242 TABLE 5-12: ESTIMATED NUMBER OF HA UNDER AE MEASURES, 2007 - 2013.......................................... 242 TABLE 5-13: TIMEFRAME FOR LEADER IMPLEMENTATION ......................................................................... 247 TABLE 5-14: ALLOCATION OF FUNDS FOR MEASURE 202 ........................................................................... 248 TABLE 5-15: OUTPUT, RESULT AND IMPACT INDICATORS FOR SUB - MEASURE 1 ....................................... 250 TABLE 5-16: OUTPUT, RESULT AND IMPACT INDICATORS FOR SUB – MEASURE 3....................................... 255 TABLE 5-17: INDICATIVE BUDGET FOR MEASURE 301. ................................................................................ 260 TABLE 5-18: ALLOCATION OF FUNDS UNDER MEASURE 301....................................................................... 260 TABLE 5-19: EXPECTED NUMBER OF ELIGIBLE INVESTMENTS PER SECTOR ................................................ 260 TABLE 5-20: INDICATIVE BUDGET FOR MEASURE 302 ................................................................................. 267 TABLE 5-21: INDICATIVE ALLOCATION OF FUNDS PER SECTOR (2007 – 2011)........................................... 267 TABLE 5-22: ALLOCATION OF FUNDS PER SECTOR (2012 - 2013) .............................................................. 268 TABLE 5-23: EXPECTED NUMBER OF ELIGIBLE INVESTMENTS PER SECTOR ................................................ 268 TABLE 5-24: INDICATIVE BUDGET FOR MEASURE 501 ................................................................................. 271 TABLE 5-25: LIST OF INDICATORS FOR MEASURE 501 ................................................................................ 271 TABLE 6-1:COMPLEMENTARITY AND DEMARCATION BETWEEN NATIONAL SUPPORT SCHEMES AND IPARD

PROGRAMME.......................................................................................................................................... 279 TABLE 7-1: MAXIMUM EU CONTRIBUTION FOR IPARD FUNDS IN EUR, 2007 - 2011................................ 282 TABLE 7-2: FINANCIAL PLAN PER PRIORITY AXIS IN EUR, 2007 - 2011 ...................................................... 282 TABLE 7-3: INDICATIVE BREAKDOWN BY MEASURE, 2007 - 2011 ............................................................... 282 TABLE 7-4: INDICATIVE ALLOCATION OF EU CONTRIBUTION BY MEASURE 2007-2011 IN EUR FOR

MONITORING PURPOSE.......................................................................................................................... 283 TABLE 7-5: PERCENTAGE ALLOCATION OF EU CONTRIBUTION BY MEASURE 2007-2013 FOR MONITORING

PURPOSE ............................................................................................................................................... 284


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TABLE 10-1: RESULTS OF CONSULTATIONS ON DRAFT IPARD PLAN ......................................................... 292 TABLE 11-1: LIST OF RECOMMENDATIONS AND ACCEPTANCE/REJECTION BY MAFRD - DSDRA............. 297 TABLE 11-2: RESULTS AND FINDINGS OF EXTERNAL EVALUATION OF SUB SECTOR ANALYSIS ................... 305 TABLE 12-1: DIVISION OF SMALL BUSINESS ENTITIES IN EU........................................................................ 323 TABLE 12-2: SELECTED INDUSTRIAL PRODUCTS PROCESSING (2000 - 2004) ........................................... 328 TABLE 12-3: CEREALS PRODUCTION IN THE PERIOD 2000 - 2004.............................................................. 330 TABLE 12-4: FOOD AND BEVERAGES CONSUMPTION PER INHABITANT (2000 - 2005)................................ 332 TABLE 12-5: DIRECT PAYMENTS PER UNIT IN HRK...................................................................................... 334 TABLE 12-6: MINIMUM SUPPORTED QUANTITIES .......................................................................................... 337 TABLE 12-7: DIRECT PAYMENTS FOR THE PERIOD 2001 - 2005 (HRK) ..................................................... 340 TABLE 12-8: IMPLEMENTING INSTITUTIONS FOR PRODUCTION SUBSIDIES SCHEME AND THEIR TASKS....... 344 TABLE 12-9: AVERAGE NUMBER OF PIGS PER HOLDING (2003) .................................................................. 345 TABLE 12-10: METHODOLOGY OF ASSESSMENT OF ECONOMIC VIABILITY FOR BENEFICIARY..................... 346 TABLE 12-11: METHODOLOGY OF ASSESSMENT OF ECONOMIC VIABILITY FOR PROJECTS ......................... 346 TABLE 12-12: NATIONAL MINIMUM STANDARDS ........................................................................................... 347 TABLE 12-13: STRUCTURE OF FAMILY FARMS WITH VINEYARDS BY SIZE AND GEOGRAPHICAL DISTRIBUTION,

2003 ...................................................................................................................................................... 350 TABLE 12-14: STRUCTURE OF LEGAL ENTITIES WITH VINEYARDS BY SIZE AND GEOGRAPHICAL

DISTRIBUTION, 2003.............................................................................................................................. 352 TABLE 12-15: LIST OF TRADITIONAL CRAFTS ............................................................................................... 354 TABLE 12-16: LIST OF OLIVE VARIETIES ....................................................................................................... 355 TABLE 12-17: STRUCTURE OF CEREAL PRODUCERS BY FARM SIZE AND GEOGRAPHICAL DISTRIBUTION 2003

............................................................................................................................................................... 356 TABLE 12-18: BASIC INFRASTRUCTURE ENDOWMENT AT COUNTY LEVEL (2001)....................................... 357 TABLE 12-19: HOUSING QUALITY AT COUNTY LEVEL (2001) SHOULD BE MOVED TO THE ANNEX).............. 358 TABLE 12-20: LIST OF CITIES, MUNICIPALITIES AND SETTLEMENTS ACCORDING TO TOURIST CLASS ......... 359 TABLE 12-21: LIST OF INSTITUTIONS AND OPERATIVE PROGRAMMES FOR TRAINING ................................. 375 TABLE 12-22: BIG WINE PRODUCERS, 2005 ................................................................................................ 377 TABLE 12-23: NUMBER OF ASSOCIATIONS AND FOUNDATIONS PER COUNTIES........................................... 379 TABLE 12-24: VEGETABLE PRODUCTION FOR PROCESSING, 1990 - 2003 ................................................. 380 TABLE 12-25: FRESH FRUIT IMPORT FROM 2000 - 2003............................................................................. 382 TABLE 12-26: FRESH FRUIT EXPORT 2000 - 2003 ...................................................................................... 383 TABLE 12-27: EXPORT - IMPORT BALANCE OF FRESH, HALF PROCESSED AND DRIED VEGETABLES (1999 –

2003)..................................................................................................................................................... 385 TABLE 12-28: PRODUCTION OF FRUIT FOR PROCESSING ............................................................................ 387 TABLE 12-29: LIST OF CITIES AND MUNICIPALITIES ...................................................................................... 390

List of Figures

GRAPH 2-1: DISTRIBUTION OF FAMILY FARMS ACCORDING TO SIZE OF AGRICULTURAL LAND (2003).......... 40 GRAPH 2-2: DISTRIBUTION OF LEGAL ENTITIES ACCORDING TO SIZE OF AGRICULTURAL LAND .................... 41 GRAPH 2-3: DISTRIBUTION OF PRODUCERS BY NUMBER OF MILK COWS....................................................... 50


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GRAPH 2-4: TRENDS IN PIG PRODUCTION (NO. OF HEADS, 1990 - 2005) .................................................... 55 GRAPH 2-5: STRUCTURE OF FAMILY HOLDINGS ACCORDING TO NUMBER OF PIGS (2003)........................... 57 GRAPH 2-6: STRUCTURE OF LEGAL ENTITIES ACCORDING TO THE NUMBER OF PIGS (2003) ....................... 57 GRAPH 2-7: CONSUMPTION OF PIG MEAT PER HOUSEHOLD MEMBER (1999 - 2004) ................................... 60 GRAPH 2-8: DISTRIBUTION OF FAMILY HOLDINGS BY NUMBER OF CATTLE (2003, PERCENTAGE) ................ 64 GRAPH 2-9: DISTRIBUTION OF LEGAL ENTITIES ACCORDING TO THE NUMBER OF CATTLE (2003)................ 65 GRAPH 2-10: STRUCTURE OF CEREAL PRODUCERS BY FARM SIZE (2003)................................................... 92 GRAPH 2-11: OIL SEED PRODUCERS STRUCTURE (2003)............................................................................. 98 GRAPH 2-12: DISTRIBUTION OF FAMILY FARMS BY NUMBER, SIZE AND TYPE OF ORCHARD, 2003 ............. 102 GRAPH 2-13: DISTRIBUTION OF LEGAL ENTITIES BY NUMBER AND SIZE, 2003 ........................................... 103 GRAPH 2-14: DISTRIBUTION OF FAMILY FARMS ACCORDING TO NUMBER, SIZE AND TYPE OF PRODUCTION,

2003 ...................................................................................................................................................... 105 GRAPH 2-15: DISTRIBUTION OF LEGAL ENTITIES BY NUMBER, SIZE AND TYPE OF PRODUCTION, 2003...... 106 GRAPH 2-16: COMPARISON OF AVERAGE VEGETABLE YIELD, T/HA ............................................................. 108 GRAPH 2-17: AVERAGE SELLING GROSS MARKET PRICES (EXCLUDING VAT, IN HRK/KG) ........................ 109 GRAPH 2-18: STORAGE (COOLING) CAPACITIES FOR FRUITS AND VEGETABLES (IN T) ............................... 115 GRAPH 2-19: STRUCTURE OF FAMILY FARMS BY SIZE, 2003 ...................................................................... 119 GRAPH 2-20: STRUCTURE OF WINE PRODUCERS BY SIZE (HA), 2004......................................................... 120 GRAPH 2-21: DISTRIBUTION OF BIG PRODUCERS BY SIZE (2005) ............................................................... 122 GRAPH 3-1: NATIONAL AID SYSTEM IN AGRICULTURE .................................................................................. 167 GRAPH 3-2: RURAL DEVELOPMENT SCHEME .............................................................................................. 176 GRAPH 3-3: OPERATIONAL PROGRAMMES OF CROATIA .............................................................................. 181 GRAPH 4-1: OBJECTIVES HIERARCHY .......................................................................................................... 207

List of maps

MAP 2-1: 21 COUNTIES (ŽUPANIJA) OF THE REPUBLIC OF CROATIA ............................................................... 6 MAP 2-2: DISTRIBUTION OF COUNTIES AT NUTS 2 LEVEL............................................................................... 6 MAP 2-3: STRUCTURE OF SETTLEMENTS IN CROATIA, BY NUMBER OF INHABITANTS (2003) ....................... 10 MAP 2-4: AREAS WITH DIFFICULT CONDITIONS FOR AGRICULTURAL PRODUCTION AND MANAGEMENT ........ 13 MAP 2-5: LOCATIONS OF MINE FIELDS IN CROATIA (2005)............................................................................ 14 MAP 2-6: POPULATION AGED 65 AND OLDER AS SHARE OF TOTAL POPULATION AND GEOGRAPHICAL

DISTRIBUTION .......................................................................................................................................... 18 MAP 5-1: ADMINISTRATION PROCEDURE FOR LEADER IMPLEMENTATION ................................................ 253 MAP 12-1: ORGANIGRAM OF DMSSA– - FUTURE IPARD PAYING AGENCY .............................................. 403 MAP 12-2: ORGANIGRAMME OF THE DRD IPARD MA ............................................................................... 405

List of abbreviations used.

CAP

Common Agricultural Policy.................. 198

CARDS

Community Assistance for Reconstruction, Development and Stabilisation ......... 195

CASB


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Croatian Agency for Small Business .... 168

CBRD

Croatian Bank for Reconstruction and Development ..................................... 168

CBS

Central Bureau of Statistics ...................... 3

CCE

Croatian Chamber of Economy .............. 93

CDS

County Development Strategy.............. 265

CMLK

Central Milk Laboratory, Križevci ............ 47

CMO

Common Market Organisation................ 55

CVI

Croatian Veterinary Institute ................. 196

cwe

Carcase weight equivalent...................... 59

DMSSA

Directorate for Market and Structural Suport in Agriculture.......... 219, 229, 267

Directorate for Market and Structural Support in Agriculture.......... 96, 179, 259

DRD

Directorate for Rural Development ....... 177

EIA

Economic Interest Association... 58, 69, 70, 71

EIB

European Investment Bank ...................... 8

EVD

The Netherlands Government Agency . 196

FAO

Food and Agriculture .............................. 34

FT

Farm Tourism.......................................... 27

GDP

Gross Domestic Product 15, 16, 30, 31, 33, 36, 37, 154, 156, 157, 204, 327

GVA

Gross Value Added..................... 15, 16, 79

GWh

Giga Watt per hour ............................... 136

HABOR..........................................See CBRD

ICCAT......................................................... 79

IFOAM ........................................................ 45

MAFRD

Ministry of Agriculture, Fisheries and Rural Development ..................................... Vidi

MAFWM

Ministry of Agriculture, Forestry and Water Management ....................................... 13

MRDFWM

Ministry of Regional Development, Forestry and Water Management ....... 25

MSTTD

Ministry of Sea, Tourism, Traffic and Development ................... 8, 27, 187, 199

MWh

Mega Watt per hour .............................. 135

NCEA

National Classification of Economic Activities .............................................. 15

NSRD

National Strategy of Regional Development ......................................... 8

NUTS

Nomenclature of Teritorial Units for Statistics.......................................... 6, 10

OECD

Organization for Economic Co-operation and Development .......................... 10, 11

OG

Official Gazette ....................................... 12

PEP

Preaccession Economic Programme ... 199

PIU

Project Implementation Unit ..................... 8

PUR

Total Development Programme................ 8

RER

Renewable Energy Resources ............. 198

ROP


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Regional Operation Programme............... 8

TCP ............................................................ 46

TISUP

Market Information System in Agriculture............................................................ 68

ULO

Ultra low Oxygen .................................. 114

UNDP

United Nations Programme for Development ......................................... 7

VAT

Value Added Tax .................................... 68

WTO

World Trade Organization ...................... 62


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1. EXSPLANATORY MEMORANDUM The information provided in this document is a description of the situation at the time of drafting the programme and the approval of the IPARD programme will not constitute acceptance of the institutional structure and national legislation by the European Commission.

All the numbers in the document are written in the following way:

Point – “.” – represents a thousand separator (i.e. 100.000, meaning hundred thousand)

Comma – “,” – represents decimal space (i.e. 1,55 meaning one and a fifthy five)


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2. CURRENT SITUATION IN AGRICULTURE AND THE RURAL AREAS

2.1. GENERAL DESCRIPTION 2.1.1. Geographic regions

The Republic of Croatia has a surface of 87.609 km² consisting of 56.542 km² (64,5%) of continental land area and 31.067 km² (35,5%) of territorial sea area. With a total population of 4.437.460 (Census 2001), Croatia has an average population density of 78 inhabitants / km².

The country is situated on the crossroad between Middle Europe, Mediterranean and Western Balkan countries. It has 2.197 km of total land boundaries: with Slovenia (670 km) in the north, Hungary (329 km) in the northeast, and Bosnia and Herzegovina (932 km), Serbia (241 km) and Montenegro (25 km) in the southeast. The total Adriatic coastline amounts to 5.835 km (mainland 1.777 km and islands 4.058 km). Croatia has a rich natural environment and consists of diverse landscapes. It stretches in the form of a bow from the foothills of the Julian Alps in the northwest and Pannonian plains in the east, from the Danube on the northeast to Istria on the west, across the Dinaric Mountains to the southern part of the Adriatic coast. 1.246 islands belong to Croatia, of which 47 are inhabited. 9,1% of the land territory are under protection with a total 450 protected sights, of which 78% are national and nature parks (with 10 nature parks of IUCN category II and 2 strict nature reserves of IUCN category I), and 22% covered by other protection categories (protected landscapes, nature monuments etc.).

In Croatia (2004), two third of the land (63%) is classified as agricultural land and forests, and 37% as settlements, with forests covering almost half (44%) of the total land. Out of the total available agricultural land and forests, 81% are in use and maintained (see Table 2-1).

Table 2-1: Land use categories Land use categories Area (ha) %

Total land area, thereof: 5.653.800 100%

1) Agricultural area, of which: 1.391.622 24,60%

- Agricultural land in use 1.077.403 77,40%

- Agricultural land not in use 314.219 22,60%

2) Forests, of which: 2.688.687 47,60%

- Maintained forests 1.996.783 74,30%

- Abandoned forest areas 345.952 12,90%

- Infertile forest areas 61.370 2,30%

3) Settlements 1.573.491 27,80%

Source: CBS Agricultural Census 2003

According to the relief and clime, Croatia can be grouped into three large geographical regions (Pannonian Region, Mountain Region and Adriatic Region), which are subdivided into different agricultural regions and sub regions. Out of a total 4,4 million residents (2001), 64% lived in the Pannonian Region (of which 31% lived in the Eastern and 69% in the Western part), 30,2% percent in the Adriatic Region while only 5,8% was living in the mountain region.

The Pannonian and peri-Pannonian Region is a lowland area situated in the north of Croatia and in the eastern part (Slavonia) and is characterized by a moderate continental climate and


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strictly defined seasons. It consists mainly of plains and some low mountain ranges (Zagorje, Međimurje), and being drained by the rivers Sava and Drava and their tributary streams towards the Danube. It covers almost half (47%) of the total land surface and two third of the total population and comprises the demographic and economic centre round the cities Zagreb, Karlovac and Sisak. The area is also rich in oil and natural gas reserves, quartz sand, clay, thermal springs and other natural resources. The fertile soil, moderate climate and favourable precipitation regime provide an excellent natural potential for intensive agricultural production, and pertaining the region as the granary of Croatia with excellent results being also achieved in wine cultivation. An important economic activity is therefore primary food production and the food processing industry. Forests and woods give a sound basis for the development of heavy timber and wood processing industry. Due to the rich and divers natural reserves, tourism has developed in the Pannonian area in form of health resorts, hunting, fishing, recreational and rural tourism activities. Good domestic road and railroad connections, but also with neighbouring countries contribute to the prospering development of the Pannonian region.

Although the Pannonian region has an overall high natural and economic development potential, its capacities are not yet fully used. Many primary and secondary production capacities, which were devastated or abandoned during the war 1991 - 1995, especially in the eastern and western parts of Slavonia, are not yet restored and large agricultural and forests areas still being under mines. Additionally, the consequences of transitional problems due to incomplete privatization of former state-owned agricultural cooperatives, unresolved issue of land ownership titles or the misuse of former state-owned property have shaped the agricultural production system.

The Dinaric Mountain and Hill Region is the second area, which covers heterogeneous landscapes with some karsts terrains in the hinterlands of Karlovac, high valleys (Lika and Krbava) between the Velebit Mountains and West Bosnia, mountain massifs (Mala Kapela, Velika Kapela or Gorski Kotar) and a small part of the northern Dalmatian hinterland. These middle and high mountain massifs represent the water shed between the Danube and the Adriatic Sea. Natural resources of the region comprise forests, lake areas, protected nature reserves, clay sites and a diverse flora and fauna. The National Park “Plitvice Lakes“, which is included in the UNESCO World Natural Heritage List, is situated in this area. It counts as one of the most beautiful nature phenomenon in Europe with an area of 295 km², mostly forest areas and 16 lakes that are connected with each other.

The predominating mountain climate has high precipitations up to 2.500 – 3.500 mm per annum with lots of snow and a short vegetation period. The heterogeneous soil has developed upon high silicate rocks, limestone or dolomites. The agriculture production systems are adjusted to the mountainous climate conditions, and are thus mainly based on small, private mixed farms with beef breeding as the main economic branch. The cultivation of field crops is limited with mainly early maize, potatoes, rye and vegetables being cultivated. Agricultural production has been traditionally extensive and due to this fact not many chemical substances and mineral fertilizers have been used compared to other regions in Croatia providing favourable conditions for organic farming combined with eco-tourism. Although the area is rich in natural springs, forests and waters, a low population density, a degraded and underdeveloped rural infrastructure (e.g. road infrastructure), as well as partly still deteriorated production capacities caused during the war in the 1990’s, result in a very difficult development process in this mountain region. The main economic activities in the rural areas remain the primary production in agriculture and forestry, combined often with wood processing and tourism. Almost all parts of this region receive government support as areas of special state care (see Chapter 2.1.4).

The third region, the Adriatic Region, covers the continental Mediterranean Sea coast areas and the islands. It ranges 1.777 km from Istria in the northwest, to the coast areas (Hrvatsko Primorje) of Rijeka with the islands of the Kvarner Bay as well as Dalmatia with the cliffy coast from Zadar, Split to of Dubrovnik and Konavli in the south, thereby having an enormous variation in the breadth of the coastline. The Adriatic region is characterised by karst areas and a Mediterranean climate with an increase of annual temperature and decrease in rainfall from north to south. The sunny and hot climate favours the growth of high quality Mediterranean field crops, fruits and vegetables like olives and figs. Due to its specific geographical location, this region has a very complex natural environment and a very diverse flora and fauna with


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separate natural landscapes like islands, mountain massifs and coast areas. Small-scale private agricultural production and fishing have a long tradition in the region, yet tourism is the main economic activity in the coastal areas, followed by the food processing industry and a highly developed service sector. From the economic point of view, the northern part of the region (Istria) is the wealthiest part offering diverse employment opportunities and future development possibilities due to a high entrepreneurial spirit of the population, a well-developed infrastructure and the closeness to Zagreb. This part of the Adriatic region was also not affected by the war in the 1990’s, contrary to the middle and southern part of Dalmatia, where the war consequences are still obvious. Numerous production capacities are still abandoned or totally ruined. However, improvements in the road infrastructure and the tourism boom support the revival of the sub-region. Poorly populated islands with a low agricultural production and industrial potential receive special state support.

2.1.2. Territorial organization and administrative system

Croatia is divided into 21 counties (Županija), including the City of Zagreb having a special status, which consists of 556 administrative divisions, i.e. small local self-government units (124 towns and 426 municipalities) with a total of 6.751 communities (31 December 2005)1.

The counties (see Map 2-1) were established in 1990 after the adoption of the new Constitution in Croatia as regional self-government units covering each a territory that constitutes an entity in terms of nature, history, economic and social development. Each county has its own assembly whose head and members are elected for four years. In county state government office performs administrative and service tasks with decision-making competences related to the following fields: economy (whereby agriculture plays an important role), social activities, physical planning, property rights and legal affairs, statistics, general management and surveillance of legality of general legal acts adopted by representative bodies of local and regional self-government units.

A municipality is a local self-government unit comprising several rural communities with up to total 10.000 inhabitants and representing a natural, economic and social entity based on the common interests of the population.

A town is a local self-government unit at the same administrative level as a municipality, and which constitutes an urban, historical, natural, economic and social entity. As a local self-government unit, a town may include suburban settlements building together an economic and social entity.

In Croatia, out of total number of cities, there are 55 cities with less than 10.000 inhabitants. Special concern should be given to suburban settlements which also faces difficulties concerning infrastructure, as being located out of city centre and access to urban facilities.

1 OG 129/02, 44/02


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Map 2-1: 21 counties (Županija) of the Republic of Croatia

Source: www.hr/maps/counties

After a few different proposals, the Institute of Economics in Zagreb was charged with the task to elaborate a scientific study on NUTS regions issue. The study proposed to divide Croatia into three statistical regions at NUTS level 2: North – West Croatia, East – Central Croatia (Pannonian) and Adriatic Croatia. In April 2007 EUROSTAT gave positive opinion to such classification.

Regardless new NUTS classification the data presented in the Plan are based on county level.

Map 2-2: Distribution of counties at NUTS 2 level


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Source: CBS, 2007

2.1.2.1. Development capacities and strategy at level of local and regional self-government unit

Croatia is trying to found the national system for regional development management on the existing administrative-territorial division and institutional organization at the levels of counties, municipalities and towns.

As in the legislative framework of the Republic of Croatia no obligation of organization of a body competent for regional development at regional level is foreseen, the existence of such bodies at levels lower then the central one is the reflection of needs and possibilities of regional units themselves to establish such bodies within the framework of its self-governing scope of activities.

Within the self-governing scope of activities in counties there are administrative bodies (administrative departments or services) competent for issues of development. Thought different projects (branding of wine, cheese, vegetable, wine roads, organic production, agriculture production on water protected areas etc) they develop their counties. Besides, in the majority of counties there are one or more development institutions like: county development agencies, entrepreneur centres (county and local centres for support of SMEs with loan and consultancy services and entrepreneurs for information, vocational training and promotion of entrepreneurship), centres of technology and other development institutions that resolve economic and other development issues at regional or county level. These institutions have a more or less developed degree of partnership and cooperation with central government institutions, and as a rule their founders are counties, towns or municipalities.

One of the significant moves in the sense of developing institutional capacities for development at county level is the work on the so called “Regional Operation Programmes” (ROP). At the beginning, their development was stimulated by the Delegation of the European Commission and the UN Programme for Development (UNDP), with the support of central government, and as a prerequisite for usage of funds from the CARDS programmes aimed for financing of investment programmes in counties that were in regions stricken by war.

The process of ROP development has been eventually expanding to other counties and outside of these regions. Today almost all the counties have their ROP, and this implies very active participation of central government in stimulation and financing of their development (see Table 2-2).

Table 2-2: Regional Operation Programmes in RC

COUNTY Elaboration Date of approval

13 Zadar elaborated 14.12.2006

1 Zagreb County elaborated 14.12.2006

2 Krapina - Zagorje elaborated 11.12.2006

3 Sisak - Moslavina elaborated 21.07.2004

4 Karlovac elaborated 19.07.2005

5 Varaždin under preparation -

6 Koprivnica - Križevci elaborated 14.06.2006

7 Bjelovar - Bilogora elaborated 15.07.2006

8 Primorje and Gorski Kotar under preparation -

9 Lika - Senj elaborated 28.10.2005

10 Virovitica - Podravina elaborated 24.10.2006

11 Požega - Slavonia elaborated 13.09.2005


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12 Brod - Posavina elaborated 19.07.2005

14 Osijek - Baranja elaborated 15.12.2006

15 Šibenik - Knin elaborated 21.12.2006

16 Vukovar - Srijem elaborated 12.7.2007

17 Split - Dalmatia elaborated 05.06.2006

18 Istria elaborated 11.09.2006

19 Dubrovnik - Neretva elaborated 13.07.2007

20 Međimurje elaborated 30.05.2005

Source: MSTTD, 2006.

ROPs are developed at the county level with participation of local governments and other local stakeholders in a partnership and supported technically by county level Project Implementation Units (PIU) and their supporting external consultants.

The ROP) managers have taken a pro-active approach in searching for donor support and support from the state budget for ROP implementation. Particular projects prepared within the partnership on ROPs already meet the conditions for support from other pre-accession funds of the EU, current projects financed by other international financial institutions (EIB, WB) and the state budget.

Although at the very beginning the ROP as such was supposed to serve as a pilot project in a very comprehensive, strategic and participative development planning process, and as a preparation for future implementation of structural funds in the Republic of Croatia, the practice by now and experience gained in the process of development and implementation of ROP, especially partnership established and strengthened through this process, shows their significant potential of institutionalizing regional and local development.

Local development support based on sustainable development principles has been realized through co-financing the elaboration of „total development projects“ (PUR) for certain self-government units. Ministry of Sea, Tourism, Traffic and Development, based on public tender, during 2005 has contracted elaboration of PURs with 37 self-government units. In 2006, 65 new requests for co-financing were submitted, but due to lack of resources in the state budget, contracts were not realized. In 2007, MAFWM has published a tender for local self – government units providing financial means for PUR elaboration. Up until 30th of October 2007, the MAFWM received 207 requests for support for elaboration of PURs’. They will be approved or rejected in following months.

Main objective of PURs' elaboration is building of institutional capacities through encouraging self-government units on planning, cooperation and partnership with entrepreneurs and civil society which creates basis for joint work on future projects.

The existing legislation does not regulate significant issues indispensable for development activities management, therefore lack of national guidelines and political framework within which county development partnerships can function in the future can be noticed.

A significant effort regarding preparation of adequate legal framework for managing regional development policy has been made within the CARDS 2002 project "Strategy and strengthening of capacities for regional development". Within this project, under the coordination of the relevant line ministry – the Ministry of Sea, Tourism, Transport and Development (MSTTD), a draft proposal of the National Strategy of Regional Development (NSRD) and general Act on Regional Development (ARD), was prepare at the national level. By means of this Act, a coherent system of regional development management was prepared.

The draft proposal of the Act on Regional Development sets the legal foundation of regional policy management. After its entering into force, the Act shall fill the gap currently existing in the Croatian legal system, relating to the general regulation of the subject matter of regional development management.


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The Act shall serve as an instrument of fund management building that shall simultaneously be standardized in the whole territory of Croatia, but also harmonized with practice and requests that are the consequence of obligations of Croatia towards the European Union.

Draft Strategy of regional development and the new Act on Regional Development, introduce comprehensive system of regional development and propose that ROPs as strategic development documents at county level are eventually to be replaced by county development strategies. The county development partnerships have furthermore a significant role in preparation and monitoring of implementation of the county development strategies.

The county development strategies shall define development needs of counties (economic development, employment, acquiring of necessary skills, infrastructure needs, environment, local, urban and rural development, resolving of poverty problems and social exclusion) and therefore in their preparation active participation of various interest groups shall be necessary. Furthermore, the strategies shall be dealing with common strategic goals with other neighbouring counties and needs and possibilities related to cross-border and cross-region cooperation. Every county strategy shall have obligatory chapters relating to the following:

Social - economic needs of the county, including needs of big cities,

Needs of regions with development difficulties,

Priorities of cross-border and cross-region cooperation,

Coherence with local development plans (where existent),

Development needs of islands (in counties having islands).

The Strategy envisages an obligation of the central level to prepare National guidelines for county development by means of which a broader context for county development strategies shall be ensured, procedures of their drafting defined and a wider context of development policy given, specifying national and EU development priorities that would be taken into consideration at their preparation.

With the aim of capacity strengthening for development management at county level, the Strategy envisages a stimulation of establishment and strengthening of county development agencies that shall support and promote development activities in the county area and provide assistance to county partnerships in their work, conduct various researches, provide assistance in consultancy processes with local interest groups, draft strategic documents and provide support in the implementation of county development strategies.Developed structures and experience gained through above described activities will contribute to the implementation of IPARD measures, in particular LEADER.

2.1.3. Characteristics of rural areas In Croatia, an official definition of rural and urban areas does not yet exist. The most commonly applied method is to define rural areas as being located outside of urban area and characterised by three main characteristics: small settlements with low population density, predominantly agricultural and forests land use systems, and the rural identity of the community. In Map 2-3 the distribution of settlements in terms of number of inhabitants is shown.


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Map 2-3: Structure of settlements in Croatia, by number of inhabitants (2003)

Source: Rural tourism sector analysis report (DSDRA 2006)

For administrative purposes, the differentiation between rural and urban areas in Croatia is based on the local territorial divisions considering all communities under “municipalities” (426) as “rural”, and those under “towns” (124) as “urban” areas. Based on this administrative differentiation criterion, out of the total population of 4.437.460 (CBS, census data 2001), 44,4% (1.971.005) of the inhabitants were classified as rural and 55,6% (2.466.4559) as urban population.

For policy formulation purposes, the mostly used criterion to separate rural and urban regions is the OECD definition based on population density. The OECD developed the most common, internationally applied definition to separate rural and urban regions. The OECD scheme distinguishes two hierarchical levels of geographic detail, namely Local Community (LAU 1/2) level and Regional level (mainly NUTS 3). Local Communities are classified as rural or urban, based on the population density threshold of 150 inhabitants/km² alone. At regional level, the OECD distinguishes these larger functional or administrative units by their degree of rurality, depending on what share of the region’s population lives in rural communities and groups them into three types: predominantly rural regions (more than 50% of regional population living in rural communities), significantly rural regions (15 to 50% of the population living in rural communities) and predominantly urban regions: less than 15% of the population living in rural communities.

The CBS applies the local community threshold of 150 inhabitants/km² at county level to define rural areas for Croatia as a whole. In 2001, 91,6% of the total area was classified as rural and 8,4% as urban, and 88,7% of the settlements were located in rural and 11,3% in urban areas with 35% of the total population living in 14 towns with more than 30,000 inhabitants. As regards the population, out of the total 4,437.460 inhabitants, 47,6% lived in rural and 52,4% in urban areas (see Table 2-3). These figures underline the fact that the population density in Croatia is very heterogeneous. On average, it amounts 78 inhabitants/km², ranging between 34 inhabitants/km² in rural up to 325 inhabitants/km² in urban areas.


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Table 2-3: Rural and urban areas, population and settlements according to OECD criterion OECD criteria

Classification (2001) km2 % No of

settlements % No of inhabitants %

Rural areas 51.872 91,6 6.001 88,7 2.110.988 47,6

Urban areas 4.731 8,4 763 11,3 2.326.472 52,4

Total 56.603 100 6.751 100 4.437.460 100

Source: CBS, Statistical yearbook (31st December 2005)

If the OECD definition for the regional level is applied for Croatia at county level, a differentiated picture on rural and urban areas is given (see Table 2-4). Clustering all municipalities and towns (as the lowest level on which statistical information on area and population is available) on the basis of population density in those two categories, i.e. urban communities (population density > 150 persons/km²) and rural communities (population density < 150 persons/km²), the calculation of each county’s share of population living in rural communities shows following facts:

Croatia as a whole country exhibits a high degree of rurality;

The majority (14 out of 21) of counties are classified as predominantly rural regions (over 50% of population lives in rural areas);

Five counties (i.e. Sisak - Moslavina, Karlovac, Lika - Senj, Virovitica - Podravina and Šibenik - Knin) have an extremely high degree of rurality (i.e. as much as 90 - 100% of counties’ total population lives in rural communities);

In 6 counties the share of total population living in rural communities varies between 15 - 50% (significantly rural regions); and

Only one county (City of Zagreb) can be described as predominantly urban (i.e. share of county’s population living in rural areas is in this case lower than 10%).

For the purpose of this programme the definition of rural areas based on the OECD criteria (see Table 2-4) will apply, unless otherwise specified under technical measure sheets in chapter 5.

Table 2-4: Distribution of rural areas according to OECD criteria

County Predominantly rural Mostly rural % Predominantly urban

Number % Number % Number %

Bjelovar – Bilogora 133.084 6,30

Brod – Posavina 176.765 8,37

Dubrovnik – Neretva 122.870 7,94

Istria 206.344 13,34

Karlovac 141.787 6,72

Koprivnica – Križevci 124.467 5,90

Krapina – Zagorje 142.432 6,75

Lika – Senj 53.677 2,54

Međimurje 118.426 7,65

Osijek - Baranja 330.506 21,36

Požega – Slavonia 85.831 4,07

Primorje – Gorski Kotar 305.505 19,74


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Sisak – Moslavina 185.387 8,78

Split – Dalmatia 463.676 29,97

Šibenik – Knin 112.891 5,35

Varaždin 184.769 8,75

Virovitica – Podravina 93.389 4,42

Vukovar – Srijem 204.768 9,70

Zadar 162.045 7,68

Zagreb County 309.696 14,67

City of Zagreb 779.145 100

Total 2.110.988 100 1.547.327 100 779.145 100

Source: Draft Rural Development Strategy for Croatia (UNFAO 2004)

2.1.4. Less favoured rural areas Under the Agricultural Act (OG 66/01 and 83/02), less favoured areas in Croatia facing difficult conditions for agricultural production and management are entitled to a higher amount of state aid under certain agricultural aid schemes. Such areas do not exclusively cover rural areas, but also some towns. The categories and definitions of less favoured areas are based on three legal frameworks:

1. The Mountain and Hill Area Act (OG 12/02, 32/02, 117/03, 42/05 and 90/05, see page 326), defines less favoured agricultural regions as those mountain and hill regions having considerable limitation in using the land due to the high altitude, step slopes, oriented towards sun, inefficient fertility, or other natural characteristics aggravating the living and working conditions of the population. They are divided into two groups (list of cities and municipalities that are covered by this Act is presented on page 389)

a) Local self-government units with negative population growth, low economic growth rates and development, high unemployment rates, and low capital and communal infrastructure and public services standards compared to the average in Croatia.

b) Local self-government units whose population, due to unfavourable climatic and natural conditions typical for mountain areas, living in more difficult conditions and having higher living costs in comparison with the population in other parts of Croatia.

2. All islands and the Pelješac peninsula (Act on Islands, OG 34/99, 149/99, 32/06 and 33/06, see page 325) are under special protection of the state due to their specific location and importance for the national development.

3. Areas of Special Government Concern are area groups receiving specific support under the Special Government Concern Programme (Act on Areas of Special Government Concern, OG 26/03, 42/05 and 90/05, see page 324):

a) Group 1; includes towns and municipalities which were occupied during the recent war, which are situated in the direct vicinity of the state border, whereby the distance between the town's/municipality's centre and the state border is not more than 15 km air route, and having no more than 5.000 inhabitants (according to the population census from the year 1991), as well as all other formerly occupied areas of towns, municipalities and settlements of the Croatian Danube region.

b) Group 2; includes towns, municipalities and settlements which were occupied during the recent war, and which were not allocated to the first group.


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c) Group 3; includes rural municipalities assessed as undeveloped parts according to four development criteria: economic growth, structural problems, demographic situation and special issues. This group is not entitled to a higher amount of State aid under agricultural aid schemes.

The regions based on these three categories of less favoured areas are illustrated in Map 2-4. Regions with difficult conditions for agricultural management include also areas of unfavourable hydrological and pedological characteristics, but their definition and classification is not yet finalised and approved by a regulation under the authority of the MAFWM.

Map 2-4: Areas with difficult conditions for agricultural production and management

Source: Ministry of the Sea, Tourism, Transportation and Development, 2005

2.1.5. War-affected rural areas In Croatia, mine pollution of rural areas as a consequence of the war 1991 – 1995 causes a whole series of economic, developmental and social problems. Housings, infrastructure facilities and land are still under mines. 12 counties, i.e. 121 municipalities comprising one quarter of the total population (1.113.000 inhabitants), are mainly affected by mine pollution. Since mine-polluted areas make up a large part of the rural territory in some war-struck regions, the speed and intensity of the rehabilitation of those areas determine to a large extent the process and progress of the local economy. The largest part of the mined agricultural and forest areas are in state ownership despite the fact that more than 80% of arable land is in private ownership, since the highest pollution rate prevails in forest areas, which are mainly owned by the state. In Map 2-5, the minefield locations are illustrated.


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Map 2-5: Locations of mine fields in Croatia (2005)

Source: Croatian Mine Action Centre, 2005

In 1998, the Croatian Government established the Croatian Mine Action Centre, which is responsible for the mine action planning and the demining of polluted areas. The total area, which is still polluted by mines according to the data collected by the Centre, amounts to 114.700 ha or 2,01% of the total land area. The highest pollution rate is given for forest areas (61.940 ha), followed by agricultural areas and arable land (19.610 ha), macchia and karst terrains (12.850 ha), grassland and pastures (10.670 ha). The largest mine-polluted forest areas are situated in Lika - Senj county (12.020 ha), followed by Osijek - Baranja county (11.890 ha) and Sisak - Moslavina county (11.520 ha). The largest share of agricultural areas and arable land polluted with mines are located in Osijek - Baranja county (5.580 ha), Sisak - Moslavina county (5.470 ha), Vukovar - Srijem county (4.680 ha), and in Karlovac county (2.060 ha).

The funds allocated from the state budget reached 20,3 million EUR (150,3 million HRK) only in the year 2006. 35% (32.000 ha) of the total mine polluted area, are considered as priority demining areas (arable land, houses and infields, infrastructure objects and the largest part of the grassland and pastures). Other mine-polluted areas relate to hill and mountain areas, mainly covered with forests, and to other areas of no significant economic importance situated far away from inhabited places. According to the National Demining Programme, the main priorities have been the demining of houses, yards, infrastructure, roads and other areas in the direct vicinity of the population. In the next step, the demining of agricultural and forest areas will take place. Since the Croatia Government signed the Ottawa Convention, it committed itself to the demining of the whole country until the year 2009. Although efforts have been made in the demining, the results are far from being satisfactory.


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By July 1st, 2007, total mine suspectable territory in Croatia was around 1.010 km2 (101.000 ha) of which 173,7 km2 (17.370 ha) is agricultural land. From 1998, only 212,54 km2 have been demined which is 1/5 of total mine-polluted area.

2.2. ECONOMIC AND SOCIAL SITUATION 2.2.1. Economic context

Since the year 2000, the national economic situation is characterized by significant economic growth, which can be seen in the increase and stabilisation of the main macroeconomic indicators (Table 2-5). Average annual GDP growth was about 4% for this period. The inflation rate of 1,8% in the year 2003 was recorded as being the lowest one in all transitional countries, although showing a growing tendency accompanied by an increase of the consumer price index. The structure of the Gross Value Added (GVA) of the sectors2 indicates a decreasing value for agriculture, hunting, forestry and fishing, no significant changes in the secondary sector but with increasing values for the tertiary sector.

The negative export balance trend is mainly due to an increased demand for imported goods like motor vehicles, furniture, food and beverages, which are either not produced in the domestic market or to a higher price, often combined with a lower quality. Between 2000 and 2005, the import continued to grow at lower rates, as a result of negligible economic growth in Croatia's main trade partners. In this process, the growth of export of services was much more intense than the growth of export of goods, the biggest growth being registered in the segment of tourism services.

Table 2-5: Main macroeconomic indicators 2000 - 2005 INDICATORS 2000 2001 2002 2003 2004 2005

GDP – (in million EUR, current prices) 19.976 22.177 24.468 26.234 28.395 30.949

GDP – annual growth rates (in %, constant prices) 2,9 4,4 5,6 5,3 3,8 4,3

GDP per inhabitant

(in EUR) 4.560 4.998 5.507 5.906 6.397 6.972

GVA of primary sector (% of GVA) 9,1 9,3 9,0 7,3 7,2 7,0

GVA of secondary sector (% of GVA) 25,5 25,2 23,8 23,7 23,6 24,1

2 Economic activites were grouped according to the NCEA Classification of Economic Activites in the EU.


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GVA of tertiary sector (% of GVA) 65,4 65,5 67,2 690 69,2 68,9

Consumer price index, (% annual change) 4,6 3,7 1,7 1,8 2,1 3,3

Average annual inflation rate (%) 4,6 3,8 1,7 1,8 2,1 3,3

Export of goods and services (% of GDP) 47,1 48,7 45,5 50,1 50,1 49,4

Import of goods and services (% of GDP) 52,3 54,6 56,4 57,9 57,0 56,4

Balance of payments current account (% of GDP) -2,4 -3,7 -8,6 -7,1 -4,9 -6,3

Sources: CBS and Croatian National Bank (2006)

The overall boosting Croatian economy contributed to the stabilisation on the labour market, although the registered unemployment rate still remains at a high level (see Table 2-6, see also Table 2-12 and Table 2-13) with a similar rate for women and men. The average net income level indicates an increasing tendency, yet the comparison between the sectors show, that the average income in the primary sector is below those in the secondary and tertiary sector.

Table 2-6: Employment and income situation 2000 – 2005 (per employee) INDICATORS 2000 2001 2002 2003 2004 2005

Unemployment rate (%) n.a. 15,8 14,8 19,2 18,1 18

Average income (net), all sectors (EUR) 454,3 483,7 508,1 538,2 570,0 597,8

Average income in Agriculture, hunting, forestry (EUR)

418,7 412,9 441,4 451,1 482,2 507,5

Average income in Fishery (EUR) 296,1 339,4 359,9 402,5 417,3 457,6

Source: CBS, 2006

It can be estimated, based on the analysis of the Census data 2001 referring to the income and employment situation of each municipality and town at county level that the income level of families and households in rural areas are lower in comparison with those in urban areas. The share of people, whose income from work is at the same time their main source of means for living, is much lower for those living in rural areas (29%) than in urban areas (37%). The percentage of those whose main source of income is the unemployment support is twice as great in rural than in urban areas (FAO 2004). In mainly rural areas, many households live from their subsistence farming as the main source of income.

The average registered unemployment situation in rural areas does not differ significantly from the one in urban areas at county level. As far as the age structure of the total population and of the unemployed persons is concerned, there is no significant difference between rural and urban areas. Yet, in predominantly rural areas in some counties, e.g. in Šibenik - Knin, Medimurje, or Varaždin, the unemployment rate is above 30%. If taken the hidden employment in terms of family members working on the family farm or part-time employees that are not registered, the situation on the labour market in rural areas is worse than given in the official statistics.

According to the data obtained from the Ministry of Health and Social Welfare, in August 2007 there were 47.716 applicants entitled to the social support, making the total of 105.755 people while that number in 2002 was 53.119 aplicants and 121.778 people In many predominantly rural areas the percentage of people receiving social support was 3 to 4 times higher than the national average registered Šibenik - Knin county (9,4%), Karlovac county (6,4%), Međimurje


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county (4,9%), Virovitica - Podravina county (7,1%), Sisak - Moslavina county (7,4%), Brod - Posavina county (6,6%) and Osijek - Baranja county (12,8%).

It can be assumed that the number of social support receivers, especially in rural areas, would be even higher if the Ministry of Health and Social Welfare had not had a right to enter a claim in the land register on property owned by a claimant. Although it is not a ‘mortgage’ but a type of insurance against possible misuse, some would-be claimants are repelled by this fact. This is especially true for elderly, single households in rural areas since they are distrustful of this institution preferring to give up the claim than let it be entered in the land register.

In February 2007 World Bank has presented report “Croatia – Living Standard Assessment”. According to this report, poverty in Croatia is found to be quite limited. Some 11% of the population is poor, and another 10% is at risk of poverty in the sense that their average consumption level is less than 25% above the poverty line. Some groups, numbering about 1% of the population, face severe deprivation. Households that are small (1 - 2 people) and large (more than 6 people) face greater poverty risks than others. More than three-quarters of the poor live in households headed by individuals with only primary or less education. And poverty is tightly associated with the activity status of the head of household, who are retired, unemployed, or economically inactive feature prominently among the poor. Retired people are more vulnerable to poverty in rural areas than in urban.

One fourth of the poor live in houses without water supply, and 8% live in houses without toilets, and 8% without a telephone line. In general, as one might have expected, access to services in Croatia is considerably worse in rural areas compared to urban, and for the poor compared to the non-poor.

Households headed by unemployed are a small but very vulnerable group.

Women have higher unemployment rates and lower wages than other labour market participants. Employment rates among youth and average earnings are particularly low - fewer than one in four people aged 15 - 25 years have jobs, and the unemployment rate for this age group is three times that of the age group 25 - 50.

2.2.2. Demographic characteristics and trends According to the last population Census of 2001, Croatia has 4.437.460 inhabitants compared to 4.784.265 inhabitants in 1991. In parallel to the general declining population trend in Croatia (-7,3%) in that period, the rural population decreased at a faster path, both absolutely and relatively. At the beginning of 1991, 2.187.000 people or 45,7% of the total population of Croatia lived in rural areas, whereas 10 years later in 2001 only 1.971.000 people (-10%) or 44,4% lived in the rural areas.

As regards the ethnic groups and nationalities, the 2001 Census indicates that out of the total population, 89,6% were Croatians, 4,5% Serbs, 0,5% Bosnians, 0,4% Italians 0,4% Hungarians, 0,3% Slovenians, 0,2% Roma and a rest of 4,1% of other groups and nationalities.

In 2001, 17% of the rural population were up to 14 years of age, 64% were counted as active economic persons (with women aged between 15 - 59 years and men between 15 - 64 years) and 18,9% as senior population (with women aged above 60 years and men above 65 years). The ageing index for the rural areas increased in that period from 0,79 (1991) to 0,96 (2001). An analysis of the age structure of the population living in rural areas reveals negative trends for the economic and social development process.

As illustrated in Map 2-6, in nine counties (42,9%) the proportion of the senior persons in total population is higher than the national average, in 10 counties (47,6%) their proportion is around the average and in only two counties (City of Zagreb and Međimurje), their share is lower. A much higher share of population of the 65 and older age group in total population lives in the rural and predominantly rural regions (e.g. Sisak - Moslavina, Karlovac, Lika - Senj or Šibenik - Knin) compared with predominantly urban areas).


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Map 2-6: Population aged 65 and older as share of total population and geographical distribution

Source: Rural tourism sector analysis report (DSDRA 2006)

Additionally to the ageing of the rural population, a much lower percentage of young women (age of 20 - 29) and much lower proportion of women in reproductive age (between 18 - 49 years) of total population live in rural regions compared with urban areas. In extreme rural regions, the respective coefficient equals to only 35% (e.g. Sisak - Moslavina county), i.e. about 10 – 14% lower than in the majority of urban regions (48 – 49%). As regards the share of the work contingent (% of females 15 - 59 years and males 15 - 65 years) in total population living in rural areas (approximately 60%) compared with urban areas (approximately 66%), the lowest share exhibits the extreme rural regions (e.g. Sisak - Moslavina county approx. 54%, Lika - Senj county approx. 56%).

Although in both, rural as well urban areas, the natural population growth has been negative in recent years; there has been a much stronger decline in rural areas compared to urban regions. In predominantly rural areas, the population decline was approximately three times stronger than in predominantly urban regions. In some predominantly rural counties, e.g. Sisak - Moslavina county, a natural decline of population in the years 1998 - 2001 was approximately five times stronger than the average of Croatia. Natural population growth rates differed strongly among the regions. In predominantly rural areas the vital index (live births per 100 deaths) during the years 1998 - 2002 amounted to less than 50%, e.g. Lika - Senj county, compared with 100 - 112% in Zadar County or 100 - 120% in Dubrovnik - Neretva county.

Strong negative growth rates of rural population is a trend which has divers origins: a low share of women in reproductive age living in rural areas, inadequate living conditions for young families, change of living pattern (preferences for having less children) or a higher share of economic active, younger people searching for a job career in urban centres. Although in some EU countries negative growth rates of population coincide with positive trends in economy both in urban and rural regions, in Croatia the situation is different and characterised by strong differences regarding opportunities for economic and social development among the regions. Overall, there is quite a striking difference between economic growth rates and growth rates of population in rural and urban regions and/or between less prospective and more prospective rural regions. The strong negative growth rates of population living in extreme rural regions is a result of relative and/or absolute deterioration of living conditions for young families and an


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increased trend towards out-migration to urban centres or more prospective rural/tourist regions.

The pattern of in- and out-migrations observed between urban and rural regions confirms previous considerations, i.e. preferences for out-migrations from rural to urban regions due to poor economic and social living conditions in rural areas and a strong tendency to change a place of residence in rural regions by moving to the nearest town located in the same county. Both developments indicate strong preference for moving out from remote, isolated and neglected rural areas to more prospective regions in urban centres or rural tourist areas. As the population of economic migrants is in majority (except of migration caused by the war between 1991 and 1995) younger, more economically active and better educated than average rural residents, a strong trend of out-migration from rural areas increases problems of aging, dependency and social isolation of the remaining population. Furthermore, an increasing outflow of young families and young women from rural regions may contribute to deterioration of a quality of education of those living in rural areas, e.g. necessity to close existing schools due to a low pupils frequency, or to a lowering of a disposable income of remaining population, e.g. increase of transportation costs and time of journey of those children/parents who have to travel to another school (in case schools located in remote regions are combined together, etc.).

2.2.3. Gender equality Gender equality is one of the fundamental values of the constitutional order of the Republic of Croatia whose protection is ensured by the Constitution itself.

In October 2003, the Gender Equality Ombudsperson was appointed, and in 2004 the Government Office for Gender Equality was established. National Policy for Promoting of Gender Equality (OG 114/06, effective from October 23, 2006) was adopted by the Croatian Parliament on October 13, 2006. The Gender Equality Ombudsperson monitors the implementation of the Gender Equality Act (OG116/03, effective from July 30, 2003) and other regulations concerning gender equality.

The Gender Equality Act defines protection against discrimination on the grounds of gender and equal opportunity mechanisms for women and men.

All state bodies, legal entities with public authority, and legal entities predominantly owned by the state and local and regional self-government units are obliged to develop plans of action on the basis of an analysis of the position of women and men and determine reasons for introducing special measures, goals that should be achieved, and ways to implement and monitor them.

As these obligations were not entirely met, it is not likely that legal entities will comply with their obligation stipulated by Gender Equality Act that is, implementation of gender-sensitive policy or gender-mainstreaming. According to this provision, these bodies are, in all stages of planning, adopting and implementing decisions or actions, obliged to evaluate their effects on the position of women and men, with the aim of achieving true equality of women and men. The report of the Gender Equality Ombudsperson for 2005 shows that this provision was not implemented consistently in this reporting period.

Improvements are visible in the prevention of violence in the family, especially owing to the efforts of the Ministry of Family, Veterans' Affairs and Intergenerational Solidarity and the Ministry of Internal Affairs.

For the purpose of strengthening women entrepreneurships, Ministries, bodies of the local authority and non-governmental associations implement programmes for strengthening women entrepreneurships and also for the financial strengthening of women. One of the goals of the Operational Plan for Development of Small and Medium Entrepreneurships in 2006 included creation of preconditions for quicker inclusion of women, as a target group, by assigning credit subventions.

MAFRD by its activities promotes role of women in rural areas through sponsorship for the election of the most prominent Croatian rural woman, which was held for the seventh time in


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2006. The most prominent rural woman by her personality symbolizes the value and importance of the creative, enterprising women in the village and on the farm with the purpose of affirmation and raising the quality of life, preserving of families, cultural heritage and improvement of the particular position of the rural woman in the Croatian society.

Croatian Agriculture Extension Institute (CAEI) also within its programme of work with the family farms supports and promotes role of women on the farm and in society through cooperation with the women associations and organization of lectures, exhibitions and manifestations. Department for the Rural Development of CAEI each year organizes and celebrates the Rural Woman World’s Day, since the year 2000.

There is no relevant data about position of women in rural areas regarding gender equality.

2.2.4. Structure of agricultural population The size of both, the rural and agricultural population3 has been in constant decline since 1991, which is related to war consequences such as depopulation and mine-pollution of certain areas, structural changes in the economy and society including high negative births rates in the predominantly rural areas.

In 2001, the rural population accounted for 44,4% of the total population, while the agricultural population accounted for 5,5% of total and 11% of the rural population in Croatia. During the period of the last two censuses, the total agricultural population dropped absolutely by 40% and the “active 4” agricultural population decreased by 37% (see Table 2-7). The share of economic active persons in agriculture increased slightly from 64,7% (1991) to 67,5% in 2001.

According to the census results, less than 20% of the agricultural households had more than one active family member working full-time on the farm. Family farming is in most cases conducted as part-time farming often combined with an employment in industry or service sector.

Table 2-7: Change in agricultural population (1991–2001) Number Change

Agricultural population 1991 2001 %

Total 409.647 245 987 - 40,0

Active 264.895 165 942 - 37,4

3 Agricultural population are persons whose profession is classified in two groups (according to National Classification of Professions): ”agriculture, hunting, forestry and fishery workers ” and “simple agricultural forestry and fishery professions” and all other persons who they support 4 Active agriculture population of labour force are employees and unemployed persons classified by economic activity in referent period


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Source: Population census from the year 2001

The ageing index (1,79 in 2001) of the agricultural population is twice of the one of the rural population. According to the farmers inscribed in the Register of Agricultural Holdings of the MAFWM, their age structure shows that 50% of the farmers are older than 55 years and only 8% are up to 35 years old (8% = <35 year, 17% = 35<45 years, 25% = 45<55 years, 22% = 55<65 years and 28% = >65 years).

2.2.5. Educational situation The educational level in the rural areas compared to urban areas is in the average much lower. The share of people, who finished primary school only in total population of age 15 and above, is in rural areas almost twice as high compared to urban regions showing also regional differences. In the majority of counties, the percentage of those who live in rural areas and finished basic school only (older than 15 years of age) varies between 20 - 35%. In some counties, e.g. Međimurje county, almost every third adult person living in rural areas has only a basic education. The rural regions are especially disadvantaged regarding the share of persons with medium- or higher education, e.g. a secondary level of vocational education, high school, or a university degree. In some counties the proportion of population with higher level of education living in rural areas accounts only for one quarter of the proportion in the urban areas.

The Census data of 2001 show that in all 21 counties the share of people without any education is much higher in rural compared with urban areas. The percentage of population older than 15 years of age without any education, in some rural areas, are 3 - 4 times higher than a respective ratio in urban areas of the same county (e.g. Zadar county or Karlovac county). In Zadar county or Šibenik - Knin every 12th adult person living in rural areas has not finished any school. In the Mountain Region the respective coefficient of those who have not finished any school is almost 60% higher than the country’s average.

The educational situation in the rural areas shows a number of negative developments. From 1990 to 2000, the number of basic schools (primary and secondary schools) in rural areas decreased by 25%, which is linked to the migration from rural areas. This situation has led at the one hand to a gradual increase of the number of multi-grade classrooms in rural areas, which can lead to the lowering of educational quality due to insufficient specific preparation of teachers for multi-grade teaching. On the other hand, in some rural areas travel distances for rural children have become longer and access to additional pedagogical and non-pedagogical activities after or before normal school-hours (sports, library, out-door activities, art, etc.) became more difficult for them.

Agricultural education in Croatia is delivered through formal education institutions at two levels: high agricultural education in six agricultural schools and about 20 high schools and highly qualified education in professional courses in two colleges (at Križevci and Požega) and two universities (in Zagreb and Osijek).

2.2.5.1. Adult educational system Adult education, including farmers’ education is defined by the Adults Education Act (OG No. 17/07, from 12 February 2007) and it’s within the competence of Ministry of Science, Education and Sports. Adult education is a process of learning intended for adults with the objective of acquisition of qualifications necessary for the employment (acquisition of qualifications for the first profession, retraining, acquiring of professional knowledge and skills and their intensification) and realization of rights on a free personality development.

Adult education can be a formal, non formal, informal or / and self directed learning process and it is a part of a unique education system in Croatia, proceed as a public service.

Those participating in monitoring and development of adult education system are:

Council for adult education (expert and advising body of Government of Croatia) and


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Agency for adult education as an institution for monitoring, development, appraising and improvement of adult education in Croatia, established by Governmental regulation in 2006.

Agency executes tasks and businesses of national agency for implementation of Integrated Lifelong Learning Programme and Youth in Action Programme of the European Commission.

Knowledge, skills and capabilities acquired by adult education are proved by document. Institution for education keeps andragogy files and also files are kept on institutions for education, programmes, attendants, workers and other important data for monitoring situation in activities.

Institution for adult education is capable for implementation of programmes if it has registered activity for adult education and if it has rooms, cadre and material conditions determined by the programme, which has to be harmonized with standards and norms for their execution.

If an institution for adult education does not have harmonized programmes it is obliged to harmonize them during one year period of time from the date that Act has entered into force.

Concerning educational programmes and courses for farmers, in Croatia 36 institutions are currently authorized and they execute qualifying programmes for agricultural producers, for the objective of acquirement of different professions (see annex 12.20, Table 12-21). Qualification programmes are consisted of theoretical and practice part of the courses.

By national rural development measures MAFRD will ensure means from the state budget for the purpose of co – financing of attending certified programmes of training. This measure will be established until the end of 2007, therefore implementation of is planned for 2008.

Additional trainings with the purpose of acquiring necessary additional skills and capabilities concerning relevant Community standards on environment, hygiene, animal welfare, public health, animal and plant health, occupational safety, CMO in fruit and vegetables will be provided in cooperation with CAEI and CLC.

As a first step, CAEI and CLC employees will be trained in these issues, in the frame of on going PHARE 20055 project and by competent national bodies on specific courses (i.e. veterinary, sanitary, environment protection requirements) in order to educate potential IPARD beneficiaries and other interested participants, as a second step.

Also all other parties (public institutions, NGOs, chambers of economy and crafts, etc.) will be invited to contribute to this activities according to their field of expertise.

Special attention will be given to preparation of agri environment training programme for three pilot areas under AE measures (see chapter 5.2.1) due to fact that potential beneficiaries have to be certified in order to participate in the programme. Duration of this training programme and curriculum will be elaborated within the PHARE 2005 project. Education of final beneficiaries will be conducted by CAEI employees, who will be trained in all relevant issues.

5 Institutional Capacitiy Building and Support to SAPARD/IPARD Implementation in Republic of Croatia


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Common goal and main objective of these educations is preparation for better understanding and implementation of Community standards at all levels.

2.2.6. Infrastructure endowment and housing quality Rural households in Croatia are generally characterised by poorer access to basic infrastructure endowment (population/roads, road density, water supply per capita, waste water from public sewage system, telephone connection) and having poorer housing quality (electricity, water supply system, sewage disposal system, central heating, kitchen, toilet and bathroom facilities in the house) than households in urban regions in Croatia slowing down the economic and social development process and as well posing environmental risks. Major indicators as indicated in annex 12.17 and annex 12.18 are lower in rural (municipalities) than in urban regions (towns) as shown by the county with predominantly rural character like Karlovac, Koprivnica - Križevci, Bjelovar - Bilogora, Lika - Senj, Virovitica - Podravina, Šibenik - Knin or Dubrovnik - Neretva. The most significant differences concern the connection to central heating systems, sewage system, water pipelines and road network density. Also energy supply in many rural areas is unstable and affected by numerous disruptions. As regards the heating system, it has to be taken into account that due to warm climate conditions in counties in the southern of Croatia, rural households are not connected to the central system using wood during colder periods.

Although if households are connected to the sewage systems, the waste water in municipalities is not treated, which creates environmental problems. In 2003, only 21% of the sewage water in municipalities was cleaned, of which only 12% was subject to complete cleaning process (physical, chemical and biological cleaning). There are 82 plants for cleaning sewage water in Croatia, but only three of them are situated in swamp areas. Large quantities of unclean sewage water are released directly into rivers or into the sea. In order to improve this situation, the Government has established a plan for the construction of plants for cleaning sewage water in settlements with at least 50.000 inhabitants, and at local level to construct such plants for cleaning sewage water even in smaller settlements.

Another barrier to the socio-economic development is the poorly developed network of local streets and unclassified roads in the rural areas. According to the classification of the National Programme for Road Construction and Maintenance and according to the Act on Roads, only 18% of all roads are in a good condition. The total length of all local roads in Croatia amounts to 10.535 km, 10% of which are unclassified roads. Municipalities are responsible for the maintenance of local streets and unclassified roads referring to areas used for any kind of traffic, available to a large number of different users (rural roads, field and forest roads, paths on river banks, access roads, parking lots, gasoline stations, etc,) as defined in Public Roads Act (OG 180/04 of 20 December 2004, see page 320). Investments in unclassified local roads are of special interest in agricultural zones designated according to Act on Spatial Planning (OG No 30/94, 68/98, 35/99, 61/00, 32/02, 100/04). Good road infrastructure contributes to efficient business and further development of farms in agricultural zones.

In the Adriatic region, fire-fighting forest roads have an important economic and environmental role. Such roads serve as multipurpose roads, since they are not only used as infrastructure facility for fire fighting purposes, but also as access roads to agricultural land. Private agricultural land in the Adriatic region is very fragmented and surrounded by state-owned and private forests, which has contributed to the situation that agricultural land has been abandoned due to lack of access to or maintenance of multipurpose fire-fighting roads.

Taking into account that more than a third of territory of Croatia is covered by forests, what is far above the average of the middle Europe, and also considering multiple value benefits from the forest ecosystem, fire protection of forests demands full attention and maximum efforts of all relevant factors which are in any way included in improvement of various activities in the open space. Therefore, there is a need for ongoing activities on improvement of fire protection measures which are to be implemented, first of all for the reduction of the number of fires in the open space by organizing the repressive measures and for the purpose of forest areas and forest lands taken by fire to be reduced.


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According to statistical data of Hrvatske Šume Ltd., Zagreb, on forest fires, for the period from 1992 until 2005 in Croatia, in average area taken by fire was 14.300 ha per year, including forests and also other areas (the least size of the surface areas taken by fire was in 2005 – 3.135 ha, and the most areas where the fire occurred were in 2000 – 68.171 ha). Almost 90% of forest areas taken by fire are related to forest grown on karsts (in sub – coastal areas and on the islands), which is very sensitive issue considering ecology aspects. Forest fires are most dangerous in the coastal region considering the nature of karsts areas, where forests have special treatment and also the way they are managed, concerning their general practical functions. Occurrence of forestry fires is regular characteristic in the coastal regions, according to conditions what have been created by nature and by men. In that areas, primary function of forests is ecological and the second one is a social function, the least important is the economy one, i.e. using of timber. Because of that, management of forests is not possible without state interventions. Great part of forests management is concentrated on a protection from loosing of land coverage, timber, degradation of agricultural soil, destruction of infrastructure and objects for housing, and also loosing of recreational and landscape values and other. Except that, improvement of consequences occurred by the forestry fires is representing a great load as for the state budget so as to private sector.

It has to be emphasized that more than 60% of the forest fires occurred on a deserted agricultural land where natural succession occurred with woody species and on unarranged and unapproachable private forests areas, which are favourable for extension of fires and make extinction impossible. Also, the greatest number of forest fires is still taking place on the areas already taken by fire; there are more habitats which have been destroyed after just recently being regenerated by nature or by men means. To increasing trend of areas taken by fire contributes the fact that about 30% of occupied areas deserted after the war was overgrown in a heavily unapproachable kappice and forest. These areas represent the biggest problem of fire protection, especially considering land mines.

When taking into account conditions and site of the surface area of private forests compared with the state forests, forests in private ownerships are in greater danger.

Acts on forest fire protection are: The Fire Protection Act (OG No. 58/93, 33/05, see page 319), and Regulation on a Forest Fire Protection (OG No. 26/03). According to mentioned regulations, owners and users who are dealing with all the aspects of open spaces are obliged to maintain ‘all forest roads and pathways in the condition which enables regular access for the fire brigades vehicles.’ On the other hand, all legal persons with the responsibility of managing state forests and the units of local government who are managing forest owner’s possessions, are obliged to construct a fire protection Plan.

State bodies competent for supervision of fire prevention measures are Ministry of Internal Affairs - fire protection inspectors and MRDFWM - forest inspectors.

Financially, the most expensive and the most demanding measure of prevention is obligation of construction and maintenance of necessary net of fire firebreaks with the elements of the forest roads – multipurpose roads. According to Act, fire protection in the private forest fell under


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liability of the local and regional authorities, and those usually do not have enough funds for all the measures to be implemented.

Based on statistical average of area taken by fire in Croatia of 45 ha per fire (1992 – 2005), what is considerably above average of the Mediterranean countries (average figures are, for instance in Italy - 9 ha per fire, Spain - 9 ha per fire, Portugal - 5 ha per fire, in accordance to UNECE6 data referring period from 1991 to 2001), it is obvious that the fire prevention system must be modernized. The main reason for the existence of such vast areas taken by fire is the result of the unapproachable and difficult terrain, that is, insufficient number of fire prevention roads and cuts. All those factors prevent quick and efficient action.

The greatest number of fire occasions, and with that the greatest need for the construction of the fire preventions roads with elements of the forest road – multipurpose roads, is in I and II level areas of fire danger, coastal forests and those on the islands. But, because of neglected and unapproachable terrain continental forests are also endangered. With the cultivation of forests and with an increase of their availability due to road constructions as a result of forest management (conversion of degrades forms of forests into more valuable forests of the high quality, from the economy point of view), fire endangerment will be decreasing.

In the National Forest Policy and Strategy, as the most important document of the Croatian forestry, one of the primary measures is the implementation of the support measures for fire and civilian protection. For these purposes, the Republic of Croatia annually invests significant funds for the fire prevention in forests. Hrvatske Šume Ltd., Zagreb, annually invests more than 13,66 million EUR for the implementation of the fire prevention measures in the state forests.

As Annex 12.18 indicates, more than two third of the rural households are not connected to central heating systems. Investments into heating plants, which use biomass as a source of energy, would improve this situation, an increase in the use of biomass as a source of energy is defined by strategic activities of the National Forestry Policy and Strategy. One of the priorities is the use of organic agricultural and forest waste as a heating source, which would significantly improve living conditions of the rural population, as well as having positive environment. Investments in heating plats to improve living conditions and infrastructure in rural areas is also one of the objectives of the ROP’s in Croatia.

2.2.7. Rural tourism Rural tourism is a spectrum of activities, services and additional facilities organized by rural population mostly on family agricultural households in order to attract tourists to their area, and earn additional income. Official statistics knows only the concept of continental tourism, and it shows that in total tourist business of the Republic of Croatia in 2006, continental counties (without the City of Zagreb ) participated with 5,2 % arrivals and 2,2 % overnight stays. (Source MSTTD 2007.)

6 United Nations Economic Commission for Europe


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Rural area, as a basic resource for development of rural tourism, is huge potential for satisfying needs of urban population for piece and open recreational area. Rural tourism include visits to national parks and parks of nature, and other heritage of rural areas, panoramic drives, enjoyment in rural landscape and stay in agricultural holdings.

Tourism in agricultural holdings is well defined segment of rural tourism, which enables farmers to extend their economic activities, and enables higher added value to final agricultural food products.

Catering Act (N/N 138/06) and Ordinance on Catering Services on Agricultural Holdings (O/G 48/95, 47/97, 35/96, 25/99, 29/00, 196/03), stipulate provision of catering services on agricultural holdings. Also, Act on Providing Services in Tourism (N/N 68/07) stipulates providing of tourist services in such households. The number of registered tourist households in Croatia is rising and it continually develops for the last ten years, since register is being kept.

Act directly defines agro tourism tourist services as rental of horses for riding, photo safari, picking of crops, gathering of fruits and vegetables, harvesting and other services in agricultural households.

According to data from March 2007, (source CCE) in the Republic of Croatia 352 agricultural holdings for agro - tourist activity (TSOG) are registered with total of only 886 beds. From the total number of registered TSOG 288 or 81 % offers food, while 207 or 59 % has tasting rooms (wine, brandy, etc.).

Table 2-8: Distribution of TSOG, number of beds and offering by county (2007)

County Number of agricultural holdings (TSOG)

Number of beds in TSOG Food service

Tasting room for wine/ brandy

Bjelovar-Bilogora 2 16 2 2

Brod-Posavina 0 0 0 0

Dubrovnik - Neretva 70 23 70 70

Istria 64 253 47 35

Karlovac 0 0 0 0

Koprivnica-Križevci 6 22 5 3

Krapina-Zagorje 7 20 6 6

Lika-Senj 0 0 0 0

Međimurje 8 10 8 8

Osijek-Baranja 56 192 47 3

Požega-Slavonia 0 0 0 0

Primorje - Gorski Kotar 0 0 0 0

Sisak-Moslavina 8 27 7 3

Split-Dalmatia 31 12 31 16

Šibenik-Knin 21 16 21 21

Varaždin 6 6 3 5

Virovitica-Podravina 0 0 0 0

Vukovar-Srijem 2 0 2 2

Zadar 41 248 11 10

Zagreb County 30 41 28 23

Total 352 886 288 207 Source CCE, 2007


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According to data form Economy Department of the State Administration Office by counties, 6 counties have no registered TSOG: Brod-Posavina, Karlovac, Lika-Senj, Požega-Slavonia, Primorje and Gorski Kotar and Virovitica-Podravina.

Statistic monitoring of this segment is at the beginning, so it can not be taken fully as a reference. Central Bureau of Statistics of Croatia, monitors tourist movement in „agricultural households“ only from 2004, in accordance with definitions from regulations that stipulate issues on agrotourism households.

Rural tourism is as an activity closely related to agricultural production, rural environment, and rural way of life. As well as being a type of tourism, it shows - in the best possible way, traditional lifestyle and ambience. Also, it directly connects to the cultural and historical traditions of everyday life. Rural tourism is not only based upon tradition, but is also interesting and unique, because of the increasing value of the destination, mainly through rural hospitality, and originality of the product. The activities which are held on an every-day basis in rural area are not exclusively focused on tourists – who are guests and other features such as location of accommodation and good value for money. For the visitors, rural tourism offers something different from familiar models of tourism, whereby tourists are actively seeking a leisure experience in rural environment with its natural and cultural features.

Considering the different trends in rural tourism, it is obvious, that a wide range of possibilities for the development of this segment exists. First of all, in regards to typical activities, which can be developed and offered in the Republic of Croatia to potential guests, there is linkage to education and training, relaxation, recreation or adventure. Some of these activities are determined by a certain time of year (seasonality), others are very suitable for developing and extension of the season, some can be done in a couple of hours, others demand a day or two or maybe even more. They are determined by the surrounding nature (nature-close-tourism – cycling, walking, riding, hunting, fishing, canoeing etc.), adventure tourism (rafting or kayaking on white water, climbing, mountain biking, paragliding), educational tourism (discovering local gastronomy and wines, making of local souvenirs, music, painting, language-learning, discovering of history and heritage etc.), cultural tourism (festivals and events, music, theatre, discovering traditions of living in the countryside, cuisine, tasting of local specialties) as well as other types of selective forms of tourism, which can develop as an individual segment or an addition to existing tourist products in rural areas. Relatively precise data on national, county and local level exists only for the farm tourism referring to the number of rural households or family farms, where the hosts offer services according to the Act on Catering. Between 2000 and 2005 the registered FT units have more than doubled (see Table 2-9).

Table 2-9: Development of farm tourism units (FT) (2000 – 2007) YEAR No, FT

2000 151

2001 175

2002 269

2004 254

2005 310

2007 352

Source MAFWM, MSTTD, CCE (2007)

Expected solutions to remedy detected shortcomings of rural development of agrotourism in Croatia:

• Support for building of adequate communal infrastructure of all facilities as a precondition for tourism development in rural areas

• Support for all programs and facilities and education contents, gaining knowledge and experience for leading and performing activities of rural tourism on agricultural households


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• Support for building, reconstruction and equipping of accommodation in agricultural households

• Support for traditional crafts, i.e. revitalization of the present ones and opening of new entrepreneurial initiatives

• Support for initiatives of direct sales, i.e. equipping of sales areas on the household

• Support for building/equipping of thematic paths in the form of promenades, cycle tracks, bridle-path, waterways, etc.

• Support to marketing activities

• Rural restructuring (construction and reconstruction of new central ambient)

• Support related to environmental production and offer at TSD

2.2.8. Rural organisations and local development planning

2.2.8.1. Development of civil society in Croatia Civil society organizations in Croatia were developed especially as a consequence of the war (1991 – 1995) by acting of humanitarian and peace-making organizations.

„The National Strategy for Creation of Enabling Environment for Civil Society Development 2006 - 2011“ adopted by the Government of the Republic of Croatia on 12th July 2006, provides basic guidelines to be achieved by 2011, in order to improve the existing and create a new legal, financial and institutional system of support to civil society development, and to create an enabling environment for further development of civil society in Republic of Croatia.

The Croatian Government adopted an Operational Plan for the Implementation of the National Strategy was on 1st February 2007.

As shown in annex 12.22, Table 12-23, 31.209 associations, 100 foundations and 1 trust-fund were registered in 2006.

In accordance with the Programme of Cooperation between the Croatian Government and the NGO sector, adopted on 4 January 2001, approximately 15 charters on cooperations between cities, counties and civil society organizations performing in those areas have been signed to determain the Craotian model of relations between the government and civil society.

The Office of the Croatian Government for Associations (1988), the National Foundation for Civil Society Development (2003) as well as the Council for Civil Society Development set up by the Government supporting the development of civil society and the inter-sectoral co-operation.

Office of the Croatian Government for Associations is mainly to propose new legal frameworks for the activities of the non-governmental and non-profit sector in the Republic of Croatia, monitoring the implementation of the adopted proposal of the Programme of co-operation.

The Council for Civil Society Development, a consultative and expert body of the Croatian Government, is to monitor, analyze and evaluate the implementation of the Programme of cooperation.

The Foundation should support the development of the civil society in Croatia. The foundation offers expertise and financial support to programmes that encourage sustainability of non-profit sector, inter-sector co-operation, civil initiatives, philanthropy and volunteerism and which improve democratic institutions of the society.

The Office for Associations in the period from 1998 until 2003 based on the Programme of Allocation of Financial Support to Associations financed a total of 1997 projects and programmes of associations in a total amount of EUR 14.389.199 through public tenders and systematic monitoring of the implementation of financed associations’ projects and


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programmes. The type of funded projects covers all different types of the associations and their main group activities.

Having followed the unbalanced development of parts of Croatia, in general it can be encountered inequality in the development of civil society in individual regions. Economic development of a certain region most certainly affects the development of civil society, but this is not necessarily in a positive correlation.

Currently there is no comprehensive, strategically determined and operative system which would enable civil society organizations to participate as equal partners and contribute to the development of their local environments and regions. This equally applies to the system of financing and the system of decision-making and development management.

It ensues from the abovementioned that an approach is necessary for sustainable development of all Croatian regions (counties), in which all interested parties will take over responsibility and jointly contribute to socio-economic development.

2.2.8.2. The Leader – like experiences in Croatia The involvement of local citizens and stakeholders in policy making is till to be considered fragile in the Republic of Croatia. In order to ensure that local initiatives and involvement develop and prosper, support and reinforcement of the local communities is of great importance. Besides from contributing to prevent or delimited depopulation of rural areas and to increase the quality and attractiveness of local rural communities, it will also contribute to building up social and human capacity in rural activities. Activities carried out by local communities contributes to the implementation of the so-called ‘self-governance principle’, which indicates that responsibilities and decisions are delegated to the local level.

The exact capacity level of human resources at the local level has though not been measured and it is therefore difficult to establish a baseline for the current situation.

However, there is still a great need for strengthening local governance and democracy in the rural areas including building up trust and partnerships between the counties, the municipalities and local communities, private sector as well as the civil society (women, young people etc., who play an important role in future LAGs, and the development of local development strategies). Time and resources are therefore strongly needed to build up the necessary capacities in form of training and education likewise to increase cooperation and trust amongst the key players. Another challenge is to ensure quality in education and training programmes as well as to make the local administration more efficient in its work.

A major challenge, which the Croatian authorities, including MAFRD also are facing, concerns how to motivate local rural inhabitants to join projects and local partnerships. The organisation degree of social civil society in Croatia is considered to be low compared with EU member states. It is a common experience of Croatian stakeholders that motivation is essential and that


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emphasise needs to be given to the initial stage of establishing LAGs7, not just in terms of informing about the potentials with Leader, but also by supporting the process of identifying and establishing LAGs.

The experiences from the preparation of the ‘ROP’ and from the other initiatives described above are considered very important and useful in order to ensure a successful implementation of the Leader approach in Croatia and in order to face the challenges of low educational level, migration from rural areas to cities, low income and a high unemployment rate that characterises rural areas. Issues that can not only be solved by applying the Leader approach alone, they need to be tackled by several means. Leader is however considered an extremely important and useful tool due to its bottom-up approach ensuring that local needs and demands are met in a local context. The chosen strategy for the IPARD period is therefore to focus the limited resources available on establishing LAGs and to prepare for implementation of local development strategies by building up capacities and resources locally through training, workshop sessions, information and promotion activities.

The actions concerning development of civil society (see Chapter 2.2.8.1) will contribute to LEADER related activities as well.

2.3. SITUATION ANALYSIS IN AGRICULTURE, FISHERIES, FORESTRY AND FOOD PROCESSING INDUSTRY

2.3.1. Structural indicators for the agricultural, forestry, and fishery sector

Agriculture, forestry and fishery sector play an important economic role in Croatia. The total value of agricultural production increased by 17% from 2000 (1.496 million EUR) to 2005 (1.800 million EUR), yet its share in total GDP decreased from 7,37% to 5,75% (see Table 2-10).

Agricultural production together with forestry and fishery sector in the year 2001 amounted 1.670 million EUR – approximately 197 million more than in year 2000. Share of stated sectors in total GDP in the year 2001 was 7,54% thus showing a slight increase compared to year 2000. In the year 2002 there is a significant raise in total amount of agricultural production up to 1.793 million EUR but the share in total GDP is decreasing for 2,8% on 7,33%. In the year 2003 there is a decrease in total production for 5,69% compared with 2002 and also a decrease of share in total GDP on 5,99% due to the consequences of the long-lasting drought

7 LAG – Local Action Group


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in the year 2003. In the next three years there is a raise in amount of total production and also a decrease of share in total GDP thus showing that the whole economy is forwarding much faster than agriculture.

Table 2-10: The share of the agricultural sectors in the gross domestic product (2000-2005) Description 2000 2001 2002 2003 2004 2005

Total GDP (million EUR) 19.989 22.173 24.457 26.246 28.376 30.950

Agriculture, hunting, forestry and fishery (million EUR) 1.473 1.670 1.793 1.571 1.678 1.780

Share in GDP 7,37% 7,54% 7,33% 5,99% 5,91% 5,75%

Index (2000 = 100) 100 111 118 106 112 117

Change % 11,05% 6,50% -10,63%

5,93% 4,70%

Currency ratio (HRK/EUR) 7,63 7,47 7,41 7,56 7,50 7,40

Source: CBS, 2006

The agricultural and fishery sectors play also an important role on the labour market as well as source for self-employment.

According to the data obtained from CBS, for the years 2000 to 2005, there were in average 1.371.000 employed persons, 93.857 of which were employed in agriculture and fishery sector or were owners of their own business. The share of employed persons in agriculture, fishery and forestry in the total employment rate was 5,72%. With regard to previous years the employment rates in the above mentioned economic activities are decreasing (since the year 2000 there is a decrease of an average of 0,75% per year). The number of individual farmers presented in the Table 2-11 include also those farmers who are registered at the Croatian Pension Insurance Institute.

There is an obvious raise in number of persons employed in crafts in agriculture, hunting and forestry (993 persons in year 2000 up to 2.824 persons in year 2005). The increase by 285% (2000 – 2005) can be explained as result of National Support Programme for Promoting Small and Medium Entrepreneurship implementation (see Chapter 3.1.6.4.). Also the number of individual farmers that was very high in year 2000 (83.196 persons) is decreasing at annual rate of approximately 7,5% and it reached 62.868 persons (24,3% 2004 – 2000).

Table 2-11: Employment structure in agriculture, fishery and forestry (2000 – 2005)

2000 2001 2002 2003 2004 2005

TOTAL EMPLOYED 1.340.958 1.348.308 1.359.016 1.350.245 1.409.634 1.420.574

Agriculture, hunting and forestry

30.900 30.400 29.300 29.395 29.396 27.522

% 2,3 2,25 2,16 2,18 2,09 1,94

Fishery 1.100 1.200 1.400 1.581 1.581 1.442

Per

sons

em

ploy

ed

in

lega

l ent

ities

% 0,08 0,09 0,1 0,12 0,11 0,1

Agriculture, hunting and forestry

993 1.294 2.024 2.340 2.340 2.824

% 0,07 0,1 0,15 0,17 0,17 0,2

Fishery 2.449 2.577 2.773 2.862 2.862 2.900

Per

sons

em

ploy

ed

in

craf

ts

% 0,18 0,19 0,2 0,21 0,2 0,2


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Individual farmers 83.196 75.772 70.171 NA 62.868 NA

Per

sons

w

ith

activ

e in

sura

nce

polic

y at

th

e C

roat

ian

Pen

sion

In

sura

nce

Inst

itute

% 6,2 5,62 5,16 NA 4,66 NA

TOTAL NUMBER OF EMPLOYEES IN AGRICULTURE, FORESTRY AND FISHERY

118.638 111.243 105.668 36.1788 99.047 34.6889

% 8,85 8,25 7,78 NA 7,03 NA10

Source: CBS 2005, Processing: MAFWM 2006

When looking at the sex structure of employees Table 2-12, it can be noticed that there is an increase in employed women in agriculture and also in general. In first half of year 2002 there were 15,26% of all active women employed in agriculture and it was slightly below share of men but in total figures there were 134.000 men employed in agriculture and only 103.000 women. Following year there was noticeable trend in increased share of women employed in this sector and also decreased in employed men.

Table 2-12: Active persons and employment in agriculture according to sex

Total active Total employment Employment in agriculture11

Total Men Women Total Men Women Total Men Women

% 84,9 86,6 82,62 15,52 15,9 15,26 2002/I

Total 1.792 976 817 1.521 845 675 236 134 103

8 Without individual farmers 9 Ibid 10 NA – not available 11 Includes agriculture, forestry and fishery according to NCEA


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% 85,6 86,6 84,12 14,94 15 14,84 2002/II

Total 1.792 969 825 1.533 839 694 229 126 103

% 85,9 87,2 84,26 16,84 16,2 17,65 2003/I

Total 1.791 984 807 1.538 858 680 259 139 120

% 85,6 86,7 84,29 16,81 16,1 17,63 2003/II

Total 1.793 972 821 1.535 843 692 258 136 122

% 86,2 87,6 84,62 N.A. N.A. N.A. 2004/I

Total 1.836 1.004 832 1.583 879 704 N.A. N.A. N.A.

% 86,2 60,2 84,02 N.A. N.A. N.A. 2004/II

Total 1.789 969 820 1.542 583 689 N.A. N.A. N.A.

Source: CBS, Labour Force Census

Between 2000 and 2005, there was a significant increase of 21% in average salaries in the agricultural sector, due to the growth of the total national economy and GDP. As presented in the Table 2-13, the comparison of average salaries in this sector with average salaries at the national level for the year 2005 shows that salaries in agriculture, hunting, forestry and fishery are below (15,11% for agriculture and forestry and 23,45% for fishery). Looking on all the years the backwardness of salaries is decreasing.

Table 2-13: Average salaries in business entities in the agriculture and food processing industry, 2000 - 2005 (in EUR)

YEAR 2000 2001 2002 2003 2004 2005

Average income (net), all sectors (EUR) 454 483 508 538 570 598

Agriculture, hunting, forestry (EUR) 419 413 441 451 482 507

Increase/decrease (2000), % - -1,37 5,42 7,73 15,17 21,21

Compared with all sectors, % -7,85 -14,63 -13,15 -16,19 -15,41 -15,11

Fishery (EUR) 296 339 360 403 417 458

Increase/decrease (2000), % - 14,62 21,54 35,93 40,91 54,52

Ave

rage

in

com

e (n

et)

from

pr

imar

y se

ctor

(HR

K)

Compared with all sectors, % -34,82 -29,82 -29,17 -25,2 -26,79 -23,45

Source: CBS, 2006; Processing: MAFWM

For the production-consumption balance regarding agricultural primary products, the standard calculation methodology of FAO is used as a basis of the calculation of the total market consumption, self-sufficiency rates for certain agricultural products and animal feed. Self-sufficiency assessment is a general worldwide indicator showing the level at which the domestic production satisfies the needs of the national market.

Self-sufficiency analysis shows disadvantages of important agricultural products, especially in case of mutton, pork, beef, milk, fruits and vegetables. The surplus is evident in case of wheat, sugar, maize, wine end eggs.

Table 2-14: Self-sufficiency of selected agricultural and food products in percentages (2001 - 2003)

Product 2001 2002 2003 2001-2003

Wheat 140 124 126 130

Sugar 112 117 87 105

Maize 92 106 106 101

Wine 101 102 100 101


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Eggs 100 100 100 100

Poultry 99 99 100 99

Potato 96 100 85 94

Vegetables 90 91 85 89

Milk 83 87 80 83

Pork 83 80 82 82

Mutton 79 75 79 78

Barley 81 79 67 76

Beef 83 71 68 74

Olive oil 74 85 60 73

Vegetable oil 73 60 69 67

Fish 71 61 59 64

Continental fruits 63 61 65 63

Exotic fruits 24 20 14 19

Source: CBS, 2004

In the past fourteen years there were several clearly separated periods regarding trade in agriculture and food processing industry:

First period from 1993 until 1997 when there was a rise (111%) in trade balance, in case of imports, but also in case of exports (85%);

Second period from 1997 until 2000 when there was a decrease in export for 30% and in import for 44%

Third period from 2000 until 2005 when there was agina a rise (71%) again in trade balance , in case of imports, but also in case of exports (57%).

Table 2-15: Imports-exports balance in agriculture (1991 - 2004) in thousand dollars

Agriculture, forestry, fishery Total in the Republic of Croatia Share in % Year

Exports Imports Balance Exports Imports Balance Exports Imports

1991 294.759 447.231 -152.472 3.292.113 3.828.253 -536.140 8,95 11,68

1992 605.800 589.412 16.388 4.597.492 4.460.729 136.763 13,17 13,21

1993 492.998 443.031 49.967 3.910.316 4.658.362 -748.046 12,61 9,51

1994 490.920 615.420 -124.500 4.402.811 5.529.895 -1.127.084 11,15 11,13

1995 529.426 952.408 -422.982 4.517.252 7.351.513 -2.834.261 11,72 12,96

1996 547.280 946.098 -398.818 4.643.485 7.783.829 -3.140.344 11,79 12,15

1997 552.200 1.029.507 -477.307 3.981.325 9.101.494 -5.120.169 13,87 11,31

1998 536.087 864.207 -328.120 4.517.189 8.275.582 -3.758.393 11,87 10,44

1999 431.141 706.234 -275.093 4.302.498 7.798.641 -3.496.143 10,02 9,06

2000 422.875 710.393 -287.518 4.431.597 7.886.512 -3.454.915 9,54 9,01

2001 486.681 870.419 -383.738 4.665.908 9.147.130 -4.481.222 10,43 9,52

2002 579.547 1.035.255 -455.708 4.903.584 10.772.045 -5.868.461 11,82 9,61

2003 789.745 1.289.854 -500.109 6.164.100 14.198.000 -8.034.000 12,81 9,08

2004 765.550 1.492.330 -726.780 8.022.452 16.583.152 -8.560.700 9,54 8,99

Source: CBS, 2005


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Since the year 1994 Croatia has been a net importer of agricultural products. The picture of economic relations has changed significantly in the last several years due to numerous signed free trade agreements. As a result of such liberalization, the value of Croatian exports of agricultural products is constantly rising, and the structure of exporting markets is also changing. The most important exporting destinations are the countries of the ex Yugoslavia, especially Bosnia and Herzegovina, EU Member States, and Japan (tuna exports since 1997), while the most important supplying countries are as follows: Italy, Germany, Austria, Hungary and Brazil. Traditionally, the most important export products are cigarettes, fish, chocolate and sugar, while the most important import products are beef, fish, pork, bread, pastries and cakes, animal feed.

2.3.2. Structural indicators for the food processing industry

The food processing industry plays an important role in the economy and on the labour market. The share of processing industry in total GDP (see Table 2-16) is constantly above 15% but shows certain decrease (from 17,59% in 2000 to 15,61% in 2004). Althought the share is decreasing, total production is increasing from 3.666 million EUR to 4.537 million EUR in 2004. Food processing industry along with tobacco production as an integral part of processing industry in general are also showing similar trends as total value of production is increasing (2.288 million EUR in 2000 up to 2.686 million EUR in 2004) but the share in GDP is decreasing and in year 2004 it was 9,24%.

Table 2-16: Processing industry and share in GDP (2000 - 200412)

2000 2001 2002 2003 2004

GDP (million EUR) 21.836 22.628 24.758 27.107 29.075

Processing industry (million EUR) 3.665 3.759 4.165 4.257 4.538

- Share in GDP (%) 17,59 17,50 16,82 15,70 15,61

Food and beverages production (million EUR) 657 703 751 813 848

- Share in GDP (%) 3,15 3,11 3,03 3,00 2,92

Tobacco products production (million EUR) 96 98 96 101 119

- Share in GDP (%) 0,04 0,04 0,03 0,03 0,04

Total agricultural, food processing and tobacco industry (million EUR) 2.298 2.507 2.663 2.538 2.686

- Share in GDP (%) 10,98 11,08 10,76 9,36 9,24

Source: CBS, 2006; Processing MAFWM 2006

12 There are no available data for year 2005


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In year 2000 average salaries in food and beverages processing industry were 2,16% below country’s average as shown in Table 2-17 but in following years they have increased and in year 2003 they were 1,2% above average. Processing industry in general is around 10% below Croatia’s average salaries.

Table 2-17: Average salaries in processing industry (2000-2005)

2000 2001 2002 2003 2004 2005

Processing industry (D) (EUR) N.A NA 457 486 507 537

Difference with average in Croatia (%) NA NA -10,05 -9,62 -11,07 -10,10

Food and beverages production (EUR) 445 486 514 545 NA NA

Difference with average in Croatia (%) -2,16 0,48 1,10 1,19 NA NA

Average salary in Croatia (EUR) 454 484 508 538 570 598

Source: CBS, 2006.

According to the data obtained from CBS, the number of employed persons in the year 2004 in the food and beverages industry totalled to 46.272. The largest share of companies and employed persons is present in the sector of meat and meat products production, processing and preservation, in the production of other food products, and in the beverages production industry. The total revenue of the food, beverages and tobacco industry in the year 2004 was 3,12 billion EUR. The share of the food, beverages and tobacco industry in the year 2003 made up 3,43% of the total GDP value, i.e. 889,5 million EUR.

Table 2-18: Number of employees in food and beverage processing industry (2001 – 2004) (legal persons)

2001 2002 2003 2004

Food and beverages production 45.003 45.203 45.003 46.272

Source: CBS, 2006

Croatian processing industry covers 82,5% of the total industry. The most important branch of processing industry is the food, beverages and tobacco production with 22,9%. The food, beverages and tobacco production has the largest number of employees in comparison with other branches of the processing industry, but the fact that it also has the highest total gross revenues is of great importance.


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Table 2-19: Industrial production physical volume index (2002 - 2005)

2000 = 100 Production index

2002 2003 2004 2005 2005/2004

TOTAL (C, D and E)13 117,7 116,3 120,6 126,8 105,1

Processing industry 111,9 116,8 121,6 129,5 106,4

Food and beverages production 113,0 118,8 122,0 130,4 106,8

Production of tobacco products 109,5 114,1 119,1 113,6 95,3

Textile and textile products production 94,7 90,3 74,3 69,8 93,9

Leather and leather products production 92,0 84,6 83,0 75,8 91,3

Wood and wood products production 97,0 95,0 104,8 110,4 105,7

Source: CBS, 2006

In the whole industry in the year 2005 a rise is evident in comparison with the year 2004, totalling to 5,1%. In the processing industri there is a rise of 6,4% compared to the year 2004 – a rise in food and beverages production totalling to 6,8% in the year 2005, while there was decrease in the production of tobacco products of 4,7% in the same year.

The analyses of groups of products show following developments and tendencies:

A rise of 28,52% in the observed period was achieved by meat production, processing and preservation industry. Fish and fish products processing and preservation had a rising tendency until the year 2003, while the same production in the year 2004 decreased for 15,42% in comparison with the year 2000; fruits and vegetables processing and preservation rose for 22,65%; a significant rise can be observed in fruit juice production. There was a rise in the same period also in vegetable and animal oils and fats production (35,68%), as well as in milk and dairy production (2,74%) and in mill products production (8,25%). An important rise can also be observed in the group of production of other food products (35,76%), in the same group a rise in sugar production of 278,88% is especially highlighted. Alcoholic beverages production was decreased for 7% in the observed period, while the production of ethyl alcohol stronger than 80% decreased for 31,40%

There was also a rise of 6,86% in the animal feed production in the observed period.

13 TOTAL (C, D and E) – the total index of physical volume of the industrial production of the Republic of Croatia; C – mining and extracting, D – processing industry, E – energy, gas and water supply


version of 14. 12. 2007;


A significant rise can be observed also in tobacco products production as follows: a rise of 75% in fermented tobacco production, and a rise of 12,28% in cigarettes production.

In the annex 12.2, Table 12-2 there is a detailed presentation of the quantities of processed products in the period from 2000 until 2004.

The implementation of EU provisions related to food safety requires further investments into plant processing, sector of processing of food of animal origin, such as milk, fish and meat processing facilities, and facilities for processing of fruits and vegetables and other products of non-animal origin.

In the annex 12.2, Table 12-2 it is shown that the processing industry has increased the production in the last few years. It is most obvious with meat and fish production where the index 2004/2003 is above 100 for almost every product. Decrease is seen in all sugar – like products, sweets, bonbons, chocolate and alcoholic beverages (i.e. the production of vermouth and other aromatized wines has decreased for almost 92% (from 19.022 hl in 2000 down to 1.688 hl in 2004).

Regarding consumption (see annex 12.3, Table 12-4) it is also growing in the same rate as production. Annual consumption of fish and fish products per inhabitant totals to 8,08 kg, while annual consumption of fruits and fruit products per inhabitant totals to 52,91kg, which is only 0,14kg of fruit per day per inhabitant. Of all corn products, the most frequently consumed are bread and other bakery products per inhabitant. In the period from 2000 until 2004 there was a rise of 19%.

Poultry is along with pork meat the most frequently consumed of all meat products. Meat and meat products consumption was stabilized in the period from 2000 until 2004.

Milk and dairy products consumption in the period from 2000 until 2002 shows a rise, but since the year 2003 a slight decrease can be observed and than in year 2004 there is again a slow rise.

Vegetables and vegetable products consumption is twice as high as fruits and fruit products consumption. Both groups of products have suffered a significant decrease of consumption in the year 2003, while in the year 2004 a rise of consumption can be observed.

Of all soft drinks the highest consumption is present in case of mineral water. As far as the alcoholic beverages are concerned, beer consumption has significantly surpassed wine consumption.

The consumption of sugar – like products is also decreasing for about 27% so in year 2000 it was at 14,59 kg per inhabitant and in 2004 it was 11,75 kg.

Despite its significant production potentials, the Republic of Croatia imports food as shown in Table 2-20. The main reasons for that are:

insufficient development and a large number of small and medium enterprises in the food processing industry sector;

insufficient connections of raw materials processing in the food processing industry sector through associations and/or cooperation with the industry.

Table 2-20: Trade values of processing industry, ‘000 USD

Export Import

2003 2004 2005 2003 2004 2005

TOTAL Croatia 6.186.642,43 8.024.116,17 8.809.012,30 12.699.803,73 16.592.796,99 18.534.604,67

Processing industry (D) 5.833.729,17 7.632.277,67 8.251.287,11 12.467.310,39 14.434.863,78 15.728.826,51

Share in TOTAL 94,3 95,12 93,67 98,17 86,99 84,86

Production of food and beverages (D15) 506.202,47 504.376,49 701.867,31 880.026,03 1.035.503,55 1.151.568,06


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Share in D 8,68 6,61 8,51 7,06 7,17 7,32

Share in TOTAL 8,18 6,29 7,97 6,93 6,24 6,21

Source: CBS, 2006

The share of processing industry in import and export was approximately 90% from 2003 to 2005. In 2004 there was a significant decrease in share of processing Industry import (from 98% in 2003 to 86% in 2004) even though the total value is increasing. Also year 2005 is showing similar results; the share of processing industry in total import is decreasing.

An improvement in the market structure is crucial, especially in the form of connections of individual producers with market channels, for instance, through providing support to producer associations and/or cooperative societies.

That would also contribute to the requirements of the domestic food processing industry, when it comes to the improvement of quality, quantity standards, as well as delivery deadlines.

2.3.3. Farm structure, agricultural production and land use systems

Over a long period, the Croatian agriculture was characterised by the dual structure of ownership. In the past, during the socialist era, land ownership and development investments were channelled to a small number of large socially owned agricultural enterprises, while small family agricultural holdings were marginalized.

This resulted in the present uneven ownership structure, with a large number of small family holdings, unable to generate a profit that would be sufficient for a decent living standard, and necessary investment for improved production. On the other hand, there are few agricultural holdings/legal entities in succession to former socially owned agrocombinates. The present ownership structure still largely reflects forty years long socialist system of government and the application of lax inheritance laws. A dual structure of agricultural holdings in Croatia is demonstrated in Table 2-21 below.

Table 2-21: Number and size of farms in Croatia in 2003 Farm households Legal entities Total Farm size,

ha no. ha no. ha no. ha

< 1 227.434 50.759 327 71 227.761 50.830

1 – 2 71.933 67.103 51 77 71.984 67.180

2 – 3 40.129 65.330 45 108 40.174 65.438

> 3 109.036 670.004 941 216.952 109.977 886.965

Total 448.532 853.196 1.364 217.208 449.896 1.070.404

Source: CBS, Agricultural Census, 2003

According to the Agricultural Census 2003, there are 448.532 family farms, utilizing 853.196 ha of arable land and gardens, corresponding to an average farm size of 2,0 ha (see Table 2-21). Same data shows that three quarters of all family farms are smaller than 3 ha, but cultivate only 21% of all utilised agricultural land owned by the private sector.

The main causes of inefficient agricultural production are small land areas, dislocation and far too fragmented structure of agricultural estates, especially when it comes to family farms. The average area of a used agricultural land in the case of farms is only 1,9 ha, while less than 5% of the total number of family farms owns more than 10 ha of such land. Business entities use much larger areas of the agricultural land, averaging to 159,2 ha. They are in average divided on 17 parcels with an average size of 12 ha.

According to the Agricultural Census 2003, only 21.000 family farms had an average size of agricultural land larger than 10 ha, as shown in Graph 2-1.


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Graph 2-1: Distribution of family farms according to size of agricultural land (2003)

227434

112062

45732 42426

15628525

0

50.000

100.000

150.000

200.000

250.000

<1 1 to 3 3 to 5 5 to 10 10 to 20 >20

ha

num

ber o

f hol

ding

s


The family sector occupies approximately 80% of the totally 1.070.404 ha of agricultural land, holds 82% of the livestock, owns 99% of all tractors, and accounts for approximately 95% of the total workforce in agriculture (Agricultural Census 2003, CBS). A large majority of family farms are extremely fragmentised. In average, one family household is divided into 4,4 parcels, with an average size of 0,45 ha (see Table 2-22).

Table 2-22: Land fragmentation of family holdings and legal entities (2003) Specification Value

Household with utilised agricultural land, number 448.532

Utilised agricultural land, ha 853.196

Parcels of utilised agricultural land, number 1.918.358

Average farm size, ha 2

Business entities, number 1.364

Utilised agricultural land, ha 217.208

Parcels of utilised agricultural land, number 17.718

Average farm size, ha 159,2

Source: CBS, Agricultural Census 2003,

As mentioned above, the fragmentation can mainly be ascribed to lax inheritance laws that do not contain restrictions for splitting up farms between heirs, even if they thereby become unviable. Many family farms are therefore no longer competitive, or economically viable in medium and long-term perspectives. The owners may earn their living in other sectors, use the homesteads as dwellings and use the land for subsistence farming. Some of these small holdings serve as a last resort for people without sufficient pensions or other income opportunities. Many of these farms are only producing for self-consumption and not for the market.

Regarding agricultural companies there are 1.364 legal entities (having agriculture as their main activity) with 217.208 ha of agricultural land, according to the Agricultural Census 2003 and an average size of 159,2 ha.


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Graph 2-2: Distribution of legal entities according to size of agricultural land

327

175127

359

145

231

050

100150200250300350400

<1 1 to 5 6 to 10 11 to 50 51 to 100 >100

ha

num

ber o

f leg

al e

ntiti

es


A significant difference between family farms and agricultural companies/legal entities, in terms of average size and degree of fragmentation, lies in the fact that a majority of the latter (mainly ex-agrocombinates) used the land that was consolidated through the land consolidation schemes.

2.3.3.1. Cadastral and Land Book Registers Since 1828 Croatia belongs to the dual Austro-Hungarian tradition of property registration system encompassing land book records and cadastral records. The key laws governing land registration in Croatia are: the Land Registration Act (OG 91/96), the Law on state survey and the real property Cadastre (OG No.16/07) and the Property and Other Material Rights Act (OG 91/96).

Cadastral records are located in 112 cadastral offices (20 regional and 92 branch offices) of the State Geodetic Administration and The Office for Cadastre and Geodetic Affairs of the City of Zagreb, while 109 Land Registry Offices within the Municipal Courts manage the land book function.

During the socialist era, cadastral records and land-book records were poorly maintained and updated, and these conditions prevailed until 1996. The land book and cadastral records are not coordinated, and often do not reflect the real situation. The lack of coordination is one of the main obstacles to the development of the real estate market, as well as the agricultural land market.

The implementation of the Land Registers and Cadastral Offices Improvement Project (henceforth referred to as the Project) was launched in 2003 with the aim of creating an efficient system of land registration management, which would contribute to render the real estate market more effective. This will be achieved by addressing aspects of the supporting infrastructure, especially the real property registration system in the municipal courts, the cadastre system that is operated by the State Geodetic Administration (SGA) at the regional and branch office levels and by the Zagreb City Cadastre Office, supported by the academic institutions and the private-sector support professionals.

The Project will:

accelerate registration in both the cadastre and real property registration systems;

streamline both systems and the associated transaction processes;


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harmonize data between the two systems and ensure that they match with reality by undertaking cadastre re-survey where necessary, and land book registration correction and renewal in a systematic manner in selected areas of the country;

improve customer relations and service provision, as well as organize awareness campaigns among stakeholders, aimed at supporting professionals, financial institutions, and real property holders; and

address impediments to the operation of an efficient mortgage system

The Government Program for the implementation of integrated cadastre and registration systems to cover the whole country will have to be phased over a period of fifteen years. The proposed Project will cover the first five years of this comprehensive program, and will be focused on selected urban and rural areas. The resulting selection of the priority areas in this first five year project was mainly driven by the demand of municipalities

According to the article 5. of the Law on State Survey and the Real Property Cadastre (OG No.16/07) the state survey and the real property cadastre activities are executed on the basis of five-year and annual plans. Howevar, it is still under the implementation the National Programme on State Survey and Real Estate Cadastre for the period 2001 – 2005 (henceforth referred to as the Programme) based on the old State Survey and Real Estate Cadastre Act (OG No. 128/99). This Programme defines the affairs and tasks under the scope of the State Geodetic Administration, and the areas in which these will be performed. The aim is to establish precise, reliable and up-to-date cadastral records based on the real situation. They would be coordinated with land books for the fixed locations with the aim of ensuring legal safety of the real estate ownership. The programme was implemented through four sub-programmes representing complete legal, technological, organizational and financial units. Sub-programme A) encompasses affairs and tasks related to the creation of the real-estate cadastre for the agricultural land which is of special interest to Croatia. The project envisages organization of records for the area of 25.000 ha of agricultural land and it is still under implementation. The implementation of this Sub-programme will enable the realization of several aims:

The process of harmonization between cadastral and land book records and the real situation on the field;

The improvement of the cadastral and land book records with the aim of creating real estate cadastre;

Enabling the disposal, especially the selling, of state-owned agricultural land

Improvement of water goods;

Improvement of road infrastructure;

Support to the tax evaluation and value of the land (new land classification following the survey);

Creation of legal safety of real estate ownership.

2.3.3.2. Agricultural Land Market Total agricultural land in Croatia consists of state and privately owned agricultural land. According to the Statistical Yearbook 2005, the total surface area of agricultural land is 2.695.000 ha of which 890.000 ha are state-owned and 1.805.000 privately owned.

The private agricultural land market is regulated by general laws and regulations regulating property market which including the Act on Property and Other Real Rights (OG 91/96) and the Act on Obligatory Relations (OG 57/96, 68/98, 173/03 and 88/05). The state-owned agricultural land market is regulated by the Agricultural Land Act (OG 66/01, 87/02, 48/05 and 90/05), with application of laws and regulations regulating property market. Thus, the dualism of legal system has been held, governing the complete agricultural land market.


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2.3.3.3. State-owned Agricultural Land Market The Act on Agricultural Land from 1991 transferred the ownership of land that had previously been socially owned to Croatia.

Disposal of state-owned agricultural land was initiated in 1994 in accordance with the old Act on Agricultural Land. The disposals could be in the form of lease, sale, concession, life tenancy, donations and others types. In the period 1994 – 2001, a total of 308.388 ha were disposed of as detailed in Table 2-23.

Table 2-23: Disposal of state-owned agricultural land in the period 1994 - 2007 (in ha)

Type of disposal Agricultural land, ha Share, %

Sale 59.713,66 22,99%

Donated 2.728,58 1,05%

Leased 150.746,98 58,05%

Life tenancy 4.339,22 1,67%

Concessions 42.166,65 16,24%

Total 259.695,09 100,00% Source: Agricultural Land Department, MAFWM

Some of the lease agreements have been cancelled, or have expired. As a consequence, agricultural land is subject to disposal according to the Agricultural Land Act.

The Government of Croatia has recognised the urgent need of firm actions to improve the competitiveness of the agricultural sector, not least in the light of the upcoming accession to EU. The adverse Croatian farm structure is one of the areas that need to be addressed immediately and with a long-ranging vision. Land consolidation was consequently selected for development cooperation between the Governments of Sweden and Croatia and resulted in a three-year co-financed Land Consolidation project.

The overall objective of the project is to contribute to the development of a competitive agricultural sector and sustainable rural development in Croatia by:

Designing and developing the necessary legal, organisational and technical framework for the implementation of land consolidation and land banking,

Improving the participatory capacity in decision-making processes of relevant interest groups at national, regional and local levels.

Project components are:

Implementation of five land consolidation pilot projects in the town of Novi Vinodolski/ municipality of Vinodolska, the town of Vrbovec, the municipality of Tompojevci, the municipality of Vidovec and the municipality of Krašić,

Establishment of the Agricultural Land Agency and Land Fund, as a support to the land consolidation pilot project activities on selected locations, and broader,

Establishment of the organisational structures to facilitate the project objectives as follows:

The National Land Committee (NLC), supported by the Project Coordinating Unit (PCU),

The County Land Committees (CLCs), supported by the County Land Offices (CLOs) in the counties of Primorje – Gorski Kotar, Zagreb county, Varaždin and Vukovar - Srijem,

Improvement of the efficiency of the agricultural land market by removing existing barriers,

Implementation of the training and promotion activities.


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Implementation of five pilot projects is essential in the process of designing the national land consolidation and farm restructuring policy.

In 2001, the new Act on Agricultural Land (OG 66/01, 87/02, 48/05 and 90/05) was adopted and later amended on several occasions in the period 2001 – 2005. According to the new Agricultural Land Act in force, local self-government units have to prepare programmes for the disposal of the state-owned agricultural land under their jurisdiction. If they fail to do so, regional self-government units should prepare programmes for the state-owned land within their territory. Based on cadastral maps and records, such programmes have to contain information on the areas allocated for restitution, selling, concession, leasing and other uses.

Disposal of state-owned agricultural land is a slow and insufficiently developed process. The obstacles hindering the improvement of efficiency of the state-owned agricultural land market are following:

Land book and cadastre records on state-owned agricultural land do not correspond to the real situation on the ground, which is a significant problem in the preparation of the Programme for the disposal of state-owned agricultural land. It also prevents the sale of state-owned agricultural land;

Lack of well-trained local and regional self-government staff that would be responsible for the disposal of state-owned agricultural land, and that would work efficiently;

Lack of complete database of the disposal of state-owned agricultural land, which makes the figures at the disposal to MAFWM questionable;

Over-bureaucratic procedures of the disposal of state-owned agricultural land.

The slow process of the disposal of state owned agricultural land is one of the causes for the existence of large areas of uncultivated state-owned agricultural land. Similarly, the process of disposal of state-owned agricultural land, which was consolidated though the processes of land consolidation, causes re-parcelling and fragmentation. Still, family farmers have a unique opportunity for enlarging and consolidating their land and, thus, creating a basis for making their agricultural produces competitive on the EU market. The existence of state-owned agricultural land is extremely important for the Land Consolidation Pilot Project because it will constitute a major land reserve that can be part of the Land Fund.

2.3.3.4. Organic farming The beginnings of the organic agriculture in the Republic of Croatia date from the eighties. The Act on Organic Agriculture was adopted in the year 2001 (OG 12/01, 14/01). Its largest part is already harmonised with the EU Directive 2092, as well as with IFOAM Guidelines14. The total number of registered organic farmers in the Republic of Croatia is 269 (status on 31st December 2005). A system for professional supervision and issuance of certificates to organic

14 International Federation of Organic Agriculture Movements


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farmers has also been established. There are six registered supervisory stations and two legal persons for the implementation of the certification procedure. As regards the fact that this kind of production is still relatively new, areas used for organic agriculture are still not significant in quantity, but do show a rising trend. Organic production receives 30% higher subsidy amounts than convectional production (Support system for organic production is given in chapter 3.1.1)

Table 2-24: Structure of agriculture land in organic agriculture Description 2000 2001 2002 2003 2004 2005

Arable land (ha) 12 98 601 2.259 2.577 2.214

- cereals 6 49 301 1.130 1.371 1.107

- other arable crops 0 31 255 1.039 1.122 994

- vegetables 4 12 38 79 69 98

- herbs 2 6 8 11 15 15

Permanent crops 1 10 29 57 95 142

- orchards 1 6 25 30 54 85

- vineyards 0 4 4 25 29 30

- Olive trees 0 0 0 2 12 27

Grassland (ha) 0 6 54 67 8.016 12.531

- meadows and pastures 0 6 54 67 161 740

- Bees pasture 0 0 0 0 7.855 11.791

Forest (ha) 0 3 13 50 46 60

Fallow land (ha) 0 0 2 4 20 28

TOTAL AREA 13 117 699 2.437 10.754 14.975

Share in overall % 0 0 0,1 0,2 1,0 1,4

Number of farmers 6 12 58 130 189 269

Share % 0,0 0,0 0,0 0,1 0,1 0,2

Source: MAFWM, September 2006 (AE STUDY)

Raised public awareness, market possibilities and organic agriculture incentives which significantly outbalance the conventional agriculture incentives can speed up the growth and the development of the organic agriculture. The development strategy of the organic agriculture has been drafted within the FAO project «Diverse production and certification in agricultural systems positively oriented towards the environment» (TCP/CRO 2902(A)). According to the development objectives of the strategy, until the year 2010 approximately 10% of the total agricultural production should relate to organic production. A large potential for organic production lies in the areas of and around national parks, protected natural areas and natural grasslands.

2.3.3.5. Irrigation The Republic of Croatia, regardless of its natural potential (soil quality, water resources), is placed almost on the bottom of the scale concerning land irrigation (around 9.000 ha) in Europe. The non-competitiveness of the today’s agriculture is a consequence of a low production technology level, high fragmentation level of the agricultural land, low number of facilities, low maintenance of the melioration system and low yield. Furthermore, frequent draughts (on average every third to fifth year) cause billions of HRK of damages in agriculture. Irrigation is one of the measures that may reduce and even completely prevent draught damages in certain areas.


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In Croatia only 9.000 ha are irrigated although there are irrigation potentials for even 600.000 ha. After Albania, Croatia is the country in which the least part of arable land is irrigated, thus ranking far behind other transitional countries (see Chapter 3.1.5.7)

The lack of a proper irrigation system in Croatia is not a result of insufficient water springs, insufficient infrastructure or irrigation equipment maintenance. Such a situation is partially result of the changes in ownership structures, consequence of the war, and result of changes in agricultural water resource management. The state used to implement a credit programme for the purchase of irrigation equipment intended for use on farms, but the programme turned out to be unsuccessful, since the farmers showed no interest in applying for the credit due to poorly developed basic irrigation infrastructure. In the year 2004 the State programme for irrigation, agricultural land and water resources management commenced in Croatia. The main plan has also been prepared which is going to be fully implemented in the year 2006. One of its main objectives of the State Programme for irrigation is the development and improvement of the irrigation infrastructure systems.

The lack of a proper irrigation system has particularly negative influence on the sector of fruits and vegetables production which is evident from the poor quality of such products.

The consequences of the lack of irrigation use are catastrophic as regards the peasants, but also as regards the economy as a whole; especially in the years 2000 and 2003 when due to severe draughts the majority of the counties suffered immense damage in agricultural production (see also Chapter 3.1.5.8.).

2.3.4. Subsector analysis

2.3.4.1. Milk and dairy sub sector Background and key figures

After the war (1991 – 1995), improving conditions for the milk and dairy sector have been a priority of the Croatian Government with an aim to provide for domestic consumption, products for export, and for the overall economic development. Yet, the competitiveness of the Croatian milk sector is at a low level due to prevailing small farm production structures and limited organised collection and marketing of milk from small farms.

In the long term, the cattle stock in the Republic of Croatia has decreased, as shown in Table 2-25. During the war years (1992 - 1995) the stock decreased (no. of animals compared from 1991 to 1998) by 58,5% (cattle), respectively by 63,4% (breeding cows and heifers).

Table 2-25: Changes in number of cattle and breeding cows/heifers (1991 - 2005) Cattle Breeding cows and heifers

Year Number % Number %

1991 756.813 100,00 473.141 100,00

1995 493.418 65,20 334.713 70,74

1998 442.911 58,52 299.942 63,39

1999 438.543 57,95 295.536 62,46

2000 426.570 56,38 286.704 60,60

2001 438.423 57,93 280.453 59,27

2002 417.113 55,11 277.668 58,69

2003 444.000 58,66 280.000 59,17

2004 465.935 61,56 271.411 57,36

2005 471.025 62,24 272.039 57,50


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Source: CBS, 2006

The figures indicate that the adverse trend has come to a halt in 2003, even though only in the beef sector a considerable increase in the number of cattle can be stated caused by a substantial importation of calves for fattening. In 2004, the cattle stock accounted only for 62,2% (cattle), 57,5% (breeding cows and heifers) of the stock in the pre-war period (1991).

Despite the decrease of cow number the production of fresh milk is growing in the period observed. Milk production is shown in the following table.

Table 2-26: Changes in raw milk production level (1990 - 2005)

Year Number of dairy cows*

Total raw milk production (,000 l)*

Average production per cow (l/year)

Dairy plants’ total purchase*

1990 460.142 888.927 1.932 342.273

1995 308.336 571.511 1.854 249.695

1998 270.348 614.910 2.275 377.507

1999 268.284 602.292 2.245 368.845

2000 254.702 587.634 2.307 380.037

2001 254.293 635.000 2.495 409.328

2002 257.019 925.436** 3.705 498.777**

2003 237.472 979.176 4.137 525.028

2004 238.050 1.011.469 4.249 532.841

2005 239.430 1.073.848 4.485 605.721

Source: * CBS ** CMLK

Since 2002 the purchase of milk is being monitored on the basis of the data of the Central Bureau of Statistics and Central Milk Laboratory of the CLC. The overview in Table 2-26 on changes in the milk production sector between 1990 and 2002 does not include the quantities of raw milk used for calf-feeding and those for human nutrition on the farm. From 2002, when in the presentation of total milk production are used data of Central Milk Laboratory, milk quantities used for nutrition of calves and people (farmers) on the farm are also taken into consideration.

It is clear from the table that during the entire period the production has been growing in total by 20,8%, the average production per cow has increased by 132,1%, as well as the purchase of milk by dairy plants in particular by 77,0%. In 2005, the Croatian dairy farmers sold 56,4% of their estimated total raw milk production to processing plants as compared to only 38,5% in 1990.

It is relevant to stress that the structure of milk purchase by dairy plants is changing in the sense that the share of producers who supply small quantities of milk is decreasing, while the share of those who supply larger quantities is increasing.

If the structure of producers who sell their milk to dairy processing plants is examined according to different production classes over a three-year period (2003 - 2005), a total decrease of 24,3% in the number of producers can be noted (see Table 2-27).

Table 2-27: Changes in the number of producers as to the volume of annual production (2003 - 2005)

2003 2004 2005 Production classes (liters/ year) Number of

producers % Number of producers % Number of

producers %

to 6.000 34.110 58 27.021 53,2 21.121 47,4


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6.000-10.000 10.452 17,8 9.115 17,9 7.867 17,7

10.000-20.000 9.262 15,8 9.045 17,8 8.672 19,5

20.000-30.000 2.613 4,44 2.813 5,54 3.054 6,85

30.000-40.000 1.043 1,77 1.195 2,35 1.435 3,22

40.000-50.000 478 0,81 617 1,21 802 1,8

50.000-80.000 560 0,95 635 1,25 946 2,13

80.000-100.000 106 0,18 143 0,28 251 0,56

more than 100.000 191 0,32 230 0,45 418 0,94

Total 58.815 100 50.814 100 44.566 100

Source: CMLK, 2003-2005

Classes with the lowest production in the period examined decrease as expected by 18,29%, while the share of classes with higher production is increasing by 193,75%.

If delivery of raw milk to dairies is observed sequentially during three years (2003 - 2005) according to the production classes, there may also be seen positive trends as it is visible from the Table 2-28.

Table 2-28: Overview of the purchased milk quantities according to quantity classes (2003 - 2005)

2003 2004 2005

Production classes (liters) Quantity of milk delivered (l) % share Quantity of milk

delivered (l) % share Quantity of milk delivered (l) % share

to 6.000 89.697.226 17,08 73.637.779 13,82 59.550.402 9,83

6.000-10.000 80.893.593 15,4 71.033.152 13,33 61.459.376 10,15

10.000-20.000 128.039.150 24,38 125.479.635 23,55 121.492.699 20,06

20.000-30.000 63.187.158 12,03 68.075.642 12,78 74.215.055 12,25

30.000-40.000 35.804.354 6,82 41.027.440 7,7 49.591.473 8,19

40.000-50.000 21.317.382 4,06 27.410.705 5,14 35.691.385 5,89

50.000-80.000 34.569.852 6,58 39.061.818 7,33 58.501.613 9,66

80.000-100.000 9.388.187 0,18 12.749.144 0,24 22.330.548 3,69

more than 100.000 62.271.226 11,86 74.366.530 13,96 122.888.816 20,29

Total 525.028.769 100 532.841.845 100.00 605.721.367 100 Source: CMLK, 2003-2005

It is visible from the table that the delivery of milk is increasing in the period observed (in 2003, it was 525.028.769 litres; in 2005, it was 605.721.367 litres). If the share of delivered milk concerning production classes is observed, it is visible that delivered quantities decrease in lower classes during the period. In the smallest class where the delivery of milk is less than 6.000 litres the share in delivered quantity was in 2003, 17,08% and in the year of 2005 only 9,93%.

On the other hand the share of delivery in the class above 100.000 litres of milk, has increased in the observed period from 11,86% to 20,29%.

This positive trend of increase of milk delivery from bigger farms, represent good basis for preparing such farmers for increased competitiveness which is very important upon accession of Croatia to the European Union. This could also be explained as a result of the implementation of Operative programme for the livestock production (see page 181). In the


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period 2004 – 2007 there were new 83 dairy farms constructed (average size 50 dairy cows) with total value of investment of 22,4 million EUR.

Producers

Today milk production is mainly based on mixed small production units, which produce also beef by using mostly combined breeds (Simmental and Brown). Holstein dairy cows are used in specialized milk production systems.

Milk production is growing because of the better management on farms and better herd genetic basis which is a result of genetic construction, i.e. by implementing of own breeding program. Besides that, after the war a significant number of breeding heifers from other populations have been imported.

According to the CLC, there are 44.560 of milk suppliers out of which 96% has less than 15 milk cows. They apply low levels of milking technologies, which cause also a low level of raw milk production in terms of quantity and quality. These conditions impede not only a higher milk production per cow, but also the competitiveness of the milk production sector since the environmental and hygiene standards, as well as good animal-keeping conditions cannot satisfactorily been met.

Out of total milk suppliers, 4% keep more than 15 milk cows which makes 20% of total milk cows in Croatia.

Farm structure is unevenly distributed concerning their size. Bigger farms are in the north and east part of the Republic of Croatia what is because of better conditions for cattle production.

Table 2-29: Geographical distribution of raw milk production by counties (2005) Number of milk suppliers**

Milk purchased by dairy plants)** in litres County Number of

dairy cows* Quantity %

Zagreb County 26.413 5.135 56.977.308 9,41

City of Zagreb 3.209 51 629.945 0,10

Krapina - Zagorje 14.127 1.820 16.958.874 2,80

Varaždin 8.962 2.800 26.758.492 4,42

Međimurje 4.148 1.329 25.027.049 4,13

Koprivnica - Križevci 32.112 6.120 90.067.027 14,87

Bjelovar - Bilogora 34.314 6.587 97.675.490 16,12

Virovitica - Podravina 7.029 1.610 19.646.003 3,24

Požega - Slavonia 6.793 1.478 15.107.036 2,49

Brod - Posavina 8.523 2.020 26.347.898 4,35

Osijek - Baranja 18.422 2.613 76.249.040 12,59

Vukovar - Srijem 15.387 2.010 43.311.354 7,15

Sisak - Moslavina 18.058 3.221 37.897.695 6,26

Karlovac 13.406 3.036 28.937.371 4,78

Lika - Senj 9.356 2.687 16.168.282 2,67

Primorje and Gorski Kotar 1.622 275 2.373.628 0,39

Istria 3.627 481 9.823.552 1,62

Zadar 2.126 68 7.154.362 1,18

Šibenik - Knin 4.121 199 3.528.861 0,58


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Split - Dalmatia 6.535 1.010 4.976.478 0,82

Dubrovnik and Neretva 1.046 10 78.622 0,01

Total 239.336 44.560 605.721.367 100,00

Source: * CBS, 2005;** CMLK 2005

Table 2-29 shows an uneven geographical distribution of milk production in the Republic of Croatia. The milk production is traditionally located in the northern continental part, in which the natural conditions are also most favourable and bigger production structure prevails than in the Mediterranean and southern parts. In the Counties Bjelovar - Bilogora and Koprivnica - Križevci which are located in north part of Croatia, particular the milk production occurs exclusively on family farms, while in the East Slavonia region (Osijek - Baranja and Vukovar - Srijem county) also large farms owned by legal entities are present beside the family-owned farms. Such farms with hundreds of dairy cows are units in which the milk production level per cow is high. Average annual production of milk per cow in Osijek - Baranja county had in the year of 2005, at big farms 6.289 litres while on the smaller family farms was 3.458 litres. On big farms has been already given special attention to compliance with ecological standards, hygienic and health conditions of production and animal welfare. These conditions have to be completely fulfilled also by smaller family farms. With appropriate legal regulations shall be ensured favourable material assumptions of their realization.

Looking at the structure of milk producers and number of milk cows according to data obtained from CLC out of 44.560 milk suppliers there are 1.950 producers with more than 15 milk cows and only 14 of them have more than 100 cows. The distribution of producers larger than 15 cows is shown in following graph.

Graph 2-3: Distribution of producers by number of milk cows

0

200

400

600

800

1000

1200

15 to 20 21 to 50 51 to 80 81 to 100 > 100

Distribution of milk producers by size

Source: CLC, 2007

Processing industry

Milk processing in the Republic of Croatia occurs in dairy plants authorized for milk processing and entered into the appropriate register kept by the Ministry of Agriculture, Fisheries and Rural Development.

In 2005, there were 37 dairy plants for processing of cow milk with different processing capacity (see Table 2-30). The existing production facilities are sufficient for the processing of the quantity of milk supplied and imported.

There are two milk factories that are large according to Croatian standards (they are processing over 64% of total processed milk), which were established in earlier period, before 1990s. They implement modern production technology in compliance with Community standards and there is no need to support modernization of such large plants.


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There is a number of middle sized dairy factories, that should be included into the system of quality, recognisable milk products, with the capacity in range of 1.800.000 – 50.000.000 litres per year. These milk factories don't comply with all the conditions, especially those related to quality and hygiene standards. One of the main purpose of IPARD is to help this specific group of Croatian dairy sector to do the necessary investment to upgrade to Community standards.

Table 2-30: Overview of purchased and processed milk by dairies Dairy plant 2005. Share

1 Dukat 246.735.571 40,73%

2 Vindija 144.857.118 23,91%

3 Ledo 24.713.698 4,08%

4 Meggle Hrvatska 43.382.697 7,16%

5 Kim mljekara d.d. 26.675.928 4,40%

6 Pik Rijeka 13.731.847 2,27%

7 Ludbreška mljekara 7.373.949 1,22%

8 Mljekara Vodopijevec 1.526.720 0,25%

9 Agropromet sim 740.783 0,12%

10 PZ Đurđevac 14.409.257 2,38%

11 Mljekara BIZ 1.843.030 0,30%

12 Hamer 2.502.165 0,41%

13 Družba 2.763.675 0,46%

14 Mils mljekara 7.498.542 1,24%

15 Mljekara Barbara 358.022 0,06%

16 Sirena - mala sirana d.o.o. 808.652 0,13%

17 Tomaić commerce 632.165 0,10%

18 Mcom Pag 248.946 0,04%

19 Belje Kooperacija 15.761.350 2,60%

20 Latus Žminj 1.018.604 0,17%

21 Agro promet Runovići 596.043 0,10%

22 I PAK Šibenik 2.668.105 0,44%

23 Mljekara sirko 3.769.542 0,62%

24 Euro milk Bedenica 3.332.163 0,55%

25 Biogal 581.277 0,10%

26 Mljekara St. Petrovo Selo d.o.o. 3.807.618 0,63%

27 Zvečevo mljekara d.o.o. 783.585 0,13%

28 Mala mljekara Privredna Banka 1.040.397 0,17%

29 Vesna Loborika 984.805 0,16%

30 Zdenka 17.761.652 2,93%

31 Agrolaguna 517.906 0,09%

32 Mini mljekara Veronika 5.646.140 0,93%


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33 Šimun - milk 1.795.655 0,30%

34 Križevačka mljekara 1.986.238 0,33%

35 Megalis d.o.o. 1.960.980 0,32%

36 Lović 863.031 0,14%

37 Srednja Gospodarska škola Križevci 63.673 0,01%

TOTAL 605.741.529 100,00%

Source: CLC, 2007

Out of 37 dairies, 10 purchase and process sheep and goat milk as well.

In 2005 in Croatia were in total 10 of dairies which purchased from 411 producers and processed 1.808.478 litres of sheep milk, and 10 dairies which purchased from 311 producers and processed 3.823.024 litres of goat milk (Source: CLC, 2007).

Market and trade

Due to the presence of small milk production farms, the purchase of raw milk in the Republic of Croatia is organized in a specific manner. Normally, milk is purchased in a single place in the centre of the village/town where a cooling device is present, in which the producers bring their produced milk. This milk is kept until taken up by the dairy plant. Only in the case of larger production units the milk is purchased directly from the farm.

In all cases milk is subjected to quality control on the spot (on farm or at the collection point, in any case before it is mixed in the cooling tank), according to Regulation on Fresh Raw Milk Quality OG 102/00, 111/00.

In 2005 there were 5.049 such buy-out places, in most of the cases situated at the largest milk producers.

The milk industry contracts its business relations with milk producers, upon which both sides accept the provisions of the Regulation on the aimed price of the fresh raw milk (OG No 156/02).

The price of the milk is determined on the basis of a quality analysis containing data regarding the proportion of milk fat and proteins, as well as the number of somatic cells and micro organisms.

There is construction of new or reconstruction of existing farms what as a result has an increased volume of processed milk. Milk sector is achieving a higher level of competitiveness, but it still hasn't reached conditions completely satisfactory for the health and environment aspects of the production as well as securing animal wellfare.

The sale of dairy products is conducted through a trading network. In the past years the sales of dairy in large chain stores has been growing. In the Republic of Croatia the control of the selling prices of dairy products does not exist, which is the reason why they are freely formed according to market conditions.

Nearly all of dairy products of different domestic producers are present today in the Republic of Croatia. There are also a large number of imported different dairy products on sale.

The changes in the production volume of the most important dairy products are shown in the Table 2-31.

Table 2-31: Volume and structure of the most important dairy products manufactured in dairy plants (2002 - 2005, in tons)

Year Type of dairy product

2002 2003 2004 2005

Fresh milk 287.252 308.129 341.909 324.993


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Other fresh dairy products 76.892 90.106 86.599 82.624

Cheese 20.344 21.798 20.448 25.566

Sheep and goats cheese 445 482 562

Butter 2.282 2.270 2.392 3.716

Milk powder 1.365 434 158 3.135

Source: CBS, 2002-2005

Table 2-31 shows that the volume of processed milk and dairy products has increased during the examined period, which is understandable since also the purchase of milk has increased in the given period.

Upon sale of the fresh milk its quality is determined according to the Ordinance on the quality of the fresh raw milk (OG No 102/00), which has been entirely harmonised with the rules valid in the European Union. The quality control of the fresh raw milk is carried out in the Central Milk Laboratory, which has been internationally recognised on the basis of the standard HRN EN ISO/IEC 17025:2004.

In the Republic of Croatia the purchasing price of milk is based on the quality, upon which the proportion of milk fat and proteins, as well as the number of somatic cells and micro organisms are taken into account. Provisions regarding the manner of payment for milk are contained in the government Regulation on the aimed price of fresh raw milk (OG No 102/00). On the basis of its quality milk is divided into four classes. According to the minimal quality requirements, milk has to contain at least 3,7% of milk fat, more than 3,2% of proteins and not more than 100.000 micro organisms and 400.000 somatic cells in one millilitre.

Due to such conditions and the manner of testing the quality of milk has improved significantly in the past years. The share of single classes of milk in the past three years is shown in the following table.

Table 2-32: Class distribution of the milk supplied

Class % 2003 2004 2005 Index (2005/2003)

E 21,32 33,15 45,73 214

I 9,93 3,78 3,30 33

E+I 31,25 36,93 49,03 156

II 24,25 21,51 20,97 86

III 35,35 37,28 27,50 78

No class 9,15 2,95 2,09 23

Source: CMLK, 2006

Milk belonging to classes E and I matches entirely the standards of the European Union regarding the number of micro organisms (100.000) and somatic cells (400.000). However, that data show that improvements are made but 50,7% of raw milk supplied is still not in compliance with the EU minimum standard quality conditions, which therefore requires additional efforts in order to improve its quality even further.

Trade exchange of milk and milk products takes place in the part of export and import. The Republic of Croatia is still a country that has to import milk and milk products to satisfy the needs of its inhabitants for milk products.

Table 2-33: Import and export of milk and milk products (2003 - 2005, in tons) IMPORT EXPORT Type of

dairy product 2003 2004 2005 2003 2004 2005


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Fresh milk 36.565 92.336 50.062 17.894 40.954 40.244

Other fresh dairy products

4.806 3.045 2.476 10.240 12.181 14.511

Cheese 11.939 11.947 10.660 1.841 1.236 1.234

Butter 952 1.217 897 802 1.228 1.345

Milk equivalent 136.263 186.551 135.196 49.164 71.303 74.486

Source: CBS, 2002-2005

It is visible from the Table 2-33 that import of milk and milk products has the tendency of decreasing, while their export is increasing for the last several years. As today in Croatia is carried the restructuring of beef breeding, it may be concluded that this positive trends will continue.

The import of milk products and especially of cheese is emphasized because of the lower price which may be achieved on the world market that significantly makes harder the competitiveness of domestic production of product.

By restructuring the milk production system through the establishment of new or the adaptation of existing farms, all provisions prescribed (minimum environmental, animal keeping and hygiene standards) by the European Union shall be implemented, in particular those referring to the protection of the environment, animal welfare and the sanitary purity of milk.

In this sense the Regulation on conditions with which farms must comply and conditions for the protection of farm animals (OG No 136/05) prescribes the requirements that must be met upon establishment of new farms and at the existing facilities for keeping animals.

A regulation regarding market organisation (CMO) for milk production is in preparation, while the system of quotas and the manner of distributing the financial support for milk production shall be adjusted in the following period.

Overview of state aid for milk and dairy sub sector is given in Chapter 2.1.

2.3.4.2. Pig meat sub sector Background and key figures

Pig production is one of the most important branches of agricultural production, represented in almost all parts of the country.

Although with the small deviations in some years (1995 - 1998), data about pig production (see Graph 2-4) illustrate that number of pigs was increasing (2,55%) during the last decade. However, in 2005 with respect to 2004 the total number of pigs is diminished for almost 20%, and the number of sows and in-pig gilts for more than 13%.


version of 14. 12. 2007;


Graph 2-4: Trends in pig production (No. of heads, 1990 - 2005)

0

200

400

600

800

1.000

1.200

1.400

1.600

1.800

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

num

ber o

f pig

s (s

ows)

in '0

00Pigs total (’000 heads)Sows and gilts (‘000 heads)

Source: CBS, 2006

From the above graph, fluctuation in production must be noticed due to well known characteristic of pig cycles in production, respectively periodic unbalance between supply and demand of pig meat on the market.

In most cases, pigs are kept in inadequate objects (poor stable), where poor genetic potential of the animals is utilized on a very low level. Pigs are predominantly kept on a traditional way, as the greatest number of animals is situated in inadequate objects (poor stable), where is not possible to organize efficient production.

Existing productions systems, excluding part of a large farm, do not comply with conditions of competitiveness on the open market, and they are often questionable regarding environment conditions and animal welfare.

Producers

Pursuant to the Agricultural Census 2003, there are 215.240 holdings with pigs:

• 214.814 agricultural family holdings which have 1.726.895 pigs

• 426 legal entities which have 197.777 pigs (see Table 2-34).

The average size of family holdings with pigs, or the average number of pigs per family holding, pursuant to the abovementioned data was 8 pigs, while the average number of pigs per legal entity was 464 (see Table 2-34).

In the producers structure the biggest limitation is the fact that 90% of production is represented by about 200.000 small producers. Less than 3.300 (1,5%) producers on family farms have more than 50.000 pigs. About 12.500 have 20 - 50 heads and out of this category of family farms it can be expected to grow up into commercial producers to some extent. From the category of family farms with 11 - 20 pigs can be divided farms ready to participate in commercial production, while the majority of more than 170.000 farms with less than 10 pigs are out of commercial production.

Table 2-34: Number of pigs at holdings per counties (2003)

Number of holdings Number of pigs COUNTY Family

holdings Legal entities TOTAL Family

holdings Average Legal entities Average TOTAL


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Osijek - Baranja 22.929 91 23.020 257.421 11 24.258 267 281.679

Zagreb County 21.736 26 21.762 160.490 7 61.679 2.372 222.169

Vukovar - Srijem 16.915 49 16.964 187.497 11 25.091 512 212.588

Koprivnica - Križevci 13.191 17 13.208 163.186 12 9.463 557 172.649

Bjelovar - Bilogora 14.614 47 14.661 167.774 11 3.343 71 171.117

Brod - Posavina 12.880 56 12.936 127.382 10 7.328 131 134.710

Sisak - Moslavina 16.967 19 16.986 131.675 8 1.232 65 132.907

Varaždin 18.613 16 18.629 107.752 6 17.379 1.086 125.131

Virovitica - Podravina 10.412 23 10.435 89.017 9 30.118 1.309 119.135

Međimurje 10.397 47 10.444 82.663 8 16.389 349 99.052

Požega - Slavonia 7.643 8 7.651 73.902 10 392 49 74.294

Krapina - Zagorje 17.652 5 17.657 60.356 3 101 20 60.457

Karlovac 9.708 3 9.711 40.453 4 16 5 40.469

Split - Dalmatia 7.518 3 7.521 24.058 3 106 35 24.164

City of Zagreb 3.711 1 3.712 22.655 6 3 3 22.658

Istria 3.600 8 3.608 11.915 3 75 9 11.990

Šibenik - Knin 1.953 3 1.956 6.275 3 138 46 6.413

Lika - Senj 1.642 1 1.643 4.745 3 464 464 5.209

Zadar 1.606 1 1.607 4.491 3 195 195 4.686

Dubrovnik - Neretva 627 - 627 1.818 3 - 1.818

Primorje - Gorski Kotar 500 2 502 1.370 3 7 4 1.377

CROATIA TOTAL 214.814 426 215.240 1.726.895 8 197.777 464 1.924.672 Source: CBS, Agricultural Census 2003 (on 1 June, 2003)

As mentioned above, in the structure of pig production family holdings prevail with 90% of total production. However, they represent small production units with production for their own needs. Only 1,5% of family holdings has production capacities over 50 pigs (see Graph 2-5).


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Graph 2-5: Structure of family holdings according to number of pigs (2003)

70.748 72.855

30.23925.260

12.430

3.282

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

1 to 2 3 to 5 6 to 10 11 to 20 21 to 50 >50

# of pigs

# of

hol

ding

s

Source: CBS, Agricultural census 2003

Total production of legal entities is only 10%, likewise with mainly smaller production units (69,7% has production capacities up to 50 pigs) and only 9,2% has more than 400 pigs (see Graph 2-6).

Graph 2-6: Structure of legal entities according to the number of pigs (2003)

Structure of legal entities (2003)

84

53

160

32 30 2816 23

020406080

100120140160180

1 to 5 6 to 10 11 to 50 51 to 100 101 to200

201 to400

401 to1000

>1000

# of pigs

# of

ent

ities

Source: CBS, 2006

The Central Union of Associations of Pig Farmers of Croatia has been operating since September 2004. The founders of the Union are 12 associations of pig farmers from 11 Croatian counties. Pursuant to data from December 2005, the Union encompasses


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approximately 1.000 family farms, who among other types of production have production or fattening of pigs. The aim of the Union is to improve the conditions of pig farming production on family farms, by obtaining financial means for construction of modern farms, and to raise the level and quality of domestic production of pig meat through education.

In the beginning of 60's, the livestock producers (for pigs, beef and poultry), whose production was taking place in agricultural companies, have founded a business community for livestock – the Economical Interest Association „Croatiastočar“ – through which they have expressed and protected their interests. The representatives of associations of family farms gathered within the Central Union of Associations of Pig Farmers of Croatia participate in the work of EIA „Croatiastočar“.

Currently EIA „Croatiastočar“ gathers 30 large producers, companies which have in average annual production of approximately 18.000 pigs for fattening and 1.000 sows.

EIA „Croatiastočar“, jointly with the Central Union of Associations of Pig Farmers of Croatia actively cooperates with the MAFRD in creating, proposing and implementing measures of agricultural policy in the sector, in producing developmental programs, drafting legal acts referring to the sector, informing the Ministry about the problems in the sector, etc.

Processing industry

Production of pig meat in the period from 2000 to 2005 has shown an increase of production of fresh pig meat, in almost all meat categories (see Table 2-35 also chapter 2.3.4.5).

Table 2-35: Trends in pig meat processing industry (1997 - 2005) in tons 2000 2001 2002 2003 2004 2005

Fresh or chilled pig meat, whole and halves 23.874 24.562 26.668 28.965 26.033 27.399

Fresh or chilled pig meat, hams, shoulder – blades and parts of them

6.308 6.526 7.744 12.953 13.538 11.489

Fresh or chilled pig meat, not processed (d.n.) 1.781 1.736 1.825 2.062 - -

Pig ham, shoulder – blade and parts of them with bones, salted, dried or smoked

1.286 1.234 2.169 2.732 2.516 3.112

Pig belly (beacon spotted with meat) 2.412 3.067 2.411 2.104 2.175 2.115

Other pig parts, salted, in brine, dried or smoked 1.598 2.047 3.501 3.295 5.159 4.890

Pig ham and ham slices, prepared or preserved 1.650 1.473 1.828 1.946 538 232

Pig tinned meat (including mixtures) 10.686 10.163 12.460 12.731 12.347 11.603

Prepared meals from pig meat (including mixtures) 100 76 196 258 265 261

Other pig meat products (including mixtures), except prepared meals

145 776 683 635 69 89

Source: CBS, 2006

Market and trade

Pig meat has the greatest share in the consumption of meat on Croatian market and is traditionally used in these areas. Domestic consumption is not related to a certain time of year, but is consistent throughout the year. However, seasonal demands are increased during the


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summer season due to tourism industry which contributes to price increasing and stabilization of domestic market; especially in years when due to pig’s cycle domestic supply of pig meat tends to be greater than demand.

Table 2-36: Demand - supply balance (2002 – 2004)

Description 2002 2003 2004

Net meat production from slaughtered animals, tons 117.383 120.078 116.803

Gross indigenous production, tons 114.658 117.611 113.490

Imports:

Live pigs (tons) – cn code 0103: 3.677 3.276 4.506

Live pigs (tons/cwe15): 2.727 2.467 3.360

Meat (tons) – cn code 0203: 23.225 23.449 29.372

Processed meat (tons) – cn code 160241, 160242 and 160249 1.129 1.218 1.061

Exports:

Live pigs (tons) – cn code 0103: 2 0 63

Live pigs (tons/cwe): 1 0 47

Meat (tons) – cn code 0203: 146 12 222

Population 4.437.460 4.437.460 4.437.460

Total domestic use (tons) 140.462 143.515 145.953

Self-sufficiency (gross indigenous production/total domestic use): 82 82 78

Available for consumption per capita (kg/per capita/per year) 32 32 33

Source: CBS, 2002-2004; Analysis MAFWM, 2005

15 Cwe – carcase weight equivalent


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The CBS has been conducting a Survey on the Household Consumption since 1998, on a representative sample, pursuant to the methodology recommended by the European Union and international standards and classification. The abovementioned Survey collects data on personal consumption, or the consumption of food products and drinks in households. Pursuant to the data from the Survey, the consumption of pig meat prepared for household consumption, has risen in the period from 1999 to 2003 for 15%, and in 2003 it was 18,14 kg per household member (see Graph 2-7).

Graph 2-7: Consumption of pig meat per household member (1999 - 2004)

15,7414,5

17,61

14,66

18,1416,44

02468

101214161820

1999 2000 2001 2002 2003 2004

Year

Cons

umpt

ion

in k

g

Source: CBS, 2006

According to the data from the production and consumption balance sheet, total available gross amount of pig meat for consumption is 32 - 33 kg per inhabitant. However, from the available abovementioned amount, one part goes to industrial processing while the other is consumed fresh in households.

The majority of trade with live pigs in the Republic of Croatia still is conducted directly at the agricultural holdings. However, a significant part of trade is conducted at live markets where consumers (farmers, butcher shops, smaller meat processing trades and companies) directly purchase pigs from the producers. Live markets are owned by regional and local self government and function as public enterprises.

Slaughterhouses are privately owned and are most often organized within the meat processing industry which perform slaughter of livestock for their own needs, but also provide slaughter services. Only a smaller number of slaughterhouses performs exclusively service slaughtering. Establishing of the system for collection and analysis of data according to criteria of production capacity of individual slaughterhouse, in regards to the type of the animal or their importance is currently in progress (see Chapter Meat processing industry ).

Table 2-37: Average weight of slaughtered pigs in kg (2002 - 2004) 2002 2003 2004

Gross weight, kg 103 107 106

Net weight, kg 76 80 79

Source: CBS, 2006


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Great percentage of pigs is slaughtered directly on family farms for personal needs. According to the data from the CBS, the slaughtering of pigs on family farms was between 50 - 60% of total slaughtering of pigs in the period from 2002 to 2004.

Large trade chains have a growing significance in the supply of citizens with fresh meat, and are becoming, next to butcher shops, one of the most important chains of distribution of pig meat to the final consumer.

Agricultural producers, pig breeders are signing production contracts to a lesser extent with the slaughtering or meat processing industry, and even if they are signed they are mainly short-term contracts (related to production shifts). Meat industries sign contracts with the trade chains, but they are mostly not of a long-term nature. As more significant producers of pigs for fattening are the meat industries themselves, which have within their scope of work facilities for fattening. There is also a growing share of cooperative associations, or providing services of fattening for business entities in the market.

Table 2-38: Overview of the foreign trade exchange of pigs, pig meat and products (in tones) 2000 2001 2002 2003 2004 2005

Live pigs 6.163 3.077 3.677 3.276 4.506 10.784

Pig meat, fresh, chilled and frozen

15.229 17.868 23.225 23.449 29.372 38.121

Pig slaughtered products, fresh, chilled and frozen

999 976 1.987 1.702 1.128 1.385

Pig bacon and fat 1.777 2.037 2.442 2.932 2.844 3.705

Pig meat, salted, in brine, dried and smoked

685 930 1.095 1.539 1.795 1.926

IMPORT

Other pig meat products

768 643 1129 1218 1.061 1.289

Pigs 3 - 2 - 63 45

Pig meat, fresh, chilled and frozen

56 - 146 12 222 155

Pig slaughtered products, fresh, chilled and frozen

- 10 55 123 13 74

Pig bacon and fat 194 10 - 5 15 37

Pig meat, salted, in brine, dried and smoked

94 48 9 181 195 123

EXPORT

Other pig meat

892 496 514 553 845 788


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products

Source: CBS, 2006

Because of pig shortages import of live pigs and pig meat was considerably increased in 2000 and 2005 (see Table 2-38). In the observed period, there was an increased import of the pigs amounting up to 10.784 in 2005.

Insignificant quantities of pigs and pig meat are exported from Croatia.

Insufficient production was replaced by import, which is additionally being limited by forbidden pig import in the Republic of Croatia because of pig disease outbreak (bluetongue, foot – and – mouth disease and classical fever). Continuous pig prices oscillations and also the conditions of conducting business by producers, processors and organization of transport is the main cause for oscillations in pig production.

One of the mechanisms of the trade and price policy in the Republic of Croatia is regarding to custom protection. The basic rate of customs (custom duty on the most privileged basis) for live pigs, as well as pig meat has reached its obligatory level in accordance with the WTO requirements arising from Croatia’s accession to that organization. Transitional period for achieving final required WTO levels of custom duties for frozen pig meat shall expire in year 2007.

In 2005 basic custom rate for live pigs varied from 0% (for full – blooded breed animals and piglets) up to 40% (custom rate expressed in “ad valorem” equivalent) for the rest of the live pigs.

Custom rates for pig meat were ranged between 23% and 35% (custom expressed in ad valorem equivalent).

After expiring above mentioned transition period, the Republic of Croatia is no more obliged to decrease customs, except if agreed differently on a multilateral level agreement, for which negotiations are ongoing, according to the WTO Agreement on Agriculture on further world trade liberalizations and lowering of domestic support.

Except the custom rates, there are preferential custom rates (for unlimited quantities or quantities in the form of custom quotas) agreed in the frame of bilateral agreements of free trade and in the frame of the Stabilization and Association Agreement (SAA) with the EU.In the case of disturbance on a domestic market, Government of the Republic of Croatia can intervene by lowering of existing customs or with their increase, but only in the framework of international agreements.

An overview of the state aid schemes for pig sub sector is given in Chapter 2.2.

2.3.4.3. Beef production sub sector Background and key figures

Beef production (breeding) is the most important livestock branch in the Republic of Croatia (with 40% share in livestock production, including milk production) and also one of more important productions in total agriculture.

In the Republic of Croatia the most represented cattle breed is Simmental breed which accounts for 74% of the cattle stock, used for both milk and meat production, based on mixed production units (see Table 2-39). About 75% of cows are artificially inseminated. Another breed used for milk and meat production is the Brown cattle with 4,0%. The Holstein-Friesian cattle represent with 21% the most important breed in specialized milk production units. Other breeds like Charolais, Hereford, Swedish Red and White cattle and autochthonous breeds (Slavonia Syrmian cattle, Istrian cattle and Buša) account only for 1% of the total cattle breeding structure. The beef management is mainly based in stables while free-range system is individual and insignificant.


version of 14. 12. 2007;


Table 2-39: Breed structure of cows (2000 - 2005) in % 2000 2001 2002 2003 2004 2005

Simmental 74,36 74,19 74,15 n.a. 77,88 73,84

Holstein-Friesian 20,03 20,57 20,75 n.a. 18,12 21,5

Brown 5,16 4,76 4,59 n.a. 3,47 3,67

Other (1+2+3+4+5+6+7) 0,45 0,48 0,51 n.a. 0,53 0,99

1 Slavonian Syrmian 0,03 0,04 0,04 n.a. 0,02 0,04

2 Istrian 0,18 0,19 0,21 n.a. 0,16 0,2

3 Hereford 0,18 0,19 0,19 n.a. 0,21 0,23

4 Charolais 0,06 0,06 0,07 n.a. 0,1 0,44

5 Grey - - - n.a. 0,005 0,002

6 Buša - - - n.a. 0,03 0,06

7 Swedish Red and White - - - n.a. - 0,02

Source CLC, 2006

The national herd declined in size from 882.000 of heads in 1987 to the lowest 417.000 in 2002 (see Table 2-40). Significant contribution to this trend was the war during which a lot of cattle was lost (killed, stolen, etc.). Due to destroying of war (1991-1995) the number of cattle in the Republic of Croatia in this period has been significantly reduced (for 34,7%), and the downward trend continued until 2002, but afterwards has shown slight, but continuous growth. In 2005, the total number of cattle compared to 2004 increased by 1%, and compared with 2001 by 7,5%.

Table 2-40: Evolution of the number of cattle ('000 heads, 1987 - 2005)

Year Total cattle

Calves ≤ 1 year

Cattle > 1 year

Cows and heifers in calf

Bulls for reproduction and steers

1987 882 277 65 530 10

1988 843 251 70 513 9

1989 823 239 73 503 8

1990 830 262 68 492 8

1991 757 222 54 473 8

1992 590 159 43 384 4

1993 589 152 63 369 5

1994 519 136 32 346 5

1995 494 103 51 335 5

1996 461 98 48 311 4

1997 451 93 51 304 3

1998 443 112 28 300 3

1999 438 101 39 289 2

2000 427 93 45 287 2

2001 438 104 52 280 2


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2002 417 90 47 278 2

2003 444 102 61 280 1

2004 466 135 56 272 3

2005 471 143 54 272 2

Source: CBS, 2005

In the structure of cattle categories, the most represented are cows and heifers with 58%, which contributes to the milk production and increase of cattle fund. In practice is registered the high excluded dairy heads that end in meat production (Holstein before all). Due to a lack of domestic calves, considerable share of fattening calves is from imported heads. Unlikely the dairy production, the system of cattle production is not comprised within the purchase network, which does not ensure such a high level of purchase as in the case of milk.

Producers

According to the Agricultural Census 2003, there were 86.269 of agricultural holdings with cattle out of which 85.930 (99,6%) were family holdings and 339 (0,4%) were legal entities. In terms of numbers of cattle livestock, the production evolves at small and fragmented family holdings.

Graph 2-8: Distribution of family holdings by number of cattle (2003, percentage)

43365

22778

11650

40551797 2285

0

10000

20000

30000

40000

50000

1 to 2 3 to 5 6 to 10 11 to 15 16 to 20 >20

# of cows

# of

hol

ding

s

Source: CBS, Agricultural Census 2003 (on 1 June, 2003)

It is visible that a majority of family farms (90,26%) keep less than 10 cattle, and only 9,74% more than 10.

In order to change this unfavourable structure, Operational Programme for the Development of Livestock Production secures conditions for the establishment of new modern farms with the capacity of up to 100 cows. With the possibility of reaching higher competitiveness, such production units create a basis for meeting conditions set both in regard of environment as well as animal welfare. It is necessary to emphasise that some farmers will continue keeping a small number of animals on the farm.

Specialized cattle breeding farms are not yet developed at a large scale. One third (32,4%) of the legal entities have up to 20 cows and two third (67,6%) of total 339 producers keep more than 20 cattle out of which 25,4% or 86 have more than 100 cattle (see Graph 2-9).


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Therefore, in order to increase economic viability and compliance with Community standards (hygiene, animal welfare, manure management and other environmental issues) there is a need for restructuration of family holdings, by increasing the number of producers specialized on cattle breeding.

Graph 2-9: Distribution of legal entities according to the number of cattle (2003)

Structure of legal entities

75

35 38

69

36

86

0

20

40

60

80

100

<10 11 to 20 21 to 30 31 to 50 51 to 100 >100

# of cows

# of

ent

ities

Source: CBS, Agricultural Census 2003 (on 1 June, 2003)

Main geographic concentration of cattle breeding (67,49% of total holdings) is concentrated in continental Pannonian region of the country (counties: Zagreb County, Krapina - Zagorje, Bjelovar - Bilogora, Koprivnica - Križevci, Varaždin, Brod - Posavina, Međimurje, Vukovar - Srijem, Osijek - Baranja, Virovitica - Podravina, City of Zagreb).

Processing industry

Number of total slaughtered cattle showed growth in 2004, by 13% in comparison to the previous year, where increase in number of slaughtered cows was the highest (see Table 2-41).

Table 2-41: Number of slaughtered cattle ('000 heads) Category 2000 2001 2002 2003 2004

Calves and beef 107.464 95.327 115.603 111.239 125.735

Cows 16.390 12.060 11.417 10.107 12.088

Other cattle 230 176 193 262 265

Cattle, total 124.084 107.553 126.673 121.608 138.088

Source: CBS, 2005

The statistically registered number of slaughtered beef is significantly lower than the real one. According to CBS data, self sufficiency of beef would be only 37,5%, with consumption of about 6 kg per capita per year, which is not proportional with consumption according to the Questionnaire of household consumption, made by CBS (see Table 2-42). Expert analysis conducted by MAFRD, shows that self sufficiency of beef is at 76,5% (2002 - 2004 average), with aggregate consumption of 60.000 – 65.000 t of beef (around 12 kg per capita).

Table 2-42: Meat consumption per capita (2002 - 2004)

Beef and veal meat consumption per capita 2002 2003 2004 2005


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kg/per capita/year16 10,89 10,63 11,40 11,63

Source: CBS, Questionnaire of house holdings consumption 2006

As can be seen in Table 2-43, meat production remains unchanged throughout the observed period (2000 - 2005). It is especially relevant for the production of veal which doesn't have a clear trend: veal production is on the rise or decline depending on the price of calves. On the other hand, beef production has no similar trend. There is an increase in production during the observed period.

Table 2-43: Production of certain products and processed products of beef (2000 - 2005 in tons)

2000 2001 2002 2003 2004 2005

Fresh or chilled beef 17.137 15.563 15.014 16.362 16.883 17.263

Fresh or chilled calf meat, in parts 709 713 1.296 1.432 1.821 1.459

Cattle and calves meat, salted, dried or smoked 5 2 2 2 2 13

Ready meals of beef 3 n.a. 29 71 61 n.a.

Dishes of beef, except ready meals 16 23 2 88 702 852

Source: CBS (2000-2005)

From Table 2-43 it can be seen that production of certain processed products in 2005 has increased (i.e. fresh or chilled beef, whole and halves, front or back quarters for 50,8% compared to 2004) while production of some other processed products in 2005 has decreased (i.e. fresh or chilled beef, in parts for 22,8%) which can lead to an conclusion of certain degree of diversification in terms of market trends.

Table 2-44: Balance sheet - carcase weight equivalent (cwe) Description 2002 2003 2004

Net production

Production (tones), cwe 69.574 64.095 63.126

Import

- Live bovine (tones), cwe 16.757 12.836 14.138

16 Quantities consumed in private house holdings – year average per family member


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- Meat (tones), cwe 1.550 2.180 5.957

Export

- Live bovine (tones), cwe 0 0 85

- Meat (tones), cwe 1.829 1.890 2.522

Total domestic use - (tones), cwe 69.295 64.385 66.561

Population 4.437.460 4.437.460 4.437.460

Per capita consumption (kg/year), cwe 15,62 14,51 15,00

Per capita consumption (kg/year) 12,01 11,16 11,54

Gross indigenous production (tones), cwe 52.817 51.259 49.073

Self-sufficiency (%) 76,2 79,6 73,7

Sources: CBS and calculation of net production by MAFWM, 2006

Market and trade

As Republic Croatia for many years has not been producing beef in quantities enough for own consumption needs, it has to import beef and calves for fattening. Therefore, trade balance of sector is negative. Beef and calves for fattening are the most represented in the import structure, and last year significant growth of beef import occurred. Namely, meat import in 2005, compared with previous year, was doubled (see Table 2-45). Import of live cattle increased as well, for 15% in 2005, compared to 2004, while there was no significant import of preserved beef products.

Export of live cattle and beef is not significant. But, Republic Croatia has considerable export of preserved beef products, where trade balance is positive. Export of these products in 2005, compared with 2004 increased for almost 19%, but still, level of export from 2000 was not achieved.

Table 2-45: Trade of cattle, beef and processed products (tons) 2000 2001 2002 2003 2004 2005

Cattle export 1 486 0 0 158 885

Beef export, fresh, chilled and frozen 730 398 190 307 628 556

Processed products export, preserved 2.130 1.213 1.214 1.106 1.265 1.501

Cattle import 25.366 14.165 30.608 23.792 26.338 30.316

Beef import, fresh, chilled and frozen 5.459 1.172 1.179 1.594 4.536 9.105

Processed products import, preserved 72 40 7 15 15 36

Source: CBS, 2006

Most of the trade of live fatten beef runs on agricultural holdings. Very small part of the trade is done on cattle fairs. Regarding calves (80 - 160 kg), they are sold on cattle fairs, buying stations, and in smaller share on agricultural holdings. Cows are sold on cattle fairs or directly to the slaughter houses.

On cattle fairs cattle are mostly bought for own needs, most often by buyers who have smaller processing plants (slaughter houses). On buying stations cattle is also bought for own needs (fattening farms) or for the meat processing industry needs. On the Croatian market, most of the cattle is bought based on the live weight, not based on the carcasses quality.


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Regulation of quality of beef carcasses and halves on the slaughter line (OG No. 20/04), has been applied from 1 September 2004. The classification procedure itself may be carried out by legal persons authorized by the MAFRD for this activity. Conditions which must be fulfilled by legal persons to be authorized to carry out this activity are further stipulated by means of the Regulation.

Market Information System - TISUP, which operates within MAFRD, collects prices of different categories of live cattle (from cattle fairs, buying stations and farms, auction prices of heifers), gross and retail market prices of meat and processed meat, processes them and distributes.

Prices of live cattle are collected on almost all cattle fairs and buying stations (70 – 80%), and also from fattening farms mainly owned by family holdings. These are producer prices, without transport costs included.

Gross market prices (excl. VAT) are collected from all bigger meat industries in Croatia. Retail market prices (including VAT) are collected from butcher’s shops in 15 bigger Croatian cities .

Table 2-46: Average price on cattle fairs EUR/kg live weight

Category 2000 2001 2002 2003 2004 2005

Bull "Simmental", for slaughtering, >450 kg 1,9 1,7 2,09 1,8 1,67 1,96

Bull "Holstein", for slaughtering, 300<450 kg - - 1,98 1,71 1,3 1,76

Heifer "Simmental", for slaughtering 1,74 1,56 1,86 1,67 1,56 1,84

Calf "Simmental", 80<160 kg 2,80 2,75 3,20 3,02 2,82 3,23

Calf "Holstein", 80<160 kg - - 3,04 2,99 2,58 2,90

Cow "Simmental", for slaughter 1,03 1,00 1,21 1,02 0,84 0,97

Source: MAFRD, TISUP 2006

Calves of Holstein-Friesian breed have limited value for production of beef, therefore their price is lower compared to Simmental calves (see Table 2-46).

An overview of state aid schemes for beef sub sector is given in Chapter 2.1.

2.3.4.4. Poultry and eggs sub sector Background and key figures

In comparison to other types of livestock production, poultry production is by large organized in an industrial way prevailed by great production units. Production also exists in a smaller extent - within family farms - where the production is carried out in an extensive way and mainly for own consumption.

Even if egg production today is organized on a high technology, industrial level, there is an utmost need for the adaptation of the production in order to be fully conformed to the ecological and animal welfare standards, including increase of production competitiveness. Therefore, reconstruction of the most present farms producing eggs is needed and also the construction of the new ones. In the small systems for the egg production organized on the family farms, no great changes are about to take place.

Today, egg production for the market is organized in the great production units where the modern production technology is applied and the quality genetic material of actual hybrid lines is exploited.

Egg production taking place on the family farms is managed mostly in the extensive way in the conditions of the farm yard, where poultry is kept in the open space and only during the night is kept indoors. In such conditions, poultry is fed on the natural way; as a result productivity of


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such flock is low. Eggs produced on such way are mostly used for the farmer’s consumption, and only during the time of the greater laying production surpluses, eggs are placed on the city market, with the certificate of their health condition included.

Regarding such organization of egg production in Croatia, it is clear that the greater investments are to be expected in the industrial capacities. Egg production on the family farms is expected to be marginal activity, intended above all, for the production for own needs. It is also necessary to put emphasis on the small number of family farms specialized for this kind of production, applying modern way of production like the great production systems.

Table 2-47: Number of poultry in Croatia Categories 2002 2003 2004

Total hens, from that: 10.470.568 11.371.240 11.780.890

- Breeding flock (heavy and light lines) 511.360 543.000 572.000

- Laying hens (light lines) 3.591.000 4.080.240 3.780.000

- Broilers 5.840.000 6.213.000 6.540.000

Turkey 528.208 535.000 589.373

Other - - 299.517

Source: CBS, 2006; EIA ‘Croatiastočar’ 2006

From the Table 2-47 it is obvious that in the poultry farming in Croatia hens and turkeys are dominant, while the share of other poultry (ducks, gooses and others) is of lower importance. Regarding number of layers for the egg production, in that segment are no significant differences as well.

In the intensive industrial conditions, hybrid lines are used for the egg production and they are also used on the most of the family farms. Using of pure breeds is almost insignificant and in the breeding and production sense is of no importance.

Today, the egg production mostly satisfies the needs of the domestic population, although there is a need to emphasize that international trade of this product is also present. Balance of eggs production is specified in the following table.

Table 2-48: Balance of egg production in 2004, in tons Figures Quantity

Domestic production 48.000

Export 704

Import 1.445

Consumption in the country intended for: 47.259

- human consumption 43.352

- laying 3.442

- other consumption than nourishment 465

Consumption per inhabitant (kg / inhabitant / year) 9,77

Self – sufficiency (%) 97,10

Source: CBS 2006, EIA ‘Croatiastočar’ 2006

From the Table 2-48 it is visible that the greatest part in egg consumption is supplied from the domestic production. That is comprehensible if one takes into account that intensive production is organized for the market while family farms also produce significant quantities of eggs for own needs.


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Eggs productivity depends on a production system and it is on different levels; in the large specialized production units high laying scores are achieved, while regarding production on family farms it is significantly lower (31,13% of total consumption eggs produced), what is visible from the following table.

Table 2-49: Annual production of eggs for consumption Figures Quantity (pieces)

Consumption eggs production: 864.000.000

- for the market 595.000.000

- farm consumption 269.000.000


Producers

Although the poultry production is organized in a specialized production units (intensive production), it is also organized in the family farm conditions where poultry is usually kept in the extensive conditions of a free range breeding. Most of the poultry producers are farmers.

Table 2-50: Number of poultry farms and structure of ownership


As shown in Table 2-50, the share of large production units in respect to the total number of producers is almost insignificant (0,14%), compared to the number of family farms engaged in poultry production. In the Table 2-51, structure of farms and the number of animals is specified. Most of the production units are located on farms with free range conditions, with a relatively small number of poultry per unit. The minimum capacity for the viability of the family farm is around 2.000 laying hens (in cages) according to calculations of Faculty of Agriculture (University of Zagreb)

Table 2-51: Structure of ownership and the number of poultry for the production of meat and eggs, according to farm size

Producers (family farms and legal entities) Animals Size of a

producers in accordance to the number of poultry Number Share % Number Share %

1-99 346.230 99,77 5.193.450 44,08

100-999 72 0,02 36.000 0,31

1.000-2.999 93 0,03 125.550 1,07

3.000-4.999 76 0,02 304.000 2,58

5.000-9.999 418 0,12 2.842.400 24,13

10.000-49.999 112 0,03 1.680.000 14,26

50.000 and more 25 0,01 1.599.490 13,58

Source: EIA ‘Croatiastočar’, 2006; Centre for Poultry Farming, 2006

Legal entities Family farms Total

Layers 279 125.000 125.279

Broilers 210 180.000 180.210

Other poultry 7 41.530 41.537

Total 496 346.530 347.026


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In Croatia the following hybrid lines are used in the intensive production: for the production of eggs – light lines, for the meat production – heavy lines. On family farms and in extensive production, the same hybrid lines are used, and in the smaller extent pure breeds and cross – breeds of pure breeds and hybrids.

Regarding intensive production, poultry intended for the egg production is kept mostly in the cages and in a smaller extent on a litter, while in extensive production poultry is kept mostly free and in the open space.

Table 2-52: Ways of keeping laying hens Keeping of laying hens Number of animals Number of eggs annually

Cage 1.650.000 280

Litter 690.000 190

Open space 1.440.000 140

Source: EIA ‘Croatiastočar’ 2006

The greatest part of the laying hens is kept in cages (44%), especially in intensive production (see Table 2-52). Poultry is kept in the cages which do not comply with the present conditions because the most of such farms were built in the earlier period when cages were used as usual way of keeping poultry.

According to Council Directive 1999/74 specific rearing system to increase animal welfare in the egg production will become obligatory by 2012.

More than 80% of the Croatian egg producers do not yet comply with these standards. Therefore, costly investments (9 – 11 EUR per laying hen) are essential otherwise most of the producers will have to close down the production. Currently there are 34 bigger egg producers in Croatia, with capacities from 20.000–200.000 laying hens who should implement such investments in order to maintain their production.

Market and trade

Eggs as final product produced in the great production units are sorted and packed in the own egg grading and packaging facilities, and delivered on the market.

Eggs produced in extensive conditions on the family farms are placed on the city markets, where inspections on hygienic conditions are proceed by authorized veterinarians.

All offered eggs are marked in accordance to a class, also including the producers mark on the box package.

There is no system existing for determining eggs price in Croatia. Prices are established regarding the conditions on the market.

Table 2-53: Import and export of eggs (2002 - 2004) Import Export Type of

product 2002 2003 2004 2002 2003 2004

Eggs with shell 1.166 1.141 1.445 486 1.307 704

Eggs without shell 7 185 236 94 200 129

Albumins 5 6 15 51 53 20

Source: CBS, 2006

Egg trade has been developed on the international level (see Table 2-53). Eggs import is taking place in accordance to customs regulations and concluded conditions of a free trade with the numerous countries as well as the European Union.


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Preferential conditions for eggs and albumin were arranged with the each of the particular country in the frames of bilateral free trade agreements or upon the Stabilization and Association Agreement with the EU.

In Croatia, quotas are not applied in the terms of limiting import, but the particular quantities of the poultry products could be imported in accordance to preferential conditions (Ordinance on customs quotas allocation, OG No. 55/04, 146/04 and 138/05).

Export of poultry products to other countries is not supported.

Croatia is allowed to apply maximally permitted custom rates, according to agreement with the WTO.

Regarding trade with third countries, there is no existing permission system for the products that fell into common market organization for eggs and poultry in Croatia. That is considered also on non – existing import licences.

All producers who produce products of animal origin for the market are registered in the MAFRD, Directorate of Veterinary.

Eggs for selling are obligatory being marked in accordance to the class.

On the product declaration producers are obliged to label name of the producer, product name, product mass and date of packaging, including other labels, in accordance to the Regulation of General Food Declarations and Food Labelling (OG No. 114/04, 128/04 and 34/05). Eggs are classified in 10 classes regarding mass, in accordance to the Regulation of the Eggs and Eggs Products Quality (OG No. 53/91, 96/97 and 128/97).

Table 2-54: Classification of the eggs for consumption Class Egg weight (g)

SX > 85

SZ 85-80

SV 80-75

SU 75-70

S 70-65

A 65-60

B 60-55

C 55-50

D 50-45

E < 45

Source: MAFWM, 2006

Production and selling control in the poultry industry is performed by veterinary and market inspection services (see chapter 2.3.4.5 and 2.3.7.1).

At the moment, Croatian regulations on production and sale of eggs to the market is not yet fully harmonized with the respecitive EU regulations.

Poultry farming represent a great source of quality and cheap nutritive substances for the inhabitants. As the greatest part of the large production systems was established in the previous period, it is necessary for reconstruction to be performed with the purpose of satisfying animal welfare, environmental and ecology standards. Also, because of open market it is important that already established production systems become competitive on the world market.

An overview of state aid schemes for poultry sub sector is given in Chapter 2.2.


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2.3.4.5. Meat processing industry sub sector Background and key figures

Meat processing industry has a long tradition in Croatia. It is well known by its high quality products, the part of which is recognizable on foreign markets as well.

The annual production of meat, meat processed products in Croatia is about 180.000 tones. Sausage-making products prevail in the production structure with the share of 2/3, while canned products make 18%. (see annex 12.2, Table 12-2)

Today in the meat processing sector there are 953 approved establishments according to processing activity (see Table 2-55). The most important (by the income level) are PIK Vrbovec, MI Braća Pivac, Gavrilović and Danica. It can be noted that in the meat processing sector considerable ownership concentration appeared (Agrokor, PIK, Belje) and vertical integration. Business results after the takeover, consolidation and restructuring of the PIK show the production increase for 3 times, the revenue growth for 150 million EUR and profit more than 55,6 million EUR.

In the sale of meat and processed meat products the importance of supermarkets and hypermarkets chains is increasing. Although some of the leading meat processing industries are in a close ownership relations with mercantile chains, the connection between producers, processors, distributors and consumers is generally weak. The problem in the primary production (insufficient production) is reflected through a high import of meat and processed meat products. In 2005, the value of import of live animals, meat and slaughter-house products was almost 173 million EUR which was higher than 2006 when it was 83 milion EUR.

The increased production of cereals (especially of maize, the most important livestock feed) and oilseed crops for processing into bio-fuel and consequently the price growth of these products has caused a negative economic results in the livestock fattening sector. This trend will be even more stressed in the future period and deserve special attention.

Due to Croatia's preparation for the EU accession the national legislation has to be harmonized with the EU legislation. A particular heavy impact on the meat processing industry can be expected from the adaptation of the national legislation to take over Community standards on public health, animal welfare, environmental protection etc.

According to the former national legislative framework, the meat processing facilities are categorized in three groups according to building structures, technical equipment, capacity and production technology:

• Industrial plants (objects of a greater production capacities),

• Crafts facilities (objects of a smaller production capacities),

• Facilities in the framework of the farms.


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The assessment of all meat processing establishments17 and their categorization in accordance to their grade of compliance with Community standards is explained in chapter Government policies and strategies.

Table 2-55: Approved establishments by the MAFRD, classified according to processing activities, export approval and evaluation, March 2009

Processing activities Approved for export to EU

countries

Approved for domestic market and export to the

third countries Total EU

compliant EU non

compliant

Slaughterhouses (red meat) 5 151 156 56 100 Slaughterhouses (poultry) 5 42 47 24 23 Cutting, processing and

meat treatment 8 183 191 104 87

Wild game treatment and processing 6 18 24 11 13

Storing food of animal origin 5 217 222 170 52 Eggs packaging centres 1 54 55 39 16

Treatment and processing of milk and milk products 11 37 48 17 31

Treatment, processing and storing of fish and fishery

products 60 50 110 96 14

Live Bivalve Molluscs 19 19 11 8

TOTAL 101 771 872 528 344

Source: MAFRD, 2009

From the total amount of 203 approved slaughterhouses the biggest percentage is the slaughterhouses for ungulates (76,84%) while 23,15% are for poultry (see Table 2-56).

As to contribute to a better quality of beef meat, an improved control system for beef carcasses on the slaughter lines according to the EU minimum standards were introduced. The ordinances are in most parts harmonized with the respective EU directives.

Table 2-56: List of slaughterhouses per county

County Number of

slaughterhouses for ungulates

Number of slaughterhouses for

poultry Total

Bjelovarsko-bilogorska 6 1 7

17 Regulation EC 852/2004, Article 2(c) – „establishment“ means any unit of a food business


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Brodsko-posavska 5 5 10

Dubrovačko-neretvanska 4 4

Grad Zagreb 8 5 13

Istarska 5 4 9

Karlovačka 5 1 6

Koprivničko-križevačka 3 1 4

Krapinsko-zagorska 4 1 5

Ličko-senjska 8 8

Međimurska 4 12 16

Osječko-baranjska 2 2

Požeško-slavonska 2 2

Primorsko-goranska 7 7

Sisačko-moslavačka 6 1 7

Splitsko-dalmatinska 26 1 27

Šibensko-kninska 6 1 7

Varaždinska 2 5 7

Virovitičko-podravska 5 5

Vukovarsko-srijemska 7 1 8

Zadarska 17 4 21

Zagrebačka 24 4 28

156 47 203

Source: MAFRD, 2008.

Significant increase in the number of slaughterhouses in Dalmatia ocured in the 90ies (see also Table 2-56). During this decade a large number of small slaughterhouses and meat processing plants were opened. This was the result of the incentives provided by the independence status of Croatia and by the new business development programme by Government. The increase in slaughterhouses and processing plants in Zagreb County was a result of the post war migrations of people towards the capital. During the last few years that number has also increased in Slavonia (Osijek - Baranja county), which is the region that was most devastated during the war (1991 – 1995).

Government policies and strategies

Prior to entering into force of „Hygienic package“ regulations transposed into the Croatian legislation (October 2007) procedures of assessment and categorization of establishments had been started on the basis of Minister's Decision on conduct of procedures for assessment and categorization of food of animal origin business operators (CLASS: 322-01/07-01/41, REG.NO: 525-01-07-02, of June 19, 2007), stipulating the compulsory conduct of assessment and categorization procedures, control list for the procedures and team members who will perform them.

In October 2007, ordinances (OG 99/07) based on transposition of the “hygienic package“ regulations - Regulation (EC) 852/2004, 853/2004, 854/2004 and 882/2004 entered into force.


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Ordinance on Food Hygiene (OG 99/07) drafted on the basis of the Regulation 852/2004, in its Articles 14 and 15, prescribes the national measures related to specific establishment categories.

The procedures for food business operators after performed categorization has been strictly prescribed by Minister's Decision regarding procedures for upgrading the food business operators (CLASS: 322-01/08-01/228, REG.NO:525-6-08-1/NK,of April 7, 2008). In addition, the procedures for veterinary inspectors performing categorization, after performed categorization has been stipulated by Minister's Decision (CLASS. 322-01/08-01/270, REG.NO: 525-6-08-1/NK, of April 22, 2008,)

In 2007 in Republic of Croatia started the categorization process of food of animal origin business operators regarding alignment assessment of approved establishments with EU Regulations.

On the national level categorization of all establishments was conducted in accordance with their compliance and they were classified into 4 categories.

Based on consultations with EC (Bruxelles, 3. December 200718), the RC reorganized existing 4 type categorization into 2 type categorization – EU compliant and EU noncompliant

- establishments in compliance with EU standards and

- establishments non – compliant with EU standards.

Direct sales in the RC are currently regulated by the Ordinance on maintaining databases of registered and approved establishments and on procedures for registration and approval of establishments dealing with food (OG 125/08) and partially Ordinance on veterinary -sanitary conditions to be met by premises registered for treating, processing and storing products of animal origin on agricultural family holdings (OG 149/03) which is laying down requirements for processing food on the holdings of origin.

Pursuant to the above Ordinances, the following activities are permitted:

• processing milk and producing dairy products

• producing and packing apicultural products

• direct sales of limited quantities of raw milk and eggs

• producing traditional meat products

• dry – cured meat products and bacon

• dry and cooked sausages

• greaves and lard

18 Negotiations on Chapter 12 – Food Safety, Veterinary and Phytosanitary Policy


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HACCP system implementation

Pursuant to Regulation 852/2004, food business operators have the primary responsibility for food safety and are required to put in place, implement and maintain a permanent procedure or procedures based on HACCP principles at any stage of production, processing and distribution of food after primary production.

In Croatia, self – control system of food-producing establishments is prescribed by Food Act (OG No. 46/07), secondary legislation based on Food Law and in Ordinance on implementation of obligatory measures in approved establishments for the purpose of reducing microbiological and others meat contaminants, meat products and other products of the animal origin intended for human consumption (OG No. 74/97, 41/07). According to the Food Act, food business operators have to implement HACCP principles till January 2009, except export establishments, which are already implementing their own checks based on HACCP principles.

Inspection and control system

Pursuant to the provisions of the Food Act (OG 46/07), the MAFRD (Veterinary Inspection Directorate and Directorate for Agriculture and Phytosanitary Inspections), the Ministry of Health and Social Welfare (Directorate for Sanitary Inspection) and economic inspectors of the State Inspectorate have responsibility at central level for official controls. Official controls are carried out by state veterinary inspectors, official veterinarians and border veterinary inspectors, sanitary inspectors and border sanitary inspectors as well as by agricultural and economic inspectors.

According to the provisions of the Food Act and the Veterinary Act and based on the State Administration System Act, the competent authority may delegate specific tasks related to official controls to authorised veterinary organizations as control bodies.

Official controls may be carried out at any stage of production, processing, storage and distribution of food or feed, animals or animal by-products. Official controls are carried out without prior notification, except in the case of an audit where the food business operator must be notified in advance. Official controls of food business operators are carried out in accordance with annual and multi-annual control plans.

If, during official controls, the veterinary or sanitary inspector determines that the above stated acts or other regulations, on the basis of which he/she is authorised to act, have not been applied or have been applied incorrectly, he will issue a decision ordering that the irregularities identified must be eliminated and will set a time limit within which such irregularities must be eliminated and if necessary he may forbid the performance of the activity within the establishment. During performance of control of the proceeding in accordance with food regulations, veterinary and sanitary inspectors and authorised veterinarians are authorised to collect samples and send them to a laboratory for analysis. If during inspection an inspector establishes the infringement of legal regulations he/she will file a request to the competent law court.

Border veterinary inspectors or border sanitary inspectors are responsible for checks on consignments moving across the borders of the RC.

In the RC the competent authority for forbidden substances and control of residues in animals and products of animal origin is the Veterinary Directorate and Veterinary Inspection Directorate at the MAFRD.

Annual National Residue Monitoring Plan (NRMP) in live animals and products of animal origin is drafted by the Veterinary Directorate. Control of residues is conducted at farms, slaughterhouses, dairies, establishments for farming and processing fish, shellfish and honey, establishments for collecting eggs and packing centers for eggs, other establishments/sites, including those for the production of feed.

The number of samples to be tested within the framework of the NRMP is determined in accordance with the Ordinance on monitoring of certain substances and residues thereof in live animals and animal products (OG 79/08). Analytical methods for determining residues are


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applied in accordance with the Ordinance on the performance of analytical methods and the interpretation of results (OG 2/2005). These ordinances are aligned with the acquis communautaire.

Animal by - products

Animal by-products not intended for human consumption are regulated by the Veterinary Act (OG 41/07) and the Ordinance on handling animal by-products not intended for human consumption (OG 56/06). The Ordinance is partially aligned with Regulation (EC) No 1774/2002. The Ordinance stipulates procedures for handling animal by-products not intended for human consumption, and veterinary and sanitary conditions for the collection, transport, storage, handling, processing and use or disposal of animal by-products, in order to prevent these products from presenting a risk to animal or public health, or the environment. The Ordinance also lays down conditions for the trade, import, export and transit of animal by-products and products derived from them.

The Ordinance also lays down which animal by-products generated in various establishments must be dispatched for heat treatment process. Animal by-products do not need to be directly dispatched to an incineration plant, but may be collected at the intermediate plant, where they have to be stored on adequate temperature. Direct dispatch of by-products to the processing or incineration plant is allowed only from establishments generating up to 1 ton of animal by-products daily. Veterinary Directorate has to register special vehicles for the transport of by products. Intermediate plants have to be approved by the Veterinary Directorate.

In the RC there is one processing plant for heat treatment process for Category 3 material with a daily capacity of over 300 tones, receiving Category 3 material from the entire country (Agroproteinka at Sesvetski Kraljevac – Zagreb County). Agroproteinka is a beneficiary of SAPARD funds aimed at harmonization with relevant Community standards. There are also 5 processing plants for Category 3 material within establishments producing food of animal origin, where only animal by-products generated in these establishments (poultry slaughterhouse and fish processing establishments) are processed. Their daily capacity is 2 - 10 tones. For the heat treatment of Category 1 and 2 materials there is one plant with a daily capacity of over 100 tones (Agroproteinka).

Furthermore, in the RC there are 4 intermediate plants for animal by-products not intended for human consumption, in which Category 1 and 2 materials are stored separately from Category 3 materials. Chilled animal by-products are dispatched from these plants by special vehicles registered at the Veterinary Directorate to plants for heat treatment. There is also one storage plant approved only for the storage of Category 2 material (animal carcasses). In addition, full and due disposal of animal waste in Croatia requires at least five facilities - intermediate plants with the capacity of 80 - 100 t/day and necessary temperature regime for the needs of the following several counties jointly, preferable in places (and 100 km around).

Koprivnica - Križevci, Varaždin, Bjelovar - Bilogora Virovitica - Podravina and Međimurje counties - Križevci

Istria, Primorje - Gorski Kotar counties – Pula;

Požega-Slavonia, Osijek-Baranja, Brod - Posavina, Vukovar - Srijem counties – Slavonski Brod;

Zadar, Šibenik - Knin, Lika - Senj counties - Benkovac;

Split - Dalmatia, Dubrovnik - Neretva counties - Split

Currently, Croatia has two “county” intermediate plants (in Rijeka and Pula) from which one is not in compliance with Community standards.

2.3.4.6. Fisheries sub sector Background and key figures

Fisheries sector in Croatia comprises the management of marine and freshwater resources, including freshwater capture fishing and aquaculture, marine capture fishing and marine


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aquaculture, processing of fish and other water organisms, as well as overall control, supervision and international co-operation. The administrative body in charge is the Directorate of Fisheries within the MAFRD.

The fisheries sector accounts for a small portion of the national GVA as demonstrated in the Table 2-57 but it provides for around 20.000 jobs and thus plays a significant socio-economic role with the traditional fishing dominating the commercial type. Almost 70% of fishing, farming and processing take place on the islands where income sources are limited. The Table 2-57 further shows that the absolute value of the fisheries sector continues to grow over the given period while its share in total GVA decreases.

Table 2-57: Significance of fisheries sector expressed through GVA 2000 2001 2002 2003 2004

GVA amount of fisheries in million of EUR 39,42 38,89 53,88 56,09 56,37

Share of fisheries GVA in total GVA (%) 0,24 0,22 0,27 0,25 0,23

Share of fisheries GVA in total GVA for agriculture, hunting, forestry and fisheries industry (%)

2,57 2,28 2,97 3,46 2,95

Source: CBS, 2006.

Fishery in Croatia is a multispecies fishery. In terms of biological resources supporting the fisheries sector, there are about 410 fish species in the Adriatic Sea, out of which 100 species are commercially exploited. Continuous monitoring of marine resources status has shown that the majority of demersal catches (as much as 80%) is composed by maximum of ten species where the most important are hake (Merluccius merluccius), Norway lobster (Nephrops norvegicus) and striped mullet (Mullus barbatus). Commercially important species of small pelagic fish are sardine (Sardina pilchardus), anchovy (Engraulis encrasicolus) and sprat (Sprattus sprattus.)

When referring to freshwater fishery, the main freshwater species are carp (Cyprinus carpio), grass carp (Ctenopharyngodon idella), tench (Tinca tinca), catfish (Silurus glanis), pike perch (Stizostedion lucioperca), pike (Esox lucius) and Californian trout (Oncorhynchus mykiss).

The total marine fisheries production (including capture fisheries catches and marine aquaculture production) amounting 45.000 tons in 2005 represents an increase of 50% if compared to the fisheries production amounting 30.000 tons in 2002 respectively (Table 2-59). marine aquaculture participates with approximately 10.000 tons or 22% in the total catch while on the global scale, farming already accounts for over 50% of the catch. In regard to the fish-processing industry Due to the sudden loss of central European market the production of canned fish decreased three times if compared to 2001, while other fish-processing programme has notably increased.

The export/import figures (Table 2-73) reflect the trends in fisheries sector in general and indicate key events influencing the industry. As the tuna farming industry gained on its importance over the past 6 years it significantly contributed to building up the exporting value,increasing small pelagic species import at the same time. In general, the imports trend is increasing: compared to 2004, the 2005 imports increased by 15.000 tons, from 38.627 tons to 53.671 with value of 74,3 million EUR. The bulk of imports are used for export purposes. In the same time export has increased from 23.428 tons in 2004 to 24.416 tons in 2005, with value of 73,5 million EUR. The fish imports in 2005 were higher in terms of imported quantities, but lower in value terms. Such situation is the consequence of higher-volume imports of small-size pelagic fish (herring, sardine) of lower value, while the higher-value fish is exported (tuna).

The fishing quota is set for tuna (Thunnus thynus) , in accordance with the ICCAT, and the collection of corals is set to maximum 200 kg per license annually exclusively in the period from April 1st to November 30th.


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Table 2-58: Number of fishing vessel (2000 - 2004) Year 2000 2001 2002 2003 2004

Vessels 381 420 450 477 475

Boats 2.348 2.578 2.700 3.205 3.209

TOTAL 2.729 2.998 3.150 3.682 3.684

Source: MAFWM, Directorate of Fisheries, 2006

The total production of marine capture fishery reached 34.661 tons in 2005, out of which small pelagic fish accounts for 82,6% (28.621 tons of sardines, anchovies and sprat) while the balance of 4.325 tons comprises demersal species and 1.467 tons of shellfish and other marine organisms (Table 2-59).

Table 2-59: Trends in catch of marine fishing 2000 - 2005 Catch by category (t)

Year Total Pelagic fish Demersal Other

2000 20.971 17.072 2.365 1.534

2001 17.594 13.572 2.567 1.455

2002 19.500 14.500 3.200 1.800

2003 29.102 24.369 3.556 1.177

2004 31.937 26.381 4.325 1.231

2005 34.661 28.621 4.573 1.467

Source: MAFWM, 2006

Increasing trend in catch record occurred due to introduction of logbook system in 2000. That is the main reason for noted increase of demersal catches which doubled in 2004 if compared to 2001. Regarding the pelagic fish and in addition to the establishing data record system, the introduction of incentives for small pelagic fish in 2003 resulted with obvious increase in catch of pelagic fish in total – the figure of 19.500 tons in the year 2002 increased to 34.661 in 2005.

In regard to freshwater capture fishery, sports and recreational fishing (Table 2-60) dominates in terms of subjects engaged (36.781 in 2005) and catch quantity (521,5 tons in 2004). the number of active commercial fishermen on the rivers Danube and Sava is limited (maximum of 25 commercial fishing licenses issued on Danube and 10 on Sava river) and catch as presented in Table 2-61 (0,45 and 0,51 in 2004 and 2005 respectively) insignificant if compared to total catch of sports and recreational fishery.

Table 2-60: Catch in sports fishing from 2000 - 2005 Year Catch (t)

2000 457

2001 463

2002 428

2003 415

2004 521,50

2005 621

Source: CBS and MAFWM, Directorate of fisheries

In the year 2004 Directorate of Fisheries began to collect data and monitor the catch in commercial freshwater fisheries (Table 2-61). Also, in the same year the quota was set for the catch of indigenous freshwater fish species which is still in force. The data of the catch in the years previous to 2004 are not available.


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Table 2-61: Total catch in commercial freshwater fisheries in kg Species 2004. 2005.

Carp (Cyprinus carpio) 1.454 2.587

Wels (Silurus glanis) 4.085 3.193

Pikeperch (Stizosteidon lucioperca) 1.130 1.466

Pike (Esox lucius) 650 1.428

Bream (Abramis brama) 14.830 15.501

Starlet (Acipenser ruthenus) 100 38

Tench (Tinca tinca) 24 12

Ide (Leuciscus idus) 742 2.519

Asp (Aspius aspius) 729 857

Other indigenous species 10.713 13.847

Other allochthonous species 10.753 9.804

TOTAL 45.210 51.252

Source: MAFWM, 2006

Marine aquaculture

Croatian marine aquaculture predominantly includes production of sea bass (Dicentrarchus labrax) and sea bream (Sparus aurata) in floating cages (inshore and/or semi-offshore) and bluefin tuna (Thunnus thynnus) in offshore floating systems. Shellfish production is mostly composed of black mussel (Mytilus galloprovincialis) and European flat oysters (Ostrea edulis) on long lines.

Table 2-62: Production trends in marine aquaculture from 2000 - 2005

Year Seabass and seabream

(t)

Mussels

(t)

Oysters

(kom)

Tuna

(t) Seabass and seabream fry (pcs)

2000. 2.500 1.200 1.000.000 1.200 4.500.000

2001. 2.500 2.000 1.000.000 2.500 4.600.000

2002. 2.500 2.400 1.000.000 3.971 4.900.000

2003. 2.510 2.800 800.000 4.679 5.500.000

2004. 3.000 2.400 800.000 3.777 6.974.000

2005 3.000 2.500 800.000 3.425 5.782.720

Source: MAFWM, 2006

It is clear from Table 2-62 that production of sea bass and sea beam has slightly increased during last two years. Due to the increase of domestic demand, revitalisation of tourism, and as well to the new investment possibilities, it is expected that this production should continue increasing in the coming years. Shellfish production is stagnating due to the fact that marketing is limited only to domestic market. It is expected that as soon as EU requirements for export will be fulfilled, production will be significantly increased. Tuna production is the fastest growing activity but it is expected that there will be no future significant increase, due to the fishing restrictions.

Some investments in fish production have been done recently, but there is a strong need to continue with modernization of presented farms to fullfil EU standards. Fry production is not


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meeting the requirements of domestic needs and it is predicted that at least one hatchery (10 million fry annual production) should be constructed in the near future.

Shellfish production is mostly family bussines, there are only about 10 farms producing more than 50 tons annually. As legislation regulating distribution and purification centres for shellfish has entered in force recently, there is a strong need for construction of new centres. There is a strong need for construction of several hatcheries for oysters, especially in the context of planed production increase. It is necessary to expand existing national monitoring of the areas and zones for shellfish production to all the locations that have good predispositions for shellfish farming. Monitoring is going to provide basis for registration and validation of new production areas.

The entire marine aquaculture sector needs to be adjusted to the changed market situation. This does not apply only to the fish production, but also to the processes of recognizable profiling and product confectioning. The focus inevitably shifts towards increased diversification of products and introduction of new species to the production process, based on continuous scientific research tested through development programs. Another necessary step concerns measures to introduce the HACCP system to all marine fish farms. Long-term strategic objective is to achieve efficiency comparable to international competitors, while at the same time meeting the most stringent environmental and quality standards.

Freshwater aquaculture

In 2005, the production in the freshwater aquaculture reached 6.199 tons. Altogether, the production has over last five years decreased, primarily due to disappearance of traditional markets and problem related to transition processes (Table 2-63). The surface area of farms has also decreased, reaching in 2005 one-half the size in 1995 (Table 2-64). One reason for this decrease is that this area has been strongly affected by recent war activities, and the second one is intensification of production. Fish farming includes freshwater fish species in cold water (salmonids) using the technology of flow-through channels and farming of warm-water species (cyprinids), predominantly carp in fish ponds. As the production is carried out in a completely extensive manner, the yield rarely surpasses 500 to 600 kg/ha. With the annual production reaching some 3.000 to 5.000 tons (compared to the real potential of approximately 12.000 tons) and several hundred tons of trout, the freshwater cultivation certainly does not match the natural potentials of Croatia or even its historical highs. The main problems of the freshwater aquaculture are high water-management and veterinary fees and unresolved issues concerning compensations for damages caused by fish-eating birds. the objective is to increase the production in the next decade to 12.000 – 15.000 tons.

Table 2-63: Production trends in freshwater farming (2000 - 2005) in tons

Types 2000 2001 2002 2003 2004 2005

fish fry 1.594 1127 1.266 957 1.545 1.480 Carp

consumption 2.358 2.578 1.606 1.660 1.753 2.236

fish fry 68 76 149 124 119 114 Amur

consumption 265 228 185 318 294 378

fish fry 11 61 17 17 10 7 Bighead carp consumption 281 21 86 1 0 57

fish fry 37 27 57 19 80 55 Silver carp

consumption 72 226 301 414 299 270

fish fry 2 2 3 1 1 16 Tench

consumption 6 2 6 11 8 13

fish fry 20 7 22 18 12 9 Catfish

consumption 38 31 36 54 59 31

Pike perch fish fry 1 2 1 1 2 7


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fish fry 2 1 2 0 1 1 Pike


fish fry 217 41 46 178 186 120 Trout

consumption 945 1.039 1.620 1.222 1.173 1.303

fish fry 52 24 17 50 8 46 Others

consumption 33 39 60 23 53 49

Total fish fry 2.004 1.368 1.580 1.365 1.964 1.855

consumption 4.025 4.181 3.920 3.711 3.654 4.344

Grand TOTAL 6.029 5.549 5.500 5.076 5.618 6.199

Source: MAFWM, 2006

Table 2-64: Production areas of freshwater fishponds (2000 - 2005)

Year 2000 2001 2002 2003 2004 2005

WW19 10,8 39,3 11 2 2 0 Spawning areas

CW20 0,1 0,1 0,1 0,1 0,2 0,1

WW 387,93 216,93 368,9 344,6 240 231,34 Growing areas

CW 0,55 0,29 0,22 0,65 0,29 0,29

WW 1.542,52 1.559,12 1.399,48 1.353,50 1.433,90 973,16 Juvenile rearing areas

CW 0,17 0,37 0,22 0,3 0,28 0,29

WW 165,82 58,92 63,53 50,53 46,53 38,8 Broodstock areas

CW 0,3 0,2 0,3 0,3 0,3 0,4

WW 7.004,09 7.277,59 6.372,69 4.448,60 4.844,30 5.005,60 Consumption size rearing areas

CW 9,34 2,93 4,44 4,46 4,68 4,4

WW 62,7 58,4 67,38 76,9 50 39,68 Over-wintering areas

CW 0 0 0 0 0 0

WW 9.173,86 9.210,26 8.282,98 6.276,13 6.616,73 6.288,58 Total

CW 10,42 3,85 5,29 5,84 5,78 5,48

Source: MAFWM, 2006

19 WW – warm water 20 CW – cold water


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There is a strong need to help revitalisation of freshwater aquaculture sector and its future sustainable development. The main investments should be done in building a new fresh water farms and hatcheries, modernising the existing ones to reach necessary sanitary standards (HACCP), constructing facilities for processing and adding new values to farming products. Education of all structures involved is a basic imperative.

Producers

As shown in Table 2-65 majority of legal entities registered for fishery in Croatia, engage in seawater fisheries whereas in the continental part of Croatia 5,76% are dealing with freshwater fisheries. In both cases, micro-sized entities are predominating with 96% and 4% of small-sized entities.

As far as the regional distribution is concerned, Table 2-65 shows that majority of entities registered for fishery activities are located in the Istria county (21,15%); then in the Primorje - Gorski Kotar county and Split - Dalmatia county (both with 19,23%). Further on, Zadar county marks 15,38% registered entities, Dubrovnik - Neretva county 13,46% whereas Zagreb county and Šibenik - Knin county both marking 5,76% registered entities for fishery activities.

Table 2-65: Fishery legal entities by county and size (2000 - 2006)

The City of Zagreb

Freshwater Fisheries 1 Zagreb

Seawater Fisheries 2 3 5,8%

Bjelovar - Bilogora 0 0 0 0

Dubrovnik - Neretva Seawater Fisheries 7 0 0 7

Karlovac 0 0 13,5%

Koprivnica - Križevci 0 0 0 0

Krapina - Zagorje 0 0 0 0

Osijek - Baranja 0 0 0 0

Lika - Senj 0 0 0 0

Požega-Slavonia 0 0 0 0

Seawater Fisheries 10 0 0 Istria

Freshwater Fisheries 1 0 0 11 21,2%

Primorje - Gorski Kotar Seawater Fisheries 9 1 0 10 19,2%

Brod - Posavina 0 0 0 0

Split - Dalmatia Seawater Fisheries 9 1 0 10 19,2%


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Šibenik - Knin Seawater Fisheries 3 0 0 3 5,8%

Zadar Seawater Fisheries 8 0 0 8 15,4%

Sisak - Moslavina 0 0 0 0

Varaždin 0 0 0 0

Virovitica - Podravina 0 0 0 0

Vukovar - Srijem 0 0 0 0

Međimurje 0 0 0 0

TOTAL 50 2 0 52 100,0%

Source: CCE; Situation on 13th December 2006.

According to the DG Sanco21 list of fish (from catch and farming) and fish-product exporters, there are 72 business entities distributed in eleven counties (Table 2-66).

Table 2-66: Geographical distribution and number of exporters of fish products COUNTY Number of exporting entities

Zadar 17

Split - Dalmatia 16

Istria 15

Primorje - Gorski Kotar 8

Šibenik - Knin 5

Lika - Senj 2

Zagreb 2

City of Zagreb 1

Dubrovnik - Neretva 4

Bjelovar - Bilogora 1

Krapina - Zagorje 1

TOTAL 72

Source: DG Sanco, 2006

21 The acronym for the Directorate General for Health and Consumer Affairs


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Table 2-67: Number of registered farmers (2006) County White fish Tuna Shellfish

Split - Dalmatia 8 4 1

Zadar County 12 3 3

Šibenik - Knin 2 0 11

Istria 2 0 11

Dubrovnik - Neretva 5 0 45

Primorje - Gorski Kotar 3 0 0

Total 32 7 71

Source: MAFWM, situation on 1st November 2006

It is estimated that in Dubrovnik - Neretva county some 100 shellfish farmers are awaiting registration due to obstacles related to land planning, and the number of farmers awaiting registration in Šibenik - Knin county is around twenty.

Table 2-68: Geographical distribution of Trout and carp farms (2006)

COUNTY Total number

TROUT

Total number

CARP

Zadar 1

Šibenik - Knin 1

Split - Dalmatia 3

Zagreb 6 2

Lika - Senj 4

Požega - Slavonia 1 3

Koprivnica - Križevci 2

Karlovac 5 1

Virovitica - Podravina 1

Osijek - Baranja 5


Sisak - Moslavina 1

Brod - Posavina 1

Vukovar - Srijem 1


TOTAL 22 21

Source: MAFWM, Directorate of Fishery, 2006

Processing industry

Due to transition problems, loss of former markets, customs restrictions, lack of capability to meet the standards of the EU market, and lack of significant investments, most of former salt works and processing companies in Croatia have been closed.

According to the records kept by the Commercial Court of Croatia, 40 companies are registered for fish-processing, out of which 24 companies are active Out of the 24 active companies, 5 companies fall into the medium-size, 11 companies are small while 12 companies are considered micro sized (Table 2-69).


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Table 2-69: Geographical distribution and number of companies registered for fish processing

COUNTY Large Medium Small Micro

Krapina - Zagorje 1

Osijek - Baranja 2

Međimurje 1

Vukovar - Srijem 1

Virovitica-Požega 1

Istria 1 3 1



Šibenik - Knin 1

Zadar 1 2 1

Dubrovnik - Neretva


TOTAL 0 5 11 12

Source: CCE, 2006

Table 2-70: Trends in fish - processing (in tons, 1999 - 2005) Product 1999 2000 2001 2002 2003 2004 2005

Salted fish (t) 350 1.881 2.500 2.800 2.900 3.914 6.110

Frozen fish (fillets and other) (t)

250 470 850 1.500 3.200 3.500 1.935

Canned fish (t) 14.000 14.500 15.500 14.000 11.700 5.256 6.920

Other (salads, mixed) (t)

120 60 110 120 1.200 1.600 1.980

TOTAL 14.720 16.911 18.960 18.420 19.000 14.270 16.945

Source: MAFWM, 2006

In the fish-processing sector in 2005, 6.110 tons of fish was salted, 1.935 tons was frozen/filleted, 6.920 tons canned and 1.980 tons were processed in other manner (marinated products, salads, pates and semi-finished products) (Table 2-70). Apart from canned sardines (62% of the total production), the most of remaining production was filleted tuna and mackerel. significant increase is visible in quantities of processed salted fish, frozen fish and other, and decrease in quantities of canned fish. Costs of canned fish production in Croatia are high, resulting with uncompetitive products at EU market. due to the lower production costs and market value, salted and frozen fish products can successfully compete.

In addition to problems related to market standards, the fish-processing industry has adapted with difficulty to new market conditions. In fact, the lack of investment in technology development and product diversification led to exclusive orientation to sardine and anchovy as marine and carp and trout as freshwater resources. Only four largest producers possess export license for the European market and meet the standards.

When it comes to distributing centres and centres for shellfish purification 30% are registered for export, but none has the license to export to the EU market.


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Capacity of existing distribution and purification centres in Croatia are from 200 up to 7.50 t per year It is expected that in the future there will be more need for such centres.

Table 2-71: Distributing centres and centres for shellfish purification (2006) County Total number export registration

Šibenik - Knin 4 1

Split - Dalmatia 1 1

Istria 5 1

Total 10 3

Source: MAFWM, Veterinary Directorate, 2006

When it comes to production in freshwater fisheries, change in the product assortment by introduction of new species is necessary.There is a strong need for processing capacities and diversify product processing (smoking, filleting etc.).

Market and trade

As fish consumption is strong tradition in Croatian coastal regions, it is to be expected that in case of improved fish product market consumption could significantly increase. As additional demand for fish food, coming from tourism, is continually increasing, it can be easily concluded that domestic market is far from saturation.

Croatia does not have an organised fish market – starting with the lack of adequate equipment for storage and freezing of fish on the ship, unsafe mooring facilities, unorganised collection and distribution of fish, inadequate organisation of boat supply, inadequate warehousing and refrigerating facilities, which in the end results in low fish and fish-product consumption. Most fishing boats are small-size vessels (less than 15 m), only a few have adequate facilities for storage, refrigeration and freezing, which further limits the access of fresh and high-quality fish to the market.

Fishing boats unload their catch in small port facilities which are not adequately equipped (ice-machines, cold storage, specialised vehicles, cranes etc.).

Port/vessel/trade facilities should seek new and efficient solutions to the product quality issues, including the introduction of ISO and HACCP systems. Inability to meet the fresh-fish standards may cause further degradation of the fishery sector. This would also hinder the development of coastal and continental rural areas which significantly depend on this branch of agriculture. The failure to meet EU sanitary and health standards in the production of shellfish and crustaceans already thwarts this potentially profitable activity.

Present average prices on the market (Table 2-72) point to a necessity of providing added value to products through branding, offer in own facilities and possible confectioning.

Table 2-72: Prices of most significant fish species - marine fisheries catch in EUR (2000 - 2006)

Fish species (kg)

2000 2001 2002 2003 2004 2005 2006 (Jan-Oct)

Sea-bream I 7,49 5,94 6,53 6,38 6,88 8,20 8,51

Sea-bream II 3,51 3,37 3,59 3,89 3,57 4,03 3,99

Gilthead sea bream 4,52 10,44 6,83 5,52 7,38 9,03 10,93

Sole I kg 3,40 3,93 7,47 5,98 7,63 6,86 7,57

Sole II kg 2,61 3,10 4,71 4,23 4,32 3,55 4,98


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Seabass I 7,65 0,00 6,93 6,12 7,17 9,70 12,17

Hake I 3,27 4,08 3,70 3,69 3,81 3,87 3,83

Hake II 2,43 2,66 2,65 2,52 2,63 2,54 2,45

Hake III 1,79 1,75 1,72 1,72 1,80 1,63 1,63

Stripped mullet 1,87 2,09 1,92 1,84 1,42 1,63 1,87

Sprat 0,00 0,82 0,64 0,51 1,00 1,00 0,92

Mackerel 1,43 1,12 1,01 1,08 1,41 1,86 1,93

Pilchard 0,41 0,47 0,44 0,44 0,52 0,48 0,53

Tuna 2,32 2,40 3,32 4,78 3,31 2,70 3,62

Squid 5,38 5,16 5,77 6,33 6,29 6,09 6,52

Musk white 0,74 0,83 0,99 0,83 0,86 1,05 0,88

Musk black 1,29 1,24 1,23 1,37 1,45 1,65 1,68

Scamp I 11,97 14,07 15,22 15,00 16,12 18,44 18,77

Scamp II 9,78 11,26 11,79 12,09 12,03 12,80 14,02

Source: MAFWM - TISUP, 2006

Table 2-73 and Table 2-74 give numbers on import and export of sea water fish and fish products, as well as their share. The most important export products are fresh (from catch and farming), and fish products (canned fish and salted fish).

Table 2-73: Import and export of fish and fish products volume and value (2000 - 2005)

Source: MAFWM, 2006

Table 2-74: Share of exported fish and fish products of total value (2004, %) Tuna 51,75

Canned fish in oil 9,39

Salted anchovies 6,18

Fresh or refrigerated anchovies and sardines 2,44

Farmed fish 4,99

Other 25,25

Total 100

Source: MAFWM, 2006

Governmental policies

Import Export Year

MT EUR MT EUR

2000 25.532 25.011.936 18.247 33.233.116

2001 37.955 35.122.031 10.322 35.349.144

2002 56.292 57.326.763 22.365 60.356.580

2003 57.315 62.526.460 22.687 86.814.141

2004 38.627 54.237.167 23.428 78.599.004

2005 53.671 74.372.291 24.416 73.574.612


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The activity of marine fishing is regulated by the Sea Fisheries Act (OG No. 74/94, 57/96, 46/97 – consolidated text, and 48/05 see page 315) as well as a number of implementing regulations. Freshwater Fisheries Act (OG No 106/01, 7/03, 174/04, 10/05, 49/05 – consolidated text, see page 315) regulates freshwater fishing activities.

Main objectives of the Croatian fishing policies are:

• consolidation and restructuring of the fisheries sector;

• achievement of permanent, balanced and sustainable management of fishing resources in accordance with fishing capacities;

• development of aquaculture with a special emphasis on achieving international-grade competitiveness, while meeting highest environmental and quality standards;

• improvement of processing through new-value addition and better utilisation of the resources from catch and farming;

• establishment of organised marketing of fish and fish products;

• improvement and modernisation of the fishing fleet;

• development of infrastructure and logistic support to the fishing industry (ports, docks, moorings, transport etc.);

• establishment of efficient mechanisms of structural measures in the fishing industry;

• education of all subjects concerned in the fishing industry entities;

• strengthening of fishermen's associations.

In accordance with the Sea Fisheries Act, a long-term plan for the management of biological resources will be adopted in 2007.

The strategic fishing policy guidelines have been defined by the Development strategy for agriculture and fisheries, adopted as one of 19 constituent parts the Government of Croatia Strategy »Croatia in the 21st century« (OG 89/02), which deals with agriculture, fishery and food industry, including:

• adapt fishing and fish farming to the principle of sustainable and responsible management taking into account protection of the environment,

• adapt aquaculture to market requirements,

• promote environmental criteria for farming and management of water resources in order to promote them as attractive export and tourist product,

• modernize fish processing and include new economic operators by providing favourable investment funds and through financing of operational costs,

• stimulate the development of small family households based on fishing,

• stimulate the usage of appropriate and selective fishing tools,

• organise the transport of fish through disembarkation points, buying centres, auction centres and wholesale markets,

• initiate and stimulate the construction of the continental fishing infrastructure and logistics,

• stimulate professional fishermen's associations.

In the pre-accession period the priority objectives of the fishing policy of Croatia are: to strengthen and expand marine and fresh water farming and secure sustainable management of animal resources, while, at the same time, increasing the competitiveness of producers through marketing and structural mechanisms and establishment of appropriate administrative institutions.


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As it is anticipated that fish farming will be given important place in the pre-accession process, the most important investments are intended for modernisation of existing and construction of new farming facilities and environmental performance in order to increase the product quality and diversity. In addition to that, special attention will be paid to reach all EU requirements concerning quality, environmental protection and sanitary conditions in fish-processing companies and to diversify production both in farming and processing. Very important segment is port/vessel/trade facilities modernisation, in order to improve storing, cooling, packing, handling and all other activities that could improve final product quality by meeting all the necessary sanitary standards (ICO, HACCP). Education of all actors included in fishing, farming and processing is essential.

The lack of financial support and limitation of credit facilities (due to the failure to meet EU sanitary and health standards) would cause closing of enterprises and increased unemployment rate. Furthermore, inability to meet the fresh-fish standards may cause further degradation of the fishery sector. This would also hinder the development of coastal and continental rural areas which significantly depend on this branch of agriculture. Thus, the IPARD measures should provide necessary conditions for the regular supply of fresh fish and raw materials for the market, processing and farming, ensuring highest quality and consumer protection.

Overview of state aid schemes is given in Chapter 2.1.

2.3.4.7. Grains and oil crops sub sector

2.3.4.7.1 Grains Background and key information

Share of total agricultural production in total GDP of Croatia in the last few years was about 7% (2002 – 2004). In total plant production in Croatia share of grain production has the most important place.

In total structure of arable agricultural land, 1,09 million ha is cultivated with grains, which cover approximately 70% of all land. Therefore, the grain production in Croatia is maintained, in average, on 720.000 ha with total gross production of 3,6 to 3,8 million of tons of grains (see annex 12.3, Table 12-3). In grain production was registered decrease; in 2000 (maize, in particular) and also in 2003 (for all other grains), which was a direct implication of long term drought.

In the structure of grains production, dominant culture is maize with 58%, wheat with 32%, barley with 7%, oats with 2,6% and rye and the other grains in total with 0,4%.

Regarding production structure and areas, production of wheat is in steady decline (self-sufficiency is 130%), and it is produced on 220.000 ha. Maize production shows slightly increased trend (self – sufficiency of 101%), as well as barley production (self-sufficiency of 87%). Areas sown with other cereals do not show significant changes. All grains yields vary from one year to another and they often mirror (un)favourable agro climate changes which were present during the past years. In 2003, yield of all cultures was reduced (by 20 – 30%), which was a direct implication of drought. An average yield is approximately 5,1 t/ha. Croatia in a whole has very good conditions for grain production (soil fertility, climate benefits and tradition).

Total balance need for grains in Croatia is about 3,2 million of tons (see Table 2-78). From that amount, for cattle feeding is used 2,3 million tons; as a seed consumption about 85.000 tons; for the industrial needs including maize and barley fodder grits in beer industry is spent about 70.000 tons. Market losses are quite high, and they are about 5%, mostly because of the way of keeping maize on the farms. Human consumption is about 660.000 tons, and consumption per capita is estimated on 165 kg. In average years, self – sufficiency in grain sector is on the level of 110%, mostly because of the greater wheat production in comparison with total needs.

Producers


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Total number of agricultural farms in Croatia, according to Agricultural Census from 2003, is 483.326, out of which 244.439 farms produce only grains (see annex 12.27, Table 12-17). 60% of these farmers produce grains at the most 2 ha of, 5.5% produce grain on 10 to 20 ha, and 1,6% are bigger than 20 ha (these farmers can be assumed being competitive om the market)..

For the purpose of achieving the desired level of market competitiveness, it is necessary that certain technical and technology preconditions are realized: increasing the size of land parcels, appropriate agricultural mechanization and equipment, notable warehouses capacities and drying facilities.

The uneven distribution of existing warehouses and insufficient capacities in certain areas (counties) is a limiting factor for a great number of farms (see Graph 2-10).

Graph 2-10: Structure of cereal producers by farm size (2003)

148813

55852

26136

9680 3958

0

20000

40000

60000

80000

100000

120000

140000

160000

Number of holdings

0>2 ha 2>5 ha 5>10 ha 10>20 ha >20 ha

Source: CBS, 2003

Table 2-75: Situation in the Register of Agricultural Holdings regarding applications for grain subsidies

Year 2003 2004 2005

Number of farms 50.298 73.280 63.344

Source: MAFWM, 2006

Table 2-75 shows the trends in number of the agricultural farms (family farms, trade companies, cooperatives, etc.) registered in Register of Agricultural Holdings regarding realization of the state supports for grains. In 2005 there were 63.344 farms representing about 25% of total registered farms producing grains in Croatia (Table 2-78).

Table 2-76: Storage capacities and geographical distribution

County Silo (t) Floor warehouses (t)

TOTAL (t)

Number of warehouses / county

City of Zagreb 152.476 2.800 155.276 7

Istria 16.700 10.000 26.700 3

Varaždin 21.000 10.000 31.000 3

Međimurje 20.850 10.400 31.250 2


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Zagreb County 38.700 15.230 53.930 4

Šibenik – Knin 10.000 7.000 17.000 1

Osijek - Baranja 507.200 95.600 602.800 13

Dubrovnik - Neretva 10.000 3.000 13.000 1

Bjelovar - Bilogora 80.850 5.500 86.350 8

Virovitica - Podravina 93.000 21.000 114.000 6

Vukovar - Srijem 203.650 18.200 221.850 8

Sisak - Moslavina 89.700 220.00 111.700 5

Koprivnica - Križevci 100.000 7.000 107.000 5

Zadar 33.000 110.00 44.000 3

Primorje - Gorski Kotar 36.700 6.000 42.700 2

Brod - Posavina 50.000 0 50.000 1

Požega - Slavonia 69.000 3.000 72.000 2

Split - Dalmatia 30.000 10.000 40.000 1

Karlovac 20.000 0 20.000 1

TOTAL 1.582.826 257.730 1.840.556 76

Source: MAFWM, 2005

In Table 2-76 regional distribution of warehouse capacities per counties is presented, showing that the areas with significant grain production lack warehouses capacities (for instance, Brod – Posavina and Požega – Slavonia county where the warehouses of smaller capacities are present in only 3 enterprises), what confirms investment justifiability in this sector.

Producers, registered as companies, are registered in the Croatian Chamber of Economy, under National Classification of Economic Activities (NCEA): activity A0111, Grain production and other sowings and plantation.

According to this evidence, for mentioned activity (A0111), there are registered 367 companies, which submitted the final financial account for 2004, from which are 322 small companies, 32 medium and 13 large companies.

Processing industry

Table 2-77: Processing capacities - grain sector Capacity (‘000 t) Number of enterprises

0 > 10.000 5

10.000 > 20.000 6

20.000 > 30.000 5

30.000 > 50.000 5

50.000 > 100.000 2

> 100.000 2

Source: Žitozajednica Ltd., Zagreb

According to Register of millers, bakers, producers of mixtures and concentrate and flour importers, those were enlisted until 31 December 2005, in total:

• 181 millers,


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• 12 producers of mixtures and concentrates,

• 4 legal persons dealing with pre-packaging of flour,

• 36 flour importers,

• 27 importers of mixtures and concentrates

• 1.419 bakers (estimation is such that there are more bakers than what is indicated).

During the period from 1 January 2005 until 31 December 2005, there were 52.403.554 flour stamps published and 35.941.721 of them were used.

Based on the number of used – spent stamps, in 2005 were marketed 413.746 tons of wheat, rye and maize flour, of which 10.015 tons were imported (flour, 6.269 t and for application mixtures and concentrates 3.475 tons).

Market and trade

There are no adopted quality standards which should be used as a framework for conducting any intervention or for the price calculations, in case of interventional buy in.

At the occasional interventional buy in, minimum quality and price calculations related to quality are prescribed. Minimum quality standards are linked with the three factors: hectolitre mass, ingredients and humidity.

Most of the above mentioned companies participate in a grain buy in, and most of them, according to the value of the business, are medium size companies.

More than 90 enterprises have participated in wheat buy in process in 2005. Those enterprises are located in the territory of the whole country, but majority of them are located in the eastern part.

A significant number of Croatian companies participate in the wheat trade and almost all of them are private properties.

Republic of Croatia mostly exports wheat and maize (EU, countries of the former Yugoslavia), and imports rice (EU, India), millet (EU), and some products from the milling industry, mostly from the EU member countries.

Table 2-78: Supply - demand balance sheet of cereals production (2000 - 2004) Year 2000 2001 2002 2003 2004

wheat (‘000 t) 1.032,09 965,15 988,18 609,26 920,61

maize (‘000t) 1.585,72 2.286,09 2.578,04 1.630,32 2.468,43

barley (‘000 t) 151,44 161,49 170,95 134,24 181,87

oats (‘000 t) 51,14 47,63 50,00 34,12 48,78

Dom

estic

pro

duct

ion

others (‘000 t) 14,72 14,64 14,15 9,19 14,52

Total production (1) 2.835,09 3.475,00 3.801,32 2.417,13 3.633,90

changes in storage (‘000 t) 203,3 -196,32 -315,64 498,55 -544,25

Total import (2) 203,4 261,1 66,4 117,1 230

SU

PP

LY

Total supply (1+2=3) 3.038,49 3.736,10 3.867,72 2.534,23 3.863,90

Total consumption (4) 2.888,70 3.251,20 3.197,50 2.777,20 3.288,60

DE

MA

ND

Total export (5) 353,1 288,6 354,6 255,5 310,1


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Total demand (4+5=7) 3.241,80 3.539,80 3.552,10 3.032,70 3.598,70

Supply / demand balance (3-7=8) -203,31 196,3 315,62 -498,48 265,2

changes in storages (‘000t) (9) 203,3 -196,32 -315,64 498,55 -544,25

(8+9) -0,01 -0,02 -0,02 0,07 -279,05

Total consumption per capita in kg 148,7 163,2 161,3 184 167,2

Total self - sufficiency rate (%) 98,1 106,9 118,9 87 110,5

Source: CBS, 2006

Monitoring price system in Croatia is organized through the Market Information System in Agriculture - TISUP, within the Ministry of Agriculture, Fisheries and Rural Development. Price collecting is done by cooperants, independently; Ministry does not interfere in the system of collecting, processing and publishing of price information.

Prices are collected on the level of agricultural farm in the season of buying in and selling. Wholesale prices are collected during the whole year.

Table 2-79: Grain market price oscillations (2001 - 2005) Type Year/EUR 2001 2002 2003 2004 2005

Min 0,11 0,11 0,10 0,13 0,11 Wheat

Max 0,26 0,16 0,21 0,22 0,17

Min 0,09 0,08 0,08 0,08 0,08 Maize

Max 0,24 0,16 0,18 0,21 0,12

Min 0,11 0,09 0,10 0,11 0,09 Fodder barley

Max 0,24 0,17 0,14 0,14 0,14

Min 0,15 0,11 0,11 0,10 Brewer's barley

Max 0,16 0,12 0,14 0,14

Min 0,11 0,11 0,12 0,12 0,09 Oats

Max 0,23 0,19 0,18 0,20 0,16

Source: TISUP, 2006

It can be seen that price trends of the main crops (maize and wheat) in the last few years have been stable in average. Although they depend on market oscillations, farmers are enabled to plan their production.

Great share of grains is sold right after the harvest by direct marketing in the field, in the case of shortage of the great warehouses capacities in situation when there is a great number of producers, and prices in such way of selling are considerably lower and they amount in average of 60 – 70% of the before mentioned prices. As a result of a greater capacity of warehouses, thereby storage of grains for a longer period of time, would contribute to the achievement of a higher price in the market by selling in the optimal period.

There are no export subsidies for the grains, according to the Protocol of the Accession of Croatia to the Marrakech Agreement Establishing the World Trade Organization (OG, International Contract, No. 13/2000).

Preferential conditions for wheat trade were contracted with European Union, Bulgaria, Albania, Serbia, Bosnia and Herzegovina, Macedonia, Moldova, Montenegro.

By Protocol of the Accession of Croatia to the Marrakech Agreement, Croatia gained obligation of gradually decreasing of custom taxes for agricultural and food products during transition period, which ends in 2007. According to mentioned Protocol, Croatia has no right to apply


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export subventions. There are also defined preferential trade conditions with the countries members of WTO.

Croatia does not apply import / export permissions as a model for tracking import and export. Import licenses issuing is limited on an import situation in a framework of preferential quotas, regulated by contract on free trade, what is within the competence of MAFRD.

Agriculture Act decrees Directorate for Market and Structural Support in Agriculture (DMSSA) of MAFRD, as authorized unit for operative implementation of trade measures and structural support in agriculture. That comprises implementation of market – price policy measures, including trade measures (customs and custom quotas which are defined in accordance with the obligations taken in the framework of World Trade Organization and others international agreements which Republic of Croatia has ratified).

In Croatia, due to specific conditions upon wheat buy in, as main bread grain, for the last few years regulation for wheat buy in has been adopted every year, defining:

• Guaranteed price,

• Interventional buy in and selling conditions,

• Wheat quality, subject to interventional buy in.

By adopting this regulation, state has disregarded the term “minimum price” and has released wheat buying and selling to the market conditions and relationship between the seller and the buyer.

For other grains, such a regulation in the form of CMO, has not been adopted yet. Regarding harmonization of enterprises with the Community standards, in 2005 9 enterprises have got ISO, 6 HACCP and 4 are preparing HACCP, there were no data for enterprises with export permission.

There is a need to stress that existing equipment and technology in the most of the grain processing enterprises are obsolete. Modernization is needed in order to achieve Community standards, because at the moment only 12 enterprises do comply with these standards (some of them only to a certain extent).

2.3.4.7.2 Oil crops Background and key information

In the period 2000 – 2005 oil crops were cultivated on an approximately 6% of the total arable land. Areas covered with oil crops in the last five years have been approximately 80.000 ha for one year (Table 2-80).

In the production structure, the most abundant is soybean, produced on approximately 50% of areas, than sunflower and oilseed rape, produced on, in average, 13.000 ha.

In the last few years and especially between 2002 and 2003, there was a significant increase of areas covered with these crops. The most significant increase of areas is the one of soybean. Oilseed rape and sunflower production are recording slightly increasing growth from one year to another. In the last four-year period, changes and growth in the sowing areas have showed market needs for these products. The importance of soybean as a grain legume is manifested primarily in the production of oil cakes and also oil. Soybean oil comprises approximately 42% of manufactured raw oil from domestic oil crops.

In total, the production in Croatia covers only a part of needs for crop fat and oil, currently about 75.000 t. Taking a look at raw oil calculations from these oil crops, total oil production is moving in a broad spectrum from 50.000 up to 60.000 t. Croatia does not produce sufficient quantities of soybean, so the majority is imported (see Table 2-82), which partly satisfy needs for oil and oil cakes production. In the last few years the share of oil crops export in EU countries, have been more significant.


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In total, share of these cultures in the production structure is still relatively small so there are further possibilities for expanding areas covered with oil crops, as for total needs for raw oil and also bio diesel production.

Table 2-80: Oil crops production in the period 2000 - 2005 Crop 2000 2001 2002 2003 2004 2005

area (000 ha) 47,48 41,62 47,90 49,86 36,98 48,21

production (000 t) 65,30 91,84 129,74 82,59 97,92 119,60

Soybean

yield (t/ha) 1,38 2,21 2,71 1,66 2,65 2,48

area (000 ha) 12,89 10,32 13,04 15,52 14,28 20,15

production (000 t) 29,44 22,46 25,59 28,60 31,39 41,27

Oilseed rape

yield (t/ha) 2,28 2,18 1,96 1,84 2,2 2,05

area (000 ha) 25,72 25,34 26,84 28,21 28,33 49,77

production (000 t) 53,95 42,98 62,96 69,25 68,97 78,00

Sunflower

yield (t/ha) 2,1 1,7 2,35 2,45 2,43 1,57

area (000 ha) 86,08 77,27 87,77 93,59 79,58 118,12

production (000 t) 148,69 157,28 218,29 180,44 198,28 238,88

Total production

Average yield (t/ha) 1,72 2,03 2,48 1,92 2,49 2,02

Source: CBS, 2006

Producers

Differences between numbers of farms appearing during the years are the result of fluctuation of oil crop prices in the market and also unfavourable conditions for oil crop production, which has influenced some producers. Approximately 8.500 farms used state support for the oil crop production in 2005. This number will probably increase in the following years due to possibilities for increase of production of all oil crops in Croatia. That especially refers to oilseed rape production because of the production of bio diesel which has realistic conditions to be increased (available land, requirement for bio diesel) and the necessity for orientation of agricultural farms on the other types of production.

Table 2-81: Situation in Register of Agricultural Holdings regarding applications for oil crops subsidies 2003 - 2005

Year 2003 2004 2005

Number of farms 9.300 6.391 8.475

Source: MAFWM, 2006


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Graph 2-11: Oil seed producers structure (2003)

0

500

1000

1500

2000

2500

3000

3500

0>2 ha 2>5 ha 5>10 ha 10>20 ha >20 ha

Structure and number of holdings

Source: CBS, 2003

The greatest number of oil crops producers is situated in 5 Slavonian counties, although other areas in continental parts of Croatia have very good conditions for oilseed rape production, so increase in number of farms with this type of production is to be expected. This need to be accompanied by assuring warehouses capacities for the oil crop storage.

From this table is also visible that in this sub - sector there are not so many problems existing with the production in smaller units, as it is the case with grains.

Processing industry

According to NCEA for production of raw oil and fat production (activity: DA1541) are registered 21 companies (with final financial account from 2004), out of which:

• 19 small enterprises,

• 1 medium and

• 1 large enterprise.

For the production of refined oils and fats (activity: DA1542) there were registered 9 enterprises, out of which:

• 5 small,

• 2 medium and

• 2 large enterprises.

Market and trade

Table 2-82: Supply - demand balance for oil crop production (2000 - 2004) Year 2000 2001 2002 2003 2004

soybean (000t) 65,29 91,84 129,74 82,59 97,92

oilseed rape (000t)

29,43 22,45 25,58 28,59 31,39 domestic production

sunflower (000t) 53,95 42,98 62,96 69,25 68,97


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total production (1) (000t) 148,69 157,28 218,29 180,44 198,28

soybean (000t) 31,03 78,55 130,07 103,1 42,92

oilseed rape – seed (000t)

3,24 0,001 0,003 0,002 0,019 Import

sunflower seed (000t)

0,26 1,64 16,29 7,94 0,66

total import (2) (000t) 35,32 84,13 147,99 112,53 88,01

total supply (1+2=3) 184,02 241,42 366,28 292,98 286,3

soybean (000t) 1,19 2,47 16,71 27,93 14,03

oilseed rape (000t)

22,04 9,76 3,95 15,62 5,45 export

sunflower (000t) 5,53 5,82 6,87 12,66 25,24

total export (4) (000 t) 28,81 18,13 27,75 56,41 44,91

Source: CBS, 2006

Import of oil crops shows slight increase (see Table 2-82) in observed period as well as export.

There is a free market economy in Croatia regarding oil crops trade. Some producers appear on the market individually and a part of a trade is maintained over the legal persons, contractors for the production.

Currently there are no registered organizations of oil crops producers in Croatia.

Table 2-83: Price fluctuations in the oil crop market (2001 - 2005)

Crop Year / EUR 2001 2002 2003 2004 2005

Min 0,18 0,20 0,18 0,18 0,18 Sunflower

Max 0,20 0,23 0,23 0,30 0,26

Min 0,17 0,13 0,18 0,20 0,17 Oilseed rape

Max 0,18 0,18 0,22 0,21 0,22

Min 0,18 0,20 0,20 0,20 0,20 Soybean

Max 0,27 0,26 0,25 0,29 0,24

Source: MAFWM, TISUP, 2006

An overview of state aid schemes in grains and oil crops sub sector is given in Chapter 2.1.

2.3.4.8. Fruits and vegetables sub sector

2.3.4.8.1 FRUITS Background and key figures


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Conditions for fruit production in Croatia, concerning climate and soil exist within the country, except mountain areas with altitude above 1.000 m. Croatia is among rare EU countries in which almost every type of fruit, from subtropical cultures of citrus fruit and olives, to all types of inland pomiferous plants, drupes and soft fruit may be produced.

According to statistic data, land under fruit plantations occupies about 69.000 ha or 2,2% of total agricultural land.

Fruit production in Croatia is mostly based on production located on agricultural farms and is mostly not market directed. During previous years, especially from 2000, certain progress is discernible concerning number of apple trees while conditions concerning other types are merely unchanged. Structural production problems (raising plantations within the framework of farms on smaller areas, insufficient knowledge and lack of knowledge of new technologies) both concerning apples and other types of fruits lead to yield oscillations, visible from Table 2-84.

Table 2-84: Production of selected fruit types and number of planted fruit trees (2000 - 2005)

Fruit Unit 2000 2001 2002 2003 2004 2005

t 81.339 32.461 59.143 58.054 69.682 Apple

,000 trees 3.858 4.146 4.238 4.479 5.922 6.373

t 10.081 6.734 7.594 7.600 6.206 Pear

,000 trees 992 993 980 980 1.126 1.236

t 9.330 9.046 10.120 6.631 7.110 Peach

,000 trees 714 716 746 745 942 910

t 39.857 39.631 20.543 42.826 35.863 Plum

,000 trees 5.628 5.607 5.604 5.596 5.429 4.451

t 7.566 8.169 6.542 6.947 3.851 Sour cherry

,000 trees 1.078 1.050 1.070 1.058 1.050 786

Source: CBS, 2006

About 95% orchards are owned by family agricultural farms, and mostly the problem is fragmentized and unproductive production with no function in market supply. The fruit statistics comprises fruit sorts growing on the family farms' private plots or by hobby farmers, producing mostly for their own home consumption, family farms' plantations, including entrepreneurs and craftsmen and the trade companies' plantations. With regard to these growing types, there are considerable differences in the production technologies.

As may be seen from data in Table 2-85 a share of organized plantation orchards makes 33% of the total number of trees. On these plantations production is organized in modern technological and economic principles and is mostly oriented to the markets for direct consumption or processing. For some fruits sorts, the share of plantation growing is considerably higher than the mentioned average, such as for apples 57% or peaches and nectarines 47%, Production and offering of fruit in Croatia is smaller than potential options, and in this sector is necessary to change the approach and encourage technological and structural modernization of farms which find their existence source in fruit production.


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Table 2-85: Total tree number of selected fruit kind and share of plantation orchards

plantation FRUIT TYPE Total tree number

Tree number hectare

Apple 3.830.416 2.177.570 1.640,14

Pear 947.340 232.884 246,42

Sour Cherry 511.125 136.093 209,89

Plum 4.023.906 404.703 721,28

Peach and nectarine 763.819 356.482 526,56

Source: CBS, 2003

Current circumstances of home fruit production do not satisfy even 50% of domestic needs. The reasons for it are mostly state inherited, i.e. disregard and lack of recognition of fruit-growing in Croatia within the longer period before independence (then the valid unofficial distribution of production in ex Yugoslavia in which the priority in fruit and vegetable production was given outside Croatia (Macedonia, Serbia) and in Croatia was located the processing based on raw materials from that area), war period (for almost 10 years), and later the shortage of more stimulating agricultural policy measures which were no good for restructuring of existing ones, mostly extensive and agricultural production, into working and capital intense production in fruit growing, viticulture, olive growing, vegetable growing and floriculture.

Subsequently because of such unfavourable production structures, and lack of organization of market, Croatia imports significant quantities of all types of fruit, apples more than 50% of home consumption, pears 80% and peaches 70%.

Besides above stated problems related to production, problems also exist because of unsteady and undeveloped market infrastructure. Namely, available capacities are insufficient, and equipment is technologically outdated, in particular within the segment of storage, preparation for processing (semi processed) and fruit processing. That is the reason that the major part of produced fruit is stored in inadequate conditions, and because of that regularly a significant part of the produced fruit quantities decay. At the same time undeveloped and not known wholesale market infrastructure affect the orientation to import which becomes a sign of the local market. In such circumstances local merchants usually do not contract production with Croatian fruit producers, but are orientated exclusively to import, and because of that a dependence on import has significant dimensions.

In 2000 - 2003 period in the Republic Croatia were imported total 1.408.393 tons of fresh and processed fruits of total value 726.217.577 USD (see annex 12.24, Table 12-25 and Table 12-26)

As has already been said the reason for fruit import dependence is before all in insufficiency of home fruit production. Namely, total fruit production according to statistical indicators depending on the year, varies from 160.000 tons (2001 and 2002, and 2003 are atypical; frost and bad weather destroyed a significant part of yield in 2001 and 2002 while in 2003 there was a serious drought). Consumption varies from 70 kg/inhabitant which multiplied with 4,5 million of inhabitants is 320.000 tons of fruit. According to that annually is about 160.000 tons of fruit imported, and self-sufficiency in fruit production is around 50%.

Table 2-86: Fruit import share on the market of Croatia from 1997 - 2003

Total production Import Export Available quantities Consumption per

inhabitant Import share in available quantities

tons tons tons tons kg/inhabitant %

1997 160.171 168.038 6.366 321.843 71,5 52


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1998 226.070 143.458 8.302 361.226 80,2 40

1999 174.886 138.647 6.927 306.606 68,3 45

2000 187.329 141.372 8.079 320.622 71,2 44

2001 132.583 149.619 8.889 273.313 60,7 55

2002 139.711 162.563 5.084 297.190 66 55

2003 148.149 168.094 6.465 309.778 54

Source: CBS, 2006

At the same time for the purpose of realistic consideration it is necessary to separate fruit import concerning exotic fruit which may not be grown in Croatia, and notably bananas, pineapples, etc. These kinds of fruit are imported in quantity of 70.000 tons and the major part regards import of bananas, about 50.000 tons (Equator, Columbia). So in the remaining 70.000 tons, as much is imported in Croatia, is the most direct competitor to the home production.

Producers

According to Agricultural Census 2003 there were 304.783 family farms producing fruits out of which 13.311 (4,36%) are producing fruits in a modernized way (plantage). Only 5,54% of all producers has orchards bigger than 10 ha (16.882). Distribution by size of family farms is visible from the following graph.

Graph 2-12: Distribution of family farms by number, size and type of orchard, 2003

0

20000

40000

60000

80000

100000

120000

140000

160000

<1 1 to 3 3 to 10 10 to 20 >20

Distribution by size and share of plantage orchards - FF

orchardsplantage


Also in 2003 there were 132 legal entities producing fruits in technologically advanced way. Out of all legal entities 89,39% has more than 10 ha of plantage orchard (19,70% with more than 100 ha) as shown in the following graph.


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Graph 2-13: Distribution of legal entities by number and size, 2003

05

10152025303540

<1 1 to 3 3 to 10 10 to20

20 to50

50 to100

>100

Distribution of LE by size of orchard

Orchards


2.3.4.8.2 Vegetables Background and key figures

A wide range of vegetable production in Croatia is possible in the whole country, thanks to geographical and climate differences. According to statistical data, vegetables in Croatia occupy around 135.000 ha, or 9,3% of total arable land and gardens. Potato production represents 46% of mentioned vegetable production.

Table 2-87: Trends in vegetables production 1999 - 2004

Vegetable (ha) 1999 2000 2001 2002 2003 2004*

Potato 66.388 65.263 65.662 64.640 63.097 54.883

Other vegetables22 68.083 68.908 70.476 71.645 72.433 69.177

TOTAL 134.471 134.171 136.138 136.285 135.530 124.061

Source: CBS, *Data till May 31, 2004

22 cabbage, kali, tomato, paprika, cucumber, onion, carrot, melon


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Accordingly, vegetables without potato are produced on around 70.000 ha. On this area, in average more than 370.000 tones of different vegetables are produced, which is not sufficient compared with total demand. There has been slight increase in vegetable production area from 2000 – 2003 but there was considerable decrease in production due to sevear drought in year 2003.

Table 2-88: Production of certain vegetables types Vegetable Unit 2000 2001 2002 2003

ha 65.232 65.641 64.640 63.097 Potato

t 553.712 670.233 500.954 375.050

ha 9.662 9.898 10.072 10.338 Cabbage and kale

t 112.025 123.722 124.541 97.848

ha 6.635 6.801 6.867 7.055 Tomato

t 69.555 73.882 71.400 58.640

ha 5.051 5.343 5.306 5.546 Paprika

t 30.778 38.638 45.846 31.693

ha 4.026 4.194 4.347 4.569 Cucumber

t 28.033 35.981 38.779 30.228

ha 7.026 7.258 7.228 7.145 Onion

t 44.838 58.055 60.371 40.792

ha 3.388 3.476 3.601 3.723 Carrot

t 24.154 28.249 32.474 21.549

ha 3.074 3.206 3.458 3.112 Melon and watermelon

t 50.069 49.984 55.408 40.223

Source: CBS, 2006

CBS does not make evidence of production of all vegetables types separately.

Producers

According to Agricultural Census 2003, there were 138.428 family farms producing vegetables out of which 68,98% produce potato. Only 12,99% of all producers have production area larger than 5 ha (17.994). It is also obvious from the following graph that beside potato and leguminous vegetables, only 16,68% produce all other vegetables.


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Graph 2-14: Distribution of family farms according to number, size and type of production, 2003

0

10000

20000

30000

40000

50000

<1 1 to 5 5 to 20 >20

Distribution of FF - size, type and number

PotatoLeguminoseOther


When looking at the structure of legal entities it can be noticed that most of the production is orientated on other23 types of vegetables which is different to production on mentioned family farms due to higher level of technology needed, costs and market of products. There are 300 legal entities producing vegetables out of which 42% have more than 30 ha under vegetables (19% more than 100 ha = 59 producers) as shown in following graph.

23 Other vegetables – according to CBS, it includes all vegetables (fresh or chilled) other than potato and leguminouse (i.e. – tomato, cabbage, kale etc.)


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Graph 2-15: Distribution of legal entities by number, size and type of production, 2003

0

10

20

30

40

50

60

<1 2 to 5 6 to 30 31 to 100 >100

Distribution of LE - size, type and number

PotatoLeguminoseOther


Fragmented production, selling directly to the consumers through local green markets and own consumption aggravate making accurate statistics of vegetable production and marketing. Other sources of data about vegetable production quantity and value are not available.

Concerning greenhouse production there are available estimation data from CAEI presented in following table.

Table 2-89: Distribution of greenhouse production of some vegetable types, estimation

County Tomato Paprika Cucumber Other vegetable

ha ton ha ton ha ton ha ton

Zagreb 22,5 585 6,5 195 4,3 119 7,5 118

Krapina - Zagorje 1 30 1 15 0,5 3 0,5 5

Sisak - Moslavina 3,5 105 5 150 3 90 3,7 99

Karlovac - - - - - - - -

Varazdin 2,5 110 2 55 0 0

Koprivnica - Krizevci 5 500 10 500 1 40 22 260

Bjelovar - Bilogora 2 160 2 120 0,62 254,8 1 40

Primorje - Gorski Kotar - - - - - - -

Lika - Senj - - - - - - - -

Virovitica - Podravina 20 2.000,00 10 400 5 500 5 200

Požega - Slavonia 1 50 1 30 1 40 1,8 53

Brod - Posavina 3,5 175 1,75 85 1 50 1 30

Zadar 6 960 5 350 4 1.000,00 5 175

Osijek - Baranja 5,67 1.020,60 5,9 206,32 4,8 864 10,01 238,76

Šibenik - Knin 0,1 5 - - - - - -

Vukovar - Srijem 5 300 5 200 4 160 2 40

Split - Dalmatia 35 2.740,00 25 2.425,00 35 4.032,00 63,5 2.520

Istria 50 4.000,00 30 1.800,00 50 7.000,00 65 3.350


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Dubrovnik - Neretva 20 2.000,00 10 800 10 1.200,00 10 400

City of Zagreb 18,2 182 14,6 102,2 6,2 40,3 43,05 699,3

Međimurje 3,5 700 1,2 170 1 200 0,7 21

Total 202 15.512,60 136,5 7.658,52 133,4 15.648,10 241,8 8.249,06

Source: CAEI, 2006

According to CAEI estimation in 2006, there were approximately 200 ha under tomato, 136 ha under paprika, 133 ha under cucumber and 241 ha under all other vegetables in greenhouses. Due to rotation of crops within greenhouses it is hard to make estimation based on sum of all acreage. Total production in greenhouses by this estimation was around 45.000 t. Also based on this estimation all production area is inadequate and to small to satisfy needs of domestic consumption. Average size of greenhouses of commercial bigger producers is from 2.000 m2 up to 10.000 m2.

Part of vegetable production comes from production in gardens for own consumption, which is on low technology level, with low yields.

Average vegetables yields in Croatia are lower compared with European and world averages (e.g. 8 times lower for tomato than the European average yield, 6 times lower for cucumber, 4 times for onion) (see Graph 2-16). However, there are also in Croatia bigger and specialized vegetable producers who use modern technology and make very high yields and quality.

Table 2-90: Trend in average vegetable yields, t/ha 1998-2002

Vegetables 1998 1999 2000 2001 2002 Average

1998 - 2002

Potato 10,20 11,00 8,50 10,20 10,50 10,08

Tomato 10,80 11,10 10,50 10,90 10,30 10,72

Peppers 6,20 7,70 6,20 7,30 8,60 7,2

Cucumbers 9,50 9,20 7,00 8,50 9,00 8,64

Onions 7,70 8,20 6,40 8,00 8,40 7,74

Carrot 9,10 9,10 7,10 8,10 9,00 8,48

Cabbages and kale 13,60 14,40 11,50 12,30 12,50 12,86

Beans, dry 1,40 1,50 0,60 1,30 1,40 1,24

Source: CBS, 2006


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Graph 2-16: Comparison of average vegetable yield, t/ha

0

2040

60

80100

120

140160

180

Tomato Cucumber Onion Cabbage &kale

Lettuce

CroatiaItalyGermanySpainGreece

Source: EUROSTAT, CBS, 2004

Croatian Market Information Centre in Agriculture (TISUP) operates within MAFRD. In cooperation with the CAEI, TISUP processes and publishes vegetables prices in Croatia every week. Prices are collected on two levels: gross markets and local green markets.

Table 2-91: Vegetables prices on the gross markets, 1998 - 2003 (EUR/kg)

Vegetables 1998 1999 2000 2001 2002 2003 Average

Potato 0,29 0,20 0,33 0,26 0,18 0,38 0,27

Tomato 1,01 0,99 0,91 0,98 1,21 1,13 1,04

Peppers 1,35 1,29 1,23 1,50 1,41 1,74 1,42

Cucumbers 0,87 0,85 0,77 0,83 0,95 1,18 0,91

Onions 0,56 0,45 0,46 0,42 0,39 0,52 0,47

Carrots 0,63 0,67 0,60 0,66 0,66 0,70 0,66

Cabbages and kale 0,45 0,44 0,46 0,38 0,49 0,55 0,46

Beans, dry 1,48 1,59 1,76 1,84 1,69 1,63 1,67 Source: TISUP, MAFWM, 2004

Table 2-92: Vegetables prices on the local green markets, 1998 - 2003 (EUR/kg)

Vegetables 1998 1999 2000 2001 2002 2003 Average

Potato 0,42 0,34 0,48 0,42 0,33 0,55 0,42

Tomato 1,50 1,48 1,43 1,50 1,78 1,63 1,55

Peppers 1,98 1,99 2,00 2,19 2,25 2,10 2,09

Cucumbers 1,28 1,36 1,33 1,33 1,52 1,51 1,39

Onions 0,82 0,70 0,69 0,69 0,66 0,78 0,72

Carrots 0,99 1,03 0,97 1,03 1,05 1,11 1,03

Cabbages and kale 0,73 0,72 0,74 0,64 0,84 0,87 0,76

Beans, dry 1,67 2,05 2,23 2,48 2,45 2,28 2,20 Source: TISUP, MAFWM, 2004


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In average, prices on local markets are 34% higher than on gross markets.

Selling prices of selected vegetables in the European countries are lower than prices in Croatia.

Vegetable prices in Croatia are higher than average in the European Union countries, in the first place because of higher import duties on fresh vegetables. Namely, during the negotiations with WTO the rate of regular and seasonal duties has been established to be paid for vegetable import in the period of maximal local production offer. Consequently, imported vegetables form the price at the level of extra duties.

Graph 2-17: Average selling gross market prices (excluding VAT, in HRK/kg)

0

1

2

3

4

5

6

7

8

9

Tomato Cucumber Onion Cabbage Lettuce

CroatiaItalyGermanyHungarySpain

Source: DATIMA Sistema Informativo Statistiche Agricole, Italy; EUROSTAT, TISUP, MAFWM 2004

Yields in the Croatian vegetable production are in average 5 times lower than in the European countries whereasthe total specific costs of the production are higher. Gross market prices of vegetables are higher in Croatia than in EU countries. Croatian producers are not organized into producers’ organizations. They lack facilities such as packing, sorting and grading equipment as well as logistic for the marketing of their vegetables.

In order to organize modern vegetable production which would result in higher product quality and popular market vegetable price it is necessary to solve land problems (concentration, organization, irrigation), modernize production by modern mechanization and construct modern storage spaces, construct storage and cooling capacities, and purchase processing, sorting and vegetable packaging lines.

In regard to quality standards, Croatia is at the stage of taking over of standards resulting from Commission Regulation 2200/96, and until then the Ordinance on fruit, vegetable and mushroom quality (OG 53/91, 114/04) is valid. Therefore, majority of Croatian vegetable producers at the moment could hardly compete with the European producers on the global market.

From the Table 2-93 it can be seen that the value of import of vegetables (fresh, processed and dried) is 6-12 times higher (depending on the year) than the value of exported vegetables (resulting in a negative import-export balance.

Table 2-93: Trends in import - export balance of vegetables, 1999 – 2003, USD

1999 2000 2001 2002 2003

Total fresh vegetables - export 2.252.818 2.384.740 2.434.567 2.639.197 2.139.529

Total fresh vegetables - import 13.718.100 11.696.016 15.279.628 16.255.252 28.215.142


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Balance – total fresh vegetables -11.465.282 -9.311.276 -12.845.061 -13.616.055 -26.075.613

Total semi processed and dried vegetables - export 250.826 458.329 404.429 450.759 719.974

Total semi processed and dried vegetables - import 14.129.274 11.853.047 12.806.973 14.470.693 17.595.153

Balance - total semi processed and dried vegetables -13.878.448 -11.394.718 -12.402.544 -14.019.934 -16.875.179

Total processed vegetables - export 5.341.236 4.710.588 490.582 6.027.306 6.036.676

Total processed vegetable - import 15.905.554 16.020.879 19.436.230 25.446.849 34.195.998

Balance – total processed vegetables -10.564.318 -11.310.291 -18.945.648 -19.419.543 -28.159.322

Total vegetables - import 7.844.880 7.553.657 3.329.578 9.117.262 8.896.179

Total vegetables - export 43.752.928 39.569.942 47.522.831 56.172.794 80.006.293

Balance – total vegetables -35.908.048 -32.016.285 -44.193.253 -47.055.532 -71.110.114

Source: CBS, 2006

Mushroom production

The sub-sector of mushroom growing is a bit more specific compared to other vegetable production. This production has wide possibilities but for serious progress in production it is necessary to ensure fundamental conditions. Nowadays the mushroom production in Croatia is mostly oriented and connected to import. Even sterile grafted compost is imported mainly from Hungary, Italy and Belgium (Maasmechelen).

Due to transport costs (import) of the reproduction material total production costs is increased by approximately 15%. This situation (import) makes the whole sub sector of mushroom growing extremely vulnerable, as besides transport load costs; there are problems of quality reduction and complete ruin of compost. Still, there is a potential for mushroom production in Croatia especially related to development and diversification of economic activities in rural areas.

Table 2-94: Mushroom export - import value

2003 2004 2005

IMPORT TONS USD TONS USD TONS USD

Compost and mushroom mycelium 12.605 1.778.825 11.907 1.887.463 13.327 2.266.765

Edible mushrooms fresh or cooled, dried preserved 2.293 3.615.708 2.387 3.948.762 2.638 3.491.032

EXPORT TONS USD TONS USD TONS USD

Compost and mushroom mycelium 0 643 0 0 0 0

Edible mushrooms fresh or cooled, dried preserved 192 1.340.885 365 3.876.819 430 2.981.030

Source: CCE, CBS, 2006

In accordance to data 13.327 tons of compost is annually imported to Croatia and about 1.870 tons of fresh mushrooms. According to that, total home production of fresh mushrooms on imported substrate is 4.000 tons. The total annual consumption of fresh mushroom in Croatia is about 5.870 tons, for which in terms of production about 20.000 tons of compost is needed.

In order to improve the production it is necessary to ensure production of raw materials (compost) through construction of new composting plant with minimum capacity of 20.000 tons.


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By such project preconditions for competitive home mushroom production will be made, and at the same time chicken manure and straw disposal issue, (required raw material for compost production) could be solved.

Producers’ organizations

Important preconditions for improving the economic efficiency of the fruit and vegetable producers is establishment of the producer organizations. EU experiences and legal regulations on the Common Market Organization (CMO) for fruits and vegetables indicates that weakness regarding the producers' fragmentation and badly organized sale could be overcame considerably by join supply through producer and marketing association.

Due to limited financial resourses available to Croatia under IPARD the establishment of producers organizations in the fruit and vegetable sector along the conditions set out in the respective EU CMO will be supported under national support schemes. It should also cover specific training needs for fruit and vegetable producers and dissemination of information on key concepts of the CMO, operational programmes and marketing standards.

Based on the Act on Agriculture, the legal act, i.e. theRegulation on Establishment of Producers Organizations, will have to be adopted in April 2008 at latest. The regulation will be elaborated in line with the EU rules and will define the legal status of the producers’ organizations (legal entity in compliance with national rules), minimum condition for recognition of the Producers Organizations (annual turnover, minimum number of members), obligation about marketing of products, etc.

Moreover a Register of Approved Producers Organizations will be established within the MAFRD and updated annually.

Furthermore, a "structural support measuer" requires the elaboration of a Regulation on Co financing of Producers Organizations’ Operational Fund Establishment, based on Act on State Aid in Agriculture, Fishery and Forestry.

Producers organizations approved by MAFRD and listed in the Register will be entitled to receive funds for up to 50% of the organization members’ contribution for the operational fund for their operational programmes. In addition, MAFRD also intends to support the gross salary for one professional employee in the producers’ organization.

The legal basis for the measure to support the setting up of producer organizations in the fruit and vegetable sectore should be ready early 2008 with the objective to implement the measure in the second half of 2008 or first half of 2009 at the latest depending on the funds available in the State budget for 2008 and 2009.

Within the framework of PHARE 2005 project “„Institutional Capacity Building and Support for Implementation of SAPARD/IPARD Programme in Croatia“ long-term technical assistance related to CMO for fruits and vegetables will be made available. This will also cover the preparation of the legislation and implementation of the CMOs as well as trade mechanisms, the support of the setting up regular market and price monitoring systems, buying in of agricultural produce, storage, sales, stock control, operation of control systems and control of supply management instruments. Available technical assistance will be used for preparation of described activities regarding establishment of producer organizations and preparation of legal basis.

In the framework of “PSO business to business” programme, financed by EVD -The Netherlands Government Agency, within the projects “Upgrading of the Croatian Vegetable Production” (which was finished in 2005) and “Improving the Institutional and Commercial Strength of the Croatian Fruit Sector” (which is still ongoing), importance and main characteristics of producers organizations in EU were elaborated and presented to public on several occasions (public presentations of projects results). Since main beneficiaries of mentioned project have been umbrella producers associations (Croatian Union of Vegetables Producers Associations and Croatian Fruit Association) important message regarding producers organizations have already been communicated to the Croatian fruit and vegetable producers, as well as to extension officers, processing industry and others.


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MAFRD will continue, in cooperation with CAEI, with information dissemination on key concepts of CMO, including producers’ organizations, operational programmes and marketing standards for fruit and vegetables.

Fruit and vegetable processing industry

Fruit and vegetable production for processing in Croatia descends from the nineties. The basic reason is the loss of ex-Yugoslavia market to which Croatian companies delivered significant quantities of processed vegetables. Furthermore, during the period of ‘90, the war, further production decrease happened, and individual plants were not produce due to ruination or impossibility to establish normal course of raw material purchase.

From 1993, Croatia has opened the market, and that has affected a decrease trend in vegetable production for processing from 1990 to 1996. Vegetable production for processing is about 20.000 tons annually. Respectively, home processing could not keep the strain of cheaper imported products, and production unfavourable financial (high inflation, lack of capital, high credit interests) and production conditions (impossibility to organize a cooperative production, term changes relating to home production protection (the protection of fresh vegetable is more stressed in relation to the processed). In the last 10 years the processed vegetable import to Croatia tripled in value, and the export course stagnates, i.e. decreases.

The export quantities of processed, half-processed and dried vegetables dropped by around 220% during the period of 1997 to 2003. At the same time total import has increased, in quantity and value, by 150%. That is also obvious from high negative total foreign trade balance which increased for the processed, half-processed and dried vegetable from negative 24,5 million of USD to negative 45 million USD (180%) in the period observed (see Table 2-95).

Table 2-95: Foreign trade balance (1997 - 2003)

1997 1998 1999 2000 2001 2002 2003

Total of half processed and dried vegetable

export 176.691 405.857 250.826 458.329 404.429 450.759 719.974

import 15.000.522 14.574.892 14.129.274 11.853.047 12.806.973 14.470.693 17.595.153

balance -14.823.831 -14.169.035 -13.878.448 -11.394.718 -12.402.544 -14.019.934 -16.875.179

Total processed vegetable

export 9.104.473 6.996.238 5.341.236 4.710.588 490.582 6.027.306 6.036.676

import 18.813.068 17.840.890 15.905.554 16.020.879 19.436.230 25.446.849 34.195.998

balance -9.708.595 -10.844.652 -10.564.318 -11.310.291 -18.945.648 -19.419.543 -28.159.322

TOTAL -24.532.426 -25.013.687 -24.442.766 -22.705.009 -31.348.192 -33.439.477 -45.034.501 Source: CBS, 2006

Vegetable is being processed in Croatia by drying, sterilization, and pasteurization technologies, freezing and biological fermentation and for each vegetable production processing closer or further processing is organized.

Root, leaf and bulb vegetables are processed in modernized curing plant in Vrpolje by drying process, and Spanish pepper in recently built plant in Turanovac near Virovitica. Curing plant in Vrpolje uses only third of its installed capacities, producing only a tenth of dried vegetables needed for local food industry. The basic problem is impossibility to ensure needed vegetable quantities for processing in areas nearby processing units, and one of the obstacles for development is surely the ownership structure precluding significant development of raw material basis nearby processing units. Although the technological level of existing primary production is relatively satisfying, the lack of processing capacities utilization decreases price competitiveness of final curing plant products in relation to imported dried vegetables.

Vegetable for processing by sterilization like peas and French beans are produced only in the area of Koprivnica with the stagnation tendency and production decrease. The future of


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vegetable production primarily depends on possibilities of ensuring sufficient production areas in order to efficiently utilize expensive mechanization for harvest. Present situation regarding state land management where the existing areas of concentrated land are parcelized and sold out surely do not contribute to production development.

Vegetable production intended for processing by pasteurization as pepper, cucumber and beetroot is constantly decreasing although technological level of production in the last few years has significantly increased by introduction of new varieties into production, container breeding of seedling and growing share of production which has been irrigated.

Production of condiments as ajvar, based on domestic raw material, red horn pepper, records constant growth and significantly participates in modest export of Croatian vegetable products.

Tomato production intended for processing is located in wider area of Umag where is the only Croatian processing. The production advanced mostly, in the last few years, of all vegetable production for processing by introduction of modern hybrids, irrigation of almost whole production and mechanized harvest. Tomato yield and quality for processing made by Istrian producers unlike production of many other vegetable cultures in Croatia are on the level of neighbouring Italy, European largest producer of tomatoes for processing. Production of tomato for processing in Istrian area developed by fusion of several factors like universal professional assistance to farmers in technology development by processors, help from the county for purchase of modern mechanization, town’s participation in costs of productive material purchase, state incentives as well as American government support for development by implementation of modern irrigation systems. But there are also problems, before all, inadequate management of state land, and small capacities and technological level of existing processing.

Only cabbage is processed by natural fermentation today, and majority of its production is placed in northwest of Croatia, and partly in Gorski Kotar, Istria and Dalmatian hinterland. Besides bigger industrial plants cabbage is partly processed in smaller family processing units. Although the most of processing is based on high-quality local autochthonous varieties, due to negligence to preserve original genetic identity, decay of almost all domestic companies which produced vegetable seed, a big problem of standardization of raw material for processing occurred as well as spreading of economically significant diseases transferred by seed, which endanger existing export most significant in value of all processed vegetable.

Vegetable production intended for freezing is extremely modest because only one Croatian company process small quantities of several kinds of vegetable by freezing, while almost all frozen vegetable sold at home market under known Croatian labels is imported.

Fruit processing is sensibly affected by the changes of circumstances relating to the period in nineties and reasons for production decrease are the same as for vegetable (market loss, war period and difficult terms of business, market liberalization).

In the year 1990, the fruit production for processing has decreased during mid nineties by 320% (see Table 12-28) and retained on that level until the end of the period observed (2003). The reason for such decline can be explained by cheaper imported raw material, lack of organization of fruit producers and insufficient redemption capacities for fruit processing.

Table 2-96: Import - export balance of fruit products (2000 - 2004) 2000 2001 2002 2003 2004

EXPORT 3.732.981 2.845.741 3.429.103 3.591.266 5.037.598

IMPORT 13.815.286 14.642.440 17.578.656 23.755.615 26.899.872

FTB -10.082.305 -11.796.699 -14.149.553 -20.164.349 -21.862.274

Source: CBS, 2006

From the above table may be seen the stagnation trend in quantitative and in value export of fruit products while import is increasing (in value for 100% in 2003 by comparison with 2000).

That is obvious in the trade balance too, which has grown in the period observed from negative 10 million USD to even negative 21,8 million USD (over 100%).


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Table 2-97: Production, import and export of fruit products (2001 - 2004)

FRUIT PRODUCTS

Measure unit Production Import Export

Available quantities on market (t)

Export share in production (%)

Import share in available quantities (%)

2001 t 8.611 24.933 3.812 29.732 44,3 83,9

2002 t 9.111 14.547 3.439 20.219 37,7 71,9

2003 t 7.856 18.469 2.537 23.788 32,3 77,6

2004 t 7.034 17.422 3.079 21.377 43,8 81,5 Source: CBS, 2006

Out of total available quantities of fruit products on Croatian market, 78,5% are imported products.

Precondition for development of the fruit and vegetables processing sub-sector is production of raw material for the food processing industry or for processing on farms. This requires modernisation of production tehnology and processing itself.

Production of the following products needs to be increased:

• frozen fruits and vegetables,

• minimum processed fruits and vegetables and semi-processed products for fruit and vegetable juices,

• processed products from potato and tomato, canned fruits and candied fruits,

• low pickled and pasteurized vegetables, including organic fruits and vegetables.

Storage facilities for fruits and vegetables

In Croatia there are about 113.453 tons of storage and cooling capacities for fruits and vegetables, out of wich ULO storage capacitys, mainly for apples, make 33.000 tones There is an estimation for the need of about 40.000 tons of ULO capacities. MAFRD runs a support program for construction of ULO capacities, through which co finances projects with 25% of investment value, with maximum 0,34 milion EUR (2,5 million HRK) per project.

There is also a lack of facilities for storing some 120.000 tons of vegetables that may be stored for a certain period of time.

The present level of infrastructure and domestic production requires that the further preparation of programs takes into account capacity optimization and the regional distribution of these capacities.

At present, the greater Zagreb area (western continental part of Croatia) is adequately covered by available warehouses. Therefore there is a need to build storage and cooling facilities in other fruit and vegetable growing regions (Slavonia and Baranja and north-west Croatia).

There are no enough treatment plants for fruits and vegetables, which include sorting and cooling facilities on temperature below -10°C or packaging facilities necessary for delivery of fresh fruits and vegetables to the supermarket chains.


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Graph 2-18: Storage (cooling) capacities for fruits and vegetables (in t)

0 2.000 4.000 6.000 8.000 10.000 12.000 14.000 16.000

Međimurje

Koprivnica-Križevci

Sisak-Moslavina

Zagreb county

Osijek-Baranja

Požega-Slavonia

Virovitica-Podravina

City of Zagreb

Brod-Posavina

Vukovar-Srijem

Primorje-Gorski Kotar

Zadar

Dubrovnik-Neretva

Karlovac

Bjelovar-Bilogora

Split-Dalmatia

CAPACITY OF FRUIT STORAGE UNITS PER COUNTIES

Source: MAFWM, 2006

Fruit and vegetable processing altogether represents the lowest share in total processing industry. Croatia was during the nineties one of the exporters of these products and today is prevailingly importer, and in total consumption needs of the imported goods its participation is 80%. In the existing conditions,there is a need for significant investments, before all into modernization of existing and introduction of new processing technologies.

Also there is a lack of logistic centres for raw material preparation (receipt, cleaning, sorting, storage, packing) in Croatia.

In the production segment, there is a need for investments in the modernization of fruit and vegetable production, introduction of new technologies, investments in mechanization, extension of production in protected areas in order to ensure production continuity and fill in the present seasonal gaps in the domestic production.

Overview of state aid scheme for fruits and vegetables sub sector is given in Chapter 2.1.

2.3.4.9. Wine and viticulture sub sector Background and key figures

According to natural conditions for wine grape growing, the wine-growing areas in Croatia are divided into: zones, regions, sub regions, wine-growing hills and vineyard localities.

The regions are: continental Croatia and littoral Croatia.

Sub regions of continental Croatia are: Podunavlje (the Danube region), Slavonia, Moslavina, Prigorje-Bilogora, Plešivica, Pokuplje, and Zagorje-Međimurje. The sub regions of littoral Croatia are: Istria, Hrvatsko Primorje (Northern Croatian seaboard), Northern Dalmatia, Dalmatian Zagora (Dalmatian tramontane region), Central and Southern Dalmatia.


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According to climate conditions, the sub regions fall into following wine-growing production zones:

• Zone B comprises sub regions: Moslavina, Prigorje-Bilogora, Plešivica, Pokuplje, and Zagorje-Međimurje,

• Zone C1 comprises sub regions: Podunavlje, Slavonia,

• Zone C2 comprises sub regions: Istria, Hrvatsko Primorje, Dalmatinska Zagora,

• Zone C3 comprises sub regions: Northern Dalmatia, Central Dalmatia, and Southern Dalmatia.

According to the Croatian CBS, total vineyard area in Croatia in 2004 amounts to 50.000 ha but in year 2005 there is a significant decrease in vineyard area for almost 40% due to new data collection system from CBS.

The most important grape varieties in Croatia are graševina (Welsch Riesling), malvazija Istria (Istrian malvasia) and plavac mali. These three varieties represent 48,09% of the total and the remaining 51,91% is comprised of 37 varieties with highest individual share of any variety lower than 3,5%.

The grape production in 2004 was 236.807 tons or 1,5 million hectolitres of wine, respectively.

Table 2-98: Production of grape (1999 - 2004)

Vine stocks, mill. Year

Total vineyard surface area,'000

Total Productive

Yield per wine plant, kg

Grape production, t

1999 59 331 307 1,3 394.066

2000 59 329 299 1,2 353.541

2001 58 322 296 1,2 359.042

2002 58 320 297 1,2 370.093

2003 57 314 294 1,1 333.327

200424 50 258 NA 1,2 236.807

2005 3025 132 118 1,5 181.021

Source: CBS, 2007

24 Year 2004 – estimate by CBS 25 Year 2005 – estimation by CBS according to the wine cadastar that is not finished


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Producers

Typical for Croatian viticulture are fragmented land parcels under vineyards. Most of the vineyards are owned by family farms with an average vineyard size of less than 1 ha (see also annexes Table 12-13 and Table 12-14).

From 2000 - 2004 total vineyard area decreased by 15,3%, as well as grape production which increased from 2000 - 2002 and than sharply decreased by 33% compared with year 2000. The decrease in wine growing acreage in 2005 is mostly due to different data collection and it is considered to be more accurate. It is shown that Croatia has approximately 30.000 ha covered with wine grape.

Table 2-99: Vineyards in ha and by ownership per county (2003)

County Total Legal entities

Family farms

Zagreb County 5.474 78 5.396

Krapina - Zagorje 4.061 4 4.057

Sisak - Moslavina 1.467 3 1.464

Karlovac 1.407 6 1.401

Varaždin 3.729 86 3.643

Koprivnica - Križevci 2.728 71 2.657

Bjelovar–Bilogora 1.746 157 1.589

Primorje and Gorski Kotar 1.143 42 1.101

Lika - Senj 112 - 112

Virovitica - Podravina 1.676 208 1.468

Požega - Slavonia 1.211 475 739

Brod - Posavina 940 61 879

Zadar 4.077 160 3.917

Osijek - Baranja 2.562 1.264 1.298

Šibenik - Knin 4.253 176 4.077

Vukovar - Srijem 1.240 774 466

Split - Dalmatia 6.233 193 6.040

Istria 5.831 381 5.450

Dubrovnik - Neretva 4.552 295 4.257

Međimurje 1.148 139 1.009

City of Zagreb 1.504 8 1.496

TOTAL CROATIA 57.094 4.578 52.516

Source: CBS, Agricultural Census 2003

Table 2-100: Average national yield per hectare

Year 2000 2001 2002 2003 2004 2005 Number of productive vine plants

299.184.599 296.385.049 297.501.314 293.886.740 239.296.302 132.000.000

Yield per productive vine plant, kg

1,18 1,21 1,24 1,13 1,21 1,5


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Total yield, t 353.541 359.042 370.093 333.327 236.807 181.020

Total yield in kg per ha 5.592,20 6.198,90 6.380,90 5.847,80 4.736,10 6.304,00

Source: CBS, 2005

Total yield in kg per ha decreased from 2002 – 2004 by 25,8% and in the same period yield per productive wine plant decreased also by 2,5%. Reasons of decrease in yields are huge percentage of vineyards older than 25 years and bad climate conditions in 2003 and 2004. It can also be seen that in 2005 average yield per ha has increased up to 6.304 kg/ha.

According to Croatian Institute for Viticulture and Wine (2005) 60,7% of vineyards are more than 25 years old, 24,1% is 15–20 years old, 9,4% is 5 – 15 years old and 5,8% of vineyards is up to 5 years old.

The number of wine-producing households in the sector is 154.116 (see Table 2-101). Out of the total number of households in the sector owning vineyards, 148.564 (96,4%) households own vineyards with total surface area below 0,5 ha and 5.698 (3,6%) households own vineyards larger than 0,5 ha

Table 2-101: Number of households and legal entities with vineyards, by counties (2003)

No COUNTY Number of legal entities

Number of households

1. Zagreb County 26 16.114

2. Krapina - Zagorje 3 20.344

3. Sisak - Moslavina 2 3.510

4. Karlovac 2 4.331

5. Varaždin 3 4.331

6. Koprivnica - Križevci 1 12.128

7. Bjelovar–Bilogora 3 4.745

8. Primorje and Gorski Kotar 6 1.874

9. Lika - Senj 213

10. Virovitica - Podravina 4 4.733

11. Požega - Slavonia 18 1.651

12. Brod - Posavina 2 2.746

13. Zadar 4 7.955

14. Osijek - Baranja 10 3.099

15. Šibenik - Knin 4 8.157

16. Vukovar - Srijem 11 1.186

17. Split - Dalmatia 10 17.155

18. Istria 19 9.309

19. Dubrovnik - Neretva 8 5.393

20. Međimurje 9 4.716

21. City of Zagreb 1 4.638

Total 146 153.970



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Graph 2-19: Structure of family farms by size, 2003

2.424

35.083

25.339

30.647

17.405 18.74116.717

6.0911.523

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

40.000

0 > 0,1 0,1 >0,5 0,5 > 1 1 > 2 2> 3 3 > 5 5 > 10 10 > 20 ≥ 20


According to evidence of Croatian Institute for Viticulture and Oenology, the number of producers registered in the Register of Grape, Wine and Fruit Wine Producers in 2005, who sell their wine on the market was 14.692 (see Table 2-102).

From 2003 - 2005 number of registered producers of wine increased by 7,8%.

Although the number of producers has increased, the number of productive wine plants decreased by 18,6% and the total vineyard area by 12,3% decresed in 2003 and 2004 because of 61% vineyards older than 25 years and bad climate conditions in given period (see Table 2-98).

Wine production industry

Annual wine production has been decreasing from 2002 by 28% to 1.510.000 hl in 2004. The decrease was even more substantial in 2005 when the wine production dropped by 50% to 773.000 hl, due to decrease of wine grape production.


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Table 2-102: Number of producers (grape, wine and fruit wine) who sell their wine on the market, by counties, 2003-2005

Source: Register of Producers of Grape, Wine and Fruit Wine, Croatian Institute for Viticulture and Oenology, 2006

Graph 2-20: Structure of wine producers by size (ha), 2004

Number of producers County

2003 2004 2005

Zagreb County 1.069 1.200 1.243

Krapina - Zagorje 333 354 377

Sisak - Moslavina 94 97 104

Karlovac 52 57 65

Varaždin 616 620 641

Koprivnica - Križevci 59 67 73

Bjelovar - Bilogora 42 50 84

Primorje and Gorski Kotar 202 217 251

Lika - Senj 42 86 85

Virovitica - Podravina 21 26 35

Požega - Slavonia 452 514 566


Zadar 423 418 425

Osijek - Baranja 305 337 349

Šibenik - Knin 1.580 1.558 1.575

Vukovar - Srijem 249 254 307

Split - Dalmatia 2.823 2.835 2.989

Istria 2.295 2.324 2.468

Dubrovnik and Neretva 2.491 2.499 2.543

Međimurje 366 379 392

City of Zagreb 32 32 40

TOTAL 13.627 14.002 14.692


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Source: Register of Producers of Grape, Wine and Fruit Wine, Croatian Institute for Viticulture and Oenology, 2006

Table 2-103: Wine production in ,000 hl (2000-2005)

Year 2000. 2001. 2002. 2003. 2004. 2005.

Wine production in 000’ hl 1.891 1.952 2.095 1.768 1.510 773

Source: CBS, 2005

Croatia produces 60,6% of Quality wine (top-quality wines 3,7%, quality wines 56,9%) and Table wines 39,4%.

According to Wine Act (OG 96/03 see page 317), wines are classified by quality categories depending on the quality of processed grapes, yield per hectare, degree to which the grapes are ripen, processed and tended, the content of natural alcohol and other constituents and the organoleptic (sensory) characteristics.

By quality the still wines are classified as:

• table wines

• table wines without a geographical indication,

• table wines with a geographical indication,

• quality wines

• quality wines with a geographical indication,

• top-quality wines

• top-quality wines from specified and limited wine-growing districts,

• top-quality wines from specified and limited specific wine-growing districts,

• predicate wines with a geographical indication.

Quality and top-quality wines are kept in wine-cellar conditions for five or more years of which at least three years in bottles, are entitled to bear the designation "archival wine".

Wines of higher quality comprise quality and top-quality wines.

Classification of quality wines on quality wines with a geographical indication and top quality wines with a geographical indication has been a long tradition and because of consumers protection it was not changed.

Based on the production consumption balance, the calculated annual consumption of wine per inhabitant is 42 l (excluding stocks ).

9.066

2.914

1.912

1100

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

9.000

10.000

Up to 0,5 ha 0,5 - 1 ha 1 – 5 ha More than 5 ha


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According to the Croatian Institute for Viticulture and Oenology, in 2005, out of 14.692 producers only 940 producers (5,31%) sold their wine on the market. This was 86% of the total annual production in 2005.

According to same source there were 50 big producers (see also Table 12-22) with an annual production of more than 1.000 hl of wine which makes 85% of the total wine sold on the market.

Graph 2-21: Distribution of big producers by size (2005)

Source: CIVO, 2006

Out of 940 producers 95% (890) produce 14% of the wine sold on the market. Their annual production volume is below 1.000 hl, with an average of 105 hl per producer.

The wine processing sector lacks of new and modern technologies to allow for wine processing under improved sanitary conditions in wineries as well as the processing of high quality wine which will help to better meet market demands and increase the market opportunities for the Croatian Wine, in particular in the view of the country's EU accession ahead.

Market and trade

The producer may sell his wine directly in his production facility, through specialized wine shops, agro tourism facilities or hotels and restaurants. This particularly applies to smaller producers, smaller companies and agricultural cooperatives or family households. Large wine-making companies distribute their products mainly through large national and/or multinational retail chains and hotels and restaurants.

Wine trade is organised in such a way that wine reaches consumers by direct or indirect sales through one or more intermediaries. Indirect sale involves an intermediary between the producer and the consumer. Direct sale excludes intermediaries and can be carried out in many different ways: by phone, mail, on line, «door-to-door», exhibitions and fairs, sale from the winery and specialised own wine shops.

According to surveys (dr. Z. Benašić: Wine Marketing, 2004) small shops sell approximately 50% of all wine, national supermarkets 33% and international supermarkets 10%.

There is no state monopoly on wine trade in Croatia.

In order to improve the production and marketing of wines, it is necessary to stimulate setting up of farmers' associations and manufacturing and sectoral organisations, respectively. In Croatia, the field of manufacturing and sectoral organisations has not been regulated by law. A majority of producers do not participate in such trade associations. There are two larger associations in Croatia, namely «Croatia vino» in the continental Croatia and «Vinum Croaticum» in Hrvatsko Primorje.

29

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5

10

15

20

25

30

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Imports of wine in terms of volume and value in the period beginning in 2000 up to 2005 were quickly growing, so in 2004 the value of wine imports for the first time surpassed the value of wine exports. According to the CBS, total wine imports in 2004 reached 13.592 tons worth 15,2 million USD, which represents year-on-year increase in volume of 46,6% and increase in value of 40,6%.

The value of wine exports from 2000 to 2005 has continuously grown, whereas the volume of exports has been shrinking since 2002. In 2004, total wine exports reached 5.515 t (12,6 million USD) which in comparison to 2003 represents a decrease of 39,8% in terms of volume and an increase of 4,9% in terms of value (see Table 2-105).

Wine import in the last five years has been rapidly increasing because of the very low prices of imported wine compared with domestic wines of the same quality (see Table 2-104). Croatian wines have high market prices because of high production costs and outdated production technology.

Table 2-104: Import of grape and wine

IMPORTS CT 2204 Wine from fresh grapes

CT 2205 Vermouth and other wines from fresh grapes

TOTAL

Year Tons USD Tons USD Tons USD

2000 2.643 2.366.085 47 139.712 2.690 2.505.797

2001 6.442 4.877.977 40 112.775 6.482 4.990.752

2002 7.921 6.002.061 68 185.328 7.989 6.187.389

2003 9.166 10.569.260 101 250.424 9.260 10.819.684

2004 13.489 14.891.693 103 321.040 13.592 15.212.733

2005 13.382 15.563.060 79 278.156 13.461 15.841.216

Source: CBS, 2006.

Table 2-105: Export of grape and wine

EXPORTS CT 2204 Wine from fresh grapes

CT 2205 Vermouth and other wines from fresh grapes

TOTAL

Year Tons USD Tons USD Tons USD

2000 7.788 7.371.406 2.487 1.196.709 10.275 8.568.115

2001 9.365 7.925.128 3.056 1.212.153 12.421 9.137.281

2002 10.753 9.649.856 1.268 572.166 12.021 10.222.022

2003 8.369 11.635.912 718 404.069 9.087 12.039.981

2004 4.894 12.290.988 621 346.189 5.515 12.637.177

2005 2.857 9.844.592 176 128.001 3.033 9.972.593

Source: CBS, 2006.

Authorized laboratories which carry out physical-chemical analysis of must, wine, other products from grapes and wine, fruit wines and other products based on fruit wines in Croatia are:

• the Croatian Institute for Viticulture and Oenology – Test Laboratory - Zagreb


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• the Institute for Adriatic Crops and Karst Reclamation – Oenology Laboratory - Split

• the Veterinarska stanica d.o.o. – Čakovec

• the Institute for Agriculture and Tourism, Wine laboratory - Poreč.

The laboratories are authorized pursuant to the Wine Act (OG 96/03 see page 317) and the Ordinance on Conditions for Analysis of Must, Wine, Other Products from Grapes and Wine and Fruit Wines and Other Products Based on Fruit Wines (OG 102/04).

The Wine Act and its implementing regulations are partly aligned with EU regulations. The Wine Act does not prescribe the compulsory implementation of the HACCP to wineries. At the moment, there are no official data available on the number of wineries with which already implement the HACCP system.

Products for export must have a certificates issued by the Croatian Institute for Viticulture and Grape. Grapes, crushed grapes, wine and other products from grapes and wine which do not comply with EU regulations concerning viticulture and wine production, as well as the Wine Act and regulations adopted on the basis thereof cannot be exported, imported or put into circulation.

Imported grapes, crushed grapes, wine and other products from grapes and wine must comply with requirements set out in the Wine Act and regulations adopted on the basis thereof. Such products must have a quality certificate issued by a competent institution in the producing (exporting) country, and if such products do not originate from EU Member States, they must have additional quality certificate issued by the Institute. Import and control of wines originating from EU Member States is carried out in accordance with the Additional Protocol on wine adjusting the trade aspects of the Stabilisation and Association Agreement between Croatia and the European Union.

An overview of state aid schemes for wine and viticulture sub sector is given in Chapter 2.1.

2.3.4.10. Olives sub sector Background and key figures

Different from other Mediterranean countries, in Croatia olive growing was deteriorating during the last century, especially before the Second World War and in the following years. During socialism the whole agriculture stagnated, especially family farming, which led to devastation of the olives trees. In that time more than 300.000 olive trees were ruined over a year. A large number of olive trees were destroyed during the construction of tourist facilities, and many of them burnt in frequent fires. In the course of 50 years, the areas under olive trees were cut in half.

During the Croatian war in the early 1990’s many olive trees businesses ceased to exists. Besides, the price of the olive oil on the international market remained high, notwithstanding the large production, and due to raised consumer awareness in Western Europe, USA and Japan olive oil market is constantly growing, as for its nutrition values and positive health impact.

The olive trees are one of the main determinants of the Mediterranean areas of Istria, the coastal area of Kvarner and Dalmatia and their islands. During the centuries of socialism in ex-Yugoslavia, the production of olives stagnated in Croatia. Yet, with the change of Croatia to a market economy and after the war, agricultural producers of olives as well as the industrial processors of olive oils become more and more interested expanding their production. The positive development in the sector was supported by the introduction of State support schemes, a market situation and consumer demand pattern that displays a large demand for olive oil and offer possibilities to achieve better prices, as well as the development of the tourism industry, etc.

Table 2-106: Number of olive trees and area under olive trees per county (2003) Olive trees Olive trees Plantation olive trees


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County26 total number of trees

number of fruitful trees

total number of trees

number of fruitful trees

total area, ha

Fruitful area, ha

Zagreb County 765 539 205 170 0,61 0,54

Krapina - Zagorje 407 405

Sisak - Moslavina 164 157

Karlovac 25 21

Varaždin 117 112

Koprivnica-Križevci 65 53

Bjelovar - Bilogora 50 41

Primorje - Gorski Kotar 106.983 96.268 3.013 2.176 13,01 10,83

Lika - Senj 14.737 11.977 454 414 1,66 1,51

Virovitica - Podravina 37 27


Brod - Posavina 54 52

Zadar 371.727 271.288 102.932 58.981 417,12 273,80

Osijek - Baranja 41 31

Šibenik - Knin 366.040 313.590 7.050 4.788 27,86 18,40

Vukovar - Srijem 12 2

Split - Dalmatia 858.057 744.711 75.733 65.702 263,60 228,48

Istria 266.382 215.092 170.263 135.609 676,42 547,10

Dubrovnik - Neretva 432.415 352.336 81.357 64.335 286,69 231,96

26 In the Agricultural Census from 2003 data processing, home adress of the olive growers are taken as relevant, therefore olive trees are in the counties where they can not be cultivated


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Međimurje 119 118 15 15 0,03 0,03

City of Zagreb 14.389 13.814 10.716 10.556 37,32 36,31

CROATIA TOTAL 2.432.653 2.020.699 451.738 342.746 1.724,32 1.348,96


Producers

According to the Agricultural Census from 2003, there were 40.143 olive oil producers in Croatia out of which 40.105 (99,9%) were family holdings and only 38 (0,1%) were legal enterprises.

Table 2-107: Geographical distribution of olive producers

Number of agricultural farms Number of legal enterprises Total

Zagreb County 33 0 33



Karlovac 6 0 6

Varaždin 14 0 14


Bjelovar - Bilogora 21 0 21

Primorje - Gorski Kotar 2.266 4 2.270

Lika - Senj 223 0 223

Virovitica - Podravina 16 0 16



Zadar 8.508 2 8.510


Šibenik - Knin 6.754 1 6.755

Vukovar - Srijem 2 0 2

Split - Dalmatia 11.048 9 11.057

Istria 4.816 15 4.831

Dubrovnik - Neretva 6.175 6 6.181

Međimurje 15 0 15


Total 40.105 38 40.143


Table 2-108: Size of olive varieties in ha and % of total area (2000 - 2005) Olive varieties ha %

Oblica 16.434 62,06

Slivnjača 700 2,64


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Other varieties 1.130 4,27

Drobnica 748 2,82

Karbunčela 231 0,87

Puljizica 181 0,68

Krvavica 100 0,38

Other domestic varieties 571 2,16

Leccino 1.517 5,73

Pendolino 333 1,26

Other foreign varieties 1.735 6,55

Buža 2.000 7,55

Lastovka 580 2,19

Bjelica 220 0,83

Total 26.480 100,00

Source: Estimations by the Croatian Agricultural Extension Institute, 2004

Table 2-109: Olive production trends, cultivated area and yield (2000 - 2005) Year 2000 2001 2002 2003 2004 2005

Production, tons 16.215 19.413 32.955 9.482 20.613 36.602

Area, ha 15.616 15.638 15.733 15.448 16.980 NA

Yield, kg / tree 6,27 6,49 10,63 3,07 6,37 16,3

Total number of olive trees, 000 3.365 3.413 3.460 3.524 3.743 2.935

Number of yielding olive trees, 000 3.078 2.993 3.101 3.092 3.238 2.239

Source: CBS 2004

Olive trees were cultivated on a total area of 15.616 ha in 2000 up to 16.980 ha in 2004 which indicates a growth of 8,7%. As far as the size of the plantations is concerned, in 2004 most farms (40%) occupy a small area between 0,5 – 2 ha. 37% of the olive tree plantations are below 0,5 ha whereas plantations bigger than 2 ha make up only 23%. In 2004, 3,7 millions of olive trees were planted on a total area of 16.980 ha out of which 86,5% (3,2 mil) were productive trees (due to alternate bearings in the given period (1999 - 2005) the production of olives varied (due to climate, support schemes, etc.).

The average yield per tree in the period from 2000 to 2004 ranged from 3,07 kg to 10,63 kg of fruits, and total production of fruits was between 9.482 and 32.955.000 tons. In 2005 a great boost was noticeable in production where the average yield was 16,3 kg/tree.

In 2005, CBS changed its methodology and collected for the first production data about olive yields on family farms through interviewing a selected sample of farmers. The method of collecting data through estimates provided by agricultural surveyors according to cadastral information so far used was abandonded. Due to that, significant differences appeared in the number of productive trees compared with those for previous years.

According to the Act on Associations, olive growers are associated in 38 associations registered at the State offices in counties. However, most of the growers are still not organized in such associations or producer organizations.

Processing industry


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Table 2-110: Trends in domestic production (2000 - 2005) Year Production on farms Industrial production Total production

hl tons

% of total production

hl tons

% of total production

hl tons

1999 52.849 4.830 94,56 3.042 278 5,44 55.891 5.108

2000 23.544 2.152 91,38 2.221 203 8,62 25.765 2.355

2001 30.491 2.787 85,46 5.186 474 14,54 35.677 3.261

2002 44.815 4.096 87,56 6.368 582 12,44 51.183 4.678

2003 12.567 1.148 65,71 6.554 599 34,28 19.121 1.747

2004 28.911 2.642 77,75 8.271 756 22,24 37.182 3.398

2005 49.187 4.496 88,16 6.608 604 11,84 55.795 5.100

Source: CBS, 2005, Analysis: MAFWM, 2006

Varying in oil production on the agricultural farms and in industrial production came from the fact that olive tree has an alternate bearings. In 2003 an intensive drought has occurred which influenced on olive yield as on all other crops (see Table 2-108).

In February 2005, olives were processed by 112 mills in Croatia, out of which 35 are cooperatives with a capacities of 0,08 up to 2,5 tons/hour (see Table 2-111). According to a questionnaire performed by CAEI in December 2006 and January 2007 9 additional mills were opened for processing of olive fruits. Large percentage (42%) of the mills use outdated technology which has a significant influences on the quality of the produced oil.

Table 2-111: Geographical distribution of olive mills (number and capacity)

COUNTY TOTAL MILLS

Old mills

Modern mills

Capacity t/hour

Istria 12 2 10 0,3 – 2,0

Primorje - Gorski Kotar 10 3 7 0,5 – 2,0

Lika - Senj 1 1 0,7

Zadar 21 14 7 0,08 – 2,0

Šibenik - Knin 10 3 7 0,6 – 2,5

Split - Dalmatia 32 13 19 0,35 – 2,5

Dubrovnik - Neretva 26 13 13 0,15 – 1,2

TOTAL 112 47 65 0,08 – 2,5

Source: CAEI, February 2005

Modern technology used in oil processing plants can mitigate the risk of negative effects which can occur during the extraction of oil and which could lead to chemically induced changes of the composition of oil. Such processes concern mostly small quantities but have an important impact on the oil quality, as well as are of great biological and nutritional value. In particular, mechanical steps during olive processing can induce reactions between water and oil system as well as solid ingredients (pulp colloids) could for example. make the extracting of the whole quantity of oil from vacuoles (because of the creation of emulsion) impossible.


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Table 2-112: Share of olive oil p–rocessing and table olives out of total production

year Total production of olives (t) % table olives % olive for oil

2000 16.215 16,15 83,85

2001 19.413 7,07 92,93

2002 32.955 10,16 89,84

2003 9.482 6,26 93,74

2004 20.613 2,37 97,63

2005 36.602 1,30 98,70

Source: MAFWM, 2006

Olive oil has become an important economic potential in agricultural production of the Mediterranean part of Croatia, yet the quality production and processing is still at a low stage compared to the situation in the EU Member States.

The quality level of olive oil is affected, among other factors, by time passed from harvest to process, i.e. abiding period before processing and storing of oil in quality decanters. The largest number of quality oils is processed within 2 days from harvesting.

Oil mills are mostly service providers (olive growers handover olives, takeover oil and manage sales by their own). It should be emphasised that Croatia has a basic process of olives into olive oil whereas does not have raw oil processing, filtration, and refinery and there are no facilities for oil extraction from pomace.

Taking into account that the EU criteria have increased, as it could be seen from SMK (free acidity, max 2% for virgin olive oils) values, and according to some experiences there might be a lot of lampante oil. It would be good to have a refinery plant that would refine that oil and distribute it on the market as refined oil that would be used in production of olive oil made of refined olive oil and virgin olive oils. This process would avoid import of refined olive oil. There is also another product in virgin olive oil processing. It is olive pomace - residue. Its exploitation either for compost or for heating should be arranged.

Also, there is a need to increase capacities of existing mills by introduction of new technologies and better utilisation of the existing ones.

Furthermore equipping the laboratories for basic chemical analyses would encourage buying out and sale of quality oil to the end-customer because:

• basic chemical analyses provide the first information on quality of oil,

• oil of higher quality may be stimulated by higher buy out price,

• immediate buy out after the mill processing ensures an authenticity of the product,

• subsequent unit costs are distributed on larger quantity of products

It is necessary to equip laboratories for sensor analyses at other independent institutions because:

• sensor analyses are equal to chemical analyses in regard to determination of oil quality;

• the work on education of sensor analysts and creation of panels has just begun in Croatia;

• given the character of this analysis the panels should be independent, and laboratories placed outside the production plants.

At the moment, only 12 mills in Split – Dalmatia county have the laboratories for basic chemical analysis. Taking into account that olive growth has been increasing during the last couple of years, processing of olives into olive oil has been accordingly increasing, the advancement of


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processing and marketing requires for building of new and adaptation of the existing facilities, introduction of new technologies in the mills, equipment of laboratories for basic chemical analyses in the mills and equipment of olive oil packaging facilities.

Market and trade

Table 2-113: Trends in olive oil production; import – export; consumption and self sufficiency ratio (2000 – 2005)27

Source: CBS, 2006, Analysis: MAFWM, 2006.

Table 2-113 shows variable and fluctuated yield between 1.747 tons in 2003, when it was the lowest, up to the highest of 5.100 tons in 2005 corresponding with the yield fluctuations.

In the same period import was higher than export, but like the export, import was constantly increasing during the period. Total consumption of olive oil was between 2.815 and 6.571 tons per year (see Table 2-113). Consumption per capita varied from one year to another and in average it is approximately 1 litre per capita. Some quantity of olive oil is spent in and sold to manufacturing enterprises. The data in the table displays that Croatia is not self-sufficient regarding the olive oil in most of the years.

Table 2-114: Table olives production, import - export; consumption and self - sufficiency ratio (2000 - 2005)

YEAR Total production (tons)

Import (tons)

Export (tons)

Total consumption (tons)

Consumption kg / pc

Self-sufficiency (%)

2000 2.619 781 298 3.102 0,70 84

27 Number of inhabitants according to last census in 2001 = 4.437.460; Consumption per capita (Apparent consumption = production + import – export /per capita) is calculated excluding the data about reserves.

YEAR Total production (tons)

Import (tons)

Export (tons)

Total consumption (tons)

Consumption kg/pc

Self-sufficiency (%)

2000 2.355 671 211 2.815 0,63 84

2001 3.261 1.438 339 4.360 0,98 75

2002 4.678 1.702 352 6.028 1,36 78

2003 1.747 1.725 339 3.133 0,71 56

2004 3.398 2.334 458 5.274 1,19 64

2005 5.100 1.791 320 6.571 1.48 77


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2001 1.372 1.024 252 2.144 0,48 64

2002 3.349 606 232 3.723 0,84 90

2003 594 75 246 423 0,10 140

2004 488 1.395 240 1.643 0,37 30

2005 475 1.324 217 1.582 0,36 30

Source: CBS; Analysis: MAFWM 2006.

The production of table olives in the period given in the table was variable and it fluctuated from 2.619 to 475 tons (see Table 2-114). Import in most of the years was significantly higher than export. Total consumption of table olives was also variable and in all years it was bigger that production. Consumption per capita in the given period fluctuated from 0,10 to 0,84 kg. Data in table displays that Croatia is not self-sufficient regarding the table olives i.e. it does not meet its demand for olive oil.

Table 2-115: Average production prices (EUR/l) of raw and non - refined olive oil (2000 - 2005)

YEAR 2000 2001 2002 2003 2004 2005

Price in EUR/l olive oil 6,15 6,28 6,41 7,16 7,55 8,10

Source: CBS28.

The Ordinance on oils of olive fruits and pomace (OG No. 63/2006) issued on the basis of Food Act under the competence of MAFRD determines the request for quality oils of olive fruits and pomace, i.e. categories and nomenclature, labelling, physical - chemical and sensor properties of olive oil, etc. in accordance with the EU regulations.

In regard to alignment of legal basics in olive oil and table olives sector with EU legislation in Croatia there has not been issued a unique regulation that would set out market relationships and no intervention measures in order to protect against disturbances on the olive oil and table olives market have been brought up. Furthermore, Croatia does not apply a system of monitoring of foreign trade via import licenses and deposits. The system of incentives in Croatia for olive oil and table olives sector is different from incentive system of European Union. In Croatian incentive system no multiple mutual conditionality is established, i.e. there are no prescribes measures of good agricultural practice that would make a condition for attaining incentives. Croatia does not have an olive register based on GIS system. The existing association of producers can not be compared to producing organisation defined by Acquis,

28 The data on average production price of the raw, non-refined olive oil are taken from the survey "Monthly report on buy in of agricultural, fishery, and forestry products from agricultural family holdings” and "Monthly report on sale of agricultural, fishery, and forestry products from own production – legal entities


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neither by their organisation or role, and there is no system for financing of their operational programmes.

Ordinance on oils from olive fruits and pomace, that regulates the quality of olive oil encompasses relevant EU regulations is aligned thereof with the categories, properties of olive oils and labelling. It is not aligned concerning authorisation of olive oil packaging facilities and authorisation of independent panel for sensor evaluation.

In accordance with the Food Act, the obligation of the HACCP system establishment has been prescribed. At the moment HACCP system is implemented in 4 mills (3 in Primorje – Gorski Kotar county and 1 in Split – Dalmatia county). ISO certificates are implemented in 4 mills (1 in Primorje – Gorski Kotar county, 1 in Split – Dalmatia county and 2 in Zadar county) although Community standards that determine olive oil industry do not prescribe for the exporters of olive oil to have export ISO certificates.

Development of olive growing in Croatia is planned through:

• restoration of the old and burnt plantation,

• planting of new plantations,

• application of modern agro-technical technologies,

• building of modern olive processing facilities,

• introduction of modern technologies in a production of table olives to satisfy the demand of growing tourist economy,

• organisation of self-sufficient production of olive seedling, in particular of indigenous varieties in registered and new breeding grounds

The planned objectives may be reached only by maximum engagement of all expert institutions that should secure enough stem material, surfaces and seedlings needed to organise commercial production in breeding grounds, construction of modern olive processing facilities, and continuous education of olive producers in the field of technological achievements in olive growing and oil industry.

Olive oil production process in Croatia should follow the regulations set out by the EU. The most important part in the process of olive oil production will be played by producer’s organisations and their associations, authorised for incentive receiving and their distribution among its members that will also monitor and control olive oil market.

In order to achieve development goals it is necessary to connect representatives of producers, retailers and processors of oil, since their organisations have a role in the monitoring and controlling of the market, as well as in the administration of olive oil sector.

Positive trend of olive growing development is influenced by:

• value of olive oil in regard to health,

• high price of the olive oil,

• relatively high incentives,

• sufficient number of processing facilities,

• new technology of seedling production,

• addition to tourist activities

Most of the new plantations were built by the State incentives of Croatia. The incentives serve for a unique goal: restoration of olives and olive oil production as a development potential and revival of islands and coastal areas. Increased incentives positively influence on a decision process of increasing areas under the olive trees. Furthermore, planting of the new plantations is also a preventive measure against fires.

The policy of State incentives in olive growing is aimed at increasing of olive oil quality.


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By Croatian accession to European Union the number of olive trees will be controlled by GIS (Geographic Information System), after the development and implementation of cadastral system of olives.

Therefore, the future of Croatian olive growing and oil production is affected by Operational programme for planting of new plantations that was enforced in June 2004 by the Croatian Government on a proposal of Ministry of Agriculture, Forestry and Water Management; those estimations are in the course of four following years (2004 - 2007), cultivation of at 5.500 ha new plantations and achievement of self-sufficient production of olive oil. Croatian Agricultural Extension Institute is also directly included in the carrying out of the programme due to more efficient tracking of the programme implementation and continual education of agricultural producers in the field of the latest technology achievements in olive growing and oil industry.

Policy of production of olive oil is aimed at the increase of quality by incentives for producers, modernisation of process facilities due to production of quality oils. The solutions for improvement of quality in olive growing are:

• The application of modern production technologies,

• The application of modern process technologies,

• Acquisition of new skills and knowledge from the field of marketing.

• Identification of Needs for Improvement and Additional Qualifications in the Sector

Improvement and additional qualification in the sector requires for the establishment of sensor evaluation (analysis) of the products and, accordingly, carrying out of education, registration and authorisation of tasters of olive oil in Croatia.

Further vocational training in the sector, for oil laboratories should encompass the qualification of personnel to determine free acid fats according to ISO 660, 1983 methods.

There is a need for experts in agronomy and process technology that should undergo further specialisation in olive growing industry but we do not have concrete data about their number and needs.

An overview of state aid schemes for olive sector is given in Chapter 2.1.

2.3.5. Renewable energy resources From all renewable energy resources, except large hydro centrals, the greatest contribution in the nearest future is expected from biomass. Biomass and their products is not just potentially renewable but it is enough similar to fossil fuels so the direct substitution is possible.

In the EU, 58% of primary energy obtained from renewable energy resources originate from wood biomass (great share is the result of traditional exploitation of wood potential), and estimation is given, compared with others renewable energy resources, that at the end of 2010 share will be 73%. Most of the primary energy from wood is produced in France, followed by Sweden and Finland. Great percentage of the energy production from renewable energy resources is the result of ecological conscience of inhabitants, who despite of the initial non-profitability install facilities for the production of ‘clean’ energy.

The EU follows the strategy on doubling utilization of renewable energy resources in period from 2003 till 2010. Total share of renewable energy resources would be increased from present 6% up to 12% in 2010. Those plans comprise an array of measures by which private investments in objects for transformation of renewable energy resources in usable energy would be initialized.

In Croatia, renewable energy resources - provided large hydro–power plants are excluded - provide less than 1% of the total energy needs. Considering economic development and extremely great potential for renewable energy resources, biomass in the first place (approx. 44% of land area is covered with forest, there is a long tradition of wood industry present and great areas of arable and non cultivated land), in 2010 minimal share of renewable energy resources in the structure of total power consumption is expected to be approximately 5,8%.


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It has been already foreseen that the dependency of Croatia upon energy imports will increase from present 55% of import share up to 70% in 2030. Utilization of biomass can decrease dependence upon import of energy, and contribute to the protection of economy stability of the country, to the national income and entire prosperity of country and inhabitants.

Besides the increase of energy sustainability, by producing and utilizing biomass, other ecological, economical and social effects can be achieved. It contributes to the increase of biological and environmental diversity, to the protection of soil and water, enables more efficient waste management, also concerning waste from agriculture, forestry and wood industry. On this way domestic industry can be stimulated and also new workplaces created, contributing to the development of rural areas.

Croatia became a member of the United Nations Framework Convention on Climate Change (UNFCCC) in 1996, and of the Kyoto Protocol in 1999, which derives obligations for decrease of green houses gasses emissions. According to the Kyoto protocol, Croatia needs to decrease the emission of carbon dioxide (CO2) to 0,5% by 2010 in comparison with 1990 (year with the highest emission) which would require a reduction of 4,8 t per capita.

2.3.5.1. Biomass obtained from the wood sector By exploitation and maintenance of forests there is a large mass of wood biomass leftover and it can be used for the power production. For thermal usage, wood mass from the cleaning of forests can be used, wood collected after maintenance or from the wind breakage, trees collapsed under mass of ice, ill trees, and wood from the areas taken by fire, etc. In classical exploitation, in the Republic of Croatia wood is obtained from the trunk, crown and boughs, whose diameter with bark in the thinner part (end) is bigger than 7 cm. On this way 60 – 70% of wood mass from the mature stands is being utilized, except on the younger stands where the utilization percentage only reaches 50%. Share of leftovers and waste from the wood cuttings depends on many factors and in average for all stands and tree species during cutting down, one could count on something more than 20% of leftovers. Except large quantities of biomass which are produced as a by product and waste in forestry, there is a great number of species of quick growing trees (e.g. willow, poplar and plane trees), which can be cultivated for the biomass production.

In the wood manufacturing production units, production process is resulting in wood leftovers in the form of wet biomass from the primary production, (bark, wet sawdust, pieces of waste – stubs and pieces of bark) and dry biomass from final wood processing (sawdust, grinding waste, shavings and small and big waste), which usually represent load for the wood industry (see Table 2-116).

Table 2-116: Quantities of wood waste in disposal in the wood industry ASSORTMENT (m³) 1996 1997 2000 2005

Bark, sawdust and solid waste 446.550 514.500 585.000 787.500

Final waste 225.760 261.625 295.750 398.125

Cord wood 181.234 205.246 228.800 288.600

Boughs 152.721 172.956 192.800 243.200

TOTAL 1.006.265 1.154.327 1.302.350 1.717.425

Source: MAFWM, 2006

Table 2-117: Theoretical power potential of usable biomass as a result of forest management

ASSORTMENT Energy utilization factor (µ)

Available biomass (m³/year)

Energy potential, 40% of moist (PJ)

Energy potential, 10% of moist (PJ)

Logs 0,50 1.837.881,4 12.115 14.771


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Firewood 0,60 825.054,9 6.089 7.425

Waste 0,45 458.043,9 2.004 2.324

TOTAL 3.120.980,2 20.208 24.520

Source: MAFWM, 2006

For the period from 2006 to 2015 an amount of wood mass foreseen for utilization for energy, is about 2,6 million m3 (from that amount, 2 million m3 per year is supposed to be obtained from Hrvatske Šume Ltd, and from the private forests owners 0,6 million m3). Available quantity of wood waste from the wood industry in 2005 was 1,7 million m3, with remark concerning wood waste quantity to be increased. Beside already mentioned available quantities, wood biomass from horticulture, viticulture, and also from maintenance of areas in close vicinity of roads and watercourses, have a great potential.

The areas of local self government units where the available volume of biomass for 50% of the inhabitants equals or exceeds 0.6 m3 per capita have high potentials for the use of biomass. These areas cover the following counties: Zagreb, Krapina - Zagorje, Sisak - Moslavina, Karlovac, Varaždin, Koprivnica - Križevci, Bjelovar - Bilogora, Primorje - Gorski Kotar, Lika - Senj, Virovitica - Podravina, Požega - Slavonia, Brod - Posavina, Zadar, Osijek - Baranja, Vukovar - Srijem, Međimurje, Istria and the City of Zagreb.

2.3.5.2. Cogeneration plants The most efficient way for exploitation of biomass at the moment are cogeneration plants. Cogeneration is a process of combining production of two useful forms of energy from one power source. In the most cogeneration systems, chemical energy is transforming in mechanical and thermal energy. Mechanical energy is than used for production of electrical energy, beside thermal energy used for generation of steam, heating of water or air. The main advantage of cogeneration process is higher level of utilization in comparison to standard power plants acting only for the production of electricity, and industrial systems for the purpose of steam production or hot water for technology processes. The main reason for construction of cogeneration plant is possibility of producing cheap electricity in comparison to electricity price in power network. Therefore, cogeneration plants are paying off themselves and beside that, they produce thermal energy. Cogeneration systems contribute to autonomy of industrial facilities in the case the main system for energy distribution collapses.

2.3.5.3. Small thermal systems and systems for areas heating

Category of small thermal systems comprise facilities for households heating or heating intended for public institutions and enterprises with total power of those systems up to 1.000 kW (1 MW). Total power efficiency in these facilities is about 72% do 78%. As a fuel in usage are wood, but also all other types of biomass. First heating plant with total power of 1 MW was opened in 1995 in Forest Directorate, branch – office Ogulin, and another one with same total power was opened in 2005 in Gospić. Future production of thermal energy from biomass is directed towards introduction of advanced technology as centralized thermal systems (systems of local heating units) in the great settlements and cities, and also small automated stoves feeder with split logs, pellets or splinters. Heating systems in local areas are usually systems for production of thermal power in a range from 1 to 10 MWh, and their construction is often in combination with existing heating systems running on an oil or gas.

2.3.5.4. Solid fuels (briquettes and pellets) Power exploitation of biomass can be performed in unprocessed or processed form; therefore biomass can be packed in a form of briquettes or pellets. On this way, bulk density increase considerably, and more quality fuel with higher thermal values is obtained and it is economically justified for fuel to be transported on a long distance routs. Pallets and briquettes are formed after compressing of chipped bulk biomass. Process of pellets production includes


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compressing of material on pellet machines forming pellets with 15 – 30 mm in diameter and 20 – 40 mm in length. For the purpose of briquettes production, stuff is compressed into cylinder with circular (with diameter range from 50 to 120 mm), or rectangular cross section. Pellets made from the wood mass are considered as a fuel of the future. Pellets are formed through compression from clean and pure wood biomass, without chemical bonding substances, resulting in a great thermal concentration of approximately 4,8 kWh/kg (18 MJ/kg).

2.3.5.5. Renewable energy resources legislation In accordance to adopted international obligations related to environmental protection and necessary adaptation of power sector to standards of European Union in relation to power management, Parliament of the Republic of Croatia has adopted the ‘Strategy of power development of the Republic of Croatia’ (OG, 38/02). With this strategy the goals of power policy are defined, as well as measures to be implemented, and the goals to be realized.

In the strategy of power development of the Republic of Croatia the Croatian model has been developed for reorganization and development of power sector, with its economy, legislation, and organizational, institutional and educational dimension. In accordance to already mentioned strategy, during 2004 new or changed and amended existing acts were brought (Power Act, OG, 177/04, Electric Energy Market Act, OG, 177/04, Energy Activities Regulation Act, OG, 177/04, Act on Air Protection, OG, 178/04).

The Ministry of Economy, Labour and Entrepreneurship has prepared the ‘package’ of sub act regulations related to renewable energy resources utilization, which is expected to be adopted until the end of the year. With those Acts all important questions for utilization of renewable energy sources will be defined.

These sub acts include:

Regulation on utilization of renewable energy resources (RER) and cogeneration

Tariff system for electrical power production from renewable energy resources and cogeneration (OG 33/07, of March 22, 2007)

Ordinance on incentives for production of electrical power from RER and cogeneration (OG 33/07, of March 22, 2007)

Ordinance on reimbursement of power production from RER and cogeneration

Ordinance on minimum share of electrical power produced from RER and cogeneration (OG 33/2007, of March 22, 2007)

Regulation on gaining the privileged status of power producer

Cost - benefit analysis implemented for RER in Croatia has shown that up to certain share of renewable resources in Croatia it is economically justified to support their usage and by that to avoid expenditures of environmental damage and impact on population health, which might occurred if the same quantity of energy is produced in power – plants using fossil fuel. The share will be pre-described by Croatian Government.

Concerning economy moment and potential of renewable energy sources in Croatia, there is a suggestion that in 2010 minimum share of RER will be about 1.100 GWh per year of electrical power, what would be a share of 5,8% in the structure of total power spending. That will be in accordance with EU directive on promotion of RER for the power production.

In accordance with Act on Environmental Protection and Energy Act, a Fund for the environmental protection and energy efficiency (OG, 107/03) has been established. From that fund it is planned to invest 60,55 million EUR (439 million HRK) in the project of energy efficiency and renewable energy resources till 2008. In 2006 6,1 million EUR (44 million HRK) were safeguarded for this project; of which 5,2 million EUR (38 million HRK) is paid from Fund, and 6 million HRK (827.586 EUR) from a World Bank grant.

Pursuant to decision of the Minister of Agriculture, Forestry and Water management in May 2005, the Working group for cooperation between departments in the field of biomass exploitation as renewable energy resources was established, with the task to prepare


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implementing regulations for utilization of biomass as a part of renewable resources utilization policy.

Croatia owns enormous natural potential of renewable resources, especially biomass. However, renewable energy resources do not have an important role in the country power policy and they cover only a small percentage of energy requirements. By development of technology for biomass utilization as energy or raw industrial material, in the future it can be possible to achieve significant benefits in the spirit of sustainable development. Regarding potentials of RER and efforts conducting by the Croatian government on implementing more incentive legislations, efforts on bringing strategic documents, law and sub law acts, and also because of the realization on participating in funds involved in pre accession programs to be expected, conditions are set for faster development of biomass exploitation technology.

2.3.6. Agriculture and environment Agricultural land covers a considerable part of Croatia's territory and agriculture is by far the biggest single influence on Croatian nature and the countryside. Agricultural activities affect both the quantity and quality of nature and the environment. Croatian agriculture has a substantial environmental impact on soil, water, and air, as well as on species, habitats and landscape diversity.

Therefore, Croatia for the first time will introduce agri-environmental measures in accordance with EU practice.

2.3.6.1. Development of an AE concept under the IPARD programme

2.3.6.1.1 General information about AE activities in Croatia Up to now, Croatia had no experience with the implementation of AE measures similar to EU measures, except from Organic farming. In June 2006 the EU CARDS 2003 programme financed a project assisting the Croatian government in preparing a sectoral analysis for the agri-environment (AE) sector. Aim of analysis was to help in the preparation of pilot agri-environment measures under the IPARD programme. Project was implemented in the period from June 2006 to September 2006 by Agrisystems Limited - an UK consultancy specialized in agricultural development and policy analysis. AE measures under the IPARD program will be used as an example for learning and training while implementing them on pilot areas, both for administration and the beneficiaries. Later on, since AE measures are obligatory in Rural development programmes for EU Member States, they will be spread over whole Croatian area.

Organic farming was not taken into account in the concept included as AE action under the IPARD programme. Those measures are financed by national resources (see chapter 3.1.1) and do not represent new activities. Therefore, they can not be used for gaining new experiences.

Due to limited resources and lack of experience and taking into account results of external sectoral analysis, it was decided to start with three pilot areas. As selection of pilot areas has to be made in a way that selected areas represent different geographical factors, natural conditions and type of agricultural production, after field visiting and analysis, selection was made not only based on environmental and biodiversity aspects but also local people and institutions which would participate in the pilot project.

2.3.6.1.2 Main challenges in regard to the implementation of the AE measure under IPARD

Croatia still has not minimum mandatory standards which define the baseline for the AE measure. “Code of Good Agriculture Practice” is being developed, taking into account conditions applicable for EU MS as referred to in Article 39 of the Council Regulation (EC) No.


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1698/2005 for RDP. It will enable Croatia to use these standards with as little adjustments as necessary for the AE measure under post-accession RD programme for EU Member States. Also, it will motivate Croatia, despite of a potentially close EU accession date, to start preparing and implementing the AE measures as early as possible to fully profit from the experimental approach taken under IPARD and to become sufficiently experienced in implementing the AE measures which will become obligatory.

Detailed steps necessary to accredit and implement the AE measure are presented in the following table:

Table 2-118: Timetable for accreditation and implementation of pilot AE measures Month and Year Description

1st quarter of 2008

Establishment of the Code of Good Agricultural Practice

Training of trainers (programme and materials)

Preparation of promotion and publicity campaign

Preparation of training methodology for potential beneficiaries

2nd - 3rd quarter of 2008

Establishment of a monitoring system for data gathering on the monitoring and evaluation criteria defined in the programme

Establish the premium calculations

IPARD programme modification to incorporate the missing information on CGAP and providing a final technical measure sheet for the pilot AE measure

4th quarter of 2008

Training of trainers

Training of potential beneficiaries

1st quarter of 2009 National accreditation of the measure

2nd quarter of 2009 Conferral of management

Training of potential beneficiaries

3rd quarter of 2009 - Implementation of the pilot AE measure

Source: MAFWM, DSDRA, 2007

2.3.6.1.3 Summary of the Agri-Enviroment Sector Analysis Report The results of the Agri-Enviroment Sector Analysis has shown that environmental impact of Croatian agriculture is much greater than usually believed.

The key stakeholders: farmers, advisors, local, regional and national administration and policy makers have hardly any information on AE. In addition, the prevailing attitude regarding agriculture, nature and environment, as well as farmers’ knowledge and skills can not be seen as an asset for the introduction of AE, due to the lack of information and experience.

Therefore, it was proposed to go for a two - site approach - to complement the site-specific AE pilot programme with a horizontal measure focused on information transfer and education. Information transfer and education has to address key stakeholders (farmers, advisors, nature conservationists and regional and local administration) in all Croatian counties and particular in proposed pilot sites. The site specific measures were designed to address two major problems of Croatian agriculture - decline of biodiversity on grassland and environmental degradation caused by inappropriate agriculture practices on arable land. The three site-specific measures proposed are (see details in chapter 5.2.1):

Grassland maintenance and protection in Velebit Nature Park with the objective of preventing further natural succession on species-rich grasslands; preserving or enhancing the current amount of valuable grassland habitats listed in the annexes of the Council Habitats (92/43/EEC) Directive; preventing landscape value declining by losing open landscapes and protecting karst biodiversity and fragile underground ecosystems.


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A grassland pilot measure in Lonjsko Polje Nature Park with the objective of restoring and maintaining wetland grassland as a habitat for endangered habitat types and species included in the annexes of the Council Habitats (92/43/EEC) and Birds (79/409/EEC) Directives.

An arable farming pilot measure in Zagrebačka County aimed at the reduction of existing and prevention of possible future negative environmental impacts arising from adverse agricultural practices as well as increasing biodiversity value on arable land and preserving its characteristic mosaic landscape.

2.3.6.2. Code of Good farming practices Croatia does not yet have a Code of Good Agricultural Practices (CGAP). This document makes the baseline of AE programme. It provides the reference on what is considered to be good farming practices in a country and what can be considered as additional services that farmers undertake for society and that should be paid for through the AE subsidies. Due to the lack of CGAP in Croatia it was not possible to clearly define the “pilot actions" going beyond the "mandatory standards" and make “bullet-proof” AE payment calculations.

In order to be able to implement pilot AE measures within IPARD programme MAFWM will prepare good farming practice guidelines directed toward chosen measures implementation. Pilot AE measures (see chapter 5.2.1) will be implemented in three defined area (Nature Park Velebit, Lonjsko polje and Zagreb County) and will be focused on grassland preservation and maintenance and arable land. Guidelines will include minimum technological standards in the sense of good agricultural practice as basis for evaluation of actions taken by voluntary participants in AE programme and calculation of payments. In the guidelines preparation process experts from CAEI and Agricultural faculty will be included. Planned time framework for elaboration of guidelines is beginning 2008 at latest.

Within the framework of PHARE 2005 project „Institutional Capacity Building and Support for Implementation of SAPARD/IPARD Programme in Croatia“ technical assistance related to CGAP and implementation of AE measures is envisaged. Project implementation started in October 2007.

After experience in implementation of AE measures is gained, both on administrative and beneficiary level, further elaboration of CGAP, in accordance with future AE measures, will be elaborated.

2.3.6.3. Efficiency of inputs Exceptionally high consumption of fertilisers and pesticides in Croatia on one hand and quite low yields on the other hand indicate inappropriate management practices. Nutrient and pesticide efficiency score low both from the environmental and economic point of view. Consequently, a substantial portion of these must be ending up in the environment, causing pollution and biodiversity decline. Nitrogen recovery by crops (efficiency) in the period 2001 - 2003 is assessed to have been 42%.

According to the Agency for Environment Protection, the annual nitrogen surplus of Croatian agriculture in the period 2000 - 2003 was 39.000 – 67.000t. However, a nitrogen budgeting calculation for Croatian agriculture in the period 2001 - 2003 suggests that this surplus is substantially higher about 124.000 t N/ha, resulting in a surplus of 155 kg N/ha of UAA. About 40% of this nitrogen is lost into water and 27% into the atmosphere, while 52% is retained in the soil. The huge disparity between these two calculations is most probably because the Agency for Environment Protection calculation is based on the crop N output on the non-existing 3,14 million ha of agricultural land resulting in a lower N surplus . Croatia's policies efforts on nutrient pollution control are focused on aligning national legislation with the EU. Regulations controlling negative environment impacts due to nutrients derived from agriculture are at an early stage of development. Croatia is currently preparing amendments on the Law on Fertilizers and Soil which will prescribe use of fertilizers "in accordance with the principles/code of good agricultural practice". Current Law regulates quality, quality control, labeling, trade and inspection of livestock manure, fertilizers and soil improvers. The Ordinance on the Protection of Agricultural Land from Contamination by Harmful Substances wich


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includes some elements of CGAP, prescribes maximum allowed quantities of liquid manure that can be spayed per year (60 m³/ha). It defines ban on liquid manure applicatrion in certain conditions (i.e. on agricultural land covered by snow or frozen land, in coastal zone, at watercourses up to 10 m distance, etc). The Law on Agricultural Land prescribes measures for protecting land against adverse agricultural practice, regulates the application oh harmful substance to the soil and enquires that agricultural land is well managed.

The transposition of EU nitrate directive into national legislation is planed for 2008.

Table 2-119: Nitrogen budget of Croatian agriculture in period 2001 - 2003

Average 2001 - 2003

2001 (t) 2002 (t) 2003 (t) t % kg N ha UAA

kg N ha arable land

N inputs

Inorganic fertilisers 124.341 122.151 110.509 119.000 55 110,5 148,4

Livestock manure 47.604 47.385 57.751 50.913 24 47,3 63,5

Biological nitrogen fixation 30.410 28.002 25.905 28.106 13 26,1 35

Atmospheric deposition 14.006 16.161 10.774 13.647 6,3 12,7 17

Seeds and planting material 3.850 3.650 3.750 3.750 1,7 3,5 4,7

Organic fertilisers 0 0 0 0 0 0 0

Total 220.212 217.349 208.689 215.417 100 199,9 268,6

N outputs

Harvested crops 72.726 81.662 53.417 69.268 76 64,3 86,4

Harvested grass forage crops 22.496 25.485 17.352 21.778 24 20,2 27,2

Total 95.222 107.147 70.769 91.046 100 84,5 113,5

N efficiency % 43 49 34 42 - - -

N surplus

Total 124.989 110.202 137.920 124.371 58 115,4 155,1

Losses

Loss to atmosphere 32.558 34.289 34.280 33.709 27 31,3 42

Loss to water 52.365 36.713 58.331 49.136 40 45,6 61,3

Retained in soil 40.066 39.201 45.310 41.525 33 38,5 51,8 Source: DSDRA, AE study

2.3.6.4. Air and climate In the period 2001 - 2003 Croatian farming emitted on average 3,8 Mt CO2 equivalents per year and the damage to the air caused by greenhouse gases and atmospheric pollutants is assessed to have been 357 million EUR per year. However, due to the transboundary nature of the pollutants, only 35% of this damage is taking place in Croatia.

Croatia has signed Kyoto Protocol on 11th March 1999 as a 78 signatory country. On the 12th meeting of Conference of parties in the Framework Convention of UN in relation to climatic changes (UNFCCC) in November 2006 in Nairobi, decision was brought by which Croatia is


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regarding specific conditions upon green - house gasses emission before and after 1990, and which is emerging from the power system structure within the borders of ex Yugoslavia. Pursuant to that decision, Croatia has been allowed to increase an amount of 31,7 Mt of CO2 of total emissions of green house gasses in 1990 for additional 3,5 Mt of CO2, because of establishing rate of the CO2 emissions in the basic year. Adoption of this decision shall have enabled the beginning of the ratification procedure of Kyoto protocol in Croatian Parliament in April 2007, by which the Republic of Croatia will have accepted an obligation task on decreasing of green - house gasses emissions for 5% in the first period required from 2008 to 2012, concerning base year. Croatia in harmony with National Strategy for the Environmental Protection and with National Plan for Interacting with the Environment (OG, 46/02) is implementing measures for decreasing of emissions of the green - house gasses with the purpose of fulfilling obligations established in Annex B of Kyoto Protocol.

The ammonia emissions originating from agriculture represent 60% of total ammonia emissions in Croatia, while nitrous oxide makes up 53% and methane 21% of total emissions.

Livestock Breeding Law (OG 70/97) and amendments to Livestock Breeding Law (OG 132/06) are stipulated obligation for proper procedure with stable manure. Therefore, Directorate for Agricultre at MAFRD plans to adopt, during 2008, an Ordinance of Good Agricultural Practice on Manure Use and stipulate Codes of Good Agricultural Practice which shall be respected by all farmers. It will prescible tehnical-tehnological conditions that have to be fulfilled in objects for collecting of manure (dunghill, manure pit, pits for manure and lagoons) and by equipment for processing and handling of manure.These measure are expected to contribute to reduction of ammonia emissions. In the IPARD measuer „ Investments in agricultural holdings to restructure and to upgrade to Community standards“ investment will be allowed in milk, meat and egg sector with the condition of manure management compliance with Community standards.

2.3.6.5. Water Croatia lacks a comprehensive system of water quality monitoring, resulting in inconsistent and poor data. While the quality of fresh water is monitored to a degree by state-owned company Croatian Waters, there is no systematic monitoring of the coastal water - only some basic testing is being practiced for the region of Dalmatia. A comprehensive database of information on nitrogen levels in lakes is not yet available and systematic groundwater monitoring exists only in the city of Zagreb. In addition, both Croatian surface and drinking water quality is assessed using fewer parameters than recommended by the World Health Organization or signed conventions. Statistics on the share of agriculture in total soil and water pollution are not available.

Data from the Croatian Water Resources Management Plan indicate that agriculture accounts for more than 90% of the total nitrogen pressure on Croatian water resources each year. Croatian agriculture threatens water resources primarily through the use of atrazine and nitrogen applications above 150 kg N/ha. Both atrazine and nitrates are regularly found in excessive concentrations in Croatian water resources.

The nitrogen content of the major rivers of the Danube basin, which is also Croatia’s most intensive agricultural area, fails to meet the prescribed quality for the rivers. The eutrophication process has been enhanced in most Croatian lakes and their phosphorus content is far above the prescribed parameters for the second water category, ranging from category III-V. In 2000 only 30% of Croatian spring water (largely reflecting the quality of the ground water) met prescribed nutrient content standards. An earlier report from the World Bank, similarly to Zessner, points out that 51% of the nitrogen loss to the surface water of the Danube Basin area of Croatia is derived from agriculture. Vitale et al., performed a detailed survey of the existing water quality analysis for the Drava river in the period 1992 - 2000. Both nitrates and nitrates had been increasing over the time, with nitrates often exceeding the guideline values.

In the period 2000 - 2003, at the vast majority (in the range of 64 – 74%) of the monitored locations the water exceeded the prescribed nutrient content for the given water category. A particular concern is the situation with the first category water. This includes all groundwater, as well as spring and surface water that should be drinkable in its natural state or after disinfection. In the period 2000 - 2003, 82 - 95% of locations containing such water exceeded


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the MAC for nutrients. In a recent survey, 7 out of 20 water samples taken from the springs in Velebit Nature Park (area that is believed to be virgin nature) were found not to meet drinking water criteria.

Croatian Waters measures the presence of DDT and lindane but does hardly any herbicide monitoring. Of the water samples tested in 2000, 41% contained DDT and 12% lindane in higher than allowed concentrations, while other organochlorinated pesticides remained within the prescribed limits. The situation in 2001 was much better: DDT was found in 14% of samples and lindane in only 5% of samples, most probably due to its ban in mid 2001. The reports for 2002 and 2003 do mention problems with both DDT and lindane, but unfortunately do not present aggregated data at the national level.

Following the actions that are related to the implementation of the WFD (and other water directives) existing water quality monitoring will be adjusted/improved following the requirements of the related EU directives.

Existing water monitoring consist of the monitoring network to control surface waters, and groundwater. Wastewater discharges are controlled (monitoring) based on the water permits (for discharging of the waste waters). Water permit is issued by Hrvatske vode (water management agency) for each facility that is obliged (specified under the Water Act). In water permit water quality parameters, MAQ29 and frequency of sampling is defined. Sampling and analyzing is done by authorized laboratories (authorization is give by ministry of Agriculture, Forestry and Water Management).

2.3.6.6. Soil More than 90% of Croatian soils are subject to various degrees of erosion, but on approximately 70% of the area this process is still within “tolerable limits”. The most critical situation is in the region of central Istria where erosion rates as high as 100 - 200 tons of soil per hectare of agricultural land have been recorded. The soil erosion from agricultural land in Croatia is estimated from 3,8 million tons to 4,3 million tons.

The most fertile Croatian soil types (chernozem and eutric brown soil) have in the last hundred years of cultivation lost 50 - 70% of soil organic matter and the humus content has dropped from 4 – 6% to 1 - 2% on average. The most important Croatian agricultural soils have lost 2,1 – 2,8% of soil organic matter in the last 50 years or 2,5% of the SOM over the last thirty years. Reclaimed soils have in the period of about 20 years lost humus levels from 6 – 10% to 4 – 5% and most Croatian agricultural soils currently have a humus level of 1,5 – 2,5%.

Soil compaction is another pronounced problem in Croatian soils and the reported loss of air/water porosity is in the range of 3 – 9%. Data on soil pollution with pesticides is scarce, while heavy metals are reported to be within tolerable limits.

29 MAQ - Maximum Allowoble Quantity


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According to the article 4. of the Agricultural Land Law (OG 66/01, 87/02, 48/05 and 90/05 see page 313) in order to protect agricultural land from contamination, controlling and permanent monitoring of the level of contamination of agricultural land with noxious substances (hereinafter refered as: permanent monitoring) has to be implemented including establishing of the level of contamination of agricultural land ,permanent monitoring of the condition of agricultural land, and establishing of information system for contaminated agricultural land and establishment of the permanent monitoring has to be performed by Institute for Soil, there is an intention to start the development through the EU funded (LIFE III PROGRAM) project „Development of the Croatian soil monitoring programme with a pilot project“ (LIFE05 TCY/CRO/000105). The Project has to be implemented by the Croatian Eviroment Agency and Faculty of Agronomy in close cooperation with the Ministry of Agriculture, Forestry and Water Management, Institute for Soil and others.

2.3.6.7. Biodiversity Croatia is famous for its nature and is among the biologically richest countries in Europe. At the European level, it ranks second for the number of fish species, third for the estimated number of invertebrates, fifth for number of reptiles and seventh for the number of vascular plants and mammals. When the number of species is expressed in relation to land area, Croatia ranks third for the number of plant species per area and fourth for the number of vertebrates per area. Croatia has an unusually high concentration of endemic species, particularly in the Karst (calcium carbonate limestone) region. Approximately 6% of the taxa of flower plants and algae (of a total of four hundred and thirty nine) are endemic to Croatia. Out of 4.924 known plant species in Croatia, 514 (10,4%) are endangered. But in spite of this, there are only 44 protected plant species, while an additional 92 deserve strict protection because they are seriously threatened. It is estimated that Croatia harbours some 56.121 animal species (808 are endemic), of which only 39% have been identified.

The high biodiversity in Croatia is enhanced by its location in quite different climatic, (geo) morphological and hydrological zones: the Danube floodplain, the Karst limestone zone, the Dinaric Alps and the Mediterranean Coast with its unique islands. A substantial part of Croatian biodiversity and many protected natural areas were devastated during the recent war and are still suffering from this destruction.

Although many valuable species are in decline, some of these can still be found in agricultural habitats. According to the Biodiversity Strategy, agricultural habitats harbour many rare and threatened species. The wild plants include the Corn Cockle (Agrostemma githago) that has disappeared from the areas of intensive agriculture (Slavonia and Baranja) and the Tulip (Tulipa praecox), which is locally limited to vineyards of the island of Korčula. Oriental Knight’s Spur (Conosolida orientalis) and the White Poppy (Papaver dubium ssp. lecoquii var. albifolium) can be found only in the eastern part of Croatia. Croatian arable land and grassland still host some birds of important European conservation status such as Corncrake (Crex crex), Partridges (Perdix perdix) and Quails (Coturnix coturnix), Stone-Curlews (Burhinus oedicnemus) (Krk and Pag islands), Shrike (Lanius minor) and Calandra Lark (Melanocorypha calangra) (Mediterranean areas). Furthermore, some of the rarest Croatian breeding birds, such as the Imperial Eagle (Aqueila heliaca), Lesser Kestrel (Falco naumanni), Redfooted Falcon (Falco vespertinus) and Saker Falcon (Falco cherrug), as well as the Common Redshank (Tringa totanus) which nests only in two places in Croatia also live in agricultural habitats.

Croatian grasslands are habitats for numerous endangered plants, among which the most important are the whole family of orchids (Orchidaceae) and exemplars of diverse other families or genera such as Anemone, Arnica, Daphne, Dianthus, Edraianthus, Eryngium, Gentiana, Iris, Lilium, Ligularia, Linum, Narcissus, Primula, Scilla, Veratrum, etc. The most important rare mammals living on Croatian grasslands are hamsters (Cricateus cricateus) and mound-building mice (Mus spicilegus) and among endangered species, the European ground squirrel (Citellus citellus) and lesser mole rat (Nannospalax leucodon). Grassland habitats in Croatia have a rich fauna of grasshoppers and butterflies. The majority of its 187 species of daily butterflies can be found in meadow habitats. Two genera are particularly important: the endemic subspecies and species of the arguses (genus Erebia) and the myrmecophyllous


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genus of large blue Maculinea. These are either endemic taxa or species endangered at the European level.

During the last 50 years, a major part of Croatia's lowland grassland has been converted into arable land. Extensive land reclamation and regulation of watercourses has left hardly any marshy and wet grassland. They are now very extensively and only temporarily used for grazing and mowing. If this trend continues, lowland grassland in Croatia will entirely disappear. Formerly diverse swampy and wet grasslands (communities Caricetum, Deschampsietum, Molinietum) are turning into less wet areas, predominantly communities of tall oat grass (Arrhenatheretum). This results in a significant decline in biodiversity.

Croatian karst ecosystems are widely acknowledged not only because of their plant and animal biodiversity, but also because their fragile hydrological and geological features (caves, lakes, waterfalls, “underground rivers”, limestone phenomena, etc.). These subterranean and terrestrial karst ecosystems are interconnected and dependent upon the maintenance of a delicate balance between relief, hydrology, climate and vegetation. Karst regions account for more than half of Croatia's territory.

The major cause of Karst grassland degradation is depopulation and changes in traditional agricultural practices in mountainous regions of Croatia (Gorski Kotar, Lika, Velebit, etc.) where cattle breeding used to be much more developed. Without grazing and regular mowing large areas are increasingly overgrown by woodland. Similar processes are ongoing in Mediterranean karst areas on littoral dry grassland and rocky pastures. Although due to the dry and hot climate the natural succession here is rather slow, the long-term result is the same: shrubby vegetation is suppressing valuable grassland species adapted to survive on sparse soil or in holes between rocks with a shortage of water.

Protected natural areas in Croatia cover approximately 10% of the country (excluding territorial seas) and are made-up of 450 protected sites. The best known among these are the eight national parks (IUCN category II): Plitvice Lakes, Paklenica, Risnjak, Mljet, Kornati, Brijuni, North Velebit and Krka and 2 strict nature reserves (IUCN category I): Hajdučki and Rosanski Kukovi and Bijele and Samarske stijene. Several of these have been listed as internationally valuable natural areas. The Plitvice Lakes are included in the UNESCO World Natural Heritage List and the Velebit Mountain is in the UNESCO MaB (Man and the Biosphere) scientific programme. Four areas are included in the Ramsar Convention List (Kopački rit, Lonjsko polje, the lower Neretva and Crna Mlaka).

Appropriate agricultural management is essential for the biodiversity and wildlife of many Croatian protected natural areas. However, most of these areas either are without significant agricultural production or depopulated (or sometimes both). Therefore, agriculture-dependent biodiversity is in decline. A particular threat is the absence of moving and grazing operations in protected natural areas. Shrubs and other pioneering vegetation take over vast areas and thus diminish the biodiversity of the rich meadows and pastures. Neglected or abandoned land or land that has become afforested or overgrown by scrub decreases the biodiversity value of grassland. Besides, such land is at risk of fire that can arise if excess biomass is not subject to grazing pressure. Therefore, the forest area in Croatia has been gradually and continuously increasing at the expense of species-rich grassland. This trend is worrying and has to be stopped. The encouraging news is that the remaining (agricultural) population in protected areas is becoming increasingly aware of the problem. The same goes for the management teams in protected areas of nature. These have started to work on management plans and prescriptions for specific agricultural measures.

Although the existing Croatian regulations limit the application of agricultural inputs, notably pesticides and fertilisers, as well as some other agricultural practices in nature-protected areas, they are not precise enough. Thus, their interpretation is quite liberal and monitoring and control over farming protected areas is moderate.

Farmland, especially grassland and meadow orchards are very biodiversity rich habitats, hosting numerous valuable species. Agriculture also shapes the landscape and influences its quality and character.

The changes in farming practice that have taken place during the last decades are mainly a result of intensification of farming. These comprise the specialization of production, a decrease


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in traditional farming, the use of high quantities of industrial fertilisers and plant protection preparations, narrow crop rotations, changes in the types of crops grown, loss of field boundaries, etc. Intensive farming increases environmental pressures including soil erosion, loss of organic content, water pollution and a decreased number of wildlife species. In Croatia both intensive and extensive agriculture have an adverse impact on landscape, habitat, species and genetic diversity. Intensive use of agri-chemicals, as well as reduction of the genetic pool caused by narrow crop rotations, lack of mixed-cropping and the use of limited number of breeds and varieties have had a significant negative impact on biodiversity. Drainage of wetlands (among most important in Europe) and their conversion to arable land, as well as removal of hedges and trees from agricultural land has had a negative biodiversity impact, too. Although Croatia has numerous local breeds and crop varieties, these have been replaced by modern stock that is likely to better suit the demands of the modern market. Some less favoured areas and less-productive breeds, and crop varieties have been neglected or left out from production all together. All this has resulted in monotonous landscapes, and a decrease in genetic, species and habitat biodiversity.

The narrow crop rotation that is practised by most Croatian farmers and co-operatives is considered to have a negative impact on soil fertility and biodiversity, although small farms with fragmented plots provide a good starting position for nature protection. In the period 1945 - 1990, huge grassland and wetland areas were reclaimed and converted to arable land. During this operation a thousand kilometres of hedgerows, stonewalls and farm woodlands were removed, that used to be part of the traditional Croatian landscape. Unfortunately, many private farmers have also lost touch with nature and have eradicated valuable habitats and landscape elements from their farms, too. Besides, some less favoured areas (e.g. terraces and steep slopes), less-productive breeds, and crop varieties have been neglected or left out from production all together. All this has resulted in monotonous landscapes of some regions, and a decrease in genetic, species, habitat and landscape biodiversity.

Land use has been strongly influenced by the process of economic transition and the exodus of the rural population caused by the war. The dissolution of a number of large state co-operatives and the failure of the state-planned economy resulted in the abandonment of vast areas of land.

Due to the lack of livestock both organic soil matter and grassland biodiversity is in decline in Croatia. The stocking density is particularly low in areas of high natural value. This results in reforestation and the loss of species-rich grasslands and the open landscape important for migratory birds and many other species. Under-grazing also prevents the beneficial influence of animals on biodiversity, such as species selective grazing, seed dissemination, re-rooting of pasture flora, maintenance of soil organic matter, pest and disease control, etc. According to some estimates, in the period 1992 - 2002, bush re-encroachment has taken place on approximately 300.000 ha. However, this figure seems to be severely underestimated, as in the same period more than 400.000 ha of arable land alone remained uncultivated and exposed to invasion by bushes. Most animals in Croatia (with the exception of sheep) are kept in stables all year round. This practice together with decline in the number of animals does not allow for efficient utilisation of grassland. This has impoverished biological and landscape diversity, threatening the existence of numerous plant and animal species associated with grassland ecosystems and/or management practices. This problem is particularly pronounced in the biodiversity-rich karst and mountainous regions.

2.3.6.8. Observed climate changes Croatia has adopted the ”Second, Third and Fourth National Report According to Framework Convention of UN on Climate Changes on February 6, 2007. Data presented are based on that report.

Temperature and precipitation variations recorded in Croatia in the 20th century were identified by processing data for the periods 1901 - 2000 and 2001 - 2004 at five meteorological stations: Osijek (continental climate), Zagreb - Grič (continental climate under a mild maritime influence), Gospić (continental climate of highland Croatia under a strong maritime influence, 1924 - 2004), Crikvenica (maritime climate of eastern coast of the northern Adriatic) and Hvar (maritime climate of the Dalmatian area).


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Both globally and in Croatia, the period between 1991 and 2000 was the warmest decade of the 20th century. Among ten warmest years five were recorded in Zagreb - Grič, three in Osijek and Hvar and two in Gospić and Crikvenica. Including data for 2000 - 2004 it may be noted that 2002 falls under the 10 warmest years across the entire area of Croatia, the years 2001 and 2003 in all parts of Croatia excepting eastern lowland part, and the year 2004 on the island of Hvar. In the period 1901 - 2000 the rise in the mean annual temperature recorded on the coast was higher than on the mainland. The only exception is Zagreb - Grič where heat island effects of urban environment cannot be excluded. The greatest contribution to warming in the coastal part is from temperatures of the warm season: autumn on the island of Hvar and summer in Crikvenica, while in the mainland areas the winter temperatures increased most.

Agriculture is an activity generally suffering most from the climate change. Given the natural and geographical special features and diversity of Croatia, in climate change scenarios account should be taken of the predominant way of using space in certain parts of Croatia.

The predicted increase in the annual number of active vegetation days (temperature above 5°C) in lowland areas of Croatia by 35 - 84 days and the extension of the period with a temperature above 20°C by 45 - 73 days will have a positive effect on the increase in yields and quality of agricultural crops.

The total amount, distribution, form and intensity of precipitation are highly important for the soil water balance. If the soil is not irrigated during a dry period, the yields of crops grown will drop. In Croatia droughts occurs every three to five years on average, and may, depending on the intensity and duration, cut the yields of various crops by 20 - 92%. Severe droughts were recorded in 1992, 1995 and 1998, and those of the years 2000 and 2003 were proclaimed natural disasters.

Climate changes affect the physiology and interactions between plants causing changes in their distribution areas (areals) in terms of increasing or decreasing the area of a species or a community and shifting the areal (horizontal and vertical migration). The migrating speed of areals is estimated at 2,1 km/year under a milder and 3,9 km/year under the extremer scenario.

The shift of vegetation belts of specific climate zones is expected to be accompanied by the disappearance of poorly adaptable species, while the invasion dynamics of allochthonous species may increase and those more aggressive may force the autochthonous taxa out of their natural habitats.

The success of adapting to life in new habitats resulting from climate changes is hardly predictable. The ideal case of the species survival, including a migratory shift, is only sometimes realistic due to isolated ecological niches (insular populations, types of watercourses, etc.), and natural and artificial barriers.

Aquatic and wetland habitats are especially important at the national and international level. They provide and/or participate in a number of critical ecological functions such as water regime regulation and creation of the habitat for a number of stenovalent plant and animal species. Since particularly dependent upon the water regime, wetland habitats will be vulnerable to changes in the amount and distribution of precipitation, including secondary effects on related species.

On the basis of Air Protection Act (NN 178/04), the Government of Croatia has enacted Regulation on Monitoring of Greenhouse Gas Emissions in Republic of Croatia (OG 1/07), in December of 2006. Regulation regulates establishment of the National system for the estimation and reporting on anthropogenic gas emissions by sources and removal of greenhouse gas chasms which are not being monitored on the basis of Montreal Protocol. Monitoring of greenhouse gas emissions is conducted through the following components: National system according to the Decision 19/CMP.1; National registry of greenhouse gas emissions; Report on policy and measure for mitigation of climatic change effects implementation; Report on projections of greenhouse gas emissions and National report according to the United Nations Framework Convention on Climate Change (UNFCCC).

On the basis of Air Protection Act, in October 2007, a proposal of Greenhouse Gas Emissions Trading Scheme Regulation was created. By this Regulation shall be established trading system rights on greenhouse gas emissions in Croatia, in accordance with the Directive


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2003/87/EU. Regulation will be applied starting from 2010, when the system will be connected with trading system rights on greenhouse gas emissions of European Union.

Croatian Parliament has adopted the Kyoto Protocol Validation Act with to the United Nations Framework Convention on Climate Change (OG - International Agreements, No. 5/07) on April 27, 2007. By Kyoto Protocol Ratification the Republic of Croatia has as a party from Protocol Appendix B accepted the obligation to limitate quantitatively greenhouse gas emissions in the period from 2008 to 2012 to 95% from the emission quantity in the basic 1990.

In January 2007, the National Strategy for UNFCCC and Kyoto Protocol Implementation with the Action Plan draft has been finished and issued in June of 2007. This document is integral part of the Plan for air protection and air quality improvement in the Republic of Croatia for the period of 2008-2011, and its enactment is planned for the other half of 2007.

Main goals of the implementation of project LIFE04 TCY/CRO/029 „Qualification for implementing the United Nations Framework Convention on Climate Change and Kyoto protocol in the Republic of Croatia (January 2005-October 2007) were establishment of institutional, legislative and organizational qualifications, and improvement of upbringing, education and public awareness of climate changes.

2.3.6.9. NATURA 2000 Legal framework regarding establishing of the NATURA 2000 network in the Republic of Croatia is given by the Nature Protection Act (OG 70/05, see page 319) and relevant implementing regulations.

Through the LIFE III project – Setting up of National ecological network (CRO-NEN) which was carried out in the period from 2003 to 2005 by the State Institute for Nature Protection, the Draft National ecological network was drawn up as a basis for adoption of a Regulation of the Government of the Republic of Croatia on the National ecological network. The Ministry of Culture as a central administrative body responsible for nature protection in the Republic of Croatia, has prepared a draft of this Regulation which is now undergoing the process of consultations with other relevant sectors (like physical planning, agriculture, forestry and water management). Proposal of the National ecological network is composed of sites important for conservation of species and habitat types on the national and international level, including potential NATURA 2000 sites.

Through the Emerald network project, the State Institute for Nature Protection continues in 2006 its work on collection of new information required for evaluation of potential NATURA 2000 areas according to the criteria referred to in Annex III to the Habitats Directive, and on creation of NATURA 2000 database.

The final proposal of NATURA 2000, including consultation process, is expected to be formulated through the PHARE project NATURA 2000 in Croatia (2006 - 2008) by the end of 2008, when the Government of the Republic of Croatia is expected to adopt the Regulation on international ecologically important areas, which will designate SCIs.

Upon designation of SCIs, the activities on establishment of the necessary conservation and management measures within the meaning of Article 6 of the Habitats Directive will be intensified. It is expected that a part of NATURA 2000 area will be protected in some of the categories pursuant to the Nature Protection Act, involving adoption of a management plan specifically designed for each individual site. Some of the sites will not be specially protected, instead the conservation and management measures will be incorporated into other relevant sectoral documents (e.g.: forestry – forest-management plans, water management – water-management plans, agriculture – Agri-environment programme).

A significant number of sites that represent potential NATURA 2000 sites have already been protected and are under management (public institutions for management of protected natural assets) – ¾ of the area of protected sites relate to national parks and nature parks which are under management and in respect of which country plans and ordinances on internal rules have either been adopted or are in the process of adoption. There is still no management plan in respect of any site, but several such plans are being developed (National parks: Risnjak, Plitvice lakes, North Velebit and Paklenica and the nature parks Kopački rit and Velebit) or their


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development will commence in the course of this year and the next year (the nature parks the Lonjsko polje and Vransko Lake, possibly other nature parks as well). The sources of funding for all the aforementioned management plans will be co-funded by international projects (GEF/WB, EK-LIFE and PHARE). It is envisaged that management plans will be in place in respect of all 18 national parks and nature parks by the year 2010. Management plans have also being developed in respect of two small potential NATURA 2000 sites, which have been financed by the European Commission's CARDS programme.

Article 36 of the Nature Protection Act (OG 70/05, see page 319) prescribes obligatory assessment of acceptability of planned projects to nature in respect of the sites of the National ecological network, which also includes potential NATURA 2000 sites. The mechanism will be prescribed in detail by the Ordinance on assessment of acceptability of planned projects to nature, which is now in the final stage of adoption.

2.3.6.10. Environment risks related to the food processing industry

The food processing industry is one of the greatest producers of industrial waste waters. Of the total of 52 million m³ of waste waters per annum approximately 30%, i.e. 15 million m³ of waste waters is produced by the food processing industry. Around 76% of this quantity is drained into the sewage, and the rest into the nature. Around 70% of waste waters produced in the food processing industry drained into the sewage are subject to previous processing. In some cases waste waters pose a threat to the sensitive karst ecosystem in protected areas such as Lim Channel. That is an additional problem for Croatia, especially due to the need for the construction and modernization of city facilities for waste water processing. At present, only 12% of city waste waters in the Republic of Croatia are completely processed (physically, chemically and biologically). The largest part of even 52% is processed only physically.

Thus said it is clear that the whole IPARD programme, as a main objective through the investments within all measures as main elegibility criteria has to respect protection of environment (i.e. manure maneagement, environmentaly friendly technique, etc.). Where applicable, the investment will respect the environment issues at the beginning of investment but certainly they will all comply with related Community standards at the end of investment.

2.3.6.11. Environment risks related to fish - farming Sea fish farming, shellfish farming and crustacean farming has been constantly rising. As far as the environmental requirements are concerned, tuna fish farming has caused concerns in local areas due to its negative influence on the environment. Ecological inspections of fish farms which started working in the year 2001 have become even more frequent. Furthermore, national standards of decreasing potentially negative influence on the population are implemented. Surveillance of activities performed on shellfish and crustacean farms has shown a progress in the ecological situation since the farming activities have been brought in line with the national regulations.

2.3.6.12. Description of AE programme The design of any AE programme should relay upon reliable data and assumptions. In the case of Croatia some vital data necessary to make a sound selection of the AE sites and development of pilot AE measures were either missing or of limited reliability. The following data and assumptions were particularly problematic:

Land use and utilised agricultural area. The agricultural land area of protected natural sites is usually split among several municipalities and their land use data either do not exist or are controversial. Because of this it was very difficult to assess their actual UAA and the potential uptake in the AE pilot programmes.

Gross-margin calculations. Croatia has no reliable gross-margin calculations of agricultural commodities. These are essential for determining income foregone and additional costs that might occur because of practising AE measures. Lack of GM calculations makes it difficult at


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this stage to make sound estimates for the AE premiums. A set of agricultural GM calculations is available in a publication of the Croatian Agricultural Extension Service (CAEI). These calculations are not the result of FADN (Farm Accountancy Data Network) or systematic surveys but of a theoretical assumption of the economic results that could be obtained if Croatian farmers implemented good management practices and applied optimally agricultural inputs. However, their value is in existing methodology of calculating incomes and costs of agricultural production, which can be adjusted and used for the purpose of AE premiums calculations. Trained experts of CAEI will be engaged in the process of establishment of GM calculations and premiums regarding specific locations (pilot areas) and AE measures included in IPARD programme.

2.3.6.12.1 The size of AE pilot areas Most AE pilot measures are site-specific. In many cases these are well defined micro locations exhibiting specific biodiversity features (e.g. one particular bird or orchid species in need of protection) or encountering specific environmental problems (e.g. water harvesting area polluted by nitrates deriving from agriculture). The magnitude of the sites usually ranges from a few up to a few hundred ha. Applying this approach in Croatia would lead to problems. The average farm size in Croatia is just 2 - 5 ha (depending on the assessment methodology) and divided in 5 - 10 plots. A 30% uptake in a site-specific pilot consisting of for instance 100 ha of rich meadows would require the involvement of about ten farmers. The AE hectare: beneficiary ratio in Croatia is most likely to be about 3:1. The situation in other countries is completely different. The average farm size of the EU-15 is approximately about 20 ha. The average farm size in the Czech Republic is about 300 ha, while 90 % of the farmland in the Slovak Republic is farmed by farms bigger than 1.000 ha. In order to achieve an AE uptake of 1.000 ha only 1 farm is needed in SK, 3 farms in CZ, 50 farms in EU-15 and some 300 farms in Croatia. The UK AE programme for instance runs a special AE scheme for small-scale farms, so called Small Units Prescription. But its “small-scale” AE programme is designed for farms that can be as big as ten ha, which is still about 2 - 5 times bigger than an average Croatian farm that is supposed to take part in the agri-environment programme.

Croatian Authorities will make maximum efforts for usage of limited EU funds for agri-environmental measures in order to gain as much as possible practice in implementation of such actions. Expected uptake target in the pilot areas must be as realistic as possible. In order to ensure the involvement of the targeted land area under AE measures (and thus in order to avoid the failure of the pilot AE programmes), the potential AE pilot area must be big enough, allowing the uptake of a decent number of ha even in case most farmers are not interested in participating.

2.3.7. Public services in agriculture and food industry

2.3.7.1. Veterinary institutions Veterinary Directorate of the MAFRD performs tasks related to animal health protection and ensuring the health correctness and harmlessness of products of animal origin, furthermore, it enforces and coordinates risk management activities in the area of food safety, it enforces other veterinary public health measures, it promotes animal reproduction, it defines the organization and monitors the functioning of the veterinary service and veterinary inspection, it determines and implements veterinary environment surveillance measures, it supervises the production, transportation and use of veterinary drugs and veterinary-medical products, it takes care of the animal welfare by determining and controlling the manners of their keeping, accommodation, feeding, protection and relationships towards animals, and it is in charge of the control of the internal and international traffic of animals and products of animal origin.

Croatian Veterinary Institute (CVI) offers laboratory services for official control of foodstuffs and food of animal origin. The Central veterinary institute is situated in Zagreb, while four other regional veterinary institutes are situated in Split, Vinkovci, Rijeka and Križevci respectively.


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The Faculty of Veterinary Medicine (FVM) performs scientific and educational activities, as well as clinical and terrain diagnostic tasks, certain laboratory analyses for the official veterinary control, it also evaluates health correctness and quality of the food and of other products of animal origin.

The Centre for Reproduction in Livestock Breeding (CRLB) of the Republic of Croatia is a body responsible for the transfer of knowledge and technology in the field of reproduction, breeding and increasing the animal fertility, as well as for the distribution of animal markings needed for animal identification and registration.

Croatian Veterinary Chamber (CVC) is a professional veterinary association made up by the veterinary medicine doctors; it is responsible for issuance and extension of work permits (licenses), planning and surveillance of the systematic and continuous professional training of its members.

Authorized veterinary organizations are legal persons with public authorities. In Croatia there are 161 authorized veterinary organizations. Such organizations perform animal health protection, as well as veterinary health checks and controls in accordance with the Veterinary Act.

Veterinary inspection of the Republic of Croatia is organized by the principle of vertical subordination. Inspections at the central level are performed by the state veterinary inspection of the Inspection Department of the Veterinary Directorate within the MAFRD.

At the local level the inspections are performed by the county veterinary inspectors, i.e. by the city veterinary inspectors. The organization of the county veterinary inspection follows the administrative division of the Republic of Croatia in a way that a Veterinary office has been established in each county having, as a rule, one or more branch offices. The City of Zagreb, as a separate administrative unit, has its own separate Veterinary office. Veterinary and health checks and controls in facilities under veterinary-health surveillance are performed by authorized veterinarians. All inspectors (state, county/city, border inspectors) are civil servants, while the authorized veterinarians are employees of authorized veterinary organizations in private ownership.

2.3.7.2. Croatian Livestock Centre The main activity of the Croatian Livestock Centre (hereinafter: CLC) is promoting livestock production, breeding and selection. These activities are laid down by the Regulation of the Government of the Republic of Croatia concerning the establishment of the Croatian Livestock Centre30.

CLC activities are as follows: breeding, selection and improvement of genetic quality of domestic animals; registration of all marked animals in the Republic of Croatia; production

30 Regulation of the Government of the Republic of Croatia concerning the establishment of the Croatian Livestock Centre, Official Gazette number 64/94, 11/97, 47/99 and 78/03


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testing of all breeds and species of domestic animals; breeding and selection data processing and registered animals breeding values assessment; issuance of certificates of origin for all bred animals on the market; management and coordination of the breeding programme for each breed; protection and preservation of all domestic and protected breeds and species in the Republic of Croatia; support to establishment of livestock breeder associations; bred animal trade organization; livestock services organization; production of certain species and breeds with the aim of breeding programme implementation and breeding results and selection measures control; cooperation with scientific institutions in promotion of breeding and selection measures and in improvement of genetic quality of all breeds and species; processing of applications for stimulation of the livestock production and administrative control of the implementation; quality testing of livestock products, i.e. fresh uncooked milk in the central laboratory in Križevci, and the assessment of bodies and halves in slaughter houses.

2.3.7.3. Plant production institutions The area of plant production is covered by two specialized services.

Institute for Plant Protection in Agriculture and Forestry is a diagnostic and preventive service for protection of plants against pesticides. Beside the health control of flora needed for the production of seeds and plants, its services envelope plant and plant products health preservation; the Institute also conducts chemical and biological researches in the field of plant preservation and performs systematic education (courses on monthly basis) on the subject of plant protection.

Institute for Seed Production and Nurseries is a newly established institute and its main activities are defining of agricultural plan sorts, seed attests, etc. The institute is divided into four departments and laboratories for the seed preparation and testing. The number of newly employed persons in the institute continues to rise.

2.3.7.4. Fruit Growing Institute Fruit Growing Institute was established on the basis of the Regulation of the Government of the Republic of Croatia (OG No. 100/01) as a specialized institution for performing the tasks in the field of fruit growing, financed from the state budget funds, transferred via the MAFRD, as well as from the funds earned through the performance of its regular activities.

The Institute is mainly responsible for: growing and maintenance of lemon balm for the production of reproduction materials for nurseries production in fruit farming; growing and maintenance of lemon balm for the production of non-virus fruit bases and shoots; introduction of new sorts and bases of fruit species; performance of clone selection with the aim of separation of the most valuable genotypes of individual fruit species; growing of reference collections of sorts and bases of fruit species; keeping a register of orchards plantations; designing, growing and maintenance of experimental orchards with the aim of researching the most perspective growing forms, fertilization, protection, soil maintenance systems and pomotechnics; statistical analysis and compilation of all results of fruit growing researches; drafting a proposal of the Plan of regionalization of the fruit production in Croatia; performance of other tasks and works laid down by the statute of the Institute and in accordance with the law.

2.3.7.5. Croatian Institute of Viticulture and Oenology Croatian Institute of Viticulture and Oenology has been established in 1996, by Institute Establishment Act (OG, No. 22/96, 85/96, 11/97 and 48/00). Basic tasks of Institute are defined by the Wine and Other Grape and Wine Products Act (OG, No. 96/03) and by implementing regulations adopted on its basis.

Basic tasks of the Institute are: performing analysis and evaluation of grape for wine, must, wine and other wine and grape products, fruit wines and other products based on the basis of fruit wines; keeps vineyard land registry; keeps and consolidates the main Registry of grape, wine and fruit wine producers; bring decisions for adding sugar into must and grapes; adding


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sugar to special types of wines; bring decisions about circulation of grape, must and other grape and wine products and fruit wines; issuing certificates about wine and other grape and wine products, and fruit wine quality imported or exported; issuing certificates and opinions about wine and other grape and wine products, and fruit wine quality in inspection.

For the purpose of monitoring efficiency and state in viticulture and oenology the Institute is obliged to submit reports about performed activities at least twice a year to the Ministry and registration working body of the Croatian Parliament.

Wine and other grape and wine products in circulation at home market and during import and export, have to have control stamps, i.e. ribbons issued by the Institute.

Croatian Institute of Viticulture and Oenology is a reference laboratory for physical and chemical analysis of must, wine, fruit wine and other grape and wine products which are made because of the inspection. It is also authorized for implementation of organoleptic evaluation of must and wine.

2.3.7.6. Food safety institutions Ministry of Health and Social Welfare (MHSW) and MAFRD are bodies responsible for food safety.

Croatian Food Agency (HAH) is fully responsible for the coordination of all food and animal feed safety aspects. The tasks of the Agency include all levels of risk analysis: risk assessment, risk management and risk related communication. Croatian Food Agency coordinates and directs food protection policy at the national level. All proposed laws need to get an opinion of the Croatian Food Agency before they are passed. Croatian Food Agency coordinates also the inspection system performed by the MAFRD and the Ministry of Health and Social Welfare. Croatian Food Agency approves annual control programmes as well as reports from official controls of these ministries.

Ministry of Health and Social Welfare (MHSW) – Sanitary Inspection Directorate is responsible for legislation, implementation and surveillance of safety of food of non-animal origin. The directorate is divided into two departments:

Croatian Public Health Institute (HZJZ) is a scientific institution providing laboratory services of food safety for products of non-animal origin (national and county laboratories); conducts annual monitoring programmes; it is also responsible for monitoring air and water quality.

Ministry of Agriculture, Fisheries and Rural Development and Ministry of Health and Social Welfare are responsible for the policy, passing of regulations and activity inspection in the sector of plan protection agents, as well as pesticides residuals. The inspections themselves are performed by sanitary and phyto-sanitary inspectors at the national level.

2.3.7.7. Croatian Agricultural Extension Institute (CAEI) Croatian Agricultural Extension Institute (hereinafter: CAEI) is an institution which provides free of charge services of counselling to family farms with the aim of increasing productive and economical efficiency of agriculture, as well as renewal, development and preservation of all values of rural areas.

The main tasks of this Institute are providing technological recommendations, instructions and practical examples for the demonstration of new technologies and new management methods, as well as studying the available knowledge and skills needed for the development of agricultural production on family farms.

CAEI functions through the Head Office in Zagreb, as well as through its county sections. Within the Head Office there are three services – Service for Coordination of Implementation of Measures and Programmes Supporting Agricultural Development, Professional Training and International Cooperation; Service for Planning, Coordination and Monitoring of Professional Work; and Service for Legal, Personnel, Organizational, Financial, Accounting Affairs and Procurement. Within these services there are nine specialized departments on the head of which there are Heads of Department – experts for various fields of agriculture (livestock


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breeding, fruit growing, vineyard farming and gardening, plant protection, crop husbandry, agro-economics, agricultural mechanisation, fish farming, rural development, food and organic agricultural production), and employees who deal with economy, finances, informatics, legal, publishing and other administrative affairs.

CAEI has its sections in all counties and in the City of Zagreb. Each section has several offices (branch offices) and employs from 4 to 17 agronomic experts.

From the very beginnings of the existence of the Council for Applied Agricultural Research the CAEI employees have participated in the conduction of such researches. Implementation bearers are scientific and other institutions and subjects which have also participated in the proposals and evaluation of projects proposed for a particular research.

At the same time, CAEI organizes lectures, presentations and courses for the education of farmers and its other clients throughout the year.

CAEI has very important role in informing, organizing promotional activities and providing assistance to agricultural producers, and other subjects in agricultural business, in implementation of agricultural policy measures in Croatia. It also conducts promotional activities related to adjustment of agricultural sector in pre-accession period (pre-accession programmes) for Croatia. Therefore, it was actively included in informing, promotion and implementation of SAPARD programme in the following way:

- Training of trainers – education of CAEI employees as trainers who took over dissemination of information to potential beneficiaries;

- Workshops / lectures – were organized at county and local levels, designed for local self-government representatives and potential beneficiaries.

- Events (round tables, workshops, lectures, etc.) on invitation;

- Media – advertising and informing public through press, radio and television

- Website of CAEI

- Promotional material – promotion and distribution of promotional materials to final beneficiaries.

CAEI departments according to their specialties, directly cooperate with MAFRD in organizing and implementation of information activities related to national agricultural policy measures, and to preacession programmes.

2.3.7.8. Croatian Market Information System in Agriculture (TISUP)

The Market Information System in Agriculture in Croatia (hereinafter referred to as: TISUP) is developed within the framework of World Bank and MAFRD project „Development of Services for Agricultural Farms Support“, in 1995.

TISUP which was established in 1997 is a system of centralized, regular collection and processing of data about the market of agriculture food products, and distribution of obtained, relevant, market information about market participants. The emphasis is on data and information about agriculture-food and fishery products prices in order to ensure easiness to survey the state on the market.

Main tasks of Market Information System are: market and market products observation on national, regional and specified, extended international level, and making of impartial reports about prices, tendencies and total state of agricultural-food products, fulfilling the needs of different target groups.

Department for Market Information System in agriculture collects data about prices of agricultural-food products and inputs in agriculture and fishery, basic marks of offer and demand on local Croatian and international markets; ensures data interchange about prices within and outside the Ministry and cooperates with other institutions; prepares groundwork for measure modification for market-price policy; collects data and prepares reports about prices of


version of 14. 12. 2007;


agricultural- food products and inputs in agriculture for the needs of European Commission and other international institutions; cooperates with international institutions in implementation of projects for improvement of market information system in agriculture.

2.3.7.9. Other institutions Tasks in the field of agriculture are partially performed also by other state institutions, such as State Inspectorate, State Meteorological and Hydrological Service, and State Geodetic Administration. Administrative and technical tasks related to the general environment protection policy are the responsibility of the State Nature and Environment Protection Administration.

2.4. DISPARITY ANALYSIS In Croatia the regional differences in development are still growing, which is influenced by various elements. The level of regional development and regional competitiveness are measured through a number of indicators, while several separate indicators show that the given inequities are quite visible.

2.4.1. Regional development disparities Disparities in counties’ development are illustrated in the Table 2-120 across four development indicators: (i) GDP per capita, (ii) change in population (iii) share of population with higher education and (iv) unemployment rate.

(i) Comparison of the basic economic indicator GDP per capita (in PPS) on county level shows that in 2003 only four counties exceeded the Croatian average GDP (City of Zagreb, Istria county, Primorje - Gorski Kotar county and Lika - Senj county). Data show that the two most developed counties have a GDP per capita 2,6 times higher than the two least developed counties. Compared to the average EU25 GDP per capita, the level of GDP p/c ranges from 81% of the EU level in case of the City of Zagreb, to 26% in the Vukovar - Srijem and the Brod - Posavina counties.

(ii) In general, the demographic situation in Croatia during the last inter-census period (1991 - 2001) is bad. A widespread depopulation process can be noted. Only five counties had either growth or stagnation regarding the population size, whereas all other counties were depopulated (mostly in the Lika - Senj county-34,9%). Furthermore, a trend of rural-urban divide has continued. It is characterised by a growing concentration of population in Zagreb and a few other macro regional and regional centres and narrow coastal areas, while other regions of Croatia are being intensively depopulated. It is striking that the natural population decline in the years 1998 - 2001 in some rural counties is approximately five times higher than the national level.

There is thus great variation in population density across counties. Population density is the highest in the City of Zagreb – 7,5 times higher than in the second most populated county (Međimurje), and 15,5 times higher than the Croatian average of 78,4 inhabitants per km2. When the City of Zagreb is exempted, the proportion of the least populated county (Lika - Senj) to the most populated county (Međimurje) is 1:16,2. There is a direct and reciprocal relation between a unit’s population density and its economic opportunities and development as enterprises and other legal persons are usually situated in the most populated areas and contribute significantly to local revenues. Because of their relatively high number, a great number of counties and municipalities in Croatia faces the problem of ineffective policy delivery and lack of development funds due to their small tax base (number of inhabitants) on which many of these units are reliant upon for local income. As a consequence, the local and regional self-government – and the assisted areas in particular – greatly rely on financial transfers and state aid from the national budget. (The situation should improve over time, as the process of fiscal decentralization continues and comes to mirror the scope of policy decentralization and as inter-county and inter-municipality cooperation on development projects and service supply is encouraged).


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(iii) Data on the level of educational attainment, which represents a significant factor for regional development, additionally reveal the level of disparities within the country. Whereas the Croatian labour force is relatively well educated and trained, very significant disparities exist at the level of counties. The City of Zagreb has the highest proportion of inhabitants with higher education compared to total population (16,8%); this proportion is five times higher than in the county with the worst ranking i.e. the smallest share of people with higher education (Krapina - Zagorje county, 3,2%). Most people with higher education live in larger cities, which offer more possibilities for them in terms of employment. The concentration of educated people in the City of Zagreb is outstanding; it attracts almost twice as many highly educated people than any other county.

(iv) The unemployment rate across counties differs significantly. On the one hand there are the most developed counties which show relatively low unemployment rates compared to the Croatian average (which in 2004 amounted to 16,8%), whereas on the other hand the least developed counties show high unemployment rates. The range lies between the Istria county (6,6%) and the City of Zagreb (10,3%) with the lowest unemployment rates on one side, and the Vukovar - Srijem county (28,4%) with the highest unemployment rate on the other side.

Table 2-120: Development disparities among Croatia's counties

Surf

ace

area

Popu

latio

n

GD

P pe

r ca

pita

PPP

in

200

3, E

UR

Popu

latio

n w

ith h

igh

educ

atio

n

Popu

latio

n w

ith h

igh

educ

atio

n

Shar

e of

po

pula

tion

with

hig

h ed

ucat

ion

(%)

Une

mpl

oym

ent

County

(km

2)

2001

C

ensu

s

Popu

latio

n de

nsity

GD

P pe

r ca

pita

PPP

in

2003

, EU

R

(RH

=1

00)

Inte

r-ce

nsus

ch

ange

20

01/1

991

(%)

2001

ce

nsus

(%

)

2001

ce

nsus

2001

ce

nsus

In 2

004

Une

mpl

oym

ent r

ate

(%)

Zagreb County 3.060 309.696 101,2 7.172 74,1 110,58 4,9 12.379 4,3 13.463 10,3

Krapina - Zagorje 1.229 142.432 115,9 6.976 72 96,45 3,2 3.816 1,3 5.852 10,7

Sisak - Moslavina 4.468 185.387 41,5 7.670 79,2 74,79 4,6 7.084 2,5 18.789 24,9

Karlovac 3.626 141.787 39,1 7.596 78,4 79,08 5,1 6.095 2,1 13.104 22,4

Varaždin 1.262 184.769 146,4 9.037 93,3 98,76 4,9 7.522 2,6 10.419 13,5

Koprivnica - Križevci 1.748 124.467 71,2 9.595 99,1 96,99 4,1 4.235 1,5 7.899 17,2

Bjelovar - Bilogora 2.640 133.084 50,4 7.451 76,9 93,37 4 4.330 1,5 11.395 22,8

Primorje - Gorski Kotar

3.588 305.505 85,1 11.285 116,5 95,47 9,9 25.927 9 17.626 12,5

Lika - Senj 5.353 53.677 10 10.172 105 65,06 3,8 1.701 0,6 3.468 16,8

Virovitica - Podravina 2.024 93.389 46,1 7.356 76 90,84 3,5 2.678 0,9 9.706 26,8

Požega - Slavonia 1.823 85.831 47,1 7.051 72,8 87,49 4 2.765 1 5.494 17,5

Brod - Posavina 2.030 176.765 87,1 5.620 58 102,56 4,2 5.987 2,1 15.864 25,9

Zadar 3.646 162.045 44,4 7.795 80,5 76,78 6,7 8.840 3,1 11.818 18,2

Osijek - Baranja 4.155 330.506 79,5 7.402 76,4 91,62 6,3 17.051 5,9 32.397 23,9

Šibenik - Knin 2.984 112.891 37,8 6.766 69,9 76,79 5,6 5.273 1,8 10.850 24,7


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Vukovar - Srijem 2.454 204.768 83,4 5.742 59,3 90,28 3,9 6.439 2,2 20.175 28,4

Split - Dalmatia 4.540 463.676 102,1 7.253 74,9 98,48 8,5 32.028 11,1 40.712 20,9

Istria 2.813 206.344 73,4 12.863 132,8 101,4 7,3 12.663 4,4 6.313 6,6

Dubrovnik - Neretva 1.781 122.870 69 8.584 88,6 98,56 8,2 8.195 2,8 8.200 15,7

Međimurje 729 118.426 162,2 7.699 79,5 100,97 3,7 3.536 1,2 7.257 15,3

City of Zagreb 641 779.145 1.215,50 17.301 178,7 100,82 16,8 109.323 38 38.936 11

TOTAL 56.594 4.437.460 78,4 9.684 100 93,89 7,9 287.867 100 309.735 16,8 Source: CBS, 2003 - 2004

2.4.2. Inequities with respect to the European Union Main inequities regarding the rural development are the following:

Table 2-121: Croatia - inequities with respect to the European Union

Indicators Units 200331

Basic data EU (15) EU (25) Croatia

Area ‘000 km2 3.230,8 3.976,4 56,6

Population ‘000 380.379 454.580 4.437,4

Population density per km2 117 114 78

GDP per capita based on PPP (purchasing power parities) EUR 24.464 21.441 9.684

Population under 15/Total population % 16,4 16,5 17,0

Population over 65 and older/Total population % 16,8 16,3 15,6

Activity rate % 64,3 62,9 50,2

Unemployment rate % 7,5 8,3 19,1

Employment in agriculture and fishery % 4,0 5,2 7,3

Employment in industry and construction % 24,6 25,5 30,5

Employment in the service sector % 71,4 69,2 62,2

31 Year 2003 – great drought


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Gross added value in agriculture/GDP % 1,6 1,6 6,5

Employment in agriculture/Total employment % 4,0 5,2 7,3

Municipal waste generated (2004) Kg/person 580 537 282

Water resources: total renewable per capita (1998 – 2002)

000 m3 / inhabit. / yr 7,10 7,13 23,77

Used agricultural areas/Total area % 40,5 42,0 19,0

Forest-covered areas % 35,3 34,5 42,0

Crops products / Final agricultural product % 57,1 56,6 60,6

Livestock farming products/ Final agricultural product % 42,9 43,4 39,4

Average farm size ha 17,7 13,5 2,4

Wheat tons per ha 5,3 4,8 2,9

Potatoes tons per ha 33,9 26,4 5,9

Sugar beat tons per ha 57,7 53,9 24,8

Rape tons per ha 2,9 2,6 1,8

Milk kg per cow 6.248 5.906 2.625

Sources, DZS, EUROstat, FAOstat Analysis: MAFWM, 2004; Average exchange rate HRK/euro in 2003: 7,56

Data in above table show that where inequities are present they are quite extreme (2 – 3 times higher or lower compared with EU) and elsewhere they are minor or not existing.

Inequities between Croatia and EU member states are mostly expressed regarding GDP per capita and unemployment rate which is almost doubled in Croatia compared with EU. Also population density in EU is almost twice as high than in Croatia as well as waste generation.

Water resources is one of the few comparative strength for Croatia where is shown that Croatia has three times more renewable water resources than EU-25.

Significant inequities can be also seen in the agricultural production, where the average farm size and average yields in plant and milk production are much lower in Croatia.

Same applies for used agricultural area in total area where Croatia has 19% where in EU-25, 42% can be seen.

2.5. SWOT ANALYSIS 2.5.1. SWOT Analysis of Socio-Economic Situation in

Rural Areas The huge diversity of the Croatian geographic regions in terms of natural, social, economic and cultural aspects is to a large extent an effect of the four groups of factors that determine today the general local development process of rural areas:

The natural potential of the region (climatic and hydrological conditions, soil quality, forests, water resources, distribution of settlements, etc.);

Historical and social factors – the tradition of the region, the consequences of war and the change of political systems (migrations, mingling of different cultures, political consciousness


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and participation in decision making process, lobbying, organization of local community), age and educational structure of the population (the percentage of the old people who are not prone to change compared to the young entrepreneurs), the consciousness of cultural heritage and traditional values;

Economic factors – e.g. distance to the market, especially larger city centres, structure and organization of local markets, access to the basic infrastructure, financial strength of local budgets, economic efficiency of enterprises, entrepreneurship, etc.;

Institutional factors – e.g. laws and regulations (including local taxation) and their enforcement, degree of local participation in a decision-making, efficiency of local administration, etc.

Strengths Weaknesses Opportunities Threats

Preserved environment and nature

Migration trend towards towns especially among the

younger economic active population and women

Favourable climatic conditions

Slow process in structural reforms

Rich landscape diversity Depopulation and ageing

trends in predominantly rural areas

Favourable geographic position of the country in

Europe High unemployment rates

Rich cultural and historical heritage

Low level of formal education and poor quality of education institutions in

rural areas;

Stable macroeconomic indicators

Unbalanced regional growth and development due to

lack of basic infrastructure, social and human capital in

rural regions

Acknowledgement of traditional skills and

products;

Lower level of basic social and economic infrastructure facilities compared to urban

regions

New highway network and telecommunication network

constructed

Slow process in improving the efficiency of local

administration;

Forests areas with high potential for hunting tourism

and wood processing

Slow demining progress of war-affected areas;

New trends in tourist demands

Slow progress in improving rural infrastructure

Development of diverse systems of agricultural

production

Many abandoned rural and agricultural areas

Renewable energy resources availability

Lack of reliable statistical data on rural areas.

SME sector in service and manufacturing with high potential creating jobs

Potential for development of renewable energy Low organisation degree of

rural civil society

Good perspectives for rural and agro tourism

Too small and inefficient local administrative units;

Local government structure experienced in local

development planning

Reform of the professional agricultural education

system not implemented

Low labour cost Underdeveloped treatment of waste water and waste

management

Source: MAFWM – DSDRA, 2007


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2.5.2. SWOT Analysis of the Agri environmental situation


General large awarness of the country's natural

beauty

Illegal hunting, fishing, forest and vegetation

destruction reveal a gap between rhetorical support for nature/environmental protection and common

practices

Being a new concept, AE might be appealing

Rapidly declining number of farmers

Croatia has adopted/ratified major

international conventions on environment and

biodiversity

AE is not a primary interest and top priority for the

stakeholders

Creation of brands from AE managed farms/regions

Lack of understanding and support for AE by influential

societal groups

Determination of NATURA 2000 sites in progress

Decades old cadastre data and Land Books

Management requirements of NATURA 2000 sites favour

implementation of AE measures

Agriculture getting more specialised and industrialised

Some farmers already practice organic farming

Substantial agricultural land in these areas is state-owned and responsible public institutions do not

want to or cannot manage it

Potential employment opportunities for nature

conservationists/ecologists

Ageing of farmers’ population

Regulation on organic farming exists

Management plans in most nature-protected areas

under development

Consultations with MS and experience gained

Loss of agricultural land due to rapid spread of

settlements and infrastructure

Active and qualified nature protection institutions

Weak administrative structures to manage AE

procedures EU accession process

Abandonment and overgrowth of the habitats/grassland

Previous projects have sown the seeds for

understanding of the AE concept

Weak co-operation between public, private and civil

society institutions

AE programme is the only obligatory component of the EU

RDP

Intensification of agricultural production in

certain areas

Rich landscape, habitat and species diversity of

which some is of international importance

No financial incentives for mowing of the abandoned

land

Abundance of surface and ground water

Biodiversity on agricultural land severely reduced

Nearly all grassland managed extensively

Heavy use of pesticides and fertilisers on arable

land

Many local varieties and breeds

No tradition of on-farm nature management

practices



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2.5.3. SWOT Analysis of the Leader approach Strengths Weaknesses Opportunities Threats

Local government structure experienced in local

development planning

Low level of formal education and poor quality of education institutions in

rural areas;

The decentralisation trend in EU and in the rural development policy

Slow process in structural reforms

Existing initiatives in rural areas

Too small and inefficient local administrative units;

Associations, NGOs and communities working with

rural development is already up and running

Lack of social and human capacities

The Bottom up approach is known and applied by

several stakeholders in Croatia

Lack of training and education

Lack of self governance tradition

Difficult to motivate rural

inhabitants to join projects and local partnerships.

Low organisation degree of rural civil society

Slow process in improving

the efficiency of local administration.


2.5.4. SWOT Analysis of the agriculture PIG MEAT


Traditional production and consumption of meat and

meat products.

Unfavourable farm structure (economy of value) and

insufficient specialization

Potential for the increase of competitiveness and quality

improvement

Appearance of diseases which can influence

domestic consumption and export

Significant grain production for production of fodder

concentrate

Insufficient level of compliance with

environmental and hygiene standards

Increase of pork meat consumption

Continuous oscillations of market prices and uncertain

conditions

Croatian consumers are traditionally oriented to

domestic products

Insufficient level of manure management and manure

storage capacity

Possibilities of processing of pig meat prepared as

recognizable traditional products, which can gain higher price on domestic and international market

Quality supply at lower prices from foreign markets

Weak technology productivity (because of

farm structure and breeding methods)

Potential for the improvement of the

production organization

Non-compliance with relevant Community

standards at the date of Croatian accession to the

EU

Insufficient level of cooperation between

producers, processors and tradesman

Improvements in cooperation between


Increase the utilization of technological potential for the production of specific

traditional products

BEEF

Strengths Weaknesses Opportunities Threat


version of 14. 12. 2007;


Unutilized capacities on family holdings for fattening

of beef

Unfavourable farm structure (economy of value) and

insufficient specialization


improvement



Meat is product which can obtain high prices, which

can influence total income on farm



Use of unutilized grass resources

Quality supply at lower prices from foreign markets


concentrate


storage capacity

(great) potential for further differentiation of products to offer a wider assortment to

consumers



EU

Croatia already exports baby beef, which achieves a

high prices on foreign markets

Short production cycle in intensive fattening resulting in too early slaughtering of

animals at lower weight

Expected increase in consumption of domestic

beef products

slow land consolidation process

Croatian consumers are traditionally oriented to

domestic products

Low technology productivity (because of farm structure

and breeding methods)

Huge, unutilized area for cows (meadows and

pastures)

Undeveloped agricultural land market

Insufficient number of calves for fattening (which will continue, because of

decreased import possibilities, and use of Holstein breed in milk

production which is not suitable for quality meat

production)

POULTRY AND EGGS

Strengths Weaknesses Opportunities Threat High industrialized

production where high production results are

achieved




improvement

Egg prices decrease on the world market

Sufficient fodder quantities for the production are

available


storage capacity

Potential for maintenance of viable middle sized

producers in compliance with Community standards

Non – compliances to ecological conditions and

conditions on animal welfare on small farms

The tradition in production and well known technology

Insufficient compliance with animal welfare and rearing

methods

Costly investments in animal welfare (closing down the

production)

Producers non -

competitiveness on small production units



Non existance of bio security equipment in

production units



EU MILK PRODUCTION


Existance of well educated and experienced middle

sized dairy farmers



Ongoing restructuring of the sector by establishing new

production units, adaptation which will increase the competitiveness of the

sector

Uncertainty about the milk price on the world market


version of 14. 12. 2007;


Huge, unutilized area for cows (meadows and

pastures)


storage capacity

Existence of internationally competitive processors with

EU expert licences

slow land consolidation process


concentrate

Insufficient level of extra quality milk

Increased market opportunities if Community

standards are met

Due to higher yields per cow and restructuring the sector,

there are less cows

Existance of expert support for dairy farmers

Insufficient compliance with animal welfare and rearing

methods

Regionally recognised dairy products (cheese)



EU

Consumer preference for domestic dairy products

Producers non - competitiveness on small

production units

Possible increased income due to decrease in production costs.

Unfavourable farm structure

and insufficient specialization

Foreign direct investments in the dairy industry

Insufficient use of grassing and low quality of

voluminous, winter fodder (hay and silage)

Professional training for dairy producers is available

Low competitiveness on the open market

Readily available labourforce at affordable

costs

Lack of raw milk in a quality needed by the processing

sector

Insufficient level of education of small sized farmers in the field of

production and management)

FRUITS


Favourable pedological and climatic conditions

Small agricultural farms, fragmented production


improvement

market pressure due to import products

Tradition in fruit production



Potential for maintainance of viable middle sized


Lower level of quality due to outdated handling

equipment

Consumer preference for domestic fruit products




production units

Distrust into organizing systems (co-operatives) - historical heritage among

significant number of producers

lack of producer organizations

Possibilities for job creation and additional income from

associated activities such as direct marketing and rural

tourism.



EU

Lack of knowledge and training of producers in

usage of new and modern technological solutions

Lack of modern handling equipment

VEGETABLES



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Tradition in vegetable production

Small agricultural farms, fragmented production

Potential for increasing the yields and decreasing the

production costs


Favourable pedological and climatic conditions



Potential for increase of production in protected

areas

Lower level of quality due to outdated handling

equipment

Competitive production of tomatoes in Istria



Potential for prolongation of production season of open

space production in Dalmatia by new

technologies.

Distrust into organizing systems (co-operatives) - historical heritage among

significant number of producers

Consumer preference for domestic vegetable

products

lack of producer organizations

Great market potential for domestically grown

vegetables of high quality



EU

Big number of sorts and varieties of vegetables in

production

Lack of knowledge and training of producers in

usage of new and modern technological solutions

Bigger market due to EU accession

Lack of modern handling equipment

Possibilities for job creation and additional income from

associated activities such as direct marketing and rural

tourism

Limited and seasonal supply

Lack of market infrastructure

Lack of the irrigation systems, sorting and

storage facilities and cold – storage plants for fresh

vegetables

FRUIT AND VEGETABLES PROCESSING INDUSTRY


Available production technology

Lack of raw material as a result of insufficient logistics (sorting, packaging facilities)

Highly attractive sector for FDI


Knowledge on modern processing technology


improvement

Lower level of quality due to outdated processing

equipment





EU


production units

Bigger market once Croatia joins the EU

WINE


Strong local market and tourism-related consumption

Small agricultural farms, fragmented production, technologically under

equipped.

Additional sales opportunities through rural

tourism and wine roads

Huge number of small producers who are not sufficiently prepared for

international markets – high production prices and low

competitiveness


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Rich offer of autochthonous assortment of wines



High sales opportunities because of well established local markets and tourism

related consumption (Adriatic cost)


Experience and tradition in the production of grapes

and wine




improvement

Lower level of quality due to outdated processing

equipment

High level of knowledge on modern equipment and

technology

High market prices of domestic wine due to high

production costs





EU

Certain number of quality wine producers

Lack of producer organizations

Potential for the decrease of production costs trough

modernization of wineries

Lack of market infrastructure Increase of quality due to

implementation of new technology

Creating the quality standards according to the

EU legislation (ISO, HACCP)

GRAINS AND OILCROPS


Very good fertility of agricultural soils


equipped (mechanization, equipment, grain storages,

drying facilities)


improvement Land abandonment

Farmers experience in the crop production



Potential for maintenance of viable middle sized


Slow demining of mined agricultural areas

Natural conditions and agro – ecology capacities




modernization of production



competitiveness

The complementarity with the livestock production

Lack of specialized production

Increasing demand for oil crop production due to the

growing market for bio diesel


Available quality seeds for cereals


production and management





EU

Bigger market opportunities upon EU accession

OLIVE


Good territorial deployment of oil refineries


equipped (mechanization, equipment)


improvement

Accumulation of olive reserves


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High quality of olive oil





Strong competition in national/ international

markets

Typical indigenous olive varieties




modernization of olive mils



EU

Tradition in production of olives and olive oil


production and management Register of

olives does not exist





competitiveness

GIS is not exist High sale potential market pressure due to import products

Stem material in breeding grounds is not sufficient

Economically significant potential in agricultural

production

Olive farmers and producers insufficiently educated

Well developed national / international markets for

olive oil

Number of out dated oil refiners

Non-adequately equipped laboratories

Lack of packaging facilities

Insufficient monitoring and control of the products on

the market

Low yields and utilization level in olive production

High unit production costs

Lack of technological disciplines

Lack of producer organizations

MEAT PROCESSING INDUSTRY


Great number of traditional meat products

Primary production incapable to deliver raw

material in sufficient quantity and quality demaded by the processing industry (size – quantity, technology level -

quality, lack of organization)

Incease of share in the domestic market and export

due to harmonization with the Community standards

Livestock diseases and their impact on production and

market

Quality of products


environmental, hygiene and animal waste management

Higher value products as chance for smaller production facilities

development

No competitiveness of meat processing industry on

global market

Recognizable products and products origin

Week connection between producers, processors,

distributors and consumers

Higher value products as chance for smaller production facilities

development



EU

Increased demand during the tourist season

Huge number of small slaughterhouses who are

not sufficiently prepared for international markets – high production prices and low

competitiveness

Source; MAFWM – DSDRA, 2007


version of 14. 12. 2007;


2.5.5. SWOT analysis of the fishery sector Strengths Weaknesses Opportunities Threat

Favourable geographic and climatic conditions for

development of aquaculture

Inadequate marketing for farming products

Significant opportunities for environmentally-friendly

production

Resistance to associations and co-operation among

elderly population

Rich natural resources Lack of capital for

replacement of production systems

Significant opportunities for promotion in co-operation with tourism – health food

Lack of capital

Clean environment Weak infrastructure Increase product quality Insufficient producer skills

Well-preserved eco-system Difficulties in finding farm locations due to poor land

planning Adding new values Unordered market

High market demand Unorganised market Sector attracts foreign investments

slow development of required infrastructure on

islands

Long tradition and experience

Feed for marine fish farming exclusively from import

Employment of island population Insufficient bank support

Availability of competent manpower

Low unit yields in freshwater aquaculture

Increase of domestic consumption

Slow development of marketing strategy

Availability of expert and scientific institutions for training and research

Insufficient bank support Increased awareness of food quality

Insufficient co-operation among competent state

bodies

Reputation gained on the global market

Lack of fishing ports and disembarkation points Opening of new markets Poor spatial planning

Available water resources required for freshwater

aquaculture

Lack of refrigerating capacities required to

preserve product quality

Introduction of new species to aquaculture

Non-acceptance of integral management approach for

the costal zone

Availability of autochthonous species for freshwater and

marine aquaculture

Obsolete technology in freshwater aquaculture

Significant competition with other activities for space

utilisation

Lack of processing plants and adding new value to

aquaculture products

Lack of marketing strategy

Lack of producers' associations

Insufficient product diversification

High production costs in aquaculture

High insurance risks

Lack of managerial skills

Insufficient knowledge of sanitary standards

Poor co-operation, horizontal and vertical, among competent state

institutions

Obsolete fishing fleet

Insufficient awareness of environmental protection



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3. OVERVIEW OF NATIONAL SUPPORT TO AGRICULTURE AND RURAL DEVELOPMENT AND PRE-ACCESSION AGREEMENTS

3.1. NATIONAL AID SYSTEM FOR AGRICULTURE AND RURAL DEVELOPMENT

The legal basis for the allocation of the state aid in agriculture includes various provisions and their financing is determined by the state budget and local budgets of the regional (counties) and local (municipality and cities) self-governments. The Croatian Government does not have the legal basis for monitoring aid to agriculture financed from local budgets.

The majority of the national agricultural policy is implemented through two Acts – the Agriculture Act and the Act on the State Aid in Agriculture, Fisheries and Forestry. MAFRD is the body responsible for their implementation.

The Agriculture Act (OG, 66/01, 83/02) is the umbrella act that governs the overall field of agriculture by incorporation the existing legislation and areas that have not yet been directly regulated. The Act sets out the objectives and measures of agricultural policy, defines beneficiaries, institutional aid, agricultural policy makers, monitoring and reporting in agriculture as well as administrative and inspection control.

The Act on State Aid in Agriculture, Fisheries and Forestry (OG, 87/02, 117/03, 82/04, 12/05, 85/06, 141/06) provides for four different state aid schemes intended for different target groups or aid beneficiaries. The schemes are:

Graph 3-1: National aid system in agriculture

Source: MAFWM, 2007

• the production subsidy scheme (direct payments)

• the income support scheme,

• the capital investment scheme and

• the rural development scheme.


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The said models have the following key goals of the agricultural and rural development policies:

restructuring of the agricultural aid towards the work-intensive production and a further strengthening of the role of livestock farming, wine-growing and fruit-growing;

better and more diversified promotion of income aid as the main type of support to numerous non-commercial farms;

more dynamic strengthening of the share of aid to rural development investments and programmes within the overall aid system, which shall influence a more transparent and efficient aid, especially to the commercially most important farms, as well as the sustainable development of the entire agricultural area;

a strict compliance with budget limitations, the adopted international obligations (in particular, those within the WTO system) and a further gradual harmonisation with the CAP.

This Act distinguishes commercial and non-commercial agricultural farms. Commercial farms fulfil the conditions of models: direct payments, support to capital investment and rural development scheme, while non-commercial farms fulfil the conditions for models: income support scheme and rural development scheme.

The aid system is strictly related to the creation of the Register of Agricultural Holdings. The said Register shall be the central statistical database for agricultural farms. The creation of this Register, which shall have to include all agricultural farms that sell their products on the market and lodge requests for aid to agriculture, shall lay the basis for the introduction of different measures for different kinds of users. The following step shall be a further development and harmonisation of the Register with the Integrated Administration and Control System (IACS) which is the control system related to direct payments for agriculture in the EU and that the EU member states apply in managing the Common Agricultural Policy (CAP).

MAFRD is also responsible for the allocation of state aid for certain programmes based on secured funds in the state budget and special decisions of the minister.

Special agencies of the Croatian Government (Croatian Bank for Reconstruction and Development - CBRD, Croatian Agency for Small Business - CASB) allocate aid to the economy in general, therefore including agriculture, under special programmes in accordance with the several horizontal regulations (Investment Support Act, Act on State Support for Small Entrepreneurship, Islands Act, Act on Areas of Special State Concern, Act on Mountainous Areas, Regional Development Fund Act). It concerns crediting infrastructure and economic projects and the issuance of guarantees.

There are also specific programmes adopted by the Croatian Government (beef, pigs, permanent crops, vegetables) and implemented by CBRD and CASB. These programs consist of financing investments through loans with interest rates lower than commercial ones.

All aid to agriculture stemming from measures of the national policy is financed from the state budget, which is adopted each year by the Croatian parliament. The state budget determines revenues and expenditures by budget users and particular activities (aid programmes). The MAFRD budget is constantly increasing (see Table 3-1)

Table 3-1: MAFWM budget (1998 - 2007) Total national budget (HRK) MAFWM budget Share

Year HRK EUR HRK EUR (%)

1998 46.846.452.957 6.399.788.655 794.078.991 108.480.736 1,7

1999 49.334.031.813 6.739.621.832 1.573.518.496 214.961.543 3,19

2000 50.663.666.723 6.921.265.946 1.868.514.991 255.261.611 3,69

2001 58.138.242.000 7.942.382.787 1.855.605.699 253.498.046 3,19

2002 71.033.143.640 9.703.981.372 1.889.354.313 258.108.513 2,66


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2003 75.755.831.255 10.349.157.275 2.337.132.937 319.280.456 3,09

2004 80.463.518.169 10.992.283.903 2.438.363.264 333.109.736 3,03

2005 86.357.026.545 11.797.407.998 2.621.632.180 358.146.473 3,04

2006 93.995.547.750 12.840.921.824 2.838.367.126 387.755.072 3,02

2007 103.489.203.196 14.137.869.289 3.315.640.279 452.956.322 3,2

Source: Ministry of Finance, 2007

Pursuant to the Act, the Government is to determine quotas (maximum aid amounts) for the monetary support model in the current year. In 2004 the Government determined quotas for the first time as one of the instruments limiting the excessive budget spending, taking into account the distribution priorities within each model and the timely and just distribution of finances in cases in which the initially envisaged finances exceed the reported users’ needs. Furthermore, the Croatian Government and the competent institutions shall conduct an additional check-up of budget spending for aid to agriculture, in order to apply gradually the Community standards.

It is necessary to establish an administrative structure that will be responsible for the authorisation and monitoring of state aid in agriculture in the Republic of Croatia in accordance with EU regulations, notwithstanding the legal basis for their implementation or financial sources (state or local budgets). As such, it is necessary to establish a special Unit for State Aid within the MAFRD. Such an office would represent a liaison between the Republic of Croatia and the European Commission (EC) in the area of state aid in agriculture.

In addition to establishing the administrative structure, it is necessary to standardise the conditions for allocation of different types of aid in agriculture with those of the EU, which results in a need to amend the Agriculture Act and Act on State Aid in Agriculture, Fisheries and Forestry.

3.1.1. Production subsidy scheme (direct payments) The production subsidy scheme covers direct aid that is linked to production and aimed at improving the income of commercial farms (family farms, cooperative farms, small business or companies) in order to strengthen the competitiveness of farm production. It encourages arable crops, permanent crops and livestock farming (see Table 12-5).

Registration in the Register of Agricultural Holdings and compliance with the minimum supported quantities (see Table 12-6) which are provided for by the above Act and dependant on the type of the production are the basic conditions to be fulfilled to obtain aid. In order to respect the set limits of the agricultural budget, the Government of the Republic of Croatia determines each year the maximum subsidized quantities for individual productions, i.e. the total volume of production at the national level up to which each beneficiary shall be paid a full amount of the aid. In the event that the maximum prescribed quantity is exceeded, the aid shall be proportionately reduced for all beneficiaries.

The subsidies envisaged for less favoured areas have been increased by 35% in viticulture, fruit growing and partially in livestock farming. Organic production, in which minimum eligible quantities of livestock are not prescribed, receives higher subsidy amounts than conventional production. In order to integrate all farmers into the tax system, an obligation of family farms to submit evidence of filing a tax return or of registration in the register of taxpayers of income tax will be introduced from 1 January 2008.

In 2005 obligations arising from the production subsidy scheme amounted to 264.974.171 EUR (1.939.610.936 HRK) which is 23,7% higher with respect to 2001 (see Table 12-7).

In the 2005 in the aid structure the production of cereals dominated with a share of 51,41% and was followed by livestock farming with 45,47% and fishery with 3,12%. From 2001 – 2005 period share of subsidy amount for plant production was decreasing, while livestock production share was constantly increasing (see Table 3-2).


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Table 3-2: Aid structure, 2001 - 2005 in %

Sector 2001 2002 2003 2004 2005

Plant production 61,40 58,77 52,47 51,68 51,41

Livestock farming 34,45 37,31 44,19 44,53 45,47

Fishery 4,15 3,92 3,34 3,79 3,12

TOTAL 100 100 100 100 100

Source: MAFWM, 2007

When looking at certain production types, it can be noticed that cereals and oil crops had the highest share in total amount of direct payments from 2001 – 2005, although it has been continuously decreasing. Milk and dairy cows sector had the highest growth (3,6 times higher in 2005 compared with 2001). Continuous growth can be also noticed in the fruit, viticulture and olive sectors in the last two years (see Table 3-3).

Increased amount of paid subsidies through production subsidy scheme in mentioned sectors can be explained by the Government agricultural policy whose objective is development of these sectors in order to become more competitive on the global market.

Table 3-3: Share of certain production types in total direct payments

Sector 2001 2002 2003 2004 2005

Cereals and oil crops 42,89 38,80 32,41 30,21 27,48

Vegetables 0,60 0,75 0,69

Fruits 0,51 0,51 0,83 1,20 1,68

Olives 1,83 2,89 1,08 1,25 1,93

Viticulture 1,38 1,23 1,25 2,77 2,99

Milk 22,98 24,73 22,31 24,42 25,48

Dairy cows and bulls 2,69 3,00 9,67 8,15 9,72

Cattle 1,16 1,05 0,54 2,35 2,59

Pigs 3,79 4,06 5,01 4,05 2,82

Fishery 4,15 3,92 3,34 3,79 3,12

Source: MAFWM, 2007

The aid to organic production is part of the production subsidy scheme. As a rule, the subsidies for organic production are about 30% higher than the same subsidies in conventional production. Their amount has also been increasing and almost doubled in 2005 compared with 2001 (see Table 3-4).

Payments for organic production account for 0,16% of all direct payments.


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Table 3-4: Direct payments for organic production (2003 - 2005) 2003 2004 2005

Sector HRK EUR HRK EUR HRK EUR

Plant production 1.887.343 257.834 3.109.198 424.754 3.605.750 492.589

Cereals (wheat, rye, triticale) 12.181 1.664 986.712 134.797 1.199.137 163.817

Beer barley 258.055 35.253 230.735 31.521 113.845 15.553

Corn 399.946 54.637 243.768 33.302 563.843 77.028

Rye, oat 210.967 28.821 0 0

Other fodder cereals 0 244.099 33.347 214.301 29.276

Other industrial plants 0 0 0 0 21 3

Soy 230.175 31.445 213.401 29.153 114.195 15.600

Oil plants (sunflower, oil rape)

5.187 709 9.373 1.280 316.332 43.215

Forage 485.500 66.325 731.836 99.978 789.614 107.871

Vegetables 115.731 15.810 195.831 26.753 90.903 12.418

Tobacco 0 0 0 0 0 0

Medicinal plants 93.748 12.807 132.949 18.162 58.083 7.935

Agricultural seeds 0 40 5 38.484 5.257

Planting material 0 0 0 0 0 0

Vineyards - annually 11.642 1.590 12.198 1.666 9.909 1.354

Orchards I, II group and hop - annually

57.915 7.912 107.928 14.744 92.368 12.619

Strawberry - annually 0 0 0 0 3.545 484

Olives 4.659 636 0 1.170 160

Lavender - annually / oil 1.638 224 330 45 0

Livestock farming 0 0 319.528 43.651 76.588 10.463

TOTAL 1.887.343 257.834 3.428.726 468.405 3.682.338 503.052

Source: MAFWM, 2006

Institutions responsible for the implementation of the production subsidy scheme are listed in Table 12-8 according to the type of aid.

3.1.2. Capital investment scheme The capital investment scheme, established in 2003, is a structural measure that is designed to improve relations between farmers and business banks and is aimed at increasing the productivity and competitiveness of commercial farms. The Ministry of Agriculture, Fisheries


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and Rural Development awards investment grants to farmers to whom a commercial bank has granted a commercial loan for investments in agriculture. This model is one of the pillars of the agricultural policy reform, which aims at developing the commercial private agricultural sector.

The aid to capital investments is granted for medium-term loans (minimum two years) and long-term loans in agriculture. The minimum loan amount, for which a capital investment is granted, accounts for 10.928 EUR (80.000 HRK).

The investment aid may be granted to both physical and legal persons: commercial agricultural farms, users of fishing licences or subjects registered for forestry-related activities.

The request for aid for capital investment may be submitted after the applicant has already carried out the investment during the year in which he received the loan, not later than 28 February of the following year for loans obtained in the previous year.

The maximum support per agricultural producer may amount to 34.153 EUR (250.000 HRK) in the year the loan was used, with the exception of investments done according to the Operative plan for the implementation of the programme for cattle-breeding (see chapter 3.1.5.1), where the maximum support may amount to 68.306 EUR (500.000 HRK) annually per agricultural producer.

Investment aid may be granted for:

• the purchase of young female breeding animals and other breeding animals in livestock farming;

• the purchase of male breeding animals in livestock farming and registered fish species for breeding or aquaculture selection;

• investments for the cultivation of permanent plantations;

• the cultivation of forests;

• building and equipment of facilities for agricultural production and aquaculture;

• restoration of agricultural land;

• the purchase of fishing boats and machines for agriculture, fishery and forestry;

• building and equipment of warehouses and facilities for the processing of agricultural products and fish;

• the purchase of private agricultural land for the purpose of land consolidation.

Table 3-5: Overview of the implementation of the model of capital investments in 2003

Purpose No. of

Amount of the loan granted Amount of the requested investment aid


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requests HRK EUR HRK EUR

Purchase of the basic flock/herd in livestock-farming

444 40.810.014,39 5.575.138,58 7.112.002,88 971.585,093

Cultivation of permanent plantations

19 3.795.375,09 518.493,86 645.213,77 88.143,9577

Cultivation of forests[1] 0 0 0,00 0 0

Building and equipment of facilities for agricultural production and aquaculture

295 119.230.683,88 16.288.344,79 15.721.510,87 2.147.747,39

Restoration of agricultural land

33 6.114.909,33 835.370,13 1.357.589,59 185.463,059

Purchase of fishing boats and new equipment and machines for agriculture, fishery and forestry

721 178.902.373,64 24.440.214,98 29.062.600,89 3.970.300,67

Building and equipment of facilities for storing and processing of agricultural products and fish

86 1.600.000,00 218.579,23 6.643.494,66 907.581,238


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Purchase of private agricultural land for the purpose of land de-fragmentation

18 1.723.814,60 235.493,80 430.853,65 58.859,7883

Combined uses 274 64.377.017,35 8.794.674,50 14.719.093,17 2.010.805,08

TOTAL 1890 416.554.188,28 56.906.309,87 75.692.459,47 10.340.499,9

Source: MAFWM, 2004

In 2003, 1.890 requests were lodged for this benefit model. According to the given requests, the total value of used loans amounted to 56,91 milion EUR (416,55 million HRK), for which 10,35 milion EUR (75,69 million HRK) of aid have been requested.

Other requests were processed, approved and paid in 2003 and during 2004. The total amount of aid of 8,75 milion EUR (64,07 million HRK) has been distributed among 1.521 applicants.

National measures for capital investments are oriented towards the increase of the production profitability, efficiency and competitiveness. They apply only to commercial agricultural farms (mostly small family farms), which have used the possibility of obtaining a commercial loan for farm investments.

3.1.3. Income support scheme The income support scheme was established in 2003 and intended for small and non-commercial family farms in order to initiate structural changes and redistribute agricultural land in favour of sustainable market-oriented agricultural farms and with the purpose of creating a favourable environment for agricultural land transactions. The goal of this scheme is to encourage a gradual exit from agriculture of smaller farms with mainly older population. Qualified farmers are given the possibility to receive a lump sum as payment instead of production aid (direct payments), which separates such payments from the production.

After a farmer has chosen the income support scheme, he receives the status of non-commercial agricultural farm, which is irreversible and may not be modified subsequently into the commercial farm status. Therefore, in distinction from commercial farms, non-commercial agricultural farms may not receive aid within the production subsidy scheme or capital investments scheme, but, apart from benefits from the income support scheme, may be eligible to aid within the rural development scheme.

Farmers must fulfil the following basic criteria in order to be eligible for the income support scheme:

they must be entered in the Register of Agricultural Holdings;

they must have a total business volume of the agricultural farm accounting for at least 3 production units (defined by the Act) and use at least 5 ha of agricultural land.

On the basis of other conditions that are to be fulfilled, they are afterwards subdivided into two categories of beneficiaries of the income support scheme.

Conditions for the first category:

contributions to the agricultural pension fund;

at least 50 (women) or 55 (men) years of age;

1.640 EUR (12.000 HRK) annually per representative or member of the farm, for a maximum of 3.280 EUR (24.000 HRK) per farm, with quarterly payments;

farmers have the right to income aid until retirement.

Conditions for the second category:


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at least one member is retired and receives the agricultural pension, or is unemployed, or makes contributions to the agricultural pension fund, but does not fulfil the conditions for the first group, that is the age criterion,

the beneficiary receives 683 EUR (5.000 HRK) annually per farm as a lump sum.

The request for income aid is submitted to the local state administration offices in single counties (including the City of Zagreb), which are directly included in the administration of this model, starting from 1 December to 31 December of the following year. The said offices collect the requests, process them and decide whether an applicant is eligible for support or not. In 2003, 2.500 individuals lodged 2.262 requests for agricultural farms and 1.625 farms, that is 1.945 individuals were granted the right to income aid in the total amount of 1,9 milion EUR (13,93 million HRK).

Table 3-6: Overview of request for income aid in 2003 per county Amount

County No. of requests

No. of persons

No. of farms HRK EUR

Bjelovar - Bilogora 204 196 168 1.405.800 192.049

Brod - Posavina 105 101 78 718.200 98.115

Dubrovnik - Neretva 75 73 62 525.600 71.803

Istria 49 45 37 324.000 44.262

Karlovac 37 32 28 230.400 31.475

Koprivnica - Križevci 60 23 23 165.600 22.623

Krapina - Zagorje 285 237 185 1.693.800 231.393

Lika - Senj 79 72 70 513.000 70.082

Međimurje 12 5 5 36.000 4.918

Osijek - Baranja 223 193 164 1.372.200 187.459

Požega - Slavonia 170 164 131 1.179.000 161.066

Primorje - Gorski Kotar 110 52 45 369.000 50.410

Sisak - Moslavina 2 0 0 0 0

Split - Dalmatia 102 99 83 705.600 96.393

Šibenik - Knin 55 51 46 365.400 49.918

Varaždin 3 2 2 14.400 1.967

Virovitica - Podravina 269 202 173 1.454.400 198.689

Vukovar - Srijem 124 117 90 842.400 115.082

Zadar 58 52 43 374.400 51.148

Zagreb County 30 26 23 187.200 25.574

City of Zagreb 210 203 169 1.454.400 198.689

TOTAL 2.262 1.945 1.625 13.930.800 1.903.115

Source: MAFWM, 2004


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3.1.4. Rural development scheme The objective of the rural development scheme is the maintenance and development of rural areas and particular traditional features of the Croatian agriculture. This scheme comprises three programmes: (1) development of rural areas, (2) preservation of autochthon and protected breeds, and (3) marketing preparation of agricultural products and foodstuffs.

Graph 3-2: Rural Development Scheme

Source: MAFWM, 2007

3.1.4.1. Programme for development of rural areas The fundamental objective of the Programme for development of rural areas is sustainable development of rural areas by ensuring adequate working and life conditions and the preservation of natural and cultural heritage. Measures for the development of rural areas encompass aid for:

• investments into farms

• processing of agricultural products,

• establishment of machinery rings,

• young farmers,

• education, retraining and training,

• environmental protection measures in agricultural and forestry areas,

• forestry,

• renewal of fire affected forests and agricultural areas,

• land improvement measures,

• reconstruction and development of the countryside,

• preservation of cultural property, rural customs and manifestations,

• various agricultural and other activities aimed at realising additional or alternative sources of income,

• rural and hunting tourism and traditional crafts,


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• improvement of rural infrastructure connected with the development of agriculture,

• promotion of wine roads and other tourist routes,

• promotion of quality autochthonous products

• development of services in rural areas.

Implementation of the Programme is based on the pooling of financial resources from the state budget and user resources, county resources and other sources of funding. The objective is for this issue to be approached according to a “bottom-up” principle or that local self-government units become actively involved in the decision making process for decisions important for the development of this region.

The right to financial aid as part of this Programme may be realised by a legal or natural person – beneficiary determined separately for each published tender for a certain measure and who complies with the conditions stipulated therein. These are:

• farms, commercial and non-commercial, listed in the Register of Agricultural Holdings (this includes: family farms, agricultural cooperatives, legal persons registered for trade and agricultural activities);

• agricultural producers’ association and machinery ring (listed in the Register of Associations);

• company and small business (registered for activities significant for the rural community);

• beneficiaries of aid for fish farming and aid for commercial fishing;

• beneficiaries registered to carry out forestry activities;

• state or private occupational school (secondary school and higher), tertiary institution, college and university which has a regular and specialised programmes (or will develop them) in which students are educated for agricultural occupations;

• state or private institutions (museums, galleries, libraries, etc) or organisations (tourist boards, tourist agencies, agencies for project drafting, etc), non-government civil associations or societies (cultural-artistic societies,

• units of local and regional self-government (municipality, city, county).

The programme is implemented by the MAFRD, DRD.

Examples of some implemented measures from Programme for development of rural areas:

3.1.4.1.1 Aid to producer’s associations and agricultural cooperatives

Up until 2002 aids for associations were organised through the Government Office for Cooperation with NGOs, as part of the activities for strengthening of the civil sector. From 2002 following a Government decision, the competent ministries within their field of activity ensure funds for aid to associations.

The objective is to award financial aid to associations for their work projects and programmes. The purpose of awarding financial aid is the promotion of the work of the association as an important factor in organising agricultural producers. Beneficiaries of aid are associations registered in accordance with the provisions of the Act on Associations (OG 88/01 and 11/02 see page 322) those that, according their classified activity, fall within the field of activity of the MAFRD. Funds are awarded through public bidding (see Table 3-7).

Table 3-7: Overview of aid for agricultural associations, 2003 - 2006 Year 2003 2004 2005 2006

No of applications 27 42 78 61


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HRK 500.000 450.000 450.000 450.000 Amount of aid EUR 68.306 61.475 61.475 61.475

Source: MAFWM, 2007

Except above mentioned funds for agricultural associations, additional funds were allocated through public bidding for specific programmes:

• co financing associations of producers and/or processors of autochthons Croatian food (11 programmes, 305.000 HRK total funds, aprox. 41.667 EUR)

• co financing machinery rings associations (4 programmes, 1.500.000 HRK, aprox. 204.918 EUR).

In 2006, through public bidding funds were awarded to the agricultural cooperatives as well:

• establishment of new agricultural cooperatives (28 programmes, 1.746.500 HRK total funds, aprox. 238.593 EUR)

• development of existing cooperatives (77 programmes, 1.650.000 HRK total funds, aprox. 225.409 EUR)

• co financing of salary for the professional cooperative managers (17 requests, 1.449.100 HRK total funds, aprox. 197.964 EUR)

3.1.4.1.2 Aid to agricultural secondary schools Financial aid for construction, adaptation and equipping of facilities for practical work in agricultural secondary schools is awarded pursuant to a Decision of the minister of agriculture, forestry and water management. The objective of aid is to improve the quality of teaching, improve the conditions of conducting of practical training of students, as well as the option of using these families for the education of agricultural producers.

All agricultural secondary schools are beneficiaries of this aid.

Funds are awarded through public bidding. For the purpose of applying for a tender, potential beneficiaries submit an elaborated proposal for investment of funds for construction, adaptation and equipping of facilities.

Table 3-8: Overview of aid for agricultural secondary schools, 2001 - 2005 Year 2001 2002 2003 2004 2005

No of applications 5 6 12 17 16

Amount of aid (EUR) 184.426 204.918 204.918 204.918 122.951

Source: MAFWM, 2006

3.1.4.1.3 Participation on exhibitions, fairs, seminars and other agriculture related events

Every year the MAFRD opens a tender with the purpose of collection of offers for awarding sponsorship and aid of the Ministry for holding of fairs, exhibitions, seminars, round tables, scientific gatherings, congresses and anniversaries with the purpose of promoting domestic products, connecting producers and improving agricultural production through transfer of knowledge.

Those participating in the tender are natural and legal persons with their seat or residence in the Republic of Croatia organising fairs, exhibitions, seminars, round tables, scientific gatherings, congresses and anniversaries in the area of agricultural, food, forestry and hunting.

In 2006, 97 events were sponsored and granted a financial support in the total amount of 423.500 EUR (3.100.000 HRK).


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3.1.4.2. Programme for preservation of autochthon and protected breeds

The objective of the Programme is maintenance and advancement of the production of autochthon and protected breeds of domestic animals (see Table 3-9). The Croatian Livestock Centre carries out registration and marking of animals, receives and processes application for payment of subsidies, while payment itself is carried out by the MAFRD through the DMSSA.

Commercial and non-commercial farms entered in the Register of Agricultural Holdings are aid beneficiaries.

Table 3-9: Overview of autochthon and protected breeds aid request, 2001 - 2004 Year 1999 2000 2001 2002 2003 2004

Breeds Number of beneficiaries

Istrian bovine 65 76 76 91 94 102

Slavonian Srijem Podolac 1 1 1 1 1 1

Buša - cattle 2 17

Turopolje pig 1 1 1 1 1 4

Black Slavonian pig 50 82

Istrian sheep 27 21 33

Cres island sheep 3 2 2

Pag island sheep 13 14 12

Lika Pramenka 4 36 23

Dubrovnik Ruda 20 17 16

Cigaja sheep 2 19 28

Lipicanac horse 118 120

Croatian Posavac horse 352 330

Međimurje horse 19 12

Croatian cold-blood horse 509 436

Donkeys 702 804 790 811 527 647

Zagorje turkey 265 231

Source: MAFWM, 2006

In period 2001 – 2004 total 4,43 milion EUR (32,4 million HRK) was paid for autochthon and protected breeds (see Table 3-10).

Table 3-10: Overview of subsidies paid for autochthon and protected breeds, 2001 - 2004 in HRK and EUR

Year Total paid per year

HRK EUR

2001 5.044.280,00 689.109

2002 9.189.320,00 1.255.372

2003 8.263.025,00 1.128.829

2004 9.927.023,26 1.356.151

TOTAL 32.396.648,26 4.425.772


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Source: MAFWM, 2006

3.1.4.3. Programme for marketing preparation of agricultural food products

The objective of the Programme for marketing preparation of agricultural food products, which began in 2001, is to contribute to the competitiveness of the agricultural sector by subsidising sale of agricultural-food products especially in the tourist market by means of various marketing activities.

The programme is conducted through tenders and its beneficiaries are scientific and professional institutions, consulting companies, cooperatives, producers’ associations and local and regional units of self-government (counties, municipalities and cities).

The Programme is funded from the state budget and other sources (for example: resources of the project holder, family farms, local and regional units of self-government, etc.).

Chosen projects must deal with at least one of the required issues – market research, improvement of the quality of products, preparation for the market of original Croatian products and promotional activities.

The financing of projects from the state budget is limited to 68.306 EUR (500.000 HRK), which is the maximum amount that may be granted for single projects, and conditioned by the co-financing criterion, according to which 50% of the project value must be financed from other sources.

The projects from 2001 have been completed and comprise relate to the marketing preparation of kulen (paprika-flavoured sausage), mussels from Ston, Croatian baby beef and Istrian products. At the end of 2003 contracts for 6 new projects were concluded:

Feniks – marketing preparation of wines from Zagorje before their launch to the market;

Education of subjects in the food sector and regarding food safety control systems (HACCP - Hazard Analysis Critical Control Point) and product quality control (ISO 9000:2000);

Web page “Products and services from Croatian villages”;

The creation of a Zagreb County trademark of apple vinegar;

Wine roads of Požega - Slavonia, Split - Dalmatia and Dubrovnik - Neretva counties;

Marketing of the turkey from Zagorje (Zagorski puran).

Table 3-11: Overview of aid for marketing preparation of agricultural food products, 2001 - 2006

Total amount of aid Average amount per project Year

HRK EUR

No of projects HRK EUR

2001 1.265.000 172.814 5 253.000 34.563

2003 1.800.000 245.902 6 159.667 21.812

2004 1.800.000 245.902 12 239.208 32.679

2005 2.000.000 273.224 7 273.143 37.315

2006 3.000.000 409.836 26 191.344 26.140

Source: MAFWM, 2007

Due to its characteristics, this programme is not part of direct benefits granted to the agricultural sector, which means it is exempt from the reduction obligation prescribed by the World Trade Organisation (“green basket” measures), referring to a minimum distortion of the production.


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The programme “Marketing preparation of agricultural food products is mostly oriented towards research, while it has very limited practical effects. Furthermore, it encompasses a small part of marketing activities and it has a low number of users.

The MAFRD, DRD manages and is responsible for the implementation of this programme.

3.1.5. Operative programmes and other models of MAFRD

Priority and strategic development programmes of the Croatian Government and the MAFRD began in 2004 and aim at increasing competitiveness and the volume of the domestic production, in particular of weak production sectors, such as processing of fruit, vegetables, grapes, meat and milk. The priorities are: restructuring of the agricultural production and cultivation of permanent plantations, development of the livestock production sector and irrigation as a strategic priority project. For that reason the Government of the Republic of Croatia has adopted a series of operative programmes which contain and define measures for the improvement of the said sectors. The IPARD measures complement those national models and measures, since they are focused on the promotion of investments aimed at improving the standards regarding hygiene, animal welfare and the environmental protection, which shall ensure a higher quality production and processing.

Graph 3-3: Operational programmes of Croatia

Source: MAFWM, 2007

3.1.5.1. Operative programme for the development of the livestock production sector in the Republic of Croatia

In July 2004 the Croatian Government adopted the Operative programme for the development of the livestock production sector, the main goal of which is the increase of the domestic competitiveness.

The programme for the development of the livestock production sector shall be implemented during the following five years. The programme envisages the opening of 1.200 new dairy farms with an average number of 40 cows (20 - 100 cows), opening of 228 new cow-calf production systems with an average number of 60 cows, adaptation of 6.000 existing farms with an average number of 15 cows. The Programme for the development of the livestock production sector should increase the Croatian milk production in the following five years from 674 million litres to 1,2 billion litres. 341,53 milion EUR (2,5 billion HRK) shall be spent through loans in order to implement the programme in the given time-limit. The programme is based on


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favourable loans with a 10-year payback period, 4% interest rate and 2 years before the first instalment, which is guaranteed by the CBRD. CASB shall give guarantees for 50% of the loan, while the remaining part of the guarantee shall be investment itself. MAFWM shall participate with a subvention accounting for 25% of the loans which shall be granted by banks. The subvention may amount to a maximum of 68.306 EUR (500.000 HRK). The CAEI is in charge of the implementation of the programme.

In most modern agricultural countries the livestock farming is the most developed agricultural sector and is often used as a development measure, while in the Croatian agriculture livestock rearing and dairy production have a strategic importance.

The current situation in the livestock rearing sector shall not provide for a sufficient development level in the following period. Small production units (in average 3 cows per farm) and a low milk production level (around 2.600 litres per cow) may not ensure competitiveness of the livestock farming sector on the open market.

3.1.5.2. Operative programme for the cultivation of permanent plantations in the Republic of Croatia

In June 2004 the Croatian Government adopted the Operative programme for the cultivation of permanent plantations. The Operative programme for the cultivation of permanent plantations envisages the creation of new plantations on 33.500 ha of land (13.000 ha of vineyards, 15.000 ha of orchards and 5.500 ha of olive groves). This implies an investment of almost 1 billion euros, which shall produce employment for at least 10.000 - 15.000 households only in the production, and for almost the same number of households in the processing and trade of the said products.

Agricultural farms which also operate as trade enterprises, handicrafts or cooperatives shall be the participants of this programme. Financial plans for the programme implementation are based on state budget benefits amounting to 25% of the total project value; one third of the required financing shall be earmarked by the local self-government (counties, municipalities, towns), the CBRD and the CASB shall grant favourable loans and guarantees, while the producers shall provide for one fourth of the total project value. The CAEI is in charge of the implementation of the programme.

The fact that Croatia, regardless of its production potential, imports large quantities of all kinds of fruit, with the exception of tangerines that are produced in sufficient quantities, is a good reason for a more systematic cultivation of permanent plantations.

3.1.5.3. Operative programme for the development of the pig-breeding sector in the Republic of Croatia

The existing production systems in the pig-breeding sector are not efficient enough, profitable and do not comply with the environmental protection and animal welfare standards, which are prerequisites for all European Union member states.

In order to change such situation, the MAFWM created the Operative programme for the development of the pig-breeding sector, adopted by the Croatian Government during the session of 14 December 2005.

The programme envisages the construction of 342 new farms during a period of five years, which includes:

250 farms for breeding piglets, with an average number of 50 to 200 sows;

19 farms for the herd nucleus;

73 farms for fattening pigs.

Loans for the implementation of this programme shall be provided for by the CBRD, while the loan guarantees shall be issued by the CASB, each in the amount of 50% of the investment value.


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The MAFRD shall provide for 25% of the investment up to a maximum amount of 136.612 EUR (1.000.000 HRK) from the budget intended for capital investments scheme.

Currently, the programme is fully operative through local offices of the Croatian Livestock Centre.

3.1.5.4. Operative programme for the support to the production of the “kulen” from Slavonia

The Operative programme for the support to the production of the kulen (Autochtonic meat product, hard salami, smoked and with special production technology) from Slavonia is in accordance with the agricultural policy measures aimed at increasing the production, standardising the quality and ensuring an adequate protection of autochthon Croatian products by applying geographical indications concerning origin, tradition and authenticity.

The Croatian Government adopted the Operative programme on 5 May 2006, while its implementation began in July 2006 owing to the Croatian Livestock Centre.

Upon proposal of the Croatian Chamber of Economy, the kulen or kulin from Slavonia has received the geographical indication on 6 May 1997 by the State Institute for Intellectual Property.

The facilities with a mini processing plant and an automatic chamber for the maturation of the kulen consisting of a building, equipment for the production and maturation of the kulen, 80 fattened pigs of 150 kg weight each and handicraft instruments (up to 30%) required for the production and the covering of handicraft expenses.

It is possible to entirely finance the investments by a loan of the Croatian bank for reconstruction and development under the following conditions: the maximum amount of the loan up to 136.612 EUR (1.000.000 HRK), 4% interest rate, 10-year payback period and 2 years before the first instalment, while the loan is returned in form of monthly annuities.

The co financing of the investment is implemented with 25% of the total amount of the loan, that is, a maximum of 34.153 EUR (250.000 HRK), through a subvention of the MAFRD. The loan beneficiary may use the subvention for the reduction of the capital sum.

In case the support to capital investments for the reduction of the capital sum of the loan has been used, the remaining 102.460 EUR (750.000 HRK) would be financed through a loan at the CBRD under the following conditions: a mortgage amounting to 50% of the investment value of a non-constructed investment or other real estate and 50% of the investment value guaranteed by the CASB.

With the aim of increasing the production of the kulen from Slavonia, on the basis of the analyses of the annual business volume of a family agricultural farm and the necessary investments in production facilities and equipment, a threshold has been established for production profitability amounting to 80 fattened pigs, or 1200 kg of kulen from Slavonia per year.

3.1.5.5. Operative programme for the development of the vegetable-growing sector in the Republic of Croatia

Regardless of favourable climate, pedological and hydrologic conditions, the vegetable-growing sector in Croatia has not developed in accordance with its possibilities and requirements. One of the reasons is the neglect of the vegetable-growing sector in the period before Croatia’s independence, since the country was highly dependant on the vegetable production of other republics of the former Yugoslavia, which were main vegetable suppliers, both concerning vegetable processing or consumption of fresh vegetables.

After becoming independent and during the Homeland War, a large part of Croatia’s regions which had nevertheless developed vegetable-growing, was occupied or near battlefields. At the same time the process of economic restructuring and market opening was under way, which caused a higher demand for vegetables in Croatia than the Croatian suppliers were able to


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provide for, which was therefore compensated by import. The consequences thereof are still visible today since Croatia imports a large part of the required quantity of fresh and tinned vegetables.

Therefore the Government of the Republic of Croatia aims at initiating a long-term strategic re-orientation towards a significant increase of land used for vegetable-growing in order to ensure a vegetable production in open and closed areas which would satisfy the country’s needs and even export, with a contemporary modernisation of technologies for production, packaging and warehousing of vegetables, as well as a higher product quality. In accordance with the said goals, the Government of the Republic of Croatia during the session of 22 January 2004 adopted the Conclusion entrusting the MAFRD with the task of creating and delivering to the Government the Operative programme for the development of the vegetable-growing sector.

3.1.5.6. Operative programme for the development of the industrial wood-processing in the Republic of Croatia

The Operative programme for the development of the industrial wood-processing in the Republic of Croatia for the period 2006 - 2010 was adopted by the Croatian Government on the session of 12 July 2006.

This Operative programme aims at linking the forestry sector with the industrial wood-processing through a mutual cooperation and complementarities, optimising the capacities of the primary processing sector, increasing the production of final products as well as employment. It also aims at multiplying the value of the wood-based raw material through easily recognisable highly finalised high quality products with modern design.

The implementation of the Operative programme relies on the state budget finances, favourable loans at business banks with a lower interest rate with respect to the reference interest rate and other support measures and sources, where it may be established during the programme implementation that they offer more advantages.

The final wood-based products must be defined as national strategic products and therefore the following development priorities have been set out:

Improvement of the existing and development of new products, procedures and services through following measures:

o Research and development

o Development of the products’ quality and business processes (targeted at the industrial wood-processing sector as a whole and single companies in the said sector)

o Rational use of the wood-based raw material through following measures:

Investments in the environmental protection

Efficient use of wood in final products (targeted at the industrial wood-processing sector as a whole and single companies in the said sector)

Creation of the wood-based sector brand through following measures:

o Development of new products (targeted at the wood-processing companies producing final products)

o Development and application of new materials (targeted at the industrial wood-processing sector as a whole and single companies in the said sector)

Development of technologies and technologic processes through following measures:

o Modernisation and technology transfer (targeted at the industrial wood-processing sector as a whole and single companies in the said sector)


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o The creation of a Croatian wood-based technology platform (targeted at all groups with participation interest and knowledge, the industrial wood-processing sector as a whole and single companies in the said sector).

By adopting this Operative programme, the Croatian Government decided to earmark 27,51 milion EUR (201,4 million HRK) from the state budget for its implementation in the next five years.

For a full implementation of the programme within the period envisaged, the required loans have been calculated to amount to 243,71 milion EUR (1,784 bilion HRK). This evaluation has been made on the basis of a statistical analysis of key areas in the economic and social structure of the entire industrial wood-processing sector in the Republic of Croatia.

The loans shall be used exclusively for investments aimed at increasing the capacities for finalised production and purchasing of new and/or modernising the existing production lines, building the required infrastructure for the energetic use of processing scrap, purchasing of technical and technologic production segments and adapting the existing facilities or building new ones.

3.1.5.7. National project of irrigation and management of agricultural land and water

The Republic of Croatia, regardless of its natural potential (soil quality, water resources), is placed almost on the bottom of the scale concerning land irrigation (around 9.000 ha) in Europe. The non-competitiveness of the today’s agriculture is a consequence of a low production technology level, high fragmentation level of the agricultural land, low number of facilities, low maintenance of the melioration system and low yield. Furthermore, frequent draughts (on average every third to fifth year) cause billions of HRK of damages in agriculture. Irrigation is one of the measures that may reduce and even completely prevent draught damages in certain areas.

One of the main starting points in irrigation planning is to establish the availability and the quality of water resources. In Croatia today only 1% of renewable water resources are used for all purposes. As far as land is concerned, it has been established that Croatia has 244.000 irrigable ha, while more than 600.000 ha are irrigable with small limitations. Furthermore, it has been estimated that about 6000 ha of agricultural land are highly irrigable (mostly in the Dubrovnik - Neretva county), while about 500.000 ha are very irrigable (mostly in the Osijek - Baranja and the Vukovar - Srijem counties).

Therefore, on 12 March 2004 the Government of the Republic of Croatia started the National project of irrigation and management of agricultural land and water in the Republic of Croatia.

Pursuant to the said decision, a National delegation has been founded, while a Team of Experts was nominated on 4 June 2004 and entrusted the coordination of the creation and the adoption of the strategy for the present and future development of irrigation in the Republic of Croatia, with the aim of improving the management of natural resources, organisation of the agricultural infrastructure and the market economy of agricultural products.

The National project of irrigation and management of agricultural land and water of the Republic of Croatia was adopted by the Croatian Government on 17 November 2005 and it is an integral part of the Water Management Strategy.

The Project shall be implemented in three stages:

1. a. irrigation plans for counties

1. b. irrigation pilot-projects

2. project documentation for single irrigation systems

3. restoration/reconstruction and building of new irrigation systems

The MAFWM has financed 50% of the costs of the creation of irrigation plans for counties and project documentations, and has covered 100% of all costs regarding the restoration and the construction of new irrigation systems next to agricultural lots.


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During the previous period the creation of irrigation plans has began in 19 out of 21 Counties, four of which have been approved, seven are in the adoption process, while the rest is still in the creation phase. All plans should be completed during 2007.

On the basis of the National project of irrigation and management of agricultural land and water four national pilot projects have been devised. The creation of project documentation on the level of ideational and main projects and the procurement of appropriate location and construction permits have been started on behalf of known users and irrigation locations. The restoration of the existing irrigation systems began before the completion of the required technical documentation and the procurement of necessary permits.

Within 2010 the planned investment in irrigation systems shall amount to 318.500.000 EUR and within 2020 591.500.000 EUR. The construction of the water-supply and the distribution network shall be financed by the Croatian Government, while the financing of the irrigation system shall befall on the final user. In that manner, the total state investment within 2010 should amount to 213,4 million EUR, or 396 million EUR within 2020.

It is important to define the end users of the National project of irrigation and management of agricultural land and water, since they must guarantee to make use of the constructed systems and assume rights and obligations arising from it, which shall also be regulated by the Act.

3.1.5.8. Programme of insurance against possible production damages in agriculture

During 2003 the programme for the support to agricultural farms was adopted on the basis of the Regulation on the Realisation of the Right to Aid to Insurance against Possible Damages in Agriculture, Fishery and Forestry (OG, 47/03). This Regulation prescribes the amount of aid, manner and conditions for the realisation of the right to aid to insurance against possible production damages in agriculture, forestry and fishery. Requests for the previous year are lodged within the prescribed period (1 to 31 January). The farms lodge their requests to the local state administration office in counties or in the City of Zagreb (fish-breeders submit their requests directly to the MAFRD), which process them and establish the appropriate amount of aid per farm.

Table 3-12: Overview of the aid to insurance per years and counties (2003 - 2005)

Aid to insurance

2004 (for 2003) 2005 (for 2004) 2006 (for 2005) County No. of users Amount No. of

users Amount No. of users Amount

Bjelovar - Bilogora 89 71.690,82 134 133.117,81 189 203.963,04

Brod - Posavina 288 470.773,21 204 612.183,31 171 575.993,68

Dubrovnik - Neretva 7 19.002,30 62 59.840,63 32 40.149,55

City of Zagreb 26 687.706,57 36 590.943,76 45 634.706,51

Istria 60 540.449,06 78 870.009,14 78 757.514,88

Karlovac 1 2.024,00 2 3.284,50 5 14.142,99

Koprivnica - Križevci 296 477.656,79 131 753.333,86 192 833.996,02

Krapina - Zagorje 16 13.635,19 51 32.342,99 60 47.280,60

Lika - Senj 305 111.323,75 572 211.084,84 736 350.883,96

Međimurje 29 678.724,33 45 644.921,21 54 694.876,85

Osijek - Baranja 751 2.653.386,96 465 4.899.733,25 471 5.512.630,31

Požega - Slavonia 930 1.158.655,40 909 1.674.722,33 814 1.109.421,65

Primorje - Gorski Kotar 0 0 0 0 0 0


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Sisak - Moslavina 82 185.814,16 138 450.907,26 185 713.707,41

Split - Dalmatia 3 153.179,77 6 180.775,45 10 1.136.598,58

Šibenik - Knin 1 2.310,00 2 3.278,25 2 1.638,87

Varaždin 16 241.235,61 31 651.322,15 30 568.436,44

Virovitica - Podravina 1117 2.871.780,44 699 3.558.389,18 881 3.389.801,59

Vukovar - Srijem 1611 2.343.591,98 370 2.924.848,52 337 2.866.275,55

Zadar 17 146.178,22 22 231.132,48 19 274.862,16

Zagreb County 88 746.960,00 179 935.750,32 262 1.149.576,93

Fish-breeders

6 958.132,58 5 854.484,88 5 722.148,34

TOTAL 5.739 14.534.211,14 4.141 20.276.406,12 4.583 21.598.605,31

TOTAL 9.880 34.810.617,26 14.477 56.409.222,57

Source: MAFWM, 2006

3.1.5.9. Use of the “blue diesel” in agriculture and fishery The Act on Excise Duty on Mineral Oils prescribes all types of mineral oils, as well as the tax base and the amount of the excise duty on mineral oils. Therefore, the production price of the standard blue-coloured diesel fuel (“blue diesel”), which is used for agricultural machines and fishing boats, is exempt from the excise duty. In that manner, the production costs of farmers and fishermen are substantially reduced, which increases the competitiveness of the domestic production.

Most European Union countries and neighbouring countries have regulations regarding the use of the so called “green fuel” for agricultural machines. However, in most cases the problem has been tackled through a total or partial refund of paid excise duties. No country in this area exempts farmers and fishermen from excise duty in advance, as Croatia.

In 2002 the right to the blue-coloured euro-diesel fuel (“blue diesel”) was granted to agricultural producers who, pursuant to the Act on Monetary Aid and Refund, had also realised the right to benefit from the aid for growing cereals, oil plants, sugar beat and tobacco in limited quantities per hectare (80 litres, or 40 litres for tobacco). The right to unlimited fuel quantities is granted only to fishermen.

The Act on excise duty on mineral oils has been amended in the sense that the blue diesel may be used by all commercial farmers.

3.1.6. Other national aid programmes

3.1.6.1. Programmes for development of islands On the basis of the Islands Act, the Ministry of the Sea, Tourism, Traffic and Development (MSTTD) issued the Regulation on the contents and the methodology of the creation of the “Sustainable islands development programme”, according to which the island units of local self-government, together with experts and in coordination with the said Ministry, shall prepare the documents regarding the development of area of their jurisdiction. These programmes do not have a direct impact on encouraging and increasing employment in those areas, but the proposal of measures concerning their development influences directly the increase of the life quality standards, employment possibilities and de-population reduction. (It must be added that islands mostly consist of rural areas, which is the reason why these programmes have a particular importance and value in that sense.)

The project “Construction of communal and social infrastructural facilities on Croatian islands” is multi sector project, financed by the Council of European Development Bank (EDB), that


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began in 2004, while the total value of the project amounts to 105,45 million EUR (769.814.000 HRK). The Council of European Development Bank has contributed with 26,5 million EUR (193.364.371 HRK). The main goal of this project is the improvement of the overall life quality on islands and the creation of prerequisites for a sustainable development on small, scarcely inhabited and remote islands, as well as on large and developed islands.

The unsatisfactory living conditions, that is, the main identified problems on islands are the non-existent or underdeveloped water-supply and sewage system, inappropriate care for the elderly, inappropriate health protection and the inappropriate education system.

The project has established the following four components, the implementation of which should improve the living conditions on the islands:

Communal infrastructure – with two components:

o Water supply – improvement of water safety, reliability and supply to small or remote islands through the reconstruction of old and the construction of new water-tanks of the appropriate capacity and water-supply system. Drinking water is delivered by fishing boats or supplied through a water desalinisation plant, especially on islands with more than 2000 residents and on islands with a large number of visitors and tourists during the tourist season.

o Sewage system – it shall reduce the pollution of the environment by regulating waste water discharges in sensitive areas covered by the project, in accordance with the standards of the Republic of Croatia and the European Union.

Social welfare

Health protection

Education process on smaller islands

3.1.6.2. Programmes for stimulating employment implemented at the local level

Different national programmes for rural development and employment represent the basis for the implementation of programmes and specific projects on the counties’ level. Zagreb County and Istria Counties may be taken as a positive example thereof, having more own initiatives and projects concerning agriculture and rural development than other counties. Municipalities and towns associate their programmes for increasing employment and rural development to programmes and activities of the aforementioned institutions.

There are also numerous civil initiatives and actions of citizens participating in non-governmental associations, many of which deal with issues regarding social welfare and unemployment reduction. In 2000 the Croatian Government Office for Associations offered the financing of various associations’ programmes and projects. In 2002 around a hundred projects regarding social welfare and unemployment reduction sectors applied for financing, 65 of which for 48 associations were approved. In total 0,286 milion EUR (2,1 million HRK) were granted in 2002 for chosen projects dealing with the said issues.

According to available data, all competent institutions make programmes for stimulating employment. However, most of them are intended for urban areas only, while rural areas are still associated with the agricultural production. In fact, there are no special programmes intended for a targeted development of rural areas. Another problem is a scarce connection and communication between single institutions with respect to the determination of common goals and development of relevant measures.

The data regarding the success of single programmes is not entirely available, which indicates the need of devising a quality system for programme implementation monitoring.


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3.1.6.3. Aid to research in agriculture Scientific research, technical and development projects concerning the needs of villages and agriculture are financed owing to several sources: finances of the Ministry of Science and Technology, MAFRD through the Council for Research in Agriculture (VIP) and the Ministry of the Economy, Labour and Entrepreneurship. An important step forward towards the development of research has been made by the Ministry of the Economy, Labour and Entrepreneurship, which implements the programmes “Croatian Innovation and Technology Development – HITRA” and “Development of Knowledge-based Enterprises”. The VIP research is financed by the MAFRD through the Fund for Applied Research Development in Agriculture. This programme has the advantage of being connected with the CAEI, which conducts the process of applying the results of the research in practice. The Ministry of the Economy, Labour and Entrepreneurship also supports the so called “New Technologies Programme” and programmes and projects regarding cooperatives. Furthermore, smaller projects are financed from various sources, such as the Croatian Government Office for Associations, county and local authorities, foreign donations of international associations, companies, banks and so forth. Beside high institutes and universities, the research activities are also conducted by (regional) public institutes.

The evaluation process for research projects, however, is in most cases too long and scarcely transparent. The obligation of commercialisation of applied research in agriculture is poorly enforced, which makes the impact assessment very difficult, while the investments do not pay.

3.1.6.4. Programme for the stimulation of small and medium enterprises

The goal of the establishment of a market economy is the creation of a competitive market system, which shall be able to fit successfully in the global market competition. Small and medium enterprises are the target group of the enterprise incentives, which are the basis of the economy.

The programme for the stimulation of small and medium enterprises determines the development guidelines for all Croatian regions, rural areas as well. The programme aims at creating the prerequisites which would lead to the fulfilment of following goals:

an even development of all Croatian areas

increase of the number of small and medium enterprises

building of entrepreneurial zones

removal of administrative obstacles

increase of the competition (by investing in development, education and new technologies)

change of the activities’ structure in favour of the production

enhanced exports

creation of a positive entrepreneurial environment

contacts among small enterprises, as well as among small and large enterprises

increase of persons employed in handicrafts from 1,4 to 2 per handicraft

tax discharge

faster insertion of targeted groups (young people, women, Homeland war veteran) into the economy

entrepreneurial training and education through life-long learning

In its intent to reach these goals, the Ministry of the Economy, Labour and Entrepreneurship started 25 projects only in 2006:

Promotion of entrepreneurship


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International activities of the entrepreneurs

Students’ cooperative and Students’ enterprise

National counselling on entrepreneurship

Entrepreneurship education

Entrepreneurship of targeted groups

Stimulation of market activities

Technical training

Innovation production clusters – Central Croatia (pilot-project)

Stimulation of production, introduction of new technologies and development of new products

Local development projects – entrepreneur

Regional guarantee instruments (pilot-project)

Stimulation of small entrepreneurship

New cooperative

Development of cooperatives

Cooperative system

Registry of cooperatives

Entrepreneurial centres and regional development agencies

Entrepreneurial incubators and technologic parks

Information improvement of the Croatian business community (CARDS project)

Institutional strengthening of small and medium enterprises and development of policies for the harmonisation with the EU (PHARE project)

Handicraft development

Training, re-qualification and employment of craftsmen

Education of craftsmen

Registry of handicrafts.

Overview of several projects:

The project “Technical adjustment” aims at stimulating the introduction of systems for quality and environmental management, certification of the products’ compliance with Croatian and European standards and procurement of technical standards. The project grants subventions to production and economic enterprises which are 100% owned by private Croatian citizens.

The project “Traditional handicrafts” is implemented with aim of developing traditional handicraft activities, which safeguard the cultural and economic heritage of the Republic of Croatia. The project is intended for stimulating handicraft activities which are performed mainly manually, in limited quantities, and with traditional handicraft final products. Subventions are granted to handicrafts and companies that conduct such activities.

3.1.6.5. Models of aid to agriculture and rural areas on local level

According to the Act on Local and Regional (District) Self-government (OG 90/92 of 12 December 1992, 94/93 of 20 October 1993, 117/93 of 12 December 1993, 128/99 of 30 November 1999), counties, towns and municipalities may support measures for agriculture and


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rural development on the basis of specific local needs through their own budget finances. However, there are no state mechanisms which may harmonise, coordinate or monitor such aid models, while the local authorities do not have the obligation to register at the MAFRD the type and the amount of aid granted. According to a Ministry’s research, in 2004 the average amount of such aid amounted to 1,3 million EUR (10 million HRK) in agriculture-oriented counties. Nevertheless, the amount of the aid granted depends highly on the counties’ economic power; in other words, poorer counties have fewer resources available for such aid.

The MAFRD is well aware of the problem, which may cause production and market distortions in Croatia. It would be therefore required to establish a legal framework for regulating aid on regional and local level concerning agriculture and rural development, in order to ensure a balanced development of all regions.

3.2. PRE-ACCESSION AGREEMENTS AND MEASURES

3.2.1. Stabilisation and Association Agreement (SAA) The SAA belongs to a new generation of agreements on the associated membership for countries included in the Stabilisation and Association Process (Croatia, Former Yugoslav Republic of Macedonia, Serbia, Bosnia and Herzegovina, Albania and Montenegro). In June 1999 the Council of Ministers of the EU adopted the stabilisation and association process for Croatia, Serbia, Bosnia and Herzegovina, Albania, former Yugoslav Republic of Macedonia and Montenegro as a modification of the “regional approach” of the European Union from April 1997, when the said approach had proved to be inflexible and scarcely dynamic for an effective formation of EU policies and a long-term definition of relations with the countries in the region. The Republic of Croatia intensified the process of association to the European Union and in a very short time, through accelerated and professionally led negotiations, it affirmed itself as a partner able to respond timely and adequately to all stepwise requirements of the European negotiators within the framework of European institutions.

The agreed provisions of the Agreement, together with the preamble and general principles, contain also agreements on cooperation and mutual obligations regarding following fields: political dialogue, regional cooperation, free movement of goods, workers and capital, freedom of providing service, business title, legislations adjustment, cooperation in justice and internal affairs matters, cooperation policy, financial cooperation and institutional, general and final provisions.

According to Article 6 of the Stabilisation and Association Agreement, the SAA is entirely harmonised with the relevant provisions of the World Trade Organisation, in particular with Article XXIV of the General Agreement on Tariffs and Trade (GATT) from 1994 and Article V of the General Agreement on Trade and Services (GATS).

The trade of agricultural products is dealt with in Chapter II: Agriculture and Fishery (Articles 24-31), while Article 27 defines the foreign trade relations and measures (customs duties) for agricultural products and Article 28 relations and measures concerning fish and fish products. The Annexes of the Agreement (Annex IV a-f) contains further provisions on customs concessions for agricultural products.

3.2.2. Negotiations After submitting the application for membership (21 February 2003, Athens), the Republic of Croatia received a questionnaire consisting of 4744 questions in June 2003. The answers were presented to Romano Prodi, President of the European Commission in October 2003. On the basis of the answers given and the information received from other sources, the European Commission evaluated Croatia’s achievements in introducing reforms. The conclusion was that Croatia was a solid democracy with market economy and the country that made most progress


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regarding the implementation of the Copenhagen criteria and political conditions contained in the Stabilisation and Association Agreement.

After the European Commission presented its avis, in June 2004 Croatia received the status of a candidate country and the negotiations began on 3 October 2005.

The European Commission issued its first Progress Report (COM (2005) 561 final) on Croatia on 9 November 2005 and the second Progress Report for 2006 (COM (2006) 649 final) on 8 November 2006. The Progress Report contains a very detailed and updated overview and evaluation of Croatia regarding its compliance with political and economic criteria for membership and its ability to adopt and implement the EU acquis communitaire. The report is an important instrument for the implementation of further reforms, especially concerning those segments and issues related to the need to fully reach the European standards.

With regard to agriculture and rural development, in the Progress Report for 2006 European Commission concluded that Croatia has made reasonable progress related to the implementation of the Special Pre-accession Programme for Agriculture and Rural Development (SAPARD), quality policy and organic farming. Preparations need to be intensified as regards horizontal issues and the common market organizations. In particular, due attention should be given to the establishment of the Integrated Administration and Control System and Land Parcel Identification System.

Some progress has been made in the field of food safety, veterinary and phyto sanitary policy, but efforts are required in order to accelerate the preparations.

In the field of fisheries, Croatia has reached a satisfactory level of alignment in its preparations for accession. Important gaps remain in the areas of fleet management, inspection and control, structural actions and state aid.

3.2.3. Screening process First explanatory, multilateral meeting related to the screening process for the chapter 11 – Agriculture and Rural Development was held in Bruxelles form 5 – 8 December 2005, when representatives of the European Commission presented acquis communitaire to the Croatian and Turkish delegation.

Bilateral meeting was held in Bruxelles from January 29 – February 3rd 2006 where participated representatives of 26 working groups nominated by Croatian Government included in the process. These working groups represents each sector under Agriculture and Rural Development (milk, beef, etc.)

European Commission’s screening report was launched in July 17, 2006, where Commission recommended to the EU Council the opening of accession negotiations with Croatia on the chapter 11 - Agriculture and Rural Development. EU Council set one benchmark for this chapter to be met related to the agricultural statistics – elaboration of strategy for strengthening of statistical data collecting and processing. Strategy was officialy submitted to the EC in October 2007 for adoption. Negotiations for Chapter 11 have not been opened yet.

3.2.4. European partnership / pre-accession partnership

The Thessalonica Agenda for Western Balkans defines the manners and instruments for strengthening the Stabilisation and Association Process, also by introducing European partnerships.

According to the Commission’s avis on Croatia’s application for membership, the purpose of the European Partnership is to identify action priorities that support Croatia’s efforts of moving closer to the European Union on the basis of the pre-established system. The priorities have been adjusted to specific needs of Croatia and its preparation level, and shall be updated where required. The European Partnership also provides for guidelines on the financial aid to Croatia.


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It is expected that Croatia shall adopt a plan with a timetable and details regarding the manner it intends to pursue in order to approach the European Partnership priorities. The plan should also contain the manner of continuing the works in accordance with the Thessalonica Agenda, priorities regarding the struggle against organised crime and corruption and measures for an integrated management of borders, all of which were presented during the meeting of the ministers of justice and internal affairs held on 28 November 2003 in Brussels in the framework of the EU-Western Balkans Forum.

3.2.4.1. European partnership priorities The European Partnership defines the main priority sectors for Croatia’s preparation for further integration in the European Union on the basis of the analysis contained in the Commission’s avis on the Croatian application for membership. The priorities listed in this agreement on the European Partnership have been identified on the basis of the conclusion that it is quite realistic to expect from Croatia to fulfil them or substantially improve them within the incoming years. A distinction has been made between short-term priorities, which are expected to be fulfilled within one to two years, and medium-term priorities, which are expected to be fulfilled within a period of three to four years.

In February 2006 the Commission adopted an updated European Partnership entitled Accession Partnership.

It should be emphasised that, concerning the legislation harmonisation, the integration of the acquis communitaire in Croatian legislation system is not enough, since preparations for its effective implementation shall also be required.

3.2.4.2. Short-term priorities Agriculture and rural development

Ensure a fully-operational SAPARD/IPARD agency.

Accelerate work to set up of a proper land parcel identification system and a cattle identification and registration system.

Reinforce the collection and processing of agricultural statistics in line with Community standards and methodology.

Develop a rural development strategy and policy instruments for the design, implementation, management, monitoring, control and evaluation of rural development programmes.

Food safety, veterinary and phyto sanitary policy

Continue alignment in the veterinary and phyto sanitary sector, upgrade inspection arrangements, modernise agro-food establishments in order to meet EU hygiene requirements.

Develop a comprehensive strategy in the fields of food safety and veterinary and phyto sanitary policy. Strengthen the necessary administrative structures and improve coordination between them to ensure a comprehensive approach to the enhancement of food safety throughout the entire food chain.

Fisheries

Strengthen administrative and, in particular, inspection structures for fisheries policy.

Start establishing a computerised fishing vessel register.

With regard to the protected ecological and fishing zone, unilaterally declared by Croatia, continue the implementation of the trilateral agreement reached in June 2004.


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3.2.4.3. Mid-term priorities Agriculture and rural development

Strengthen the administrative structures and capacity needed to implement market and rural development policies.

Establish a vineyard register in line with Community standards.

Continue preparations to establish effective and financially sound paying bodies for the management and control of agricultural funds, in line with EU requirements and international auditing standards.

Food safety, veterinary and phyto sanitary policy

Substantially improve the alignment of foodstuff legislation and strengthen the necessary implementing structures.

Make significant progress with alignment in the veterinary and phyto sanitary sectors, including a system for animal identification, animal waste treatment and modernisation of agro-food establishments, animal disease control programmes, plant protection and quality of seeds and plant propagating material; significantly upgrade inspection structures.

Fisheries

Substantially improve administrative structures and equipment to ensure effective implementation of the common fisheries policy, including management of resources, inspection and control of fishing activities, market policy, structural programmes and a management plan for the fleet capacity in accordance with available fish resources.

Complete the establishment of a computerised fishing vessel register and of a satellite-based vessel monitoring system.

On November 6, 2007 EC has published proposal for Council Decision on principles, priorities and conditions contained in the Accession Partnership with Croatia and repealing Decision 2006/145/EC. In the proposal are listed priorities selected on the basis that it is realistic to expect that Croatia can complete them or take them substantially forward over the next few years. Regarding Chapter 11 - Agriculture and Rural Development following three priorities are listed:

Strengthen the administrative structures and capacity needed to implement market and rural development policies, including collection and processing of agricultural data.

Establish a vineyard register in line with EU standards. Continue preparations to establish effective and financially sound paying bodies for the

management and control of agricultural funds, in line with EU requirements and international auditing standards.

3.2.5. National Programme of the Republic of Croatia for Joining the European Union

The National Programme of the Republic of Croatia for Joining the European Union is the decisive control mechanism of the Government’s activities concerning European integrations. It reflects the readiness of the Republic of Croatia for the implementation of tangible measures required for reaching the priority goals within the process of integration in the European Union. The Programme combines the annual planning, setting out of short-term goals and the control of the accession process in different sectors within the strategic approach based on assumed obligations, own capabilities and national interests.

In December 2002 Croatia started it first National Programme for Joining the European Union. A year after the new National Programme was presented, containing a detailed analysis of


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mechanisms and actions that must be undertaken in order to fulfil the obligations assumed within the process of association to the European Union.

The National Programme of the Republic of Croatia for Joining the European Union for 2007 and 2008 aims at reaching the combination of all goals and tasks of the Republic of Croatia in the implementation of the Stabilisation and Association Agreement, as well as implementing the procedure required for continuing the integration in the European Union.

In the National Programme for Joining the European Union (NPPEU) for 2007 the agriculture and rural development are dealt with in Chapter 3.11 and fishery in Chapter 3.13.

The new NPPEU for 2008 is under preparation. Under that document it is envisaged to have fully operational structure for implementation of IPARD programme including the new Ordinance on IPARD implementation, accreditation of structures and promotional campaign.

3.2.6. SAPARD programme The Croatian Plan for Agriculture and Rural Development 2005 – 2006 (SAPARD Plan) was approved by the European Commission in February 8, 2006 and Multi-annual Financing Agreement between Croatia and EU entered into force on 6 April 2006. The management of the SAPARD programme was conferred on a provisional basis to the MAFWM – Directorate for Market and Structural Support in Agriculture (SAPARD Agency) and to the National Fund within the Ministry of Finance, by Commission Decision of 29 September 2006.

Managing Authority for the SAPARD program was established within MAFWM – Directorate for Rural Development.

Monitoring Committee (MC) for the SAPARD program, with 23 members, was established on November 14, 2005 by resolution of minister of agriculture. MC adopted Rules of Procedure on May 17, 2006 In 2006 MC had three meetings (February 15, May 17 and October 24) and in 2007 two meetings (May 23, 2007 and October 30, 2007))

3.2.7. CARDS programme The CARDS Programme (Community Assistance for Reconstruction, Development and Stabilisation) is implemented on the basis of a Multi annual Indicative Programme 2001 - 2004.

After having determined the nature of the overall situation in the Republic of Croatia, the European Commission approved five priority sectors and 12 programmes implemented horizontally. Such approach offers a solid stimulus to a better mutual connection of the state and public administration, while the said sectors are: democratic stabilisation, economic and social development, justice and internal affairs, strengthening of the administrative system and the environment and natural resources.

Twining project CARDS 2002 “Operational Capacity Building within the MAFWM” lasted from 1 September 2004 – 30 September 2006. The project had a total value of 1 million EUR. It was originally scheduled for duration of 24 months and lasted after extension 25 months. The project was implemented by a consortium between the German Ministry of Consumer Protection, Food and Agriculture (BMVEL) and the Greek National Agriculture Research Foundation (NAGREF) as junior partner. The experts, most of them active civil servants, came from the Bavarian Ministry of Agriculture and Forestry and the Greek National Agriculture Research Foundation.

EC CARDS 2002 Project ‘Strengthening capacities in the field of agriculture, live animals and food products’ was targeted to Veterinary Directorate and following activities were undertaken:

holding informative meetings on the territory of entire country, with purpose of plan presentation, and insight in new EU regulative by which food safety sector is defined,

education of county veterinary inspection in a way of how the objects are being estimated (regarding deviations from structural production demands and demands from hygienic aspect)


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systematically execution of inspection controls on a previously determined number of objects (slaughter houses and meat processing plants), for purpose of establishing of weak points on existing system and necessary conditions for modernization of all objects which are dealing with the food business in accordance with Community standards. They are enlisted in Register of approved objects with this authority. Inspection is carried out by committee consisted of member inspectors from MAFWM, and systematically inspection controls will be carried out continuously and it will comprise all the objects enrolled in Register of approved plants.

Project CARDS 2002 has started the reorganization of the Veterinary Administration through:

increase number of veterinarians (professional specialized inspectors)

splitting responsibilities in two areas: food safety and animal health and animal welfare

decrease in the number of veterinary offices

harmonization of the national laws with EU.

Within the framework of the mentioned CARDS 2002 project the analysis of the human resources capacity was made, analytical equipment and the total activity of the whole Croatian Veterinary Institute (CVI). Scientific and expert staff of CVI completely complies with the set up requirements, because the CVI is the scientific research institution with 90 employees with university degrees from which are 30 doctors of science and 16 masters of sciences.

Within CARDS 2002 Project «Strengthening of the sanitary inspection» is a sub project «Development of the laboratory network for the needs of the sanitary inspection» for which needs was made the Development of laboratory network Strategy that includes line of activities related to adjustment of the laboratory system to EU. Basic goal of this strategy is to optimize the laboratory network for the food, water and objects of universal use safety in the sense of availability of all the necessary analysis to sanitary inspection, in the sense of the relevance of the required analysis, for the purpose of ensuring the product health safety and reaching of the health control standards in accordance with the requirements of acquis communitaire.

German and Greek public administrations based on their solid experience in successful management both at national and international level were assisting the MAFWM in approximating its system to the EU best practice in the framework of this “twinning” with their officials. Project activities equally emphasised the adoption of the acquis communitaire, the alignment with the Stabilisation and Association Agreement (SAA) and the preparation for pre-accession support for agriculture and rural development.

3.2.8. EVD – The Netherlands Government Agency The EVD issues a tender for the “PSO business to business» programme twice per year. The bidders are Croatian entrepreneurs together with Netherlands companies. The aim of this programme is to strengthen business cooperation between the two countries and transfer of knowledge and know-how. Implementation of the new “programmatic PSO” programmes started in 2004. They will be used to subsidise various fields at institutional level. The table of completed and on-going projects is shown in following Table 3-13.

Table 3-13: List of PSO projects

PROJECTS BENEFICIARIES AMOUNT EUR

Upgrading of production, storage and marketing of champignons

Šampinjoni Požežanac and Lensenn BV 340.335

Upgrading of production, storage and packing of organic vegetables

Association BIOPA and The Organic Corporation BV

453.780

COMPLETED 2000 - 2004

Upgrading of swine production in the Republic

Company Žito d.d. and Cehave

449.200


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of Croatia

Upgrading of the production of anthodium in the Republic of Croatia

Company MBM d.o.o. and FLORIST de Kwakel

573.353

Improvement of genetic characteristics in swine in the Republic of Croatia

Company Stočar d.o.o. and Agriplan Consultants b.v.

637.776

Establishment of the farmers’ leasing centre for agricultural machines

Markovec SPG and KOK Bakkeveen BV 519.140

Establishment of the integrated supply chain for frozen vegetables

Lipovac d.d. and Agricultural production and Handling BV

695.527

Modernisation of fish farming in Croatia

Cenmar d.o.o. and HESY Bergambacht BV

449.000

DEADLINE FOR COMPL.

Production of decorative plants

IVA and Van Vupen Beheer B.V 615.000 2007

Development of the Croatian dairy industry

Holstein association of the Croatian breeders and Farmco

450.000 2005

Upgrading of the Croatian vegetable production

Association of the Croatian vegetable growers and Agriplan

446.108 2005

Food safety in the area of swine production

Ekotours d.o.o. and Kroonenburg Advies B.V.

490.000 2007

Land measurement AMC and Nehem International B.V 290.000 2005

Development of the network for formulation of regional water management plan in the coastal municipalities

State Water Directorate and DHV Water B.V

287.000 2005

Construction of stables for development of dairy industry

Bajkmont d.o.o. Sesvete and The Friesian Agro Consultancy BV

545.000 December 2006

ONGOING PROJECTS

Production of laying hens Perfa d.o.o. Donja Stubica and Henrix Landhorst BV

770.000 December 2006

PSO05/CR/1/1 Croatian Calf Integration Promdest d.o.o. and Alpuro Holding b.v. 700.000 December

2007

PPA05/CR/190

Improving the Institutional and Commercial Strength of the Croatian Fruit Sector

Ministry of Agriculture, Forestry and Water Management of the Republic of Croatia/ HVZ (Croatian Fruit Association)

350.000 December 2007

Source: Embassy of the Kingdom of the Netherlands, 2006


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3.2.9. World Bank projects The Croatia “Agricultural Acquis Cohesion Project” aims to develop sustainable systems and capacities within the MAFWM to ensure timely compliance with European Union acquis (legal) conditions in the rural sector.

There are four project components:

Component 1 strengthens the capacity for absorbing European Union financial assistance in agriculture. This will increase capacity during pre-accession to comprehensively implement the acquis communitaire (the precondition for accession, aimed at improving financial reporting) concerning the EU Common Agricultural Policy (CAP).

Component 2 empowers the MAFWM administration and management. This component establishes an organized, cohesive, and well-informed MAFWM management and administration team.

Component 3 ensures safe food and sanitary and phytosanitary (free from harmful pests and plant diseases) conditions. This component supports the development of the Croatia Food Agency and creates the necessary conditions for Croatian compliance with EU sanitary and phyto sanitary requirements.

Component 4 finances project management, including refinancing the Project Preparation Facility, which assists in preparing the Project.

Total project value is 48,5 million USD (34 milion EUR) and includes funding from World Bank and non-bank sources.

Besides this project, World Bank finances several other projects in Croatia, as shown in Table 3-14.

Table 3-14: WB projects in the Republic of Croatia

Project Title Amount, million USD

Trade and Transport Integration 75,30

District Heating Project 29,80

Croatia Programmatic Adjustment Loan 184,9

Education Sector Development Program Project 85,00

Science and Technology Project 40,00

Renewable Energy Resources Project 5,50

Social Welfare Development Project 40,00

Social and Economic Recovery Project 45,68

Coastal Cities Pollution Control Project 47,54

Source: World Bank Office, Croatia, 2006

The Renewable Energy Resources Project for Croatia aims at reducing greenhouse gas emissions on a continuous basis by overcoming barriers to implementation of renewable energy. Performance indicators for the global objective include: Reductions in carbon dioxide emissions at the national and project levels; and Increased share of new Renewable Energy Resources (RER) in national energy supply. The project will achieve the objectives by: (i) Overcoming the barriers to market development, including: (a) legal (e.g., lack of enabling policy and legal framework, inadequate planning capacity, unclear permitting and licensing procedures, unclear land ownership); (b) financial (e.g., lack of understanding of renewable energy in banking and business community, lack of risk capital); and (c) technical (e.g., potential strain on transmission system), (ii) Providing assistance to confirm market potential,


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build knowledge and implementation capacity, streamline procedures, monitor compliance with minimum share targets, and inform the public.

3.2.10. Brief assessment of previous actions The Pre-accession Economic Programme 2005 - 2007 (PEP) and National Programme of Joining of the Republic of Croatia into the EU, drafted annually in the Republic of Croatia, give the overall legal framework for design of the agricultural policy. The Strategy of Agriculture and Fisheries, Act on Agriculture and Act on State Aid in Agriculture, Fisheries and Forestry define the specific sectoral legal framework and define concrete measures for the agricultural sector. The emphasis in these documents is on the agricultural structural policy measures. With regard to the unfavourable structure of agricultural households in the Republic of Croatia (fragmented family agricultural households with prevalence of old members, farmers with mainly low education, depopulated rural areas, insufficiencies in rural infrastructure, bulky inefficient state agricultural combinates, processing industry insufficiently developed, etc.), the agricultural policy is aimed at speeding up changes of structural policy e.g. land policy, rural development, consolidation of agricultural land, diversification of farm activities, increase of competitiveness, development of manufacturing organisations, etc.

In the previous period the Croatian government has undertaken numerous actions and implemented many projects in the area of agriculture with the main objective of improving its structure and increasing competitiveness. Until the proposed reform of the agricultural policy in Croatia in 2003 there was no clear separation between market policies and rural development policies. Croatian structural policies were more production-oriented. Furthermore, the objectives set in the Strategy of agriculture and fisheries were often neglected due to political pressures of various lobby groups. There was also no comparable programming of the policy as in the EU.

Apart from production subsidies reform 2003 envisaged new support schemes in agriculture. Rural development became one of the keystones of agricultural policy. Further activities were oriented to establishment of an institutional and administrative system for rural development measures. The concept of majority envisaged national rural development measures is still at the inception stage. The exceptions are investment support for agricultural holdings and income support for non-commercial agricultural holdings, which have had more effect on the rural development. Implementation of SAPARD and future IPARD measures will assist rural development administration to organize, implement and control domestic measures in this area.

Until now rural development aspects of regional policy have not been given satisfactory importance. It will be necessary to ensure a coordination of rural development policies and programmes under regional development policies since responsibility for those two policies is located in two ministries, MAFWM and MSTTD.

3.2.11. Lessons learnt During the preparation and implementation of EU and other funds it has become obvious that Croatia is facing the new challenges in its present stage of development, looking forward to future integration with an enlarged EU.

The most specific constrains of rural development in Croatia are:

Low competitiveness of economic activities in rural areas (for example, agriculture, forestry, fishery, food sector, rural tourism, service industry),

Underdeveloped basic municipal and basic infrastructure in rural areas,

Underdeveloped access of rural population and economic subjects placed in rural areas to public institutions and goods (telecommunications, public transport, educational and information systems, health - care, etc.),

Areas damaged during the war, including high share of mined areas (114.700 ha),


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Depopulation of rural areas and unfavourable age and gender structure of rural population (18,9% of population in rural areas is older than 60 – women, and 65 years – men),

Low level of education of rural population,

Weak activity or non – existence of regional and local institutions competent for rural development,

Inadequate coordination of program and activities directed towards different economic activities in rural areas.

MAFWM has an important role in implementation of rural development policy. Priorities, programmes and measures within the competence of MAFWM have to be coordinated and integrated into general activities for support of rural development, conducted by other ministries and bodies of local and regional self - government. At this moment, programmes of particular ministries in the Republic of Croatia which have the impact on rural areas development, are not adequately harmonized and coordinated. Taking into account the level of integration of agriculture, forestry and fishery within other sectors of economy, the close cooperation of various entities of government administration, economic subjects, professional services, agricultural producers and other inhabitants in rural areas is inevitable for qualitative implementation and realization of rural development policy.

Rural development includes multifunctional concept, where a certain number of important activities, directed towards accelerating the process of rural areas development, develop at the level of certain government bodies. Besides MAFWM, the most important are:

Ministry of Economy, Labour and Entrepreneurship (development of small and middle enterprises in rural areas)

Ministry of Sea, Tourism, Traffic and Development (regional development policy, development of tourism, traffic connections, telecommunications, infrastructure)

Ministry of Environmental Protection, Physical and Construction (issues relating to environment protection, natural resources, infrastructure, physical planning)

Ministry of Science, Education and Sports (strengthening of educational system in rural areas, with emphasis on informal education)

Ministry of Culture (preservation and monitoring of biodiversity and completeness of ecosystem and landscape within and outside protected areas)

Ministry of Health and Social Welfare (strengthening of the system of health and social welfare in rural areas).

Also, within the context of self – government scope of work in counties, towns and municipalities exist administrative bodies (administrative departments or services) competent for development issues, including rural development. Thereto, most counties have one or more development institutions like: county development agencies, entrepreneurial centres (county and local centres for support of middle and small firms by credit and consultant services, and for entrepreneurs for informing, professional education and promotion of entrepreneurship) and other development institutions dealing with economic and other development issues at county and local level. Those institutions have, in large or small extent, developed a certain degree of partnership and cooperation with central administrative bodies. As a rule, establishers of these bodies/institutions are counties, cities and municipalities.

Due to its complexity and long duration, rural development process also requires multi sectoral approach, where besides the public sector, business and civil sector have important roles, especially at local level. Local development initiatives will be more efficient and lasting, if they are established upon complementary cooperation of all three sectors. Civil society organizations have established themselves through their activities in the area of informing and informal education – education and training, directly or indirectly related to rural development (issues like strategic planning, writing projects in accordance with the requirements of EU funds, managing of the project cycle, organizing community, etc.) and by promoting, assisting and participating in different activities on the field. Business sector has been established as


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unavoidable participant in development projects at all levels. It usually has the role of investor established on new models of private – public partnership, introduction of innovative business approach, support of good practices, starting of cooperation for development, etc.

For the purpose of administrative integration of institutional structures included in the implementation of rural development policy, it is needed to conduct activities such as:

Defining priority areas of rural development at national, regional and local level (taking into account county Regional operation programme (ROP) and Projects of total development (PUR) of cities and municipalities),

Strengthening of financial and human resources available at central level for implementation of policy and rural development programme,

Better coordination of the roles of existing institutions for the purpose of implementing new programmes and measures having influence on rural areas,

Coordination of implementation of regional and rural development policy,

Applying of EU principles in programming programmes of rural development at regional and local rural development policy,

Strengthening of local and regional self – government bodies concerning efficient use of available financial and human resources,

Strengthening of regional and local organizations and institutions (associations, non – governmental organizations, social and economic partners), regarding inclusion in preparation and implementation of programme and rural development measures at local level.

3.2.11.1. SAPARD Programme Based on SAPARD experiences in the early stage of IPARD programming certain structure was developed in order to secure involvemnt of all stakeholders (farmers, experts, other ministries and public institutions). At the same time there was a intensive use of technical assistance provided by consultants, financed through WB or CARDS projects.

In all stages of programming, the IPARD programme was presented, publicised and discussed in public in order to have all opinions and suggestions taken into account as much as possible.

Experience from the first SAPARD call for applications was useful for recognition of certain problems and obstacles in implementation, which were successfully removed for the second call for applications.

Second call for applications for measure 1: ‘Investments in the agricultural holdings’, and for measure 2: ‘Processing and marketing of agricultural and fishery products’ was published in OG 33/07 from 28 March 2007, and on the MAFWM and CAEI web pages. On the MAFWM web page also was published amended Beneficiaries Guidelines.

The most difficult part in preparing the documentation for the beneficiary turned out to be economic and financial criteria and also lack of serious approach toward completeness of documentation. Out of 51 applications received in the first call, 19 of them were discarded due to insufficient documentation and 26 of them couldn’t mach the economic viability criteria. One of the problems could and was solved as quickly as possible. Economic criteria for second call for application were “loosened” to most common and basic but still enough to make certain assurance in project’s viability. The other problem with a somewhat less serious approach from the beneficiary needed more systematic view and solution. Trying to solve that problem, DMSSA and DSDRA held series of educational and informational workshops on how to prepare the documentation in order to make them viable and acceptable.

It turned out that the both problems encountered gave good results because when second call for application was finished only half of them was discarded in comparison with first tender when 91% of them were discarded.


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The lesson learnt during SAPARD implementation will certainly contribute to avoid same obstacles in IPARD implementation and resulting in more efficient operational and administrative structure.

Particular attention should be focused on training of beneficiaries including:

what documentation do they need

where to obtain it

how to successfully prepare a project

Of course, these steps are to be prepared and thought about in details and well timed in order to solve the problems and ensure better uptake.

Modification of criteria and procedures are a result of problem analysis noted during first call for applications and through constant communication with final beneficiaries.


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4. OBJECTIVES AND STRATEGY OF THE IPARD PROGRAMME

4.1. BACKGROUND The Council of the European Union adopted on July 17, 2006 regulation No 1085/2006 on Instrument for Pre-Accession Assistance (IPA). In the interests of coherence and consistency of Community assistance, assistance for Croatia is granted in the context of a coherent framework, taking advantage of the lessons learned from earlier pre-accession instruments.

Assistance shall be programmed and implemented according to the following components:

I. Transition Assistance and Institution Building (reffered to as Component I);

II. Cross-Border Cooperation (reffered to as Component II);

III. Regional Development (reffered to as Component III);

IV. Human Resources Development (reffered to as Component IV);

V. Rural Development (reffered to as Component V).

Assistance shall be provided in accordance with the general policy framework for pre-accession, defined by the European and Accession Partnerships, and taking due account of the Reports and the Strategy Paper comprised in the annual Enlargement package of the Commission.

With a view to supporting the strategic pllaning, the Commission shall present annually to the European Parliament and the Council its intentions for the financial allocations to be proposed for the three forthcoming years, in the form of a Multi-annual Indicative Financial Framework (MIFF).

Assistance under this Programme shall be provided on the basis of Multi-annual Indicative Planning Documents (MIPD), which presents indicative allocation for the main priorities within each component, taking into account the indicative breakdown per country and per component proposed in the multi-annual indicative financial framework.

MIPD was established in close between EC and the national autorities, so as to support national strategies and ensure the engagement and involvement of the country concerned. The Croatian civil society and other stakeholders including IFIs were consulted on the 24 October 2006 and 23 May 2007.

The main policy objectives under Component V specified in the MIPD are:


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to contribute to the sustainable modernization of the agricultural sector (including processing) throught targeted investments while at the same time encouraging the improvement of EU acquis related food safety, veterinary, phytosanitary, enviromental or other standards as specified in the Enlargement Package,

to contribute to the sustainable development of rural areas.

The Croatian MIPD32 was adopted on June 20, 2007 as a strategic document seting down the priorities and goals of the programme with indicative allocation of funds per priorities in respect to MIFF.

MIFF was published on November 8, 2006.

The Commission adopted IPA Implementing Regulation33 on June 12, 2007 as a document that in detailes prescribes way of implementation of IPA and IPARD for beneficiary countries.

4.2. NATIONAL DEVELOPMENT OBJECTIVES In 2005, the Croatian Government Office for Strategic Planning has drafted a National Development Strategy, which outlines three global development objectives pursued to:

Achieve accelerated growth in real GDP and employment, as well as higher living standards compared with more prosperous regions of Europe;

Obtain higher competitiveness of the national economy compared with more developed regions of Europe;

Reduce regional disparities within the country by creating favourable conditions for social-economic development in the most backward regions.

4.3. GENERAL NATIONAL OBJECTIVES FOR AGRICULTURE AND RURAL DEVELOPMENT

The overall national objectives and the fundamental principles outlined above constitute the framework for the national objectives concerning sustainable agriculture, forestry, fisheries and rural development.

The MAFWM has translated the overall development vision in the National Agricultural and Fishery Strategy of the Republic of Croatia (ARDP) (OG No. 89/2002) into long-term development sectoral strategy goals:

32 C(2007)2566 33 EC 718/2007


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Improved competitiveness and efficiency of primary agricultural, forestry and fishery production;

Improved competitiveness and efficiency of processing and marketing of agricultural, forestry and fishery products;

Improved quality and hygiene standards, as well as environmental and animal welfare standards;

Additional employment opportunities and income for farmers and all people living in rural areas leading to improved living standards and working conditions;

Achieving sustainable rural development through optimised and balanced economic development, environmental preservation and social cohesion.

A comprehensive action plan to implement these very broad strategic goals set out in the National Agricultural and Fishery Strategy through concrete measures has not yet been elaborated by the MAFWM. The different financial support schemes and specific sub-sector programmes in Croatia that are detailed in Chapter 3.1, 3.1 have insufficiently incorporated measures to improve the quality and hygiene standards, as well as environmental and animal welfare standards in the production and processing sectors, as well as instruments to stipulate effective economic development, environmental preservation and social cohesion to achieve a sustainable rural development process.

4.4. GENERAL OBJECTIVES OF THE IPARD PROGRAMME

The IPARD Programme 2007 – 2013 constitutes a strategy which aims to tackle specific drawbacks in the rural areas in Croatia which were identified in the analysis of strengths, weakneses, opportunities and threats (SWOT) of the agricultural and rural sector in Croatia (see Chapter 2.5).

In accordance with the IPA Regulation and the conditions lay down in the framework of the Accession Partnership, Community support is provided for sustainable agriculture and sustainable rural development measures for the pre-accession period within priority areas. Taking into account the results of the SWOT analysis and the shortcuts in the implementation of the above described National Agricultural and Fishery Strategy of the Republic of Croatia, the identified development priority areas of the IPARD Programme are as follows:

PRIORITY AXIS 1: Improving market efficiency and implementation of Community standards

PRIORITY AXIS 2: Preparatory actions for implementation of the agri-environmental measures and local rural development strategies

PRIORITY AXIS 3: Development of rural economy

The three priority axes focus on the economic development of specific sub sectors or following a territorial approach.

General objectives of IPARD programme are to certain extent linked to Lisbon and Gőteborg declarations, concerning support to diversification of economic activities, development of small and middle entrepreneurship and spetial care for enviroment protection.

4.5. SPECIFIC OBJECTIVES AND CORRESPONDING MEASURES OF THE IPARD PROGRAMME

Due to limited financial volume it was indispensable to make clear-cut choices on the specific aims, which are to be achieved in each priority field and which meet an urgent need for


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intervention. Therefore, the specific objectives of the IPARD Programme will only partly cover the difficulties illustrated in the SWOT analysis of the agricultural sector and the rural areas in Croatia.

The IPARD measures will complement the implementation of the National Agricultural and Fishery Strategy. Based on Act of State Aid for Agriculture, Fishery and Forestry, Croatian Government supports development of agricultural sector and rural areas through national support schemmes. National support is focused on wide range of beneficiares (farmers, non-commercial producers, local self-government, associations and cooperatives, etc.) and wide range of investments.

On the other hand, IPARD founds are targeted to limited number of sectors, eligible investments and final beneficiaries. They are focused at viable producers, with clear priority objective to support them in upgrading to Community standards and facilitate their competitiveness. National schemes and IPARD funds in that way complement each other by providing necessary support to different beneficiaries with division of objectives.

The IPARD assistance will also contribute to a sustainable and social coherent rural development process consistent with international environmental practices by developing the rural economy, enhancing income and providing and securing employment opportunities in the rural areas to counterbalance disparities between regions and compared to urban areas, as well as to develop and rehabilitee basic rural infrastructure, also in war effected areas.

Therefore, one specific objective per priority area has been defined and will be made operational through corresponding measures:

Table 4-1: Specific objectives per selected priority

Priority Specific Objective Corresponding Measure

Investments in agricultural holdings to restructure and to upgrade to

Community standards 1. Improving market efficiency and

implementation of Community standards

Strengthening and improvement of the agricultural production and market

capacity Investments in the processing and marketing of agriculture and fishery

products to restructure those activities and to upgrade them to Community

standards

Actions to improve the environment and the countryside

2. Preparatory actions for implementation of the Agri-

environmental measures and local rural development strategies

Strengthening and improvement of the capacity for implementation of obligatory pilot project in Agri – environment and Leader based

approach Preparation and implementation of local rural development strategies

Improvement and development of rural infrastructure

3. Development of the rural economy Creating better living conditions in rural areas by improving rural infrastructures

and promoting business activities. Diversification and development of rural economic activities

Supportive measure: Technical assistance, information and publicity campaigns

Source: MAFWM, 2007

These priorities with supporting measures will be implemented as the main instruments of the IPARD Programme. Within the IPARD 2007-2013 Plan for agricultural and rural development the whole area of the Republic of Croatia will be eligible unless otherwise defined in the specific conditions set out in the technical fiches for each measure in Chapter 5 of this plan.


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Graph 4-1: Objectives hierarchy

Source: MAFWM, 2007


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5. ELIGIBLE MEASURES

5.1. ELIGIBLE MEASURES UNDER PRIORITY AXIS 1

Assistance under this priority shall contribute to the achieving of the improvement of market efficiency and implementation of Community standards in the field of environmental protection, public health, animal and plant health, animal welfare and occupational safety through:

Improved production conditions in terms of compliance with Community standards

Increased added value and competitiveness of agricultural and fishery products through compliance with Community standards

Improved income for the beneficiaries

A better use of production factors on agricultural holdings

Increased added value of agricultural and fishery products through improved and rationalised processing and marketing of products

Improved competitiveness of the food processing industry in the selected sectors in the single market

Assistance under priority axis 1 shall be given through the following measures:

investments in agricultural holdings to restructure and to upgrade to Community standards

investments in the processing and marketing of agriculture and fishery products to restructure those activities and to upgrade them to Community standards

5.1.1. Measure 101 Investments in agricultural holdings to restructure and to upgrade to Community standards

5.1.1.1. Legal basis Article 12 (2) of Regulation (EC) No 1085/2006.

Article 174 of IPA Implementing Regulation (EC) No 718/2007

5.1.1.2. Cross sector objectives This measure aims at contributing to the implementation of CAP and other related policies within the scope of investments in agricultural holdings, in particular to the:

Contribution to the preparation of the Candidate Country for its accession to the EU

Upgrading to the Community Standards as regards environmental protection, public health (food safety and quality), animal and plant health, animal welfare and occupational safety

Modernisation of production systems aimed at decreasing the pollution of the environment through agricultural production

Improvement of the overall performance in the production of primary agricultural products


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Improvement of the products’ quality

Reduction of production costs and, thus, increasing the sustainability and competitiveness of the farmers especially towards accession and future open EU market

Facilitating the competition in the internal market opening new market opportunities for agricultural products.

5.1.1.3. Rationale and specific objectives for the intervention per sector

MILK SECTOR

According to the sector analysis presented above (chapter 2.3.4.1), dairy sector in Croatia has a dual aspect:

more than 76% of the family farms keep on average up to three dairy cows (reff. Agricultural Census 2003), these very small farms have a low level of milking technology, which cause a low level of raw milk production in terms of quantity and quality. Around 50% of raw milk delivered to dairies does not meet Community standards yet.

On the other hand Croatia has a share of 4 to 5 % (2007, CLC) of dairy farms with more than 15 cows which are already specialized, open to market and close to or above the viability level.

On the perspective of future accession of Croatia to the EU it is of key importance to support the specialized, viable sector to prepare for future respect of Community standards and competition on the open market. IPARD interventions under this measure should be aimed at helping the milk production sector to achieve relevant Community standards, in particular for raw milk quality34 as well as animal welfare and environmental conditions.

At the same time some of the smaller farms should be encouraged to cross above the viability level.

Specific sector objectives under this measure for the milk sector are the following ones:

to help in priority medium sized (20 to 50 cows), viable farms to upgrade to milk production quality standards as well as animal-keeping conditions and environmental standards as well to improve production infrastructure and farm equipment to achieve better sustainability and competitiveness in the future open EU market. Also larger specialized dairy farm (50 to 100 and more cows) will be able to benefit from the

34 plate count and somatic cells in raw milk - Regulation (EC) 853/2004 Annex, Section IX, Chapter I, part III, point 3


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support but farms above 100 cows will be limited for support related to animal manure handling standards

farms below sustainability level will also be able to benefit from support if they can prove that they will reach the minimum 20 cows level after the investment period.

Eligible investments for this sector will be:

Investment in construction and/or in reconstruction and/or in equipment of facilities of stables for milk cows, including equipment facilities for milk production like milking machines, on-farm milk cooling and storage facilities on farm premises; in construction and/or in reconstruction of manure storage capacities including specific equipment of facilities for handling and usage of animal manure like manure reservoirs, specialized manure transportation equipment

BEEF SECTOR

Cattle breeding still face enormous structural problems where one of the reasons was the decrease by 58,5% (cattle), respectively by 63,4% (breeding cows and heifers) during the war period, which has obviously reduced the production volume and slowed down the necessary adjustments to make in a market system. Today, most of the cattle are held on small family farms, which, as well as the specialized cattle breeding farms do not comply with the EU minimum hygiene, animal welfare and environmental standards, which require investments. IPARD funds should in particular be focused on investments to help the sector to meet Community standards in contrary to the national operational programme to develop the beef sector which is especially focused on increase of the production.

Also, within beef production sector it is obvious a clear distinction between:

small scale farms keep less than 10 cattle and they represent for more than 90% of all cattle (see sector analysis, page 62) and are under sustainability threshold

medium and bigger producers which represents less than 10% of total number of cattle

o family farm with between 10 and more than 20 cows which are near sustainable level

o legal entities with more than 50 cattle which are viable and sustainable

On the perspective of future accession of Croatia to the EU it is of key importance to support the specialized, viable sector to prepare for future respect of Community standards and competition on the open market. IPARD interventions under this measure should be aimed at helping the beef production sector to achieve relevant Community standards, in particular animal welfare and environmental conditions


Specific sector objectives under this measure for the beef sector are the following ones:

to help in priority medium sized (40 to 150 cattle), viable farms to upgrade to animal-keeping conditions and environmental standards as well to improve production infrastructure and farm equipment to achieve better sustainability and competitiveness in the future open EU market. Also bigger specialized beef farms (150 and more) will be able to benefit from the support related to Community standards on animal manure handling

farms below sustainability level will also be able to benefit from support if they can prove that they will reach the minimum 40 cows level after the investment period.

Eligible investments in this sector will be:

Investment in construction and/or in reconstruction and/or in equipment of facilities of stables for cattle within farm premises, in construction and/or in reconstruction of manure storage capacities including specific equipment of facilities for handling and


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usage of animal manure like manure reservoirs, specialized manure transportation equipment

PIG SECTOR

According to the sector analysis (see page 54) 90% of the pig production is performed in family holdings with an average size of 8 pigs. Only 1,5% of family holdings possess a capacity bigger than 50 pigs. 10% of the total pig production is provided by legal entities which have an average size of 464 pigs. Only 9% of the legal entities have a capacity of over 400 pigs. Animal housing and equipment is outdated.

To obtain sustainability of production we recognized as a priority those with a capacity reaching viability or exceeding it.

Specific objectives of this sector are:

to help in priority medium sized (20 to 100 sows or 400 to 2.000 pigs), viable farms to upgrade to animal-keeping conditions and environmental standards as well to improve production infrastructure and farm equipment to achieve better sustainability and competitiveness in the future open EU market. Also bigger specialized pig farms (100 sows and more or 2.000 pigs or more) will be able to benefit from the support related to Community standards on animal manure handling

farms below sustainability level will also be able to benefit from support if they can prove that they will reach the minimum 20 sows or 400 pigs level after the investment period.


Investment in construction and/or in reconstruction and/or in equipment of facilities of stables for pigs within farm premises, in construction and/or in reconstruction of manure storage capacities including specific equipment of facilities for handling and usage of animal manure like manure reservoirs, specialized manure transportation equipment

POULTRY SECTOR

Poultry production is characterized by two main types of production:

production by family farms, where meat and eggs production is carried out in extensive conditions, mostly for own needs

the industrial way where great production units prevail

According to sector analysis (see chapter 2.3.4.4) 99% of all producers are having less then 100 hens. This number includes family farms and legal entities. In the same time they represent for 44% of all poultry. According to the CBS there are only 555 entities with more than 5.000 hens. This group of producers is near reaching the sustainable production and they are recognized as a priority.

The poultry farms do not comply with animal welfare and environmental Community standards and investments are necessary to adapt to the required standards. Egg producers are facing new challenges concerning necessary adaptation to animal welfare standards, laying hens will have to be kept in special rearing systems to meet EU requirements set out in Directive 1999/74/EC. IPARD funds under this measure should among others be made available for this type of investment.

On the perspective of future accession of Croatia to the EU it is of key importance to support the specialized, viable sector to prepare for future respect of Community standards and competition on the open market. IPARD interventions under this measure should be aimed at helping this sector to achieve relevant Community standards as well as animal welfare and environmental conditions.



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Specific sector objectives under this measure for the poultry sector are the following ones:

to help in priority medium sized producers with more than 5.000 to 30.000 broilers per production cycle to be able to upgrade to quality standards as well as animal-keeping conditions and environmental standards as well to improve production infrastructure and farm equipment to achieve better sustainability and competitiveness in the future open EU market. Also larger specialized poultry farms (30.000 and more per production cycle at the beginning of investment) will be able to benefit from the support for handling and usage of animal manure

farms below sustainability level will also be able to benefit from support if they can prove that they will reach the minimum of 5.000 broilers per production cycle after the investment period.


Investment in construction and/or in reconstruction and/or in equipment of facilities including bio security equipment of poultry houses within farm premises, in construction and/or in reconstruction of manure storage capacities including specific equipment of facilities for handling and usage of animal manure like manure reservoirs, specialized manure transportation equipment

EGG SECTOR

Egg production is characterized by two main types of production:

production by family farms, where meat and eggs production is carried out in extensive conditions, mostly for own needs

the industrial way where great production units prevail

According to sector analysis (see chapter 2.3.4.4) 99% of all producers are having less then 100 hens. This number includes family farms and legal entities. In the same time they represent for 44% of all poultry. According to the CBS there are only 555 entities with more than 5.000 hens. This group of producers is near reaching the sustainable production and they are recognized as a priority.

The poultry farms do not comply with animal welfare and environmental Community standards and investments are necessary to adapt to the required standards. Egg producers are facing new challenges concerning necessary adaptation to animal welfare standards, laying hens will have to be kept in special rearing systems to meet EU requirements set out in Directive 1999/74/EC. IPARD funds under this measure should among others be made available for this type of investment.

On the perspective of future accession of Croatia to the EU it is of key importance to support the specialized, viable sector to prepare for future respect of Community standards and competition on the open market. IPARD interventions under this measure should be aimed at helping this sector to achieve relevant Community standards as well as animal welfare and environmental conditions.


Specific sector objectives under this measure for the egg sector are the following ones:

to help in priority medium sized producers with more than 10.000 up to 50.000 laying hens to be able to upgrade to quality standards as well as animal-keeping conditions and environmental standards as well to improve production infrastructure and farm equipment to achieve better sustainability and competitiveness in the future open EU market. Also larger specialized egg farms (50.000 and more at the beginning of investment) will be able to benefit from the support for handling and usage of animal manure


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farms below sustainability level will also be able to benefit from support if they can prove that they will reach the minimum of 10.000 laying hens after the investment period.


Investment in construction and/or in reconstruction and/or in equipment of facilities including bio security equipment of stables for eggs production, in construction and/or in reconstruction of manure storage capacities including specific equipment of facilities for handling and usage of animal manure like manure reservoirs, specialized manure transportation equipment

FRUITS AND VEGETABLES SECTOR

As seen in sector analysis (see chapter 2.3.4.8) both vegetable and fruit production is mainly preformed by family farms, which makes the production fragmented and lowers the productivity and quality. 5,5% of the fruit producers’ family holdings own more than 10 ha, while 89,4% of legal entities has more than 10 ha of orchards. 13% of family holdings have more than 5 ha under vegetables while 42% of legal entities has more than 30 ha under vegetables. Total production of vegetables (mainly tomato, paprika and cucumber) under greenhouses is around 45.000 tons. So, the production can also be looked dually:

Small, fragmented farms with low productivity, low technology and representing for more than 80% of all producers

Larger or more specialized farms with near, or over viability and sustainability level representing for 20% of producers

In order to organize modern vegetable and fruit production which would result in higher product quality and competitiveness of the sector, it is necessary to increase production under protected areas, to modernize production by investing in new technology in harvesting, storage and cooling capacities, processing, sorting and packaging lines.

On the perspective of future accession of Croatia to the EU it is of key importance to support the specialized, viable sector to prepare for future respect of Community standards and competition on the open market. IPARD interventions under this measure should be aimed at helping the fruits and vegetables sector to achieve relevant Community standards, in particular environmental conditions.

Specific objectives of this sector are the following ones:

To help in priority medium sized:

o vegetable producers (500 m2 to 2.000 m2 of greenhouses or 0,5 – 30 ha of open-space production) to be able to upgrade to quality standards and environmental standards as well to improve production infrastructure and farm equipment to achieve better sustainability and competitiveness in the future open EU market.

o fruit producers (2 ha to 50 ha; 0,5 ha up to 5 ha of table grapes) to be able to upgrade to quality standards and environmental standards as well to improve production infrastructure and farm equipment to achieve better sustainability and competitiveness in the future open EU market.


Investment in construction and/or in reconstruction and/or in equipment of facilities for greenhouses (covered by glass or plastic) for fruits and vegetables

Investment in equipment of facilities for specialized harvesting, sorting and packaging of fruit and vegetables, including table grapes

Investment in construction and/or in reconstruction and/or in equipment of facilities for storage facilities for fruits and vegetables; excluding ULO capacities


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Investment in on-farm systems for protection against hail (including computer equipment) for orchards and table grapes

Irigation on open field is excluded

CEREALS AND OIL CROPS

Cereals and oil crops production is dominant in Croatian agriculture, concerning utilized agricultural land and number of producers. It is closely linked to livestock production, providing quality and cheaper fodder for domestic animals, therefore investments in storage and drying facilities on farm are recognized as most important one (see sector analysis, chapter 2.3.4.7)

Production of cereals and oil crops can also be seen as dual:

more than 83% of the family farms utilize on average less than 5 ha under cereals and oil crops and(reff. Agricultural Census 2003), these very small farms have a low level of technology, which cause a low level production in terms of quantity and quality. They utilize 507.000 ha.

On the other hand Croatia has a share of 16 % (CBS, 2003) of farms with more than 5 ha which are more or less specialized, open to market and close to or above the viability level. They utilize 111.000 ha.

In order to achieve objectives set under this measure especially regarding the upgrading to Community standards and competitiveness, IPARD funds will be focused on two main groups of beneficiaries which represent sector specific objectives under this measure:

to help in priority medium sized (20 to 50 ha), viable farms to upgrade to environmental standards as well to improve production infrastructure and farm equipment to achieve better sustainability and competitiveness in the future open EU market.


Investment in construction and/or in reconstruction and/or in equipment of facilities for storage and drying of grains and oil seeds

5.1.1.4. Linkage to other measures Within this programme this measure complements the implementation of the measure "Investments in the processing and marketing of agriculture and fishery products to restructure those activities and to upgrade them to Community standards" and measure under Priority axis 3 “Improvement of rural infrastructure”. Improvements in processing and marketing are accompanied by development of competitive holdings, both in processing and primary production. Development of the rural communal infrastructure generates better living and working conditions for the rural population and better conditions for rural entrepreneurship.

The IPARD measure "Investment in agricultural holdings" is complementary with national measures as well. The IPARD measure "Investment on agricultural holdings" will accelerate harmonisation of agricultural production with Community standards. The IPARD measure is more oriented towards reconstruction to develop viable farms.

By contrast national measures for investment are still more oriented to increasing the profitability, efficiency and competitiveness of production. National measures for investment in agricultural holdings are envisaged only for commercial agricultural holdings (mainly small family farms) which have used commercial credit for investment on the farm.

5.1.1.5. Final beneficiaries Final beneficiaries of this measure are agricultural holdings (family farms, crafts and legal entities) privately owned in 100% or with up to 25% of whose capital is held by a public body or bodies and defined by Act on Agriculture (OG 66/01, 83/02 see page 312), registered in the Register of Agricultural Holdings and VAT payers.


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5.1.1.6. Common eligibility criteria Common eligibility criteria for this measure are:

The investment must concern the production of agricultural products covered by the Annex I to the Treaty.

Investment must comply with relevant Community standards as specified by Article 170(1) of Commission Regulation (EC) No. 718/2007 at the end of its realisation.

Agricultural holding must comply with relevant national minimum standards (see annex 12.11, Table 12-12) regarding environmental protection, public health, animal and plant health, animal welfare and occupational safety at the time when the decision to grant support is taken. Where national minimum standards based on Community standards have been newly introduced at the time when the application is received, assistance may be granted regardless of non – compliance with those standards on the condition that the enterprise shall meet the new standards by the end of the realisation of the investment.

A prior assessment from environmental and veterinary national authorities on project must be submitted together with the project/business plan. For project of cerrtain size an Environmental Impact Assessment is to be carried out prior to investment according to the Act on Assessment of the Impact on the Environment (compliant with EU directives 85/337/EEC and 97/11/EC, including Annex I and II).

The agricultural holding must demonstrate (in the business plan) economic viability (see annex 12.10) at the end of the realization of the investment.

A business plan must be made according to the standard requirements of banks: for investments up to 27.000 EUR (200.000 HRK) a simplified form, for investments exceeding 27.000 EUR (200.000 HRK) a complete business plan. If the main objective of the investment is increase of production, the existing of a market must also be demonstrated in the business plan.

Agricultural holding must not have any outstanding liabilities against the State at the moment of applying.

Integrated production (primary production and processing) in milk, beef, pig, poultry and egg sector is not eligible for investments under this measure for beneficiaries with a status of legal entity (Ltd, and PLC) Regarding occupational skills and competence, according to agriculture holdings, following criteria are applied:

Table 5-1: Occupational skills and competence criteria Family farm Craft Legal entity

An applicant must have an agricultural school or university degree in agriculture, veterinary or food processing, or professional service records of working experience in an agriculture in the relevant specialty for at least 5 years, or must have been registered for at least two years in the Register of Agricultural Holdings

Craft manager must have an agricultural school or university degree in agriculture, veterinary or food processing, or professional service records of working experience in an agriculture in the relevant specialty for at least 5 years, or must have been registered for at least two years in the Register of Agricultural Holdings

At least one permanent employee at the level of top management in the legal entity must have an agricultural school or university degree in agriculture, veterinary or food processing, or professional service records of working experience in an agriculture or in the other relevant specialty for at least 5 years



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5.1.1.7. Specific eligibility criteria MILK SECTOR

All agricultural holdings must demonstrate that manure management is in compliance with the Community standards at the end of the investment.

As regards the investments in the milk sector, the agricultural holding must comply with relevant Community standards and in particular those specified in Regulation (EC) No 853/2004, Annex III, Section IX, Chapter I raw milk – primary production at the end of the investment if the project concern construction/reconstruction. Level of production Eligible investments

From minimum 20 and up to maximum 100 milking cows at the end of investment

All eligible investments for this sector (see chapter 5.1.1.3)

From 100 milking cows at the beginning of the investment

Construction and/or in reconstruction of manure storage capacities and/or in specific equipment of facilities for handling and usage of animal manure only

BEEF SECTOR

All agricultural holdings must demonstrate that manure management is in compliance with the Community standards at the end of the investment. Level of production Eligible investments

From minimum 40 and up to maximum 150 heads at the end of the investment


From 150 heads at the beginning of the investment Construction and/or in reconstruction of manure storage capacities and/or in specific equipment of facilities for handling and usage of animal manure only

PIG SECTOR


From minimum 20 sows or 400 pigs per year up to maximum 100 sows or 2.000 pigs per year at the end of investment


From 100 sows or 2.000 pigs per year at the beginning of the investment


POULTRY SECTOR


From minimum 5.000 up to maximum 30.000 broilers per production cycle at the end of investment


From 30.000 broilers per production cycle at the beginning of the investment


EGG SECTOR

All agricultural holdings must demonstrate that manure management is in compliance with the Community standards at the end of the investment.


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Level of production Eligible investments

From minimum 10.000 up to 50.000 laying hens at the end of investment


From 50.000 laying hens at the beginning of the investment


Reconstruction and/or equipment facilities to achieve compliance with Directive 1999/74/EC and without increasing the production.


Greenhouses (covered by glass or plastic):

Must have a minimum size of 500 m2 and maximum size 2.000 m2 Agricultural holding must demonstrate the existence of own production of fruits and/or vegetables, by registered production in the Register of Agricultural Holdings at the end of the investment

Other eligible investment:

Agricultural holding must demonstrate at the beginning of the investment the existence of own production of fruits and vegetables, by registered production in the Register of Agricultural Holdings of at least 2 ha up to a maximum of 50 ha of fruits and/or at least 0,5 ha up to a maximum of 30 ha of vegetables and/or at least 0,5 ha up to maximum of 5 ha of table grapes

CEREALS AND OIL CROPS SECTOR

Storage and drying facilities:

Investment must be at least. 100 t up to 1.000 t capacitiy.

Agricultural holding must demonstrate existence of own production of grains and/or oil seeds, by registered production in the Register of Agricultural Holdings of at least 20 ha of grains and/or oil seeds at the beginning of the investment.

5.1.1.8. Priority criteria35 Priority will be given to investments with higher number of points, according to following criteria.

Criteria Score Points

35 Detailed provisions on priority criteria is explained under chapter 6


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Investment is a construction of a new object (rather than reconstruction of existing one) If “yes” than 10 if “no” than 0 10

Investment is implemented on the Less Favoured Areas as defined by Act on Agriculture (OG 66/01, 83/02)

If “yes” than 20 if “no” than 0 20

Investment is implemented by young beneficiary (farmer, craft manager; owner or manager in legal entity) who is under 40 years of age when the application is submitted


Investment is implemented by registered organic producer If “yes” than 15 if “no” than 0 15

Size of agricultural holding in specific sector at the time of applying is more than required minimum at the end of investment specified in specific eligibility criteria (chapter 5.1.1.7)


Investment is implemented by women If “yes” than 20 if “no” than 0 20

TOTAL 100

5.1.1.9. Eligible expenditure Eligible expenditures (in accordance with the Article 172 (3) of Commission Regulation (EC) No. 718/2007) are limited to:

the construction or improvement of immovable property;

the purchase of new machinery and equipment, including computer software up to the market value of the asset;

general costs such as architects’, engineers’ and other consultation fees, feasibility studies, the acquisition of patent rights and licences up to a ceiling of 12% of the costs referred to in two points above, of which business plans costs are eligible up to 2% but not more than 3.000 EUR.

eligible costs are determined excluding VAT

Detailed provisions shall be set out in the Sectoral Agreement as defined in Article 7 of Commission Regulation (EC) No 718/2007.

5.1.1.10. Aid level Amounts in HRK presented below are only for indicative purposes.

The minimum total value of eligible investments per project is limited to 13.500 EUR (100.000 HRK).

The maximum total value of eligible investments per beneficiary is limited to 900.000 EUR (6.570.000 HRK) within the timeframe of IPARD, except in the egg sector where the ceiling can amount up to 2.000.000 EUR (14.600.000 HRK) if the investments concerns the meeting of Community standards on: i) manure storage/handling and ii) rearing systems respecting conditions set out in Council Directive 1999/74/EC (both, i) and ii) in one project).

The amount of public aid shall be up to 50% of total eligible investments per project, except:

up to 55% for investments in agricultural holdings made by young farmers (under 40 years of age at the time when the decision to grant support is taken, possessing adequate occupational skills and competence)

up to 60% for investments in agricultural holdings in mountain areas as defined under chapter 2.1.4 point 1.b).


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up to 65% for investments in agricultural holdings in mountain areas as defined under chapter 2.1.4 point 1.b) made by young farmers (under 40 years of age at the time when the decision to grant support is taken, possessing adequate occupational skills and competence)

up to 75% for investments referred to in paragraph 1(d) and for investments in agricultural holdings to implement the Council Directive 91/676/EEC concerning the protection of waters against pollution caused by nitrates from agricultural sources, subject to the existence of a national strategy for its implementation.

A maximum of five eligible investments per beneficiary are allowed within the timeframe of IPARD. The application for the next investment can be brought in only after finalisation (final payment) of the previous investment.

The payments for the investments shall be received in one instalment subject to the details fixed in the contract signed between the beneficiary and the Directorate for Market and Structural Support in Agriculture (DMSSA).

5.1.1.11. Indicative budget Table 5-2: Allocation of funds for Measure 101.

Public expenditure

Year Total eligible cost Total EU contribution National contribution

Private contribution

EUR EUR % EUR % EUR % EUR %

1 2=3+9 3=5+7 4=3/2 5 6=5/3 7 8=7/3 9 10=9/2

2007 17.000.000 8.500.000 50% 6.375.000 75% 2.125.000 25% 8.500.000 50%

2008 16.384.000 8.192.000 50% 6.144.000 75% 2.048.000 25% 8.192.000 50%

2009 16.512.000 8.256.000 50% 6.192.000 75% 2.064.000 25% 8.256.000 50%

2010 15.946.667 7.973.333 50% 5.980.000 75% 1.993.333 25% 7.973.333 50%

2011 16.253.333 8.126.667 50% 6.095.000 75% 2.031.667 25% 8.126.667 50%

2012 n.a. 36 n.a. 50% n.a. 75% n.a. 25% n.a. 50%

2013 n.a. n.a. 50% n.a. 75% n.a. 25% n.a. 50%

Total 65.842.667 32.921.333 50% 24.691.000 75% 8.230.333 25% 32.921.333 50%

Source: MAFRD – DRD, 2009

36 N.a. – not applicable at the time of drafting the programme – the figures will be included after the publication of the MIFF by the EC


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5.1.1.12. Allocation of funds per sector Table 5-3: Allocation of funds per sector

Sector Milk Meat Eggs Fruits and vegetables Grains and oil seeds Total

% 30% 30% 15% 15% 10% 100% 2007

EUR 5.100.000 5.100.000 2.550.000 2.550.000 1.700.000 17.000.000

% 30% 30% 15% 15% 10% 100% 2008

EUR 4.915.200 4.915.200 2.457.600 2.457.600 1.638.400 16.384.000

% 30% 30% 15% 15% 10% 100% 2009

EUR 4.953.600 4.953.600 2.476.800 2.476.800 1.651.200 16.512.000

% 30% 30% 15% 15% 10% 100% 2010

EUR 4.784.000 4.784.000 2.392.000 2.392.000 1.594.667 15.946.667

% 30% 30% 15% 15% 10% 100% 2011

EUR 4.876.000 4.876.000 2.438.000 2.438.000 1.625.333 16.253.333

% 30% 30% 15% 15% 10% 100% 2012

EUR n.a. n.a. n.a. n.a. n.a. n.a.

% 30% 30% 15% 15% 10% 100% 2013

EUR n.a. n.a. n.a. n.a. n.a. n.a.

TOTAL EUR 19.752.800 19.752.800 9.876.400 9.876.400 6.584.267 65.842.667 Source: MAFRD – DRD, 2009

5.1.1.13. Indicators Output indicators

Table 5-4: Expected number of eligible investments per sector

Sector 2007 2008 2009 2010 2011 2012 2013 Total

Milk 17 16 17 17 17 n.a. n.a. 84

Meat 15 14 14 14 14 n.a. n.a. 71

Eggs 3 3 3 3 3 n.a. n.a. 15

Fruits and vegetables 17 16 17 17 17 n.a. n.a. 84

Grains and oil seeds 11 11 11 11 11 n.a. n.a. 55

Total 63 60 62 62 62 n.a. n.a. 309 Source: MAFRD – DRD, 2009

Table 5-5: Output, result and impact indicators

TYPE NAME VALUE

Number of farm holdings supported (division per size, per county) 309 OUTPUT

Total volume of investment per project 270.000 EUR

Number of holdings introducing environmental control (manure handling) – except F&V sector and G&O sector 50 RESULT

Number of poultry farms introducing bio security of birds – Poultry sector and Egg sector 9


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GVA increase in supported holdings 5%

Percent young farmers supported 25%

Share of investments in LFA 20%

Economic growth (increase in GVA/ sector) 5% IMPACT

Change in Labour productivity (GVA/FTE) 5% Source: MAFRD – DRD, 2009

5.1.1.14. Administrative procedures The measure will be implemented by the Directorate for Market and Structural Support in Agriculture, MAFRD.

All applicants must submit in due course application forms, correctly filled in, and business plans together with other requested documentation to the Directorate for Market and Structural Support in Agriculture, MAFRD. Applications for support under this measure cannot be combined with applications for other measures.

A ranking system will be applied and ranking list formed and priority given to investments with higher points. Detailed administrative setup and procedures are explained under chapter 6.1.2.1.

5.1.1.15. Geographical scope of the measure Applicants, agricultural holdings, from the rural areas (see chapter 2.1.3) of the Republic of Croatia, excluding urban areas which are, according to spatial planning considered as construction areas, are eligible for support.

5.1.2. Measure 103 “Investments in the processing and marketing of agriculture and fishery products to restructure those activities and to upgrade them to Community standards”

5.1.2.1. Legal basis Article 12 (2) of Council Regulation (EC) No. 1085/2006.

Article 176 of Commission Regulation (EC) No. 718/2007

5.1.2.2. Cross sector objectives This measure aims at contributing to the implementation of CAP and other related

policies within the scope of investments in agricultural holdings, in particular to the:

Contribution to the preparation of the Candidate Country for its accession to the EU.

Adjustment of agricultural and fisheries processing plants to meet EU minimum standards related to hygiene, public health, animal welfare, occupational safety and environmental conditions

Improvement of the animal waste management situation through investment in collecting centres for animal waste

Improvement of marketing channels for the primary producers in the agricultural and fisheries sector by improved access to processing facilities

Improvement of overall performance in the processing and marketing of primary agricultural and fishery products


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Facilitation the competition in the internal market by the introduction of new technologies and innovation

Opening new market opportunities for agricultural products, putting emphasis on the alignment to the Community standards.


MILK AND DAIRY SECTOR

The majority of the micro, small and medium milk and dairy processing companies do not yet comply with the relevant Community standards, nor do they have the necessary technologies to diversify their dairy products in order to meet the local consumer demands for high-quality dairy products. In the milk and dairy sector there is altogether 58 dairy establishments, from which 47 are milk processing plants and 11 of them are mostly cold storages. According to the process of assessment, 17 establishments are placed as EU compliant and 31 of them are placed in EU – non compliant category. IPARD funds under this measure should focus on non-compliant small and medium sized dairies with a processing capacity between 1.800.000 and 50.000.000 litres per year. Investments will also cover cooling tanks owned and provided by dairies on sufficient big farms to collect milk from. Smaller farmers are supposed to bring their milk to such collection points

Eligible investments for milk and dairy sector under this measure will be:

Investment in reconstruction and/or in equipment of facilities of existing milk and dairy plants, including cooling equipment for the raw milk at collection points.

Investments in specialised transport vehicles for raw milk.

The measure aims to upgrade the technological standards of micro, small and medium processing plants in the dairy sub-sectors to comply with Community standards related to hygiene, animal welfare, and environmental conditions at the date of Croatia's accession to the EU. Furthermore support provided under this measure will help to improve the competitiveness of SMEs on the national and international market and improve the marketing access for producers of agricultural primary produces. All SMEs processing products of animal origin and funded under IPARD will have to be listed according to the national plan for upgrading processing establishments to Community standards.

MEAT SECTOR

Concerning the meat sector, after the categorisation of establishments, a total number of slaughterhouses amounts to 203, from which 156 are for red meat and 47 are for poultry and lagomorphs. There are 10 slaughterhouses approved for export to EU countries, 5 for red meat and 5 for poultry. The majority of slaughterhouses operate with outdated technologies and at a low capacity-level. It is essential to encourage investment in viable slaughterhouses that have the potential to upgrade their buildings and technologies in order to comply with the relevant Community standards on e.g. hygiene, animal welfare and environment.

On the basis of the slaughterhouse classification in the category in compliance with EU standards and category non compliant with EU standards, it is established that 56 slaughterhouses of red meat is compliant and 100 non compliant with EU standards from the total number of 156 slaughterhouses in the Republic of Croatia (as presented in table 2-55).

The Republic of Croatia has uneven meat consumption during the year due to the tourist season and increased number of guests, so the local slaughterhouses do not work with the same capacity all of the time. Due to the geographical structure of Republic of Croatia (very long and well-indented coast and the high number of islands) it must also taken into account to maintain the necessary number of existing slaughterhouses and allow them to upgrade in order to comply with EU standards.


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The minimum capacity as presented on page 223, allows thereby those local slaughterhouses to be eligible under IPARD and consequently gives them opportunity to comply with EU standards.

Regarding the rest of the slaughterhouses that may not apply for IPARD programme funds as a result of defined criteria the Republic of Croatia will help them from national funds in order to upgrade in compliance with EU standards due to the reason presented above.

There is one Croatian rendering plant which has enough capacities for Croatian needs and which was contracted to receive SAPARD funds in 2007 with the aim of upgrading buildings and technologies to meet relevant Community standards. However there is still a need to invest in at least five intermediate plants to bring them in line with the respective Community standards.

Eligible investments for meat processing sector will be:

Investment in reconstruction and or in equipment of facilities of existing slaughterhouses including equipment of facilities for cooling and packaging of meat and waste management. Cutting plants which constitute one single establishment, together with a slaughterhouse, are also eligible.

Investment in construction and/or in reconstruction and/or in equipment of facilities of intermediate plants

The measure aims to upgrade the technological standards of micro, small and medium processing plants in the meat processing sector to comply with Community standards related to hygiene, animal welfare, and environmental conditions at the date of Croatia's accession to the EU. Furthermore support provided under this measure will help to improve the competitiveness of SMEs on the national and international market and improve the marketing access for producers of agricultural primary produces. All SMEs processing products of animal origin and funded under IPARD will have to be listed according to the national plan for upgrading processing establishments to Community standards.

FISHERIES

The structure of the fish farming and processing which is one of the rare segments of the agri-food industry in Croatia with a positive export-import balance, is characterized by 5 medium sized and a number of small and micro sized enterprises. The equipment and technology used in most enterprises is outdated - not meeting relevant Community standards on e.g. hygiene, animal welfare and environmental requirements - and does not allow for the diversification of the products. None of the shellfish distribution or purification centres in Croatia operates with modern technologies. Thus investment in the construction and updating of the technologies is needed to ensure the quality of the products and to obtain minimum EU. Investments supported by IPARD under this measure will help to increase the quality of the final products and enhance the competitiveness of the processing plants on the national and international market.

Eligible investments for fisheries sector under this measure will be:

Investment in construction and/or in reconstruction and/or in equipment of facilities of fish, mussels and shellfish processing plants for cooling, slicing, drying, fuming and packaging of products and waste reduction, including software

Investment in construction and/or in reconstruction and/or in equipment of facilities of distribution centres and/or purification centres for shells

The measure aims to upgrade the technological standards of micro, small and medium processing plants in the fisheries sectors (including shellfish) to comply with Community standards related to hygiene, animal welfare, and environmental conditions at the date of Croatia's accession to the EU. Furthermore support provided under this measure will help to improve the competitiveness of SMEs on the national and international market and improve the marketing access for producers of agricultural primary produces. All SMEs processing products of animal origin and funded under IPARD will have to be listed according to the national plan for upgrading processing establishments to Community standards.


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FRUIT AND VEGETABLES PROCESSING INDUSTRY

During the transition process and war period, the fruit and vegetable processing sectors faced a sharp decline in terms of quantity and quality criteria of the processed products. Today, these sub-sectors have not yet recovered and are characterized by distorted processing and marketing structures. The quality of production of the frozen fruits and vegetables, minimum processed fruits and vegetables and semi-processed products for fruit and vegetable juices, processed products from potato and tomato, canned fruits and candied fruits, low pickled and pasteurized vegetables, including organic fruits and vegetables should be improved to meet relevant Community standards.

However, the low organizational degree of the fruit and vegetable production sector, in particular the lack of producer groups, was identified as the sector's weakest link in the marketing chain as the delivered quantity and quality of the raw material does not yet satisfy the needs of the processing industry. Therefore, and before IPARD support under this measure will be made available to the fruit and vegetable processing sector Croatia will prepare and implement a national measure supporting the establishment of producers groups along the requirements set out in the EU's CMO for fruits and vegetables. The measure will support activities such as training and information dissemination on key concepts of the CMO, operational programmes and marketing standards.

Eligible investments for fruits and vegetables sector under this measure will be:

Investment in construction and/or in reconstruction and/or in equipment of facilities of fruit and vegetable processing plants, including mushrooms

The measure aims to upgrade the technological standards of micro, small and medium processing plants in the fruit and vegetable sector (including mushrooms) to comply with Community standards related to hygiene and environmental conditions at the date of Croatia's accession to the EU. Furthermore support provided under this measure will help to improve the competitiveness of SMEs on the national and international market and improve the marketing access for producers of agricultural primary produces.

WINE SECTOR

In 2005 Croatia's wine production was 1,5 million hectolitres out of which 667.865 hl was released on the market. The majority of the 940 producers who sell their wine on the market are small (less than 1000 hl, per year) and only 9 of them produced more than 20.000 hl. IPARD support will focus on investments to improve the quality control in field of oenology.

Eligible investments for wine sector under this measure will be:

Investment in equipment of facilities (equipment for filtration, stabilization, bottling lines, automatic labelling and packaging lines) of wineries

The measure aims to upgrade the technological standards of micro, small and medium processing plants in the wine sector to comply with Community standards related to hygiene, and environmental conditions at the date of Croatia's accession to the EU. Furthermore support provided under this measure will help to improve the competitiveness of SMEs on the national and international market and improve the marketing access for producers of agricultural primary produces.

OLIVE OIL SECTOR

The processing of olive fruits into olive oil is currently made by 112 mills 47 of which have outdated equipment and 65 were modernized in last recent years. At the moment the HACCP system is implemented in 4 mills as well as 4 mills are certified according to ISO. IPARD funds will focus on investments for laboratory equipment to perform chemical analyses on the quality of the olive oil. Moreover it will provide support for equipment to further utilize olive pomace, a by-product of the olive processing, to produce compost.

Eligible investments for olive oil sector under this measure will be:

Investment in laboratory equipment for basic chemical analysis of olive oil


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Investment in equipment for utilization of olive pomace for processing into compost

The measure aims to upgrade the technological standards of micro, small and medium processing plants in the olive oil sectors to comply with Community standards related to hygiene and environmental conditions at the date of Croatia's accession to the EU. Furthermore support provided under this measure will help to improve the competitiveness of SMEs on the national and international market and improve the marketing access for producers of agricultural primary produces.

5.1.2.4. Linkage to other measures The measure "Improving the Processing and Marketing of Agricultural and Fisheries Products" complements the implementation of the measures "Investments in agricultural holdings" and “Improvement of rural infrastructure”. Upgraded processing and marketing conditions encourage and improve primary production followed by rational and efficient processing, which results in a synergistic effect on both sides. A developed rural infrastructure is a precondition for entrepreneurs. National measures in this area have not been developed. The only exception are the rural development programme "Preparation for marketing preparation of agricultural food products" which is mainly oriented to research and its practical use is very small and recently launched “Operative programme for the support to the production of the kulen from Slavonia”.

5.1.2.5. Final beneficiaries Final beneficiaries of this measure are:

Final beneficiaries under this measure are crafts and enterprises privately owned in 100% or with up to 25% of whose capital is held by a public body or bodies, which are in the VAT system and registered for the related business and which belong to micro, small and medium sized enterprises as presented in Annex 12.1, Table 12-1.

An enterprise can consist of one or more establishments.

Establishments37 in the group “EU compliant” (see table 2-55) are not eligible under this measure.


Support shall be granted for the investments in processing and marketing of agricultural and fishery products, covered by Annex I to the Treaty

37 Article 2(c) of the Regulation 852/2004


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Enterprise must comply with national minimum standards (see annex 12.11, Table 12-12) regarding environmental protection, public health, animal and plant health, animal welfare and occupational safety at the time when the decision to grant support is taken. Where national minimum standards based on Community standards have been newly introduced at the time when the application is received, assistance may be granted regardless of non – compliance with those standards on the condition that the enterprise shall meet the new standards by the end of the realisation of the investment.

A prior assessment from environmental national authorities on project must be submitted together with the project/business plan. For projects of certain size an Environmental Impact Assessment is to be carried out prior to investment according to the Act on Assessment of the Impact on the Environment (compliant with EU directives 85/337/EEC and 97/11/EC, including Annex I and II).

Enterprise must provide the list of the necessary investments to upgrade to Community standards from the veterinary services subsequent to their assessment and include it in the business plan proving the targeting of investment.

Entire establishments in the enterprises must comply with relevant Community standards at the end of the investment realization.

The enterprise must demonstrate (in the business plan) economic viability (see annex 12.10) at the end of the realization of the investment. Business plan must be made according to the standard requirements of banks. If the main objective of the investment is increase of production, the business plan must demonstrate existing market.

Beneficiary must not have any outstanding liabilities against the State at the moment of applying.

Investments at retail level shall be excluded from support.

If the investment concerns reconstruction and/or equipment facilities of existing establishments in the case of investments in the milk and dairy, meat and fisheries sector, establishment must be listed in the National Programme for Upgrading Establishments to Community Standards elaborated by MAFRD Veterinary Directorate. To ensure traceability, the registration number provided to the establishment during the assessment process should be kept or referred to during the IPARD project phase as well as linked to the EU export number if subsequently awarded.

Actions co-financed under Component III should be excluded from support under this measure

5.1.2.7. Specific eligibility criteria MILK AND DAIRY SECTOR:

Investments in dairy plants processing at least 1.800.000 l up to maximum 50.000.000 l of total capacity shall be eligible

Investments in construction are eligible only if existing capacity is closed down due to no possibility for upgrading to Community standards and only if there is an Order for Removal of the Plant issued by the Ministry of Environment Protection, Spatial Planning and Construction according to Spatial Planning Act (OG 76/07, 38/09) and Ordinance on Simple Construction Works (OG 21/09).

MEAT SECTOR

Investments in intermediate plants: priority will be given to investments situated in places listed in Chapter 2.3.4.5 (See page 77)

Investments in slaughterhouses:


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Investments in construction are eligible only if existing capacity is closed down due to no possibility for upgrading to Community standards and only if there is an Order for Removal of the Plant issued by the Ministry of Environment Protection, Spatial Planning and Construction according to Spatial Planning Act (OG 76/07, 38/09) and Ordinance on Simple Construction Works (OG 21/09).

Investments in slaughterhouses with a minimum capacity per 8 working hours of: 20 cattle or 50 pigs or 50 sheep and goats or 5.000 poultry shall be eligible

FISHERIES SECTOR

investments in fish processing plants of at least 18t capacity per year are eligible

investment implemented must comply with the Council Regulation (EC) No 1198/2006 of 27 July 2006 on the European Fisheries Fund and the Council Regulation (EC) No 2371/2002 of 20 December 2002 on the conservation and sustainable exploitation of fisheries resources under the Common Fisheries Policy


no investments shall be approved until the national measure for the establishment of producer organizations in line with EU CMO for fruits and vegetables is fully operational

beneficiaries in range of micro sized enterprises are excluded as eligible

WINE SECTOR

beneficiary must be registered in the Register of Producers of Grape, Wine and Fruit Wine at the Croatian Institute for Viticulture and Grape

beneficiaries who produce at least 200 hl up to maximum 20.000 hl per year and produces Quality wine according to Wine Act (see page 317) are eligible

5.1.2.8. Priority criteria38 Priority will be given to investments with higher number of points, according to following criteria. Criteria Points

Investment is implemented on the Less Favoured Areas as defined by Act on Agriculture (OG 66/01, 83/02)

If "yes" than 30, if "no" than 0 30

Investment is implemented by young beneficiary (farmer, craft manager; owner or manager in legal entity) who is under 40 years of age when the application is submitted

If "yes" than 20, if "no" than 0 20

38 Detailed provisions on priority criteria is explained under chapter 6.1.2.1


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Small and medium sized legal entities39 If "yes" than 20, if "no" than 0 20

Beneficiary is privately owned in 100% If "yes" than 10, if "no" than 0 10

Percentage of support in project is less then 50% If "yes" than 10, if "no" than 0 10

Extension of product range40 If "yes" than 10, if "no" than 0 10

TOTAL 100

5.1.2.9. Eligible expenditure Eligible expenditures, in accordance with the Article 172 (3) of IPA Implementing Regulation (EC) No. 718/2007, are limited to:

the construction or improvement of immovable property;

the purchase of new machinery and equipment, including computer software up to the market value of the asset;

general costs such as architects’, engineers’ and other consultation fees, feasibility studies, the acquisition of patent rights and licences up to a ceiling of 12% of the costs referred to in two points above, of which business plans costs are eligible up to 3% but not more than 5.000 EUR.

eligible costs are determined excluding VAT

Detailed provisions shall be set out in sectoral agreements as defined in Article 7 of IPA Implementing Regulation (EC) No. 718/2007.


The minimum total value of eligible investment per project is limited to 33.800 EUR (250.000 HRK).

The maximum total value of eligible investments per beneficiary within the timeframe of IPARD is limited to 3.000.000 EUR (21.900.000 HRK) out of which total investments in the olive sector cannot exceed 500.000 EUR (3.650.000 HRK).

39 Small and medium sized enterprises are excluded from measure 3.2. Diversification of rural economic acctivities 40 Beneficiary has stated in business plan that one of the project objectives is „extension of product range“


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The amount of public aid shall be up to 50% of total eligible investments in projects.

A maximum of five eligible investments per beneficiary are allowed. The application for the next investment can be brought in only after finalisation (final payment) of the previous investment.

The payments for the investments shall be received in one instalment according to the details agreed in the contract signed between the beneficiary and the Directorate for Market and Structural Support in Agriculture (DMSSA).

5.1.2.11. Indicative budget Table 5-6: Indicative budget for Measure 103.

Total eligible Public expenditure

Year cost Total EU contribution National contribution Private contribution


1 2=3+9 3=5+7 4=3/2 5 6=5/3 7 8=7/3 9 10=9/2

2007 29.920.000 14.960.000 50% 11.220.000 75% 3.740.000 25% 14.960.000 50%

2008 28.672.000 14.336.000 50% 10.752.000 75% 3.584.000 25% 14.336.000 50%

2009 28.208.000 14.104.000 50% 10.578.000 75% 3.526.000 25% 14.104.000 50%

2010 27.733.333 13.866.667 50% 10.400.000 75% 3.466.667 25% 13.866.667 50%

2011 27.560.000 13.780.000 50% 10.335.000 75% 3.445.000 25% 13.780.000 50%

2012 n.a. n.a. 50% n.a. 75% n.a. 25% n.a. 50%

2013 n.a. n.a. 50% n.a. 75% n.a. 25% n.a. 50%

Total 142.093.333 71.046.667 50% 53.285.000 75% 17.761.667 25% 71.046.667 50% Source: MAFRD – DRD, 2008

5.1.2.12. Allocation of funds per sector Table 5-7: Allocation of funds under Measure 103.

Sector Milk Meat Fruits and vegetables Fishery Wine Olive oil Total

% 30% 25% 20% 15% 5% 5% 100% 2007

EUR 8.976.000 7.480.000 5.984.000 4.488.000 1.496.000 1.496.000 29.920.000

% 25% 25% 20% 20% 5% 5% 100% 2008

EUR 7.168.000 7.168.000 5.734.400 5.734.400 1.433.600 1.433.600 28.672.000

% 25% 25% 20% 20% 5% 5% 100% 2009

EUR 7.052.000 7.052.000 5.641.600 5.641.600 1.410.400 1.410.400 28.208.000

% 25% 25% 20% 20% 5% 5% 100% 2010

EUR 6.933.333 6.933.333 5.546.667 5.546.667 1.386.667 1.386.667 27.733.333

% 25% 25% 20% 20% 5% 5% 100% 2011

EUR 6.890.000 6.890.000 5.512.000 5.512.000 1.378.000 1.378.000 27.560.000

% 25% 25% 20% 20% 5% 5% 100% 2012

EUR n.a. n.a. n.a. n.a. n.a. n.a. n.a.

% 25% 25% 20% 20% 5% 5% 100% 2013

EUR n.a. n.a. n.a. n.a. n.a. n.a. n.a.

TOTAL 37.019.333 35.523.333 28.418.667 26.922.667 7.104.667 7.104.667 142.093.333


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Sector 2007 2008 2009 2010 2011 2012 2013 Total

Milk 4 4 3 3 3 n.a. n.a. 17

Meat 5 5 5 5 5 n.a. n.a. 25

Fruits and vegetables 7 7 6 6 6 n.a. n.a. 32

Fishery 4 6 6 6 6 n.a. n.a. 28

Wine 7 7 7 7 7 n.a. n.a. 35

Olive oil 7 7 7 7 7 n.a. n.a. 35

Total 34 36 34 34 34 n.a. n.a. 172 Source: MAFRD –DRD, 2008

Table 5-9: Output, result and impact indicators

TYPE NAME VALUE

Number of enterprises supported 172 OUTPUT


Number of enterprises introducing hygiene, food safety, occupational safety standards (levels of improvement) 100

Number of projects including packaging facilities installation/improvement (level of innovation in packaging 50

GVA increase in supported enterprises 5%

RESULT

Share of investments in LFA 25%

Economic growth (increase in GVA/ sector) 5% IMPACT

Change in Labour productivity (GVA/FTE) 5% Source: MAFRD, DRD, 2008

5.1.2.14. Administrative procedures The measure will be implemented by the Directorate for Market and Structural Support in Agriculture, MAFWM.

All applicants must submit in due course application forms, correctly filled in, and business plans together with other requested documentation to the Directorate for Market and Structural Support in Agriculture, MAFWM. Applications for support under this measure cannot be combined with applications for other measures.

A ranking system will be applied and a ranking list formed and priority given to investments with higher points.

Detailed administrative setup and procedures are explained under chapter 6.1.2.1


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5.1.2.15. Geographical scope of the measure Beneficiaries from the whole territory of the Republic of Croatia are eligible for support.


Assistance under this priority shall contribute to the realization of preparatory actions for implementation of the agri-environmental measures and Leader approach in order to:

achieve better protection of natural resources in the beneficiary areas

develop practical experience with regard to the implementation of agricultural production methods designed to protect the environment and maintain the country side

improve participation of local actors in the development and implementation of rural development strategies


actions to improve the environment and the countryside

preparation and implementation of local rural development strategies

5.2.1. Measure 201.: Actions to improve the environment and the countryside

5.2.1.1. Legal basis Article 12 (2) of Council Regulation (EC) no 1085/2006


5.2.1.2. Background Agriculture is by far the biggest single influence on the Croatian environment and countryside. Currently, Croatia practices bipolar agriculture: high-input in regions with intensive arable farming and low-input farming in less favoured areas, most of which are karst regions. Agri-chemicals are applied only on arable land and permanent crops. Most Croatian farms practice very narrow crop rotation, resulting in a number of environmental problems and a decline in biodiversity. Soil erosion is a significant problem, although the biggest one seems to be land abandonment. Shrubs and forest-like vegetation are rapidly invading a vast area of Croatian agricultural land, notably species-rich grassland. Consequently the pilot agri-environment programme should be designed to address two major problems that Croatia faces concerning agriculture and environmental/nature protection:

Decline of landscape, habitats and species diversity due to loss of agricultural land, notably grassland

Environmental degradation caused by inappropriate agriculture practices including high consumption of fertilisers and pesticides, notably on arable and permanent crops.

Taking this into account it seems to be justified to design pilot agri-environment measures aiming at the:

Maintenance of the positive role of agriculture in creating and preserving semi-natural habitats and mosaic landscapes. Grasslands in Croatian karst areas are the prime potential sites for such measures.


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Reduction of existing and prevention of possible future negative environmental impacts arising from adverse agricultural practices. Intensive arable production in Pannonian Croatia should be targeted by these measures.

5.2.1.3. The scope of the measure The proposed IPARD pilot measures are geared towards a two-tier approach: horizontal information transfer and education programme and three site-specific pilot measures. The training programme is to address key stakeholders (farmers, advisors, nature conservationists and regional and local administration) in all Croatian counties. The site specific measures are designed to address two major problems of Croatian agriculture-decline of biodiversity on grassland and environmental degradation caused by inappropriate agriculture practices on arable land. Education and training of key stakeholders and beneficiaries will be organized within national schemes. In the creation of training programmes technical assistance from PHARE 2005 project „Institutional Capacity Building and Support for Implementation of SAPARD/IPARD Programme in Croatia“ will be used as described under chapter 2.3.6.2).

The selection of pilot sites was made after having visited all key national institutions dealing with agriculture, nature conservation, environment, soil and water protection and agricultural extension (details presented in progress reports). In addition, field visits were made to potential pilot regions, and their respective authorities dealing with agriculture, environment and nature protection were visited.

The regions selected for the field visits reflected Croatian regional diversities in terms of natural resources (soil, climate, flora, fauna, etc.) and socio-economic conditions. Ideally, at least one pilot site should be selected from each of the three agro-ecological zones. Unfortunately, within the scope and resources allocated under this project, it was not possible to fully comply with this requirement. However, in making decisions for the selection of pilot sites, the consultants also took into account that the proposed locations should differ in regard to geographical factors, natural conditions and type of agricultural production. Selecting two pilot sites with similar/same natural and socio-economic conditions would make less sense than selecting two sites having rather different characteristics. Last but not least, this approach also creates a higher potential for multiplication.

From the meetings held, field visits made and literature studies it became apparent that the concept of agri-environment programmes is rather unknown in Croatia. The administration and implementation of agri-environment measures require a supportive attitude, administrative capacities, skilled and willing farmers. Currently these elements seem to be present only among a limited number of stakeholders. Therefore proposed pilot agri-environment sites and measures have to embed administrative and human capacities enabling their successful implementation. In other words, besides environmental and biodiversity aspects “people and institutions” were an important selection criteria for proposing potential sites and measures. The assessment of the social capital of farmers, local administration and nature protection institutions was based on information and impressions of their education level, skills, interest and institutional functioning obtained during the field visits.

The three site-specific measures are:

1. Grassland maintenance and protection in Velebit Nature Park with the objective of preventing further natural succession on species-rich grasslands; preserving or enhancing the current amount of valuable grassland habitats listed in the annexes of the Council Habitats (92/43/EEC) Directive; preventing landscape value declining by losing open landscapes and protecting karst biodiversity and fragile underground ecosystems.

2. A grassland pilot measure in Lonjsko Polje Nature Park with the objective of restoring and maintaining wetland grassland as a habitat for endangered habitat types and species included in the annexes of the Council Habitats (92/43/EEC) and Birds (79/409/EEC) Directives.

3. An arable farming pilot measure in Zagreb County aimed at the reduction of existing and prevention of possible future negative environmental impacts arising from adverse


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agricultural practices as well as increasing biodiversity value on arable land and to preserving its characteristic mosaic landscape. The arable land measure proposed for Zagreb County can be replicated in other Croatian counties characterized by intensive arable farming provided sufficient administrative capacities and budget are available.

The implementation of the pilot measures is proposed to start in 2009.

5.2.1.4. Dissemination of results and experiences One of the important objectives of the agri-environment measures is to raise awareness of the scheme among potential beneficiaries, in particular in farming communities. Therefore, apart from the agri-environment commitments paid on an area basis, each pilot measure will ensure the dissemination of results and experiences. This will be done through documentation of implemented activities, and through various demonstration and dissemination methods such as open days, farm visits, publicity materials, etc.

Support for dissemination will be given to farmers implementing pilot measures. Where appropriate, support will also be granted to NGOs, the management authorities of protected natural areas, county agriculture offices and other types of beneficiaries.

5.2.1.5. Final beneficiaries Final beneficiaries shall be: individual farmers, agricultural co-operatives, agricultural enterprises, NGOs and public institutions which own and/or lease land in the pilot areas. The contracts’ length will be five years. The minimum land area eligible for support under particular pilot areas is specified in relevant chapter.

Participation in the measures is voluntary. All final beneficiaries from the three pilot areas fulfilling the above-mentioned criteria, willing to apply measures that go beyond usual good farming practice, can participate.

Each beneficiary shall attend a training programme of 15 hours. A certificate of attendance of the obligatory training course will be issued by the training institution.

5.2.1.6. Eligible support per hectare payments; payments shall cover only those commitments going beyond

the relevant mandatory standards specified in the CGAP (to be established as explained under chapter 2.3.6.1)

costs of dissemination of experiences and results of projects, which includes demonstration activities, extension and exhibition activities and publicity materials in direct relation with the selected pilot actions

5.2.1.7. Proposed pilot sites and measures Overview of proposed pilot areas and measures is given in following table.

Table 5-10: Pilot areas and measures Pilot area Measures

Grazing 1 Velebit Nature Park

Mowing

Grazing

Mowing 2 Lonjsko polje Nature Park

Corncrake protection

3 Zagreb county Crop rotation stabilizing


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Green covering

Field stripes

Hedgerows

Source: MAFWM, DSDRA, AE Study, 2007

5.2.1.7.1 Grassland management in Park of Nature Velebit Description of pilot site

Mount Velebit is the most important mountain area in Croatia, stretching along the Adriatic coastline in the length of 145 km, and varying in width from 10 to 30 km in the coastal hinterland.

The area comprises several protected natural sites: Paklenica National Park, North Velebit National Park, the strict reserves Hajducki and Rožanski Kukovi (part of the network of international biosphere reserves under the UNESCO programme Man and the Biosphere), the special botanical reserve Zavižan – Balinovac - Zavižanska (Velika) Kosa, Velebit botanical garden, Štirovača forest vegetation reserve and Velebit Nature Park. Velebit Nature Park is by far the biggest of these and covers 200.000 ha. The Park is an important part of CRO-NEN, the Croatian national ecological network and is evaluated as a core area of international importance e.g. potential NATURA 2000 site. The Park has vast areas under species-rich grasslands.

Geographical area

All agricultural land within the Velebit Nature Park territory.

Environment/biodiversity features

The greatest wealth of the Park’s natural value lies in the karst phenomena and the biodiversity of the mountain flora, which owes its existence to the fact that the mountain is actually a border between the two huge climatic regions - Mediterranean and continental.

The location and structure of the mountain enable the development of highly diverse habitats and wildlife. Velebit is the most important centre of endemism in Croatia. Due to the fact that the mountain has been inhabited for centuries various cultural landscapes are still present.

Most of Mount Velebit is covered with forests (more then 63%). Rocky habitats with exposed cliffs are also present. Different grassland types cover around 33% of the total area of Velebit Nature Park. Grasslands are common in the vicinity of villages, as well as in the high mountain region as a result of the natural conditions or, more often extensive seasonal livestock breeding in the past.

According to the Habitats map of Croatia (DZZP, 2004) there are 18 different habitat types listed in Annex I. of the Habitats (92/43/EEC) Directive in Velebit Nature Park. All of the recorded grasslands belong to one of the NATURA 2000 grassland habitats types.

To date, around 2700 plant taxa, of which 78 endemic, have been recorded on Mount Velebit. Some of the plant species are endangered on the national or international level. According to available data there are 8 critically endangered (CR), 21 endangered (EN) and 42 vulnerable (VU) species. Seven of the recorded species are listed in the Annexes of the Habitat Directive. 53 of those nationally and internationally endangered species are grassland species.

A great number of caves and pits with highly endemic underground fauna are a prominent valuable feature of this mountain. Especially rich is the mammal fauna. All three European large carnivore species (wolf, brown bear and lynx) are also present on the Velebit Mountain, as well as 20 species of bats (large carnivores and all bat species listed in the Annexes of the Habitat Directive). According to available data, Velebit is home to 35 bird species endangered in Croatia and 53 species listed in the Birds (79/409/EEC) Directive. 40 of those nationally or internationally endangered species are dependent on grasslands.


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The Velebit Nature Park area, with its diverse habitats, is an important bird site and therefore a potential SPA (Special Protection Area) according to the Birds Directive. Intensified forest management, changes in traditional farming, excessive or illegal hunting and unregulated recreational activities and tourism threatens birds. Mount Velebit harbours isolated nests of griffons. Their existence is endangered and threatened by human activities, notably the lack of sheep - their important food supply source.

Socio-economic situation

Small-scale semi-subsistence private farming prevails and the area does not have any significant agricultural companies. The population in the Park is quite old and not well educated. However, there are a few vital villages with relatively young farmers, with the villages of Kuterevo and Krasno being the flagship examples. Krasno is particularly interesting as it is one of the very few (if not the only) villages in Croatia with no unemployed inhabitants. It runs several small-scale businesses, including the only dairy (family-run) factory in Croatia producing milk from mountainous grasslands. This factory provides for the survival of some 120 farms in the Park and its border areas.

Agricultural practices

The latest estimates suggest that Velebit Nature Park has approximately 5.000 ha of utilised grassland and about 65.000 ha of non-utilised grassland. The current grassland management practice favours the usage of better yielding (but usually less biodiversity rich grasslands) as well as plots that are nearer to the settlements and more accessible for cultivation/grazing.

The problem

As a result of depopulation and changes in the local economy (abandonment of extensive seasonal livestock breeding practices) all grasslands are exposed to natural succession. Due to the diminishing farming activities most of the grassland has been out of production for years and substantial areas have been completely or partly overgrown by forest-like vegetation. Shrubby vegetation is suppressing valuable grassland species adapted to survive on sparse soil or in holes between rocks with a shortage of water.

Consequently the biodiversity value of the area has been rapidly declining.

Objective

To prevent further natural succession on species-rich grasslands

To preserve or enhance the current amount of valuable grassland habitats listed in the annexes of the Council Habitats (92/43/EEC) Directive

To prevent landscape value declining by losing open landscapes

To protect karst biodiversity and fragile underground ecosystems

Description of measures to be undertaken

Objective:

Practise extensive grassland management consisting of mowing or/and grazing.

Management requirements

According to management practice, grassland could be mowed or predominantly grazed. A distinction is to be made between the Mowing Package, including additional compensation for the mowing of steep slopes, and the Grazing Package.

Action 1: Mowing Package

mowing of at least 0,5 ha

clearance of shrubs and small trees to enable regular mowing

application of herbicides, pesticides and mineral fertilizers is not allowed

mowing at least once per year


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all mown grass should be harvested as hay and removed

Action 2: Grazing Package

grazing of at least 2 ha

clearance of shrubs and small trees to enable regular grazing

application of herbicides, pesticides and mineral fertilizers is not allowed

compulsory stocking rate: minimum 0.2 LU/ha maximum 1.0 LU/ha

grazing period: minimum 80 days

grazing requires supervision by shepherd

5.2.1.7.2 Grassland management in Lonjsko polje Nature Park Description of pilot site

The Lonjsko Polje Nature Park represents the largest maintained inundation area in the Danube river catchments. It comprises an area of 506 km2 and is a key element of the flood control system formed by the Sava River basin, affecting Bosnia and Herzegovina and Serbia. The Park is a Ramsar site and is home to seven important habitats and 89 species mentioned in the EU Habitats Directive. In the preliminarily developed Croatian Ecological Network, Lonjsko Polje Nature Park area is evaluated as a core area of international importance e.g. a potential NATURA 2000 site.

The Lonjsko Polje Nature Park consists mainly of lowland riparian forest and about 83 km2 of common pastureland. It contains the Krapje Đol and Rakita ornithological reserves. Krapje Đol was proclaimed as the first bird sanctuary of Croatia in 1963. Its spoonbill colony is important for the entire European spoonbill population.

The Park area with its indigenous breeds of cows, horses and pigs and the typical Posavina wooden houses also represents valuable cultural heritage.

The protected area has been managed by the Lonjsko Polje Nature Park Public Service since 1998. Management of state-owned forests and water resources are the responsibility of the public enterprises “Croatian Forests” and “Croatian Waters”.

Geographical area

All grasslands (about 8.300 ha) within the Lonjsko Polje Nature Park territory.

Environment/biodiversity features

The landscape of Lonjsko Polje Nature Park is a mosaic of traditional villages, orchards, hedges, meadows, common pastureland, ox-bows, ponds, rivers, untouched tributaries and riparian forests and depends on flooding dynamics.

The Park is home to seven important habitats and 89 species mentioned in the EU Habitats Directive (92/43/EEC). The fauna of Lonjsko Polje Nature Park consists of 250 species of birds (134 nest in the area), 58 mammals, 16 amphibians, 10 reptile and 45 fish species and 550 species of plants. Its pastures and mezophile grasslands are a feeding area for many birds endangered on the national and international level.

Socio-economic situation

Small-scale semi-subsistence private farming prevails and the area does not have any significant agricultural companies. The population in the Park is quite old and not well educated. However, there are few more vital villages with relatively young farmers.

Agricultural practices

Pasturing in the Posavina region is a dynamic system, which, depending on needs, involves areas that in other parts of the year or under changed conditions are excluded from the system. Traditional land use preserves some autochthonous domestic breeds - the Posavina horse, the


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Turopolje pig, the Posavina pointer and the Posavina goose. The Public service is the owner of a herd of Slavonian-podolian grey cattle, which has a very important role in the restoration of the Park area affected by Amorpha fruticosa. Three basic types of pasturing can be distinguished in the area:

Commons: It is practised by villages whose pastures are owned by the former public sector. These pastures are managed jointly.

Hay-field pasturing: The villages have large haymaking complexes. Up to 1st May, or after mowing, the meadows are managed in common. Here it is not essential whether the meadow is privately or publicly owned. In the event of high water during the summer, the commons type of management is abandoned in favour of the hay-making type.

Poloj: Some villages practice a pasturing system that is based on the intensive use of grass growing along dikes, road edges, groves and the inundation area between the old dike and the Sava (the so-called poloj). This is common for the villages which are short of both private and common pasture land.

Pasturing begins when the snow has melted or when the pastures are dried enough (after the spring floods) for the animals to walk on them. The state of the turf is not a criterion, and the animals are often driven to the pastures when the grass has not grown enough. In the event of a high spring water level, the animals first of all graze on the meadows, until 1st May at the latest. Then the meadows have to be left, so that the grass can recover until hay-making. Hay-making begins on 1st July and lasts until 15th August, but even after this period there can be un-mown areas, because apart from stock driving and floods, it is sometimes necessary to pay more urgent attention to other jobs (e.g., late or temporarily-restricted harvests of crops because of floods), which is an adequate reason for the haymaking time to be postponed. Late mowing makes possible, among other things, self-sowing in the meadows.

Many of the meadows, for this reason, are mown only once a year. Hay is rarely made for the second time. Meadows for mowing that are inundated and muddy are mowed last, because the hay is used only as feed for horses. This kind of hay is not used for dairy cattle. Large animals are on the pastures all summer long, right until late autumn (the first frosts) or until the new floods (October/November).

The stocking density in the Park is 0,5 LU/ha, consisting of about 2.300 cows, 1.100 horses and 1.400 pigs.

The problem

As a result of depopulation and changes in the local economy farming activities are diminishing and lot of the grassland has been out of production. Due to the abandonment and low number of cattle, but also because of the recent war (1991 - 1995) grazing and hay-making activities have been terminated on large parts of the less productive but species-rich grassland. As a consequence, large complexes of meadows and pastureland are now covered by the invasive species Amorpha fruticosa. Consequently the biodiversity value of the area has been rapidly declining.

Objective

To restore and maintain grassland biodiversity

To preserve or enhance the current number of plant and bird species listed in the annexes of the Council Habitats (92/43/EEC) and Birds (79/409/EEC) Directives

Description of measures to be undertaken

Action 1: Grazing

Objective

Restore and maintain wetland grassland as a habitat for endangered habitat types and species included in the annexes of the Council Habitats (92/43/EEC) and Birds (79/409/EEC) Directives (especially Hydrocharition and Chlidonias hybrida).


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Description of measure

Practise extensive grassland management through grazing of pastures.

Eligible sites within the Park

Poganovo polje and other grassland area in Nature Park Lonjsko Polje featuring species included in annexes of Council Habitats (92/43/EEC) and Birds (79/409/EEC) Directives (especially Hydrocharition and Chlidonias hybrida).


Grazing of at least of 3 ha

Clearance of shrubs and small trees to enable regular grazing

Application of herbicides, pesticides and mineral fertilizers is not allowed

Compulsory stocking rate between 0,5 and 1,5 LU

Grazing period: minimum 180 days (April - November)

Grazing requires supervision by shepherd

Action 2: Mowing

Objective

Restore and maintain grassland as a habitat for endangered habitat types and species included in the annexes of the Council Habitats (92/43/EEC) and Birds (79/409/EEC) Directives (especially Aythya nyroca)


Practise extensive grassland management through mowing of meadows.


Meadows in Kratečko and Rakita ornithological reserve (part of the IBA HR012) and other meadows in Nature Park Lonjsko Polje featuring species included in annexes of Council Habitats (92/43/EEC) and Birds (79/409/EEC) Directives (especially Aythya nyroca).


Mowing of ate least 2 ha

Clearance of shrubs and small trees to enable regular mowing

Application of herbicides, pesticides and mineral fertilizers is not allowed

Delayed hay cutting: not until July 20

All mown grass should be harvested as hay and removed

Action 3: Corncrake Protection

Corncrake (Crex crex) is a globally threatened species. Its survival is directly linked with grassland management. The Corncrake requires tall grass, as this provides the best shelter, feeding and nesting place. The Corncrake is widespread in the Park. Recent ornithological investigations have recorded more than 200 corncrake singing males in the Park area. In order to keep the present Corncrakes a special sub-package has been developed. Although primarily directed at the Corncrake, the management prescribed by this sub-package will also benefit several other small animals whose existence depends on grassland habitats (birds, small mammals, insects, etc).

Objective

To protect and possibly increase the Corncrake population by providing grassland habitats managed in a way favouring the Corncrake’s specific needs.


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Orlinci Pasture, meadows around Jasenovac and other grassland in Lonjsko Polje Nature Park harbouring Corncrake. The beneficiaries taking part in the scheme have to show evidence of Corncarke presence on the grassland for which the support has been requested (e.g. a statement from competent bodies such as the Park Public Service, State Institute for Nature Protection or the Ministry of Culture).


The Corncrake favours hay fields with tall vegetation. Its breeding season is from late May to early August and it nests on the ground in well-hidden locations among tall vegetation in hay fields. Therefore the management involves:

Delayed hay cutting: not until July 20, with the farmer agreeing to postpone the mowing where birds are present on the site. This will allow the Corncrake to rear its offspring

Minimum plot surface 0,15 ha

Application of pesticides and mineral fertilizers is not allowed. The Corncrake’s diet depends on insects, snails, earthworms and other pesticide-sensitive organisms

Keeping field borders (2 - 3 m wide) uncut. These strips provide shelter, as the Corncrake needs these for ease of movement. The strips should be cut once in three years in order to prevent shrub encroachment. Cutting should alternate between different sides of the field

The stocking rate should not exceed 0,3 LU per hectare. Grazing is forbidden in the period 15th May - 31st August

Grass cutting must take place in a spiral form from the centre out towards the edges. It is important to cut slowly since this will give the birds the chance to escape to the field margins.

5.2.1.7.3 Arable land in Zagreb county Description of Pilot Site

Zagreb county with its 300.000 inhabitants living on 3.000 km2 is one of the biggest and economically most viable Croatian counties. This region on the outskirts of Zagreb, Croatia's capital city, is also one of Croatian flagship agricultural regions. The utilised agricultural area is about 80.000 ha and it is managed by about 30.000 farmers. Economically speaking it is one of the most important agricultural Croatian regions as it is the single biggest producer of a number of agricultural commodities. Zagreb county is one of the most intensive agricultural areas, with heavy use of fertilisers and pesticides on arable land. This practice threatens the environment, notably the water bodies. The county has also some 8.000 ha of water-protected zones, mostly under agricultural production.

Of all the counties visited, the agriculture office of Zagreb county was the only one that showed an undoubted interest in the measure. This is not surprising as this county was the first county in Croatia with an Organic Agriculture Strategy (2001) and introducing subsidies for organic farming. It is still the only county in Croatia with a Rural Development Plan. This plan includes several AE-like measures for grassland, organic farming, etc. However, this plan does not recognise the environmental problems related to the intensive arable farming in the county.

Geographical area

All arable land within the territory of Zagreb County.

The problem

The changes in farming practice that have taken place during the last decades in Zagreb County are mainly the result of intensification of farming. These comprise the specialization of production, a decrease in traditional farming, the use of high quantities of industrial fertilisers and plant protection preparations, narrow crop rotations, changes in the types of crops grown, loss of field boundaries, etc.


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Cereals are planted on more than 80% of arable land in Zagreb County. This cropping pattern results in a very narrow crop rotation with a small proportion of legumes and grass-clover mixtures. The most common crop rotation pattern is a three-year rotation consisting of winter wheat, maize and potatoes. However, many farmers have only two-year (maize/wheat) or have no crop rotation at all.

With an average use of 233 kg N/ha of UAA, Zagreb County ranks as the second highest nitrogen input region in Croatia and is well above the national average of 164 kg N/ha of UAA. The water quality has been worsening and in 2004 has significantly decreased in comparison with 2002. The excessive use of pesticides has caused soil pollution. The land reclamation and intensive arable production has resulted in removal of hedges and other landscape features, leading to the loss of valuable wildlife habitats.

Objective

The objective of this scheme is to stimulate agricultural measures that will prevent the environmental degradation of soil and water and increase biological diversity on arable land.

Action 1: Crop Stabilizing Rotation

Properly designed crop rotation is an important tool for pest, disease and weed control. It also builds soil fertility by improving the soil structure and enriching soil with organic matter. Just as importantly, diversified crop rotation enhances overall species and habitat diversity.

Objectives

to reduce nutrient losses

to reduce the need for agrochemical inputs

to improve soil fertility

to increase overall farm biodiversity


Introduction of wider crop rotation on arable land


Cultivation of at least 4 different crops

Minimum share of each crop 15%

Share of maize should not exceed 40%

Share of cereals should not exceed 65%

Minimum share or grass-clover mixtures 15%

Action 2: Green Covering

A winter cover crop is planted in late summer or fall to provide soil cover during the winter. Often a legume is chosen for the added benefit of nitrogen fixation. The selected crop needs to possess enough cold tolerance to survive hard winters.

Green cover of plants prevents nutrient losses, protects soil from compaction and erosion, maintains soil organic matter, widens/enriches crop rotation, enhances biodiversity and provides green manure. There is a great variety of crops that can be used for green covering - alone or in mixtures (clovers, lucerne, mustard, etc.).

Objectives

to improve soil structure and fertility

to reduce soil erosion

to reduce nutrient losses

to reduce the need for agrochemical inputs


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to increase soil and species biodiversity


Sowing of crops with legumes, grass/legume mixtures or other crops


minimum 0,5 ha must be sown

sowing latest 3 weeks after harvesting of main crop

harvesting of green cover crops is prohibited

green cover crops must not be worked into the soil before 15th February the following year

Action 3: Field Strips Package

One of the negative effects of intensive, particularly arable, farming is a decline in the number of plant and animal species associated with the agricultural landscape. Field strips are important habitats for small mammals, invertebrates and birds, many of which are beneficial in agriculture. These strips help in protecting watercourses from pesticides and fertilisers, and reduce diffuse pollution and soil erosion.

Objectives

To establish habitats for wildlife species

To increase overall biodiversity on arable farms

To improve the landscape identity of arable farms


Establishment of appropriate flowering strips on arable fields


Establish at least 3 m wide strips along the entire length or across fields

The minimum length eligible for payment is 200 m

Maximum surface area under hedges up to 15% of arable field

Use seed mixtures containing at least 5 flowering species, preferably adjusted to flower all year round

The distance between strips should be at least 50 m

Application of pesticides and mineral fertilizers is not allowed

Practice non-chemical weed control only

Action 4: Hedgerows

The parcels separated by natural hedges contribute not only to the biological, but also considerably to the landscape diversity. Hedgerows improve the landscape's value and are efficient windbreaks. They host a myriad of insects, and provide habitats for a range of birds and mammals. They are also a rich source of food for wildlife species throughout the year and can be consumed by domestic animals, too. The best hedges have a variety of woody species and a rich weedy flora at the base.

Objectives

Preserve the mosaic landscape structure as a part of Croatia's natural and cultural heritage

Provide habitats for a range of wildlife species and allow migration and recolonisation of species


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Provide wind barriers

Prevent wind and water erosion


Establishment and maintenance of hedgerows


The hedgerow should be at least 50 m long

The hedgerow should contain at least five different autochthones or domesticated plant species

One tree should be planted every 25 m in the hedge

No use of mineral fertilisers or pesticides within 3 m of either side of the hedge

Regular trimming in order to keep hedges in shape

Maximum surface area under hedges up to 15% of arable field

5.2.1.8. Allocation of funds Table 5-11: Allocation of funds for Measure 201 Public expenditure Private contribution

Year

Total eligible cost Total EU contribution National contribution


1 2=3+9 3=5+7 4=3/2 5 6=5/3 7 8=7/3

2007 0

2008 0

2009 0

2010 650.000 650.000 100% 520.000 80% 130.000 20% 0%

2011 993.750 993.750 100% 795.000 80% 198.750 20% 0%

2012 n.a. n.a. 100% n.a. 80% n.a. 20% 0%

2013 n.a. n.a. 100% n.a. 80% n.a. 20% 0%

Total 1.643.750 1.643.750 100% 1.315.000 80% 328.750 20% 0%

Source: MAFRD, DRD 2008


Table 5-12: Estimated number of ha under AE measures, 2007 - 2013 Pilot Area 2007 2008 2009 2010 2011 2012 2013

Velebit Nature Park 0 0 1.280 n.a. n.a. n.a. n.a.

Lonjsko polje Nature Park 0 0 1.180 n.a. n.a. n.a. n.a.

Zagreb county 0 0 2.314 n.a. n.a. n.a. n.a.

TOTAL 4.774 n.a. n.a. n.a. n.a.

Source: MAFWM, 2007, AE Study

Number of participants at training courses

Number of distributed leaflets and promotional material


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Result indicators

percentage of uptake as compared to estimations and targets

area of proposed NATURA 2000 areas participating in the scheme

NP Velebit, NP Lonjsko polje – increase of recultivated abandoned land

preservation of endangered bird and plant species

Zagreb county – increase of crop rotation

Impact indicators

Reversing biodiversity decline – changes in trend in biodiversity decline as measured by farmland bird species population

Improvement in water quality – changes in gross nutrient balance

Preservation of appearance of new endangered species

5.2.2. Measure 202.: Preparation and implementation of local rural development strategies

5.2.2.1. Legal basis Article 12 (2) of Council Regulation (EC) No. 1085/2006 of 17 July 2006.

Article 178 of Commission Regulation (EC) No. 718/2007 of 12 June 2007.

5.2.2.2. Rationale of the intervention The LEADER approach is a new subject in Croatia. This does also indicate that tradition for involvement of local citizens and stakeholder in policymaking processes still needs to be seen as young. Different initiatives aiming at mobilizing local communities and resources are ongoing in several areas of Croatia by a number of associations, networks and NGOs. The various initiatives are all aiming at building up and enhancing social and human capital within rural Croatia and within different sectors through consulting, education and training as well as through implementation of specific projects on e.g. micro credits, ecological agriculture, tourism etc.

These experiences as well as the experiences from the preparation of the ‘regional operation programmes‘ (ROP) are considered important and useful in order to ensure a successful implementation of the LEADER approach in Croatia. The ROPs relate to the county level and today almost all counties have a ROP (see Table 2-2). The ROPs have been developed with participation of local governments and other local stakeholders forming a partnership. The experiences gained from the ROP processes as well as from the ‘total development projects’ (PUR) will help to understand and implement the LEADER approach.

However, there is a huge need for enhancing social and human capacity as well as skills among rural inhabitants on the one hand and to motivate them to join a local partnership on the other hand. Motivation and skills enhancement are the key problems to address in order to establish the preconditions for a rural development based on local resources and initiatives. It is the common experience of Croatian stakeholders that motivation is essential. Therefore emphasise needs to be given to the establishment of LAGs - not just in terms of informing about the potentials of LEADER, but also by supporting the process of identifying and establishing LAGs.

As mentioned above, the LEADER approach, including establishment of LAGs, has not been implemented in Croatia before. The chosen strategy for the IPARD period is therefore to focus the limited resources available on preparation for implementation of local development strategies by building up capacities and resources locally through training, workshop sessions,


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information and promotion activities. These activities will be supported under the sub-measure 1: “Acquisition of skills, animating the inhabitants of LAG territories.”

The implementation of the Local Development Strategy (LDS) under the Leader approach under IPARD is limited to actions eligible and supported under the measures under Axis 3 within the IPARD programme.

The LEADER method will, until the Measure 501 on ‘Preparation and implementation of local rural development strategies’ is accredited, be financed through the TA measure.

The LEADER approach for Croatia has been developed in cooperation with the relevant stakeholders in order to ensure that the design of the LEADER approach matches the demands and needs experienced in rural Croatia. This has been achieved by having MAFWM staff participating in training workshops organised by stakeholders as speakers and by inviting stakeholders to information sharing meetings within the MAFWM. This process is expected to be ongoing in order to ensure a successful preparation and implementation of the LEADER approach.

5.2.2.3. Objectives The overall objective for the LEADER approach is ‘to promote rural development through local initiatives and partnerships’. The rationale is that rural development through local initiatives will contribute to the IPARD programme objectives being

to improve rural living and working conditions, including welfare,

to create new, sustainable income earning opportunities,

to preserve and create jobs,

to diversify economic activities

More specifically the objectives are:

to encourage and develop capacities of rural population to act together also through cooperation projects,

to develop integrated local development strategies and to prepare the implementation of those,

to promote local initiatives and partnership through involvement of local communities as well as representatives of business and local government,

to transfer achievements, experiences and expertise and to make available information and conclusions through networking

The operational objectives are as follows:

to enhance capacity among rural inhabitants and LAG members through training and education,

to develop, organize and run LAGs,

to prepare and - if possible - begin implementing local development strategies in a limited number,

to implement cooperation projects

5.2.2.4. Definition of the LEADER approach The LEADER approach is defined by the following elements:

Is area-based local development strategies proposed for well-identified sub-regional rural territories;

Public-private partnership with a decision–making management body representing the interests of different groups of a rural population;


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Bottom-up approach meaning that the decisions concerning preparation and implementation of the local development strategies are taken by the local action groups;

Multi-sectoral design and implementation of the strategy based on the interaction between actors and projects of different sectors of the local economy;

Implementation of innovative approach;

Implementation of cooperation projects;

Networking of local partnerships.

5.2.2.5. Area covered The LEADER approach covers the rural areas of Croatia.

A LAG shall represent a rural area with population of more than 5.000 and less than 150.000 including small towns and towns with a population of less than 25.000.

A LAG-represented territory shall be integral from the economical, social and physical (geographical) point of view and shall not belong to the territory of other LAGs.

The same location must not belong to more than one LAG meaning one partnership, one strategy, one territory.

5.2.2.6. Division of responsibility The division of the main responsibilities among the MAFRD, the IPARD Agency and the LAGs are described below.

Responsibilities of MAFRD:

Develop legal act for the creation of LAGs, if needed

Develop selection criteria for selecting LAGs, including ranking

Develop ordinance and guidelines for the operation of LAGs and for the local development strategies

Promoting and informing all potential economic and social actors and stakeholders in rural areas about the LEADER approach in Croatia

Facilitate training and awareness activities regarding the implementation of LEADER approach

Setting up an Evaluation Committee for the pre-selection of LAGs

Support potential LAGs in developing their local development strategies

Responsibilities of the IPARD Agency:

Call of tenders under to which LAGs can apply for approval

Final selection of LAGs based on the pre-selection carried out by the Evaluation Committee

Approving their local development strategies based on recognised and objective criteria

Allocate budgets for selected LAGs

Make the eligibility evaluation and approval of projects under the local development strategies

Control function (administrative and on-the-spot)

Payments to final beneficiaries based on controlled and approved payment claims

Responsibilities of the local partnerships/LAGs:


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Establish a LAG and develop statute for the LAGs

Develop a local development strategy and local development operational plan

Promote and inform the local population about the existing possibilities and about project applications within the IPARD programme under the local development strategy

Arrange training and workshop sessions for the local population on e.g. preparation of individual business plans, application proposals, accounting, etc.

Issue letters of recommendation to the IPARD agency on projects to be financed under the local development strategy

Managing the activities of the LAG (project management, programming of activities, accounting, monthly and quarterly reports, etc)

5.2.2.7. Eligibility Criteria for LAGs The LAGs selected must in all cases cover territories with sufficient coherence and critical mass in terms of human, financial and economic resources to support a viable development strategy.

A LAG shall be an officially registered association based on means of a valid Act on Associations or other appropriate form within the Croatian legal framework.

At decision–making level the management body of the LAGs shall represent the interests of different public and private groups of the area and of the rural population, ensuring that at least 50% shall be composed by members representing the social, economic partners, the civil society and associations. Also minimum of 20% are representatives of local authorities.

The managing body of the LAGs must be representative by ensuring age diversity (at least one member should be under 25 years) and gender equality in terms of at least 30% are women.

The LAG must be able to define and propose an integrated local development strategy based on the guidelines developed by the Managing Authority. The LAG shall show the ability to implement this local development strategy and to manage public funds.

Content of the Local development strategy

The following components must be included in a local development strategy:

The local development strategies need to be implemented within the overall objectives of the Croatian IPARD programme 2007 - 2013

The local development strategy must address the economic, social and environmental problems within the area. It shall be based on the strengths, weaknesses and potentials of the area in which the strategy applies and on the specific objectives for the implementation of LEADER in the context of the IPARD programme.

Contain quantitive objectives

Contain a description of the expected activities/measures

It must be in conformity with other relevant strategies and/or national/regional policies

Include a financial table and a timetable for the implementation of the activities, if necessary

Special technical sheets (description of the project, detailed action plan, list of partners, timetable for implementation and financial tables per year, allocation per partner and per action) on the cooperation projects they will implement in accordance to the local development strategy and its priorities.


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5.2.2.8. Procedure for selecting LAGs and approval of strategies

The procedure outlined below describes the selection procedure of LAGs (see Table 5-13) and will be carried out after the Managing authority has fulfilled the preparatory tasks set out in chapter 5.2.2.6 "Division of responsibility":

The LAGs will be selected on the basis of an open tender procedure for all rural areas. This public tender will be called by the IPARD Agency.

Special criteria will be used to ensure a) area based approach, b) the quality and the conformity with the objectives of the IPARD Programme of the proposed local development strategies and c) the capability of the LAG to manage the implementation of the proposal

The selection procedure applied will be based on a ranking system of the selection criteria and not of the “first in, first served”. The ranking criteria system will be developed later on by the Managing Authority as a part of the guidelines for the LEADER approach.

Based on submitted applications and evaluation of the set selection criteria, LAGs will be pre-selected by an Evaluation Committee consisting of representatives from MAFRD/Managing Authority, MAFRD/IPARD Agency, MSTTD and other relevant rural actors and non-profit organisations. The Evaluation Committee shall submit the the list of pre-selected LAGs to the IPARD Agency for selection/approval. The role of the IPARD agency is limited to the eligibility checks in the approval procedures. If the decision made is in opposition to the evaluation report of Evaluation Committee then it has to be justified by incompliance with the eligibility criteria. The final decision will be presented to the IPARD Monitoring Committee.

The IPARD Agency will sign contract agreement on covering the running cost and the implementation of specific cooperation project with the selected LAGs and will establish a registration system of selected/approved LAGs.

5.2.2.9. Indicative timetable Below is included a timetable for the implementation of the entire LEADER approach in Croatia defined by a number of major milestones.

Table 5-13: Timeframe for LEADER implementation Phases Period (months) Responsible Activities

Information, promotion and training activities for forming LAGs

Month 1-4

Managing Authority, NGOs and different associations /experts contracted for this activity

Training, lectures, workshops, promotions etc.

Invitation for applications for identifying potential partnerships and establishing LAGs published

Month 5 Managing Authority

Groups who had attended activities in first phase and who have signed a letter of interest saying they will work together on forming a LAG

Preparation and drafting of local development strategies including technical support

Month 6-18

Managing Authority, potential LAGs, technical support (NGOs and different associations /experts contracted for this activity)

Training, workshops, studies, analysis etc


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Opening of tender for LAGs IPARD Agency Opening of tender

Evaluation of proposals from LAGs. Preselection of potential LAGs

Evaluation Committee

Pre-selection process based on the application submitted. Evaluation Committee will evaluate the submitted proposals and makes it recommendation to the IPARD Agency for selection/approval

Selection of LAGs and approval of local development strategies

Month 19-24

IPARD Agency

Selection of LAGs and approval of local development strategies based on EC proposal

Implementation of local development strategies

After selection of LAGs and approval of local development strategies

IPARD agency after recommendation of LAGs

Implementation of projects under axis 3 and cooperatives projects


5.2.2.10. Indicative budget The “Acquisition of skills, animating the inhabitants of LAG territories” sub-measure for 2007 - 2010 will be financed through the Technical Assistance measure as long as the LEADER measure is not accredited. Approximately 30% of the Technical Assistance measure will be allocated for financing activities under the “Acquisition of skills, animating the inhabitants of LAG territories ” sub-measure (see chapter 5.4). From 2010 or after accreditation of the measure funds will be used as presented in following table 5-14

Table 5-14: Allocation of funds for Measure 202 Public expenditure Private contribution

Year

Total eligible cost Total EU contribution National contribution


1 2=3+9 3=5+7 4=3/2 5 6=5/3 7 8=7/3

2007 0

2008 0

2009 0

2010 975.000 975.000 100% 780.000 80% 195.000 20% 0%

2011 993.750 993.750 100% 795.000 80% 198.750 20% 0%

2012 n.a. n.a. 100% n.a. 80% n.a. 20% 0%

2013 n.a. n.a. 100% n.a. 80% n.a. 20% 0%

Total 1.968.750 1.968.750 100% 1.575.000 80% 393.750 20% 0%

Source: MAFRD, DRD 2008.

The eligible expenditure for covering running cost of the LAG will be available to the LAGs after they have been successfully selected and contracted accordingly by the IPARD agency.


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5.2.2.11. Sub-measure 1: “Acquisition of skills, animating the inhabitants of LAG territories”

This measure is covered by article 178 of the IPA Implementing Regulation No. 178/2007.

Rationale of the sub-measure

The aim of the sub measure is to support the capacity building among rural inhabitants in order to enhance their skills in local democracy and government and to encourage them to set up a Local Action Group (LAG). The tools to ensure this are training activities, workshop sessions as well as promotion and information activities.

Objectives of the sub-measure

The overall objectives of this sub measure are:

To bring together rural inhabitants and raise their abilities and skills to work together (networking) in partnerships

To enhance rural capacity within the field of the LEADER method

The sub-measure has these specific objectives:

Supporting information and promotion activities regarding the LEADER method, including networking activities

Support identifying and setting up LAGs

Supporting capacity building and training of LAG members and inhabitants of LAG territories

Supporting the preparation of local development strategies

Supporting territorial analysis, studies, consultation and expert support, etc.

The operational objectives are:

see output indicators/targets in Table 5-15

Activities

The following activities will be eligible under this sub measure:

Awareness and promotion activities

Defining and setting up LAGs

Advisory and experts services related to establish a LAG

Technical assistance for rural studies, regional analysis

Technical assistance for preparation of local development strategies including training/education sessions and training-of-trainers

Eligible expenditure

Eligible expenditures for the Acquisition of skills and animating the local partners for establishment a LAGs are:

Communicators/experts to inform about the LEADER approach and to assist in developing local development strategies

Information and promotional events and seminars promoting the local development strategies;

Workshops and information events for encouraging the active participation of the population in the local development process;


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Training and skills acquisition of the staff/team involved with the preparation and the implementation of the local development strategy;

Training of leaders (local informal leaders living or working in the area);

Organizing other training necessary for the preparation or implementation of local development strategies;

Elaboration and release/delivery of information materials necessary for the preparation and publicity of the local development strategies (including Internet sites, brochures, etc.);

Studies of the rural area concerned: (territorial, socio-economic analyses, etc.) for the purposes of preparing a local development strategy;

The Managing Authority can chose to prepare information, promotion and training activities for forming LAGs in cooperation with NGOs, municipalities, associations, etc.

Experts can be hired to assist the potential LAGs with preparing and drafting local development strategies.

Final beneficiaries

The beneficiary will be the Managing Authority and potential LAGs.

Indicators

Table 5-15: Output, result and impact indicators for sub - measure 1 Sub measure 1

Type of indicator Indicators Targets

Output

- No. of information and promotion activities completed

- No. of potential LAGs established - No. or % of local development strategies

developed - Total geographical size of the potential

LAG area (km2) - Total population in potential LAG area

(No., %) - No. of training/education sessions carried

out - No. of training of trainers courses carried

out - No of participants in different actions - No of activities building up a network

- 20 information and promotion activities - Minimum 10 potential LAGs established - Minimum 10 Local development strategies

developed - Minimum 3.500 km2 covered by LAGs - Minimum 11% of the rural population lives within

a potential LAG areas - Minimum 20 training/education sessions carried

out - Minimum 10 trainer-of-trainer courses carried out - Minimum 2000 participants in information and

promotion activities - Minimum 400 participants in action

training/education sessions - Minimum 50 participants in training of trainer

courses in action - 5 capacity building up activities for network - 10% of local actors/groups/potential LAGs are

organized in the network

Result

- Change in the knowledge level among rural inhabitants about LEADER

- No. of well-run and organized LAGs who have developed a local development strategy and applied for IPARD support

- No. or % of participants that successful ended a training and/or education sessions

- 50% of the beneficiaries find the promotion and information activities useful and relevant (could be based on statements from beneficiaries)

- Minimum 10 potential LAGs have submitted local development strategy

- 50% inhabitants have completed training and/or

education sessions and have found it useful (could be based on statements from beneficiaries)


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- No. of "leaders" trained

- Gross No. of jobs created or

maintained

- Minimum 50 persons are trained as "leaders" of LAGs

- 5-15 jobs created in LAG areas per year

- Minimum 5 jobs maintained in LAG areas per year

- Change in rural capacity - 50 % beneficiaries find that they have gained

better skills and knowledge (could be based on statements from beneficiaries)

- New traditions for partnerships and working relations (networking)

- 50 % beneficiaries find that partnerships in form of a LAG has encourage to new working relations like networking (could be based on statements from beneficiaries)

Impact

- New bottom-up implementation methods developed

- 50 % of the beneficiaries find that they have had new project ideas and implementation methods (could be based on statements from beneficiaries)


The baseline data for this measure is zero in terms of the output and result indicators since this is a new approach in Croatia. The baseline for impact indicators is estimated to be above zero since work is already done in rural Croatia in order to build up capacity. The impact of theses activities have however not been measured and it is therefore problematic to identity a quantified baseline for the impact indicator.

Financial allocation

It is expected that approximately 30% of the Technical Assistance measure annually will beallocated for this sub - measure (see Table 5-22). Allocation of funds for Measure 202 is presented in the table 5-14.

Demarcation

Support for building up capacity within the MAFRD concerning LEADER will be a part of a PHARE 2005 project on ‘Institutional capacity Building and Support for Implementation of SAPARD/IPA-RD Programme in Croatia’. The project will also include study trips for relevant staff and key stakeholders in order to exchange know how on implementation of LEADER programmes. It is considered the LEADER activities supported under the IPARD programme and the PHARE project is complementary and not overlapping.

It will be a task for the Managing Authority to define a demarcation line to the ROPs strategy developed at county level. This should be clarified in the guidelines. The objectives and priorities of the ROPs will have to be taken into consideration.

Links to other measures

This measure is linked to all other measures in the IPARD Plan since training and acquisition of skills is a cross cutting key factor in order to ensure a positive uptake of the IPARD measures as such. The sub-measure is however closely related to the two other sub-measures under the LEADER measure as the success of these sub measures are closely interlinked.

5.2.2.12. Sub-measure 2: “Implementation of local development strategies”

Rationale of the sub measure


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The aim of this sub measure is to ensure that local needs and demands are covered through implementation of projects, which are in line with the local development strategies on the one hand, and which also contribute to the fulfilment of the objectives hierarchy defined for the IPARD Programme.

Objectives of the sub measure

The overall objective is to implement the LEADER method through implementation of local development strategies.

The specific objectives of this measure will be to contribute to the overall objectives of the IPARD Programme by the implementation of local development strategies.

The operational objectives of this measure are:

- to support implementation of local development strategies

- to support running LAGs

Activities

The activities of this measure will be to develop projects to be implemented in accordance with the local development strategies.

The projects are to follow the objectives set out in Article 171(1) of Commission Regulation (EU) No 718/2007 and correspond to the eligibility conditions established in the measures under priority axis 3 (measures 4.3.1 and 4.3.2).

In addition hereto support will be given to run the LAGs, which include support for administration, a LAG coordinator and other LAG employees, costs for keeping up premises for the LAG activities, purchase of equipments, publicity activities, etc.

Eligible expenditures

The eligible expenditures for running costs under this sub measure are:

Co-financing of salary for a LAG manager and/or other employees,

Training activities,

Publicity and promotion activities,

Office rent, purchase of equipments,

Purchase of services (specialists, accountants, advisors, facilitator),

Studies of the area, marketing studies, exhibitions, social activities, workshops, meetings etc.

Running costs of local action groups shall be eligible within a limit of 20% of the total public expenditure of the local development strategy.

The implementation of the local development strategy is limited to those measures accredited under axis 3 within the IPARD programme.

Administration

The local development strategies prepared by the LAGs and approved by the IPARD Agency constitutes the frame of the local actions to be taken. The content of the individual projects will be defined locally by the local applicants and will be in compliance with the local development strategy. This recalls for an administrative procedure that includes a local recommendation from the LAG. The administration procedure for the Leader will therefore be as follows:

Local project applicant will submit his/her application to the IPARD Agency in accordance with the eligibility conditions established under the relevant measure (Measure 501.3.1 or 4.3.2). As


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a part of the application, the applicant will include a letter of recommendation from the LAG saying that the project is consistent with the local development strategy.

IPARD Agency will conduct the eligibility evaluation and ranking of the application in accordance with the provisions under the measure concerned,

Approval or rejection letter will be submitted to the beneficiary by the IPARD Agency with a copy to the LAG,

Project implementation begins,

The IPARD Agency will undertake scheduled and random on-the-spot checking of the strategy and projects in progress,

Payments claims are submitted to the IPARD Agency,

Project finalization,

The steps are illustrated in the figure below.

Map 5-1: Administration procedure for LEADER implementation


The application is submitted to the IPARD Agency together with a letter of recommendation from the LAG

Project implementation

begins

Project finalization

IPARD Agency will conduct the eligibility evaluation and ranking of the application

The IPARD Agency will undertake scheduled and random on-the-spot checking of the strategy and the projects

Payments claims are submitted to the

IPARD Agency

Approval or rejection letter will be submitted to the beneficiary by the IPARD Agency and copy to the LAG


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Final beneficiaries

Established LAGs whose local development strategy has been approved by the IPARD Agency are final beneficiaries of this sub-measure.


It is expected that the implementation of the local development strategies will begin 2010 indicating that no funds are allocated for 2007 – 2009. Allocation of funds for Measure 202 presented in the table 5-14.

Demarcation

Support for building up capacity within the MAFRD concerning LEADER will be a part of a PHARE 2005 project on ‘Institutional capacity Building and Support for Implementation of SAPARD/IPA-RD Programme in Croatia’. The project will also include study trips for relevant staff and key stakeholders in order to exchange know how on implementation of LEADER programmes. It is considered the LEADER activities supported under the IPARD programme and the PHARE project is complementary and not overlapping.

It will be a task for the Managing Authority to define a demarcation line to the ROPs strategy developed at county level. This should be clarified in the guidelines. The objectives and priorities of the ROPs will have to be taken into consideration.

Link to other measures

This measure is closely related and links to the sub-measure 1. “Acquisition of skills, animating the inhabitants of LAG territories.” It is moreover interlinked with the other measures in the IPARD and especially with measures ‘Improvement and development of rural infrastructures’ and ‘Diversification and development of rural economic activities’.

5.2.2.13. Sub-measure 3: Cooperation projects This sub-measure is covered by article 178 of the IPA Implementing Regulation No. 718/2007.

Rationale of the sub-measure

The purpose of the sub measure is to encourage cooperation between LAGs in Croatia and/or between LAGs in Croatia and LAGs in EU member states. The cooperation will aim at exchanging experiences and lessons learned concerning implementing the LEADER method and of specific projects as well.

Objectives of the sub-measure

The overall objective of this sub measure is to develop and implement the LEADER method through encouragement of cooperation projects.

In the initial phase under the IPARD programme this is more broken down to promote local initiatives and partnership through tehnical cooperation and exchange of the best practices in rural development.

The operational objectives are to:

See Table 5-16: Output, result and impact indicators for sub – measure 3

Eligible expenditure

Preparatory technical support e.g. studies, travel expenses, lodging/accomodation;

Joint actions e.g. exhibitions, seminars, meetings, workshops;

Running common organisational structures;


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Animation activities;

Publicity concerning the project.

Conditions for cooperation projects

The LAG will have the responsibility for developing and implementing cooperation projects. The projects shall aim at ensuring capacity building and exchange experiences between two or more LAGs.

Eligibility criteria for cooperation projects:

The cooperation project will be either an inter-territorial or transnational project.

An inter-territorial cooperation project must be prepared by at least two partners operating on the territory of Croatia. At least one partner must be a LAG.

A transnational cooperation project must be prepared by at least two partners (LAGs), one of them operating in an EU member state and the other operating in Croatia. Only costs incurred in Croatia are eligible.

Final beneficiary

LAGs whose local development strategy has been approved by the IPARD Agency are final beneficiaries of this sub-measure.

Indicators

Table 5-16: Output, result and impact indicators for sub – measure 3 Sub-measure 3

Type of indicator Indicator Target

Output

- No. of supported cooperation projects (broken down in inter-territorial and transnational)

- No. of cooperating LAGs

- Minimum 15 inter-territorial cooperation projects that will be supported by 2013

- Minimum 15 transnational cooperation projects that will be

supported by 2013 - Minimum 5 LAGs will be involved in a cooperation

project in 2013

Result - Exchange of experiences and lessons

learned (broken down in inter-territorial and transnational)

- 75% of inter-territorial cooperation projects share experiences and lessons learned (based on statements from beneficiaries)

- 75% of transnational cooperation projects share experiences an lessons learned (based on statements from beneficiaries)

Impact - New project types generated - New implementing methods developed.

- 50% of the beneficiaries find that they have had new project ideas and implementation methods (based on statements from beneficiaries).



The implementation this sub-measure on cooperation projects is planned for 2010 under the LEADER measure. Therefore no funds are allocated for this sub measure in 2007, 2008 and 2009. Allocation of funds for Measure 202 is presented in the table 5-14.


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Assistance under this priority shall contribute to the achieving of the improvement of quality of life of the beneficiaries in the rural areas through:

Improved the competitiveness of rural areas

Improved quality of life of the beneficiary rural population

Increased income of the beneficiary rural population through the development and diversification of on-farm and/or off-farm activities

Creation of new employment opportunities through the development and diversification of on-farm and/or off-farm activities.


Improvement and development of rural infrastructure

Diversification and development of rural economic activities.

5.3.1. Measure 301.: Improvement and development of rural infrastructure

5.3.1.1. Legal basis Article 12 of Regulation (EC) No. 1085/2006


5.3.1.2. Cross sector bjectives This measure aims at contributing to the implementation of CAP and other related policies within the scope of the development and improvement of the basic rural infrastructure, in particular to:

Development and improvement of the basic infrastructure to foster economic and social activities for a balanced growth

Improvement of the rural living and working conditions

Improvement of the rural depopulation situation, mainly to give incentives for the active population to retain in and / or return to the rural areas.

5.3.1.3. Linkage to other measures Basic infrastructure is one of the preconditions for the development of a balanced rural economy and for ameliorating the socio-economic living conditions of the rural population. Support to the development and improvement of infrastructure facilities is therefore closely related to the measures “Investments in agricultural holdings”, “Investments in the processing and marketing of agriculture and fishery products” and “Diversification and development of rural economic activities”.


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SEWERAGE SYSTEM AND WASTEWATER TREATMENT

Fostering the development and improvement of the basic infrastructure is one of preconditions for the development of a balanced economic growth in the rural area and for the enhancement of the socio-economic living conditions of the rural population in Croatia. Major regional differences as well as urban-rural disparities prevail in terms of quantity and quality aspects of the existing local infrastructure, which is also partly due to war effects. The main discrepancies between rural and urban areas are in sewerage and water supply system. In some counties (e.g. Brod - Posavina) up to 28% of dwellings located in rural areas are not connected to a sewerage system and 23% of rural households do not have running water supply. Eligibility for investments in sewerage system and waste water treatment plant is given to local self-government units within counties with ROP in place in which such investments are recognized as needed. At the moment there are 19 counties with adopted ROPs (see Table 2-2). Creating links between existing local strategies, such as ROPs, is contribution for future local planning as regards preparation of local development strategies by local action groups on the Leader approach basis.


investment in the construction and/or reconstruction of sewage system and/or wastewaters treatment plants

LOCAL UNCLASSIF IED ROADS

A further obstacle for socio-economic development is the poor conditions of the local road network. There are 10.535 km of local roads, of witch 10% are unclassified roads. Of all local roads just 18% are in good condition. According the spatial planning, local self-government units recently often designating areas for livestock farms outside the settlement, which should be connected with the local roads.


investment in the construction and/or reconstruction of public local unclassified roads

HEATING PLANTS

The increase of the energy usage of biomasses is defined in the strategic activities of the National Forest Policy and Strategy. One priority is to use the organic waste from agriculture and forestry as a heating source to improve the living conditions of the rural population and to improve the environmental situation. In 2001, only 29,3% (according to OECD criterion), respectively 18,1% (according to EU criterion), of the rural buildings were connected to the central heating system. Investment in heating plants which use bio mass will improve this situation in public institutions such as kindergartens, schools, ambulance, etc.


investment in the construction and/or reconstruction of heating systems which use organic waste from agriculture and forestry (biomass)

FIRE PREVENTION PASSAGE WITH ELEMENTS OF FOREST ROAD AS DEFINED BY ORDINANCE ON PROTECTION OF FOREST FROM FIRE (OG 25/03)

In the coastal parts, forest fires present a large problem and risk for rural households and the rural economy because every year they destroy approximately 14.300 ha of forested and other land (the average refers to forest fires that occurred in the period 1992 - 2005). The least of the surface areas taken by fire was in 2005 3.135 ha. The main reason for the large karst surface affected is the inaccessibility of the terrain and insufficient number of fire-prevention roads, which prevents fast and efficient intervention. Having an efficient fire-protection system requires construction and maintenance of firebreak access roads. Additionally, in the


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Mediterranean region agricultural land is very fragmented and dispersed in forests. One of the reasons for the abandonment of agricultural land is the difficulty of approaching agricultural land, because of lack of those multifunctional firebreak roads.


investment in construction and/or reconstruction of fire-prevention roads with elements of forest road


Local self-government units (as listed in Table 12-29, annex 12.29):

• Municipalities and

• cities with up to 10.000 inhabitants according to Census 2001


• investment must comply with the relevant Community standard regarding environment protection at the end of the realization

• investment must comply with relevant national minimum standards (see chapter 2.5 and annex, Table 12-12) regarding environment protection at the time when the decision to grant support is taken.

• a prior assessment from environmental national authorities on project must be submitted together with the project/business plan. For projects of certain size an Environmental Impact Assessment is to be carried out prior to investment according to the Act on Assessment of the Impact on the Environment (compliant with EU directives 85/337/EEC and 97/11/EC, including Annex I and II)

• if the local rural development strategies, defined in Article 171(3)(b) of IPA Implementing Regulation (EC) No. 718/2007, have been established, investment must be in line with those strategies

• Actions co-financed under Component III should be excluded from support under this measure

5.3.1.7. Specific eligibility criteria SEWERAGE SYSTEM AND WASTEWATER TREATMENT

investments in counties with adopted ROPs and/or CDSs are eligible

LOCAL UNCLASIF IED ROADS

local self-government units which have designated in the municipality/city spatial plan and in the General Act, public local unclassified roads in the agricultural zones are eligible for support

HEATING PLANTS

business plan must demonstrate cost-benefit efficiency of the investment

minimum two years contract for supply with organic waste must be provided

FIRE PREVENTION PASSAGE WITH ELEMENTS OF FOREST ROAD AS DEFINED BY ORDINANCE ON PROTECTION OF FOREST FROM FIRE (OG 25/03)

investments in the areas of I and II level of fire danger are eligible


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5.3.1.8. Priority criteria Priority will be given to investments per sector, according to following criteria:

Criteria Score Points

Investment in sewerage system and waste water treatment If "yes" than 30 if "no" than 0 30

Investment in heating plants If "yes" than 20 if "no" than 0 20

Investment in Fire prevention passage with elements of forest road as defined by Ordinance on Protection of Forest from Fire (OG 25/03)

If "yes" than 15 if "no" than 0 15

Investment in local unclassified roads If "yes" than 10 if "no" than 0 10

Additional ranking criteria in case where there are more projects for one sector

Investment will be implemented on the LFA (defined by Act on Agriculture, OG 66/01, 83/02) If "yes" than 50 if "no" than 0 20

Investment is recommended by approved LAG If „yes“ than 30; if „no“ than 0 30

Beneficiary is a municipality If "yes" than 20 if "no" than 0 20

TOTAL 100


5.3.1.9. Eligible expenditure Eligible expenditures (in accordance with the Article 172 (3) of IPA Implementing Regulation (EC) No. 718/2007) are limited to:

• the construction or improvement of immovable property;

• the purchase of new machinery and equipment, including computer software up to the market value of the asset;

• general costs linked to expenditure referred to in two points above such as architects’, engineers’ and other consultation fees, feasibility studies, the acquisition of patent rights and licences up to a ceiling of 12% of the costs referred to in two points above;

• eligible costs are determined excluding VAT

Detailed provisions shall be set out in sectoral agreements as defined in Article 7 of IPA Implementing Regulation (EC) No. 718/2007.


Maximum amount of public aid shall be up to 100% (75% EU, 25% national funds) of total eligible expenditure per investments not of a nature to generate substantial net revenue; for other investments in rural infrastructure it shall be up to 50%.

Maximum amount of public aid per investment is limited to:

• for investments in local unclassified roads and fire-prevention roads: 405.000 EUR (3 million HRK)

• for investments in sewerage system and wastewater treatment plants: 958.000 EUR (7 million HRK)

• for investments in heating plants: 958.000 EUR (7 million HRK)

The payments for the investments can be received in one instalment according to the details fixed in the contract signed with Directorate of Market and Structural Support in Agriculture (DMSSA).


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5.3.1.11. Indicative budget Table 5-17: Indicative budget for Measure 301.

Public expenditure Year Total eligible cost

Total EU contribution National contribution

EUR EUR % EUR % EUR %

1 2=3+9 3=5+7 4=3/2 5 6=5/3 7 8=7/3

2007 5.100.000 5.100.000 100% 3.825.000 75% 1.275.000 25%

2008 5.461.333 5.461.333 100% 4.096.000 75% 1.365.333 25%

2009 5.504.000 5.504.000 100% 4.128.000 75% 1.376.000 25%

2010 5.893.333 5.893.333 100% 4.420.000 75% 1.473.333 25%

2011 6.006.667 6.006.667 100% 4.505.000 75% 1.501.667 25%

2012 n.a. n.a. 100% n.a. 75% n.a. 25%

2013 n.a. n.a. 100% n.a. 75% n.a. 25%

Total 27.965.333 27.965.333 100% 20.974.000 75% 6.991.333 25% Source: MAFRD – DRD, 2008

5.3.1.12. Allocation of funds per sector Table 5-18: Allocation of funds under Measure 301.

Sector Local unclassified roads

Fire prevention roads

Sewerage system and wastewater

Heating plants Total

% 20% 20% 25% 35% 100% 2007

EUR 1.020.000 1.020.000 1.275.000 1.785.000 5.100.000

% 20% 20% 25% 35% 100% 2008

EUR 1.092.267 1.092.267 1.365.333 1.911.467 5.461.333

% 20% 20% 25% 35% 100% 2009

EUR 1.100.800 1.100.800 1.376.000 1.926.400 5.504.000

% 20% 20% 25% 35% 100% 2010

EUR 1.178.667 1.178.667 1.473.333 2.062.667 5.893.333

% 20% 20% 25% 35% 100% 2011

EUR 1.201.333 1.201.333 1.501.667 2.102.333 6.006.667

% 20% 20% 25% 35% 100% 2012

EUR n.a. n.a. n.a. n.a. n.a.

% 20% 20% 25% 35% 100% 2013

EUR n.a. n.a. n.a. n.a. n.a.

TOTAL EUR 5.593.067 5.593.067 6.991.333 9.787.867 27.965.333 Source: MAFRD, DRD, 2008



Sector 2007 2008 2009 2010 2011 2012 2013 Total


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Local unclassified roads 15 15 15 15 15 n.a. n.a. 75

Fire prevention roads 20 20 20 20 20 n.a. n.a. 100

Sewerage system and wastewater 2 2 2 2 2 n.a. n.a. 10

Heating plants 2 2 2 2 2 n.a. n.a. 10

Total 39 39 39 39 39 n.a. n.a. 195 Source: MAFRD, DRD, 2007

TYPE NAME VALUE

Number of villages with development actions (division per type of action, per county) 195

OUTPUT


RESULT Share of investments in LFA 25%

Economic growth (increase in GVA) 5% IMPACT

Employment creation (division per age/ gender) 5%


All applicants must submit in due course application forms, correctly filled in, and business plans together with other requested documentation to the Directorate for Market and Structural Support in Agriculture, MAFRD.

A ranking system will be applied and a ranking list formed and priority given to investments with higher points. Detailed provisions on administrative structure and procedures is explained under chapter 6.1.2.1

5.3.1.15. Geographical scope of the measure Final beneficiaries for this measure are local self-government units in the rural areas of the whole Croatia, complying with criteria specified in chapter 5.3.1.7.

5.3.2. Measure 302.: Diversification and development of rural economic activities

5.3.2.1. Legal basis Article 12 (2) of Framework Regulation – Council Regulation (EC) No 1085/2006



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5.3.2.2. Objectives This measure aims at contributing to the implementation of CAP and other related policies within the scope of investments in rural areas, in particular to:

Increased income of the beneficiary rural population through the development and diversification of on-farm and/or off-farm rural activities

Creation of new employment opportunities through the development and diversification of on-farm and/or off-farm rural activities

Preservation of existing working places

Increased the volume of services for rural inhabitants and improve the quality of the services provided

Improvement of social structure in the rural areas


In the last period, farmers and other rural population through the diversification of economic activities are trying to provide additional sources of income for themselves.

Diversification and development of rural activities like rural tourism, traditional crafts, direct marketing, on - farm processing plants, non-agricultural services or plants for renewable energy resources contribute to the development of rural areas.

Diversification measure is aiming to prevent young people to leave rural areas by providing new working places and preserving existing. It is closely linked with local planning based on Leader approach, including participation of local population and strategic approach to area based development.

The measure will be targeted on farmers and enterprises in the range of micro businesses.

RURAL TOURISM

Rural tourism is important for the economic, social and cultural development of the rural areas. In 2005 in Croatia there were 310 farm tourism units with 756 total bed number and only 238 of them have conditions to serve food. In order to provide Community standards in the tourism and further development it is important to invest in new and existing tourism capacities. One of the models how to develop rural tourism is to improve the outdoor activities like horse-riding, mountain biking or sport fishing.

In the line with the sub-sector analysis and the objectives set in the IPARD strategy for Croatia, the following investments will be eligible:

Investment in construction and/or reconstruction and/or equipment facilities of tourist services, like rooms, toilets and other premises including objects for keeping animals intended for tourism purposes, recreation facilities, tourist camps, improvement of outdoor areas (for horse-riding, sports fishing on inland waters, mountain biking, eco-paths), renovation of old buildings (old cellars, mills and others)

TRADITIONAL CRAFTS

Crafts have long tradition in rural areas of Croatia and also contribute to the diversification of activities and gaining additional profits. One of the main problems are marketing and packaging of finale products.


Investment in construction and/or reconstruction and/or equipment facilities for traditional craft establishment, including facilities for packaging and marketing of products


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DIRECT MARKETING

Diversification is also possible through direct marketing of agricultural products. In that case all conditions and standards of animal and plant health must be satisfied. Small on-farm processing plants for meat, dairy, fruit and vegetables products contribute both to the tourist offer in the area and to additional income for farmers. Freshwater aquaculture as well as mushroom production has the same role – additional activities and source of income.


Investments in construction and/or reconstruction and/or equipment facilities for setting up selling points on farms for direct marketing of farm products, (for the individual or joint (group of farm producers) interest

SERVICES

Way to keep young and educated people in the rural areas is setting up services in rural areas, as additional source of income for private entrepreneurs and available services for population.


Investment in setting up (construction and/or reconstruction and/or equipment facilities) of non-agricultural services in rural areas, like IT centres and workshops for machinery reparation

ON-FARM PROCESSING PLANTS

On farm processing plant are significant opportunity for diversification of activities on family farms and source of additional income as well as for employment of family members. They are also in close relation to rural tourism development through offer of wide range of products.


Investment in construction and/or reconstruction and/or equipment facilities of micro processing plants on farms producing dairy and meat and fruit and vegetable products, including facilities for packaging and marketing of products

MUSHROOM PRODUCTION

Mushroom production is significant opportunity for diversification of activities on family farms and source of additional income as well as for employment of family members.


Investment in construction and/or reconstruction and/or equipment facilities for mushrooms production.

FRESHWATER AQUACULTURE

Freshwater aquaculture is significant opportunity for diversification of activities on family farms and source of additional income as well as for employment of family members


Investment in construction and/or reconstruction and/or equipment facilities for freshwater fish farming


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RENEWABLE ENERGY

Nowadays, at the time of global warming, renewable energy resources are important for the environment. Except large hydro centrals, the greatest contribution in the nearest future is expected from biomass or bio fuels, as important economic activities for sustainability of rural areas. Renewable energy resources contributes to the increase of biological and environmental diversity, to the protection of soil and water, enables more efficient waste management, also concerning waste from agriculture, forestry and wood industry. On this way domestic industry can be stimulated and also new workplaces created, contributing to the development of rural areas.


Investments in construction and/or reconstruction and/or equipment facilities of plants for renewable energy resources usage (like bio diesel, biogas and others) on agricultural holding

5.3.2.4. Linkage to other measures This measure complements the implementation of the measure "Improving the Processing and Marketing of Agricultural and Fisheries Products" and “Improvement and development of rural infrastructure”. Upgraded processing and marketing conditions encourage extension of product range. Due to the implementation of new and diversification of farm activities, infrastructure needs to be upgraded, such as roads and sewage systems. Close link can be also found with the Leader approach, as strategic approach to development of local area.


natural and legal persons registered for relevant business, which are in the VAT system and which belong to micro enterprises as presented in Annex 12.1, Table12-1


Investment must comply with Community standards at the end of the realization of the investment;

The enterprise/holding must respect the relevant national minimum standards (see chapter 2.5 and annex, Table 12-12) regarding environmental protection, public health, animal and plant health, animal welfare and occupational safety at the time when the decision to grant support is taken. Where national minimum standards based on Community standards have been newly introduced at the time when the application is received, assistance may be granted regardless of non – compliance with those standards on the condition that the enterprise shall meet the new standards by the end of the realisation of the investment;

Beneficiary must demonstrate by the business plan the economic viability (see annex, Table 12-10 and Table 12-11) of the investment at the end of the realization. Business plan must be made according to the standard requirements of banks: for investments up to 27.000 EUR (200.000 HRK) a simplified form, for investments exceeding 27.000 EUR (200.000 HRK) a complete business plan;

Beneficiary must not have any outstanding liabilities against the State at the moment of applying;

Beneficiary must demonstrate relevant occupational skills;


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If the local rural development strategies, defined in Article 171 (3) (b) of IPA Implementing Regulation (EC) No. 718/2007, have been established, investment must be in line with those strategies;

Actions co-financed under Component III will be excluded from support under this measure.

5.3.2.7. Specific eligibility criteria RURAL TOURISM SECTOR

• beneficiary must be registered according to the provisions of Act on Catering (OG 138/06, see page 324)

• investments are only eligible in the areas where there is an adopted PURs and/or ROPs and/or CDSs which defines rural tourism as priority development sector, otherwise area is excluded

• investments must be in line with investments identified in related PURs and/or ROPs and/or CDSs

• investments are eligible only in places classified in category “D and other unclassified places”, in accordance to the Ordinance on Classification of tourist settlements into classes (OG 78/99) presented in annex Table 12-20

• maximum number of beds is limited to 20 double beds / establishment (= max. 40 "sleeping" places)/ establishment

TRADITIONAL CRAFTS

• beneficiary must be registered according to the provisions of Craft Act (OG 49/03 see page 321)

• investments are only eligible in the areas where there is an adopted PURs and/or ROPs and/or CDSs which defines traditional crafts as priority development sector, otherwise area is excluded

• investment must be in line with investments identified in related PURs and/or ROPs and/or CDSs

• Traditional crafts, eligible for the support, are those in accordance with Ordinance on traditional and artistic crafts (OG 112/07, 31st of October 2007) and listed in annex Table 12-15

DIRECT MARKETING

• Beneficiary must be registered in the Register of Agricultural Holdings and in accordance with the provisions of the Trade Act (OG 111/03, 34/99, 118/03)

ON – FARM PROCESSING PLANTS

• Beneficiary must be registered in the Register of Agricultural Holdings

• Milk, meat and dairy processing: Beneficiary must be registered according to provisions of Regulation on veterinary and health conditions to which objects on agricultural family farms registered for treatment, processing and storage of animal origin products must comply (OG 149/03, 9/07)

FRESHWATER AQUACULTURE

• Beneficiary must be registered in the Register of Given Concessions for Freshwater Aquaculture of Ministry of Agriculture, Fisheries and Rural Development


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• Maximum capacity is limited to 150 t for trout production and 500 t for cyprinids production

MUSHROOM PRODUCTION


• Maximum capacity is limited to 2.000 m2

RENEWABLE ENERGY RESOURCES


5.3.2.8. Priority criteria Priority will be given to investments with higher number of points, according to following criteria:

Criteria Points

Investment in rural tourism If "yes" than 25; if "no" than 0 25

Investment in traditional crafts If "yes" than 10; if "no" than 0 10

Investment in on-farm processing plants If "yes" than 15; if "no" than 0 15

Investment in services If "yes" than 10; if "no" than 0 10

Investment in direct marketing If "yes" than 10; if "no" than 0 10

Invesmtment in freshwater aquaculture If "yes" than 5; if "no" than 0 5

Investment in mushroom production If "yes" than 5; if "no" than 0 5

Investment in renewable energy resources If "yes" than 20; if "no" than 0 20

Additional ranking criteria in case where there are more projects for one sector

Investment will be implemented on the Less Favoured Areas as defined by Act on Agriculture (OG 66/01, 83/02) If "yes" than 50; if "no" than 0 20

Investment will be implemented by female entrepreneur (owner of the project) If "yes" than 10; if "no" than 0 10

Investment is recommended by approved LAG If „yes“ than 30; if „no“ than 0 30

Investment will be implemented by young entrepreneur (less than 40 years of age) at the time of submission If "yes" than 15; if "no" than 0 15

TOTAL 100 Source: MAFRD, DRD, 2007

5.3.2.9. Eligible expenditures Eligible expenditures are limited to:

• the construction or improvement of immovable property;

• the purchase of new machinery and equipment, including computer software up to the market value of the asset;

• general costs linked to expenditure referred to in two points above, such as architects’, engineers’ and other consultation fees, feasibility studies, the acquisition of patent rights and licences up to a ceiling of 12% referred to in two points above, of which business plans costs are eligible up to 2% but not more than 2.000 Euro

• eligible costs are determined excluding VAT


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• Equipment, provided that their depreciation period is more than 1 year which has to be shown in the business plan.

Detailed provisions shall be set out in sectoral agreements as defined in Article 7 of EC Regulation No. 718/2007.


The amount of public aid shall be up to 50% of total investment in project.

Maximum total value of eligible investment per project is 150.000 EUR (1.095.000 HRK), except for the investments in renewable energy resources where it is limited to 675.000 EUR (5.000.000 HRK).

Maximum three eligible investments per beneficiary within the timeframe of IPARD are allowed, out of which only one can be in renewable energy resources. The application for the next investment can be brought in only after finalisation (final payment) of the previous investment.

The payments for the investments shall be received in one instalment according to the details fixed in the contract signed with Directorate for Market and Structural Support in Agriculture (DMSSA).

5.3.2.11. Indicative budget Table 5-20: Indicative budget for Measure 302

Public expenditure Year Total eligible cost

Total EU contribution National contribution Private contribution


1 2=3+9 3=5+7 4=3/2 5 6=5/3 7 8=7/3 9 10=9/2

2007 8.840.000 4.420.000 50% 3.315.000 75% 1.105.000 25% 4.420.000 50%

2008 9.557.333 4.778.667 50% 3.584.000 75% 1.194.667 25% 4.778.667 50%

2009 10.320.000 5.160.000 50% 3.870.000 75% 1.290.000 25% 5.160.000 50%

2010 9.013.333 4.506.667 50% 3.380.000 75% 1.126.667 25% 4.506.667 50%

2011 9.186.667 4.593.333 50% 3.445.000 75% 1.148.333 25% 4.593.333 50%

2012 n.a. n.a. 50% n.a. 75% n.a. 25% n.a. 50%

2013 n.a. n.a. 50% n.a. 75% n.a. 25% n.a. 50%

Total 46.917.333 23.458.667 50% 17.594.000 75% 5.864.667 25% 23.458.667 50% Source: MAFRD - DRD, 2009

5.3.2.12. Allocation of funds per sector Table 5-21: Indicative allocation of funds per sector (2007 – 2011)

2007 2008 2009 2010 2011 Sector

% EUR % EUR % EUR % EUR % EUR Total

Rural tourism 25% 2.210.000 25% 2.389.333 25% 2.580.000 25% 9.013.333 25% 9.186.667 25.379.333

Crafts 10% 884.000 10% 955.733 10% 1.032.000 10% 901.333 10% 918.667 4.691.733

Direct marketing 10% 884.000 10% 955.733 10% 1.032.000 10% 901.333 10% 918.667 4.691.733

Processing plants 15% 1.326.000 15% 1.433.600 15% 1.548.000 15% 1.352.000 15% 1.378.000 7.037.600


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Rural services 10% 884.000 10% 955.733 10% 1.032.000 10% 901.333 10% 918.667 4.691.733

Freshwater fishery 5% 442.000 5% 477.867 5% 516.000 5% 450.667 5% 459.333 2.345.867

Mushrooms 5% 442.000 5% 477.867 5% 516.000 5% 450.667 5% 459.333 2.345.867

Renewable energy resources 20% 1.768.000 20% 1.911.467 20% 2.064.000 20% 1.802.667 20% 1.837.333 9.383.467

Total 100% 8.840.000 100% 9.557.333 100% 10.320.000 100% 9.013.333 100% 9.186.667 46.917.333

Source: MAFRD - DRD, 2009

Table 5-22: Allocation of funds per sector (2012 - 2013)

2012 2013 Sector

% EUR % EUR Rural tourism 25 n.a. 25 n.a. Crafts 10 n.a. 10 n.a. Direct marketing 10 n.a. 10 n.a. Processing plants 15 n.a. 15 n.a. Rural services 10 n.a. 10 n.a. Freshwater fishery 5 n.a. 5 n.a. Mushrooms 5 n.a. 5 n.a.

Renewable energy resources 20 n.a. 20 n.a.

Total 100 n.a. 100 n.a. Source: MAFRD - DRD, 2009

5.3.2.13. Indicators Table 5-23: Expected number of eligible investments per sector

Sector 2007 2008 2009 2010 2011 2012 2013 Total

Rural tourism 25 25 25 25 25 n.a. n.a. 125

Crafts 20 20 20 20 20 n.a. n.a. 100

Direct marketing 25 25 25 25 25 n.a. n.a. 125

Processing plants 15 15 15 15 15 n.a. n.a. 75

Rural services 10 10 10 10 10 n.a. n.a. 50

Freshwater fishery 8 8 8 8 8 n.a. n.a. 40

Mushrooms 10 10 10 10 10 n.a. n.a. 50

Renewable energy resources 2 2 2 2 2 n.a. n.a. 10

Total 115 115 115 115 115 575

Source: MAFRD - DRD, 2009 TYPE NAME VALUE

Total volume of investment per project 85.000 OUTPUT Number of beneficiaries supported (gender, age, type of

craft) 575

RESULT Share of investments in LFA 25%


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GVA increase in supported businesses (non-agricultural GVA) 5%

Economic growth (increase in GVA) 5% IMPACT

Employment creation (division per age/ gender) 5%


All applicants must submit in due course application forms, correctly filled in, and business plans together with other requested documentation to the Directorate for Market and Structural Support in Agriculture, MAFRD. Applications for support under this measure cannot be combined with applications for other measures.

A ranking system will be applied and a ranking list formed and priority given to investments with higher points.Detailed provisions on administrative structure and procedures is explained under chapter 6.1.2.1

5.3.2.15. Geographical scope of the measure This measure is eligible for beneficiaries in rural areas of the Republic of Croatia as defined under chapter 2.1.3 and in accordance to criteria defined in chapter 5.3.2.7.

5.4. MEASURE 501: TECHNICAL ASSISTANCE 5.4.1.1. Legal basis The measure covers the provision of the service of technical assistance. This service is justified to support costs associated with implementation of the Programme as set out in paragraph 4 below.

The measure concerns technical assistance provided for on the basis of Article 182 of IPA Implementing Regulation (EC) No. 718/2007.

5.4.1.2. Objective The objectives of this measure are to assist in particular in implementation and monitoring of the programme and its possible subsequent modification. In support of these aims, the objectives include:

• to provide support for the monitoring of the programme

• to ensure an adequate flow of information and publicity

• to support studies, visits and seminars

• to provide support for external expertise

• to provide support for the evaluation of the programme

• to provide support for the future implementation of a national rural development network

5.4.1.3. Linkage to other measures This Measure will provide coverage of technical assistance needs for all the measures of the Programme.


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5.4.1.4. Eligible expenditures (actions) Under this measure the following actions are eligible provided they are covered by a technical assistance action plan previously approved by the Monitoring Committee and that each specific activity is approved by the Chairperson of the Monitoring Committee before its implementation:

a) Expenditures on meetings of the Monitoring Committee, including costs of all experts and other participants, where their presence is considered to be necessary to ensure the effective work of the Committee

b) Other expenditures necessary to discharge responsibilities of the Monitoring Committee which falls under the following categories:

o expert assistance to consider and review programme baselines and indicators

o experts to assist or advise the Monitoring Committee concerning implementation and functioning of the monitoring arrangements

o expenditure associated with meetings and ancillary tasks of working groups

o seminars

o Expenditure on information and publicity campaigns, including costs of printing and distribution.

o Costs of translation and interpretation at the request of the Commission, not including those required pursuant to the application of the framework, sectoral and financing agreements.

o Expenditure associated with visits and seminars. Each visit and seminar shall require the submission of a timely written report to the monitoring committee.

o Expenditure associated with the preparation of measures in the programme to ensure their effectiveness, including those measures whose application is foreseen at a later stage. Such preparatory activities also cover the “Acquisition of skills” to prepare for the implementation of the measure “Preparation and implementation of local rural development strategies” until such measure is accredited.

o Expenditure for evaluation of the programme

c) Expenditure associated with the establishment and operation of a national network supporting the coordination of activities preparing and implementing local rural development strategies. This can also cover expenditure associated with the future establishment of national rural development network in line with the EU rules for member states as well as the expenditure linked to participation in the European Network for Rural Development established by Article 67 of Council Regulation (CE No. 1698/2006).

5.4.1.5. Final beneficiary The beneficiary of activities under the measure for Technical Assistance is the Ministry of Agriculture, Fisheries and Rural Development, Managing Authority of the Programme.

5.4.1.6. Eligibility criteria Eligible expenditure shall be reported on in the context of the annual report.

The expenditure may be based also on flat rate amounts (such as per diem), in accordance with the terms and rates applied in the public sector of Croatia for similar actions where no Community co-finance is involved. All expenditure as regards experts and other participants will be limited to those from and going to applicant countries and Member States.

For this measure actions financed or foreseen to be financed within twinning covenants or other projects supported under other IPA components will not be eligible.


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5.4.1.7. Financial disposition The Community contribution to the eligible expenditure shall be limited to 80% of total public expenditure. It is expected that approximately 30% of the Technical Assistance measure annually will be allocated for sub – measure 1 within Measure 202 "Preparation and implementation of local rural development strategies".

5.4.1.8. Indicative budget Table 5-24: Indicative budget for Measure 501

Public aid

Total EU National Year

EUR % EUR % EUR %

2007 956.250 100 765.000 80% 191.250 20%

2008 1.280.000 100 1.024.000 80% 256.000 20%

2009 1.290.000 100 1.032.000 80% 258.000 20%

2010 650.000 100 520.000 80% 130.000 20%

2011 662.500 100 530.000 80% 132.500 20%

2012 n.a. 100 n.a. 80% n.a. 20%

2013 n.a. 100 n.a. 80% n.a. 20%

Total 4.838.750 100 3.871.000 80% 967.750 20% Source: MAFRD - DRD, 2009

5.4.1.9. Indicators Table 5-25: List of indicators for Measure 501

Activities/indicators

TA OUTPUT 2007 2008 2009 2010

Number of MC meetings 2 2

Number of events for MC working groups (meetings, seminars, workshops during the year)

3 6 1.

Activities related to the functioning of

MC

Study tours for MC members 1 1

Number of trainings for the adoption of skills in IPARD area

4 10

2.

Seminars, workshops (including

functioning of National Rural Development

Network) Number of participants at seminars and workshops

100 150

Number of international seminars and study tours

2 6

Number of participants at international seminars

8 15 3.

International seminars and study

tours

Number of participants at study trips

20 40


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Number of expert contracted 6 6

Number of studies prepared by expert

6 6

4.

Experts to help or advise the MC,

working groups, the Committee for the establishment of

the National Rural Network on the

issues of implementation and

functioning of monitoring

preparation of experts- technical

advisers, legal expertise

Number of expert days 75 75

Number of publicity campaigns 3 3

Number of leaflets 500 000 500 000

Number of TV and RADIO commercials and broadcasting

25 50

Number of publications 10000 10000

Number of stands 30 30

5. Promotion and

publicity campaigns

Number of reached potential beneficiaries

200 000 200 000

6.

Translation and editing of documents requested by EC or requested for the meetings with EC

Number of documents 40 40

7.

Raising of awareness of local

people on the participation in the creation of a local

partnership through acquisition of skills and creating local

development strategies-

awareness and promotion

campaing for the potential LAGs-

events, seminars, workshops, conferences,

meetings, brochures, radio

and TV commercials, leaflets, web advertising,

creation of web sites

Number of information and promotion activities completed

3 3


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Number of trainings, workshops, seminars carried out

15 20

Number of participants per region/LAGs/institution

75 75

Number of national experts contracted

5 5

Number of international experts contracted

2 2

Number of potential LAGs 5 10 8.

Data on the potential LAGs

Number of local development strategies

5 10


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6. ADMINISTRATIVE SETUP AND PROCEDURES

The IPA management structure will build upon the experience of the existing EU funds management system for PHARE, ISPA and SAPARD and ensure the adequate transfer of knowledge and skills.

Based on the European Commission’s draft IPA Implementing Regulation, the Government has adopted its own regulation41, which designates specific institutions for the management and implementation roles identified under Article 21 of the IPA Implementing Regulation (EC) No. 718/2007, and defines their functions accordingly.

The overall co-ordination of IPA in Croatia rests with the Central Office for Development Strategy and Coordination of EU Funds (CODEF). Besides being in charge of coordinating EU assistance to Croatia, CODEF is also responsible for defining Croatia’s national development strategy and monitoring its implementation, in cooperation with other central government institutions. That part of CODEF’s mandate ensures that interventions financed by IPA are deeply embedded into national development policies, ensuring strategic focus and added value of EU assistance.

CODEF oversees the implementation of all five components of IPA. The task of the National IPA Coordinator is assigned to the State Secretary of CODEF, who is to be appointed as the National IPA Coordinator.

Copmetent Acreditation Officer (CAO) shall be responsible for issuing, monitoring and suspending or withdrawing the accreditation of the national authorising officer and the national fund, in accordance with Articles 12 and 15 of IPA Implementing regulation. He/she shall be a high ranking official appointed by the Government of Croatia.

The role of the National Authorising Officer (NAO) will be performed by the State Secretary of the Ministry of Finance. The NAO will be the hierarchical head of the National Fund and will have overall responsibility for the financial management of EC funds in Croatia, as defined under Articles 25 and 27 of the IPA Implementing Regulation (EC) No. 718/2007 and Article 4 of the Croatian Government regulation. The National Fund will operate in the Ministry of Finance. It shall act as a central treasury entity through which EC funds are channelled, and will be in charge of the financial management of assistance under IPA, as per Article 26 of the draft Implementing Regulation and Article 4 of the Croatian Government regulation.

41 “Regulation on the content and the scope of the responsibilities and the mandate of competent bodies for the management of the Instrument for Pre-accession Assistance”, 8 February 2007 (OG 18/07).


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The Audit Authority competent for the IPA programme shall be responsible for the preparing and fulfiling an annual audit work plan aimed at verifying the management and control systems under the IPA programme, and the reliability of accounting information related to the programme use. It shall also report to the National Authorising Officer and the European Commission on the audit carried out within the framework of the IPA programme. The organisational unit of the Ministry of Finance responsible for the external audit of EU funds shall be the audit authority for the IPA programme.

The National Fund is a body in the Ministry of Finance with central budgetary competence. The National Fund is acting as a central treasury and is in charge of tasks of financial management of assistance under the IPA Regulation, under the responsibility of the National authorising officer.

It shall in particular be in charge of organising the bank accounts, requesting funds from the Commission, authorising the transfer of funds received from the Commission to the IPARD Agency, and the financial reporting to the Commission.

6.1. IPARD OPERATING STRUCTURE IPARD programme operating structure is consisting of:

• Ministry of Agriculture, Fisheries and Rural Development, Directorate for Rural Development, with the function of Managing Authority;

• Ministry of Agriculture, Fisheries and Rural Development, Directorate for Market and Structural Support in Agriculture, with the function of Implementing Body (IPARD Paying Agency).

6.1.1. Managing Authority The function of IPARD Managing Authority will be apointed to MAFRD – Directorate for Rural Development (DRD) laid down in Regulation on Scope and Contents of Resaponsabilities abd tge Authority of Bodies Responsible for Managing the Instrument for Pre – Accession Assistance (OG 18/07)

The tasks of the managing authority include:

• approving criteria for the selection of projects financed under provisions of the RDP;

• drafting national implementation regulations,

• taking part in the governance committee for the RDP 2007-2013,

• establishing suitable systems for collecting and keeping statistical and other data required for monitoring of the programme,

• informing all beneficiaries in the RDP of:

o requirements on providing and keeping data on effects of the programme.

o implementation of all monitoring activities required to ensure the timely implementation of the programme

• forwarding of monitoring and assessment results to the Monitoring Committee and the European Commission,

• formation of a Monitoring Committee and drafting of materials for the required monitoring of the programme's implementation under the Monitoring Committee.s rules of procedure

• dissemination of public information, as defined by Article 76 of Regulation 1689/2005,

• compiling annual progress reports, forwarding it to the Monitoring Committee and, subsequently, to the European Commission,


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The Head of the DRD is the head of the Managing Authority and is as such:

• responsible for all contents related to the RDP 2007-2013. Directly responsible to the head of the Managing Authority shall be the Secretariat, which shall be tasked with coordination at programme and axis level, and administrative support as well as secretariat functions for the Monitoring Committee.

The Managing Authority shall approve criteria for project selection, monitor the implementation of the collection of data for monitoring and assessment, inform beneficiaries of their obligations stemming from the RDP 2007-2013, inform the public about the benefits of the RDP 2007-2013 and ensure balanced information flow between MAFRD and the IPARD Agency with a view to ensure effective implementation of the RDP 2007-2013. The Managing Authority is tasked with compiling annual and other reports for the Monitoring Committee, including documents related to monitoring of the implementation of the RDP 2007-2013.

Managing Authority will be subjected to Audit and Accreditation, both national and EU. The tasks and time of accreditation will be determened by EC.

The Managing Authority and the Paying Agency are conducting inline with national Regulation on the Scope and Contents of Responsibilities and Authority of Bodies Responsible for Managing the Instrument for Pre - accession Assistance (OG 34/08).

6.1.2. Paying Agency (IPARD Agency) The Directorate for Market and Structural Support in Agriculture whitin the MAFRD is the only accredited authoritiy for implementation of measures within the SAPARD programme in Croatia and has a role of the SAPARD Agency (reffered to as: DMSSA).

DMSSA was established in 2001 for implementing the national measures and in 2005 DMSSA take the role of SAPARD Agency in Croatia.

The first national accreditation for implementation of SAPARD programme was issued to the DMSSA in March 2006 and the first European Commission accreditation in September 2006.

According to Regulation of the Scope and Contents of Responsibilities and the Authority bodies Responsible for managing the Instrument for Instrument for Pre-Accession Assistance, DMSSA shall carry out the functions that include:

The DMSSA is responsible for managing and implementing the Programme assistance under IPARD in accordance with the principle of sound financial management.

The DMSSA shall carry out the following implementing and paying tasks:

• arranging for tendering procedures, grant award procedures, the ensuing contracting, and making payments to, and recovery from, the final beneficiary

• ensuring that the NAO, the National Fund and the Managing Authority receive all information necessary for them to perform their tasks;

• selecting and checking operations in accordance with the criteria and mechanisms applicable to the IPARD Programmes, and complying with the relevant Community and national rules;

• carrying out checks to ensure that the expenditure declared has actually been incurred in accordance with applicable rules, the products or services have been delivered in accordance with the approval decision, and the payment requests by the final beneficiary are correct. These checks shall cover financial, administrative, technical and physical aspects of operations, as appropriate;

• making calls for applications and publicising terms and conditions for eligibility;

• checking of applications for approval of projects against terms and eligibility conditions, and compliance with the Agreements including, where appropriate, public procurement provisions; (see also tendering procedures above;


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• laying down contractual obligations in writing between the IPARD Agency and the final beneficiaries including information on possible sanctions in the event of non-compliance with those obligations and, where necessary, the issue of approval to commence work;

• execution of on-the-spot checks to establish eligibility both prior to and following project approval;

• follow-up actions to ensure progress of projects being implemented;

• reporting of progress of measures being implemented against indicators;

• ensuring that the final beneficiary is made aware of the Community contribution to the project;

The DMSSA has adequate internal controls especially controls linked with sound financial management.

The DMSSA internal Audit Department has an independent examination function above all the operational level of the DMSSA comprising of the following:

• checking the legitimacy, regularaity and timeliness of the operation of the DMSSA and the assessment of the current status and comparison of this with required sitation;

• Identification and assessment of causes for any deviation from the prescribed operation of the DMSSA;

• Defining actions for improving operations, working process, protecting assets, and prevention and discovery of irregularities and frauds in the work of the DMSSA.

The DMSSA has a system for preventing and reporting on irregularities and suspicions of fraud. The central unit for implementing procedures in the event of discovery and for preventing and reporting irregularities and suspecions of fraud is the department for control of measures within the SAPARD programme, which reports to the National Fund

The DMSSA has a system for risk management wich is based on the Methodology for risk management.

6.1.2.1. Description of the procedures within the DMSSA Beneficiaries for aid under measures within the IPARD programme submit in due course their applications, and business plans together with other requested documentation to the DMSSA. The DMSSA has in place written instructions and manuals, check lists and reporting systems to process the applications, approve of and calculate the amount of aid in line with IPARD programme 2007-2013.

Beneficiary will have to subject their projects prior to approval, if relevant (will be prescribed by Ordinance) to relevant veterinary and environmental services. The project if relevant will have to gain veterinary and environmental service approval.

Applications are filed by beneficiaries on forms in line with the requirements of an Ordinance on Implementation of IPARD Programme (will be prepared and published after the approval of the programme) and public tenders. Detailed administrative checks are carried out prior to approving an application to identify whether it was complete, was filed on time and whether the requiremens for approving the applications were met. The checks are documented on detailed check list templates.

Applications that will arrive complete, timely and in line with the requirements of an Ordinance and public tender will be reviewed in the order of their receival. After Agency's administrative control and on the spot control ranking list will be formed according to the ranking criteria. Ranking list will be created and projects selected following each Call for applications. In case when there is more projects with the same amount of points according to ranking criteria the favourable will be the one with an earlier date of the submission of the complete aplication.


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A ranking system will be applied and a ranking list formed and priority given to investments with higher points. Selection of eligible projects shall be carried out using critera laid down in each of the technical measures under chapters: 5.1.1.8, 5.1.2.8, 5.3.1.8 and 5.3.2.8.

After administrative control eligible applications will be checked on the spot by department for control of measures.

After administrative control and control on the spot the eligible projects for financing will be contracted until the time that the allocated funds is used up.

Procedure for checking of payment claims is the same to above described procedure for checking applications.

The Department for Financial Affairs will prepare and send Request for funds to the National Fund. According to Request for funds, NF will transfer funds to IPARD EURO account of the DMSSA. DMSSA is obliged to transfer funds at the same day, from IPARD EURO account to the beneficiarys bank account exclusively.

The Department for Accounting will perform book-keeping of commitments, payments, debtors and recoveries. It will also prepare financial reports in given terms.

After the finalization of project, veterinary and environmental services will make a control to determine whether the Community standards are respected as it is a common eligibility criterion.

All the provisions stated above are subjected to accreditation and possibly change and the final provisions will be laid down in DMSSA manual.

6.2. ADMINISTRATIVE MEASURES AIMED AT AVOIDING DOUBLE FINANCING

Avoiding double financing in agriculture by the European Community through the IPARD programme and other pre-accession funds and prevent the overlapping with other national and international financing resources shall be secured by the Ministry of Agriculture, Fisheries and Rural Development, Directorate for Market and Structural Support in Agriculture (IPARD Agency)

In order to avoid double financing within the implementation of the IPARD programme, the instruments should:

• have a seal on each receipt returned to the user and

• develop a database regarding finances granted to each user from the IPARD programme or any other support system;

• verification should be carried out with the help of the said database before carrying out any payment from the IPARD programme.

These instruments should be defined in the Memorandum of the National fund and the Directorate for Market and Structural Support to Agriculture in order to perform verification before payment.

Detailed provisions on how the double financing will be prevented will be elaborated by the IPARD Agency (DMSSA).

By the Framework Agreement between the Republic of Croatia and the EU, structures and authorities for management and implementation of pre-accession assistance will be established and they will include IPA Monitoring Committee, in agreement with the Commission, to ensure coherence and coordination in the implementation of the IPA components.

With regards to measures under component Human Resources Development, there is no concern of overlap with this Programme. Human Resources Development component


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contributes to the economy by strengthening the labour market (training and education, which is complementary to investments under the IPARD).

There is a possible overlap between component Regional Development and IPARD. Coordination of the measures with IPARD measures will be carried out systematically through the inclusion of a representative of the MAFRD in the Regional Development component working group. The investments in basic infrastructure proposed under the IPARD are mainly oriented to increase of the quality of daily life. In the case of the Regional Development the specific projects will be oriented towards supporting economic activities. The other component of the rural development priority under IPARD concerns direct investments into crafts and holdings with the purpose of enhancing rural tourist services and direct marketing of agricultural products. With this component there is no overlap at this time: firstly, because tourism-related services and infrastructure envisaged under the Regional Development component are of public character and secondly, because investments into SMEs do not target SMEs in agriculture or rural tourism.

The IPARD measures will complement the implementation of the National Agricultural and Fishery Strategy. Based on Act of State Aid for Agriculture, Fishery and Forestry, Croatian Government supports development of agricultural sector and rural areas through national support schemmes. National support is focused on wide range of beneficiares (farmers, non-commercial producers, local self-government, associations and cooperatives, etc.) and wide range of investments.

On the other hand, IPARD founds are targeted to limited number of sectors, eligible investments and final beneficiaries. They are focused at viable producers, with clear priority objective to support them in upgrading to Community standards and facilitate their competitiveness. National schemes and IPARD funds in that way complement each other by providing necessary support to different beneficiaries with division of objectives (see Table 6-1).

Table 6-1:Complementarity and demarcation between national support schemes and IPARD programme

Demarcation/complementarity IPARD measures

Corresponding national support

schemes IPARD National support schemes

Capital investment scheme (CIS)

No size/level of production criteria for participation in program

Financing only by credits

Support up to 25% of credit amount, but not more than 34.153 kn/year per beneficiary

Minimum value of credit 10.928 EUR

Purchase of animals, mechanization and agricultural land eligible

Permanent crops plantations eligible

Investments in irrigation eligible

Purchase of fishing boats eligible

Not related to compliance with Community standards

Investments in agricultural holdings

National operative programmes (NOP) for cattle, pig, fruits and

Targeted beneficiaries according to size/level of production

Possible financing of investments with own resources

Support from up to 50% to 75% of eligible expenditures

Minimum value of investment 13.500 EUR

Fixed amount of investment value per beneficiary

Purchase of animals, mechanization or agricultural land not eligible

Permanent crops planatation not eligible

Investments in irrigation not eligible

Investments in fishery

Financing through CBRD credits only


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vegetables sector not eligible

Compliance with relevant Community standards at the end of investment common eligibility criteria

Support provided via CIS under above described conditions (with exception of maximum amount per beneficiary of 68.500 EUR in cattle sector and 137.000 EUR in pig sector)

Purchase of animals, mechanization and agricultural land eligible

Permanent crops plantations eligible

Investments in irrigation eligible


Processing and marketing of agricultural and fishery products

Capital investment scheme (CIS)


Possible financing of investments with own resources

Support up to 50% of eligible expenditures

Minimum value of investment 33.800 EUR

Fixed amount of investment value per beneficiary

Construction of new processing plants in dairy and meat sector not eligible

Investments in establishments with EU export number not eligible

Investments in fruit and vegetable sector related to national measure for producers organizations set up

Compliance with relevant Community standards at the end of investment eligibility criteria

No size/level of production criteria for participation in program

Financing only by credits

Support up to 25% of credit amount, but not more than 34.153 kn/year per beneficiary

Minimum value of credit 10.928 EUR

Construction eligible in all agricultural sectors

Establishments with EU export number eligible for support


Actions to improve environment and countryside

No corresponding national measure / /

Preparation and implementation of local rural development strategies

No corresponding national measure / /

Improvement and development of

No corresponding national measure


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rural infrastructure

Diversification and development of rural economic activities

Rural development programme scheme


Limited eligible investments

Support up to 50% of eligible expenditures

Fixed total value of eligible investments

Different beneficiaries (farmers, fishermen, associations, cooperatives, local self-government units, schools, public institutions, NGOs)

Amount and ahare of support defined in the public tender according to type of actions


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7. FINANCIAL PLAN, SUBSIDY LEVEL AND THE LEVEL OF EU CONTRIBUTION

In compliance with Article 173 of the IPA Implementing Regulation (EC) No. 718/2007, the share of public funds in individual measures varies.

For investments within the Priority axis 1, the share of public funds in the investments accounts for up to 50% and the applicant’s contribution accounts for up to 50%. In public funds the EU Commission contributes with 75% and the Republic of Croatia with 25%.

For the investments within the Priority axis 2, the share of public funds in the investments accounts for up to 50% and the applicant’s contribution accounts for up to 50%. In public funds the EU Commission contributes with 80% and the Republic of Croatia with 20%.

For investments within the Priority axis 3, for the measure “Diversification and development of rural economic activities” the ratio between public and private financing is: up to 50% of the approved investment is paid from public funds and up to 50% from private funds. Public funds for financing comprise the share of the European Commission in the amount of 75% and the share of the Republic of Croatia in the amount of 25%. For investments within the measure “Improvement of rural infrastructure” total coverage will be provided from public funds which comprise 75% and 25% of the funds of the European Commission and Croatia respectively.

Implementation of the measure „Technical assistance, information and promotional activities“ is covered by the European Commission in the amount of 80% and by the Republic of Croatia in the amount of 20%.

Table 7-1: Maximum EU contribution for IPARD funds in EUR, 2007 - 2011

Year 2007 2008 2009 2010 2011 2007-2011

TOTAL 25.500.000 25.600.000 25.800.000 26.000.000 26.500.000 129.400.000 Source: MAFRD - DRD, 2009

Table 7-2: Financial plan per priority axis in EUR, 2007 - 2011

Total public aid EU contribution rate EU Contribution

1 2 (3=4/2), % 4 Priority Axis 1 - Improving market

efficiency and implementing Community Standards

112.094.667 75,00% 84.071.000

Priority Axis 2 - Preparatory actions for the implementation of agri-

environmental measures and Leader 3.612.500 80,00% 2.890.000

Priority Axis 3 - Development of the rural economy 51.424.000 75,00% 38.568.000

Measure 9: - Technical assistance 4.838.750 80,00% 3.871.000

TOTAL 171.969.917 75,25% 129.400.000 Source: MAFRD - DRD, 2009

Table 7-3: Indicative breakdown by measure, 2007 - 2011

Total public aid Private contribution Total expenditures

EUR EUR EUR

1 2 3 (4=2+3)

Priority Axis 1 - Improving market efficiency and implementing

Community Standards 112.094.667 112.094.667 224.189.333


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Measure 1 Investments in agricultural holdings 41.048.000 41.048.000 82.096.000

Measure 2: Support for producer groups 0 0 0

Measure 3: Investments in the processing and marketing of

agriculture and fishery products 71.046.667 71.046.667 142.093.333

Priority Axis 2 - Preparatory actions for the implementation of agri-environmental measures and

Leader 3.612.500 0 3.612.500

Measure 4 Preparation for implementation of actions relating to

environment and the countryside 1.643.750 0 1.643.750

Measure 5: Preparation and implementation of local rural

development strategies 1.968.750 0 1.968.750

Priority Axis 3 - Development of the rural economy 51.424.000 23.458.667 74.882.667

Measure 6: Improvement and development of rural infrastructure 27.965.333 0 27.965.333

Measure 7: Diversification and development of rural economic

activities 23.458.667 23.458.667 46.917.333

Measure 8: Improvement of training 0 0 0

Measure 9: Technical assistance 4.838.750 0 4.838.750

Total 171.969.917 135.553.333 307.523.250 Source: MAFRD - DRD, 2009

Table 7-4: Indicative allocation of EU Contribution by measure 2007-2011 in EUR for monitoring purpose

EU Contribution

2007 2008 2009 2010 2011 2007-2011

Priority Axes and Measures EUR EUR EUR EUR EUR EUR %

Priority Axis 1 - Improving market efficiency and implementing Community Standards(1) 17.595.000 16.896.000 16.770.000 16.380.000 16.430.000 84.071.000,00 65,0%

Measure 1 Investments in agricultural holdings 6.375.000 6.144.000 6.192.000 5.980.000 6.095.000 30.786.000,00 23,8%

Measure 2: Support for producer groups 0 0 0 0 0 0,00 0,0%

Measure 3: Investments in the processing and marketing of agriculture and fishery products 11.220.000 10.752.000 10.578.000 10.400.000 10.335.000 53.285.000,00 41,2%

Priority Axis 2 - Preparatory actions for the implementation of agri-environmental measures and Leader(2)

0 0 0 1.300.000 1.590.000 2.890.000,00 2,2%

Measure 4 Preparation for implementation of actions relating to environment and the countryside 0 0 0 520.000 795.000 1.315.000,00 1,0%

Measure 5: Preparation and implementation of local rural development strategies 0 0 0 780.000 795.000 1.575.000,00 1,2%

Priority Axis 3 - Development of the rural economy(1) 7.140.000 7.680.000 7.998.000 7.800.000 7.950.000 38.568.000,00 29,8%

Measure 6: Improvement and development of rural infrastructure 3.825.000 4.096.000 4.128.000 4.420.000 4.505.000 20.974.000,00 16,2%

Measure 7: Diversification and development of rural economic activities 3.315.000 3.584.000 3.870.000 3.380.000 3.445.000 17.594.000,00 13,6%

Measure 8: Improvement of training 0 0 0 0 0 0,00 0,0%

Measure 9: Technical assistance(3) 765.000 1.024.000 1.032.000 520.000 530.000 3.871.000,00 3,0%

TOTAL 25.500.000 25.600.000 25.800.000 26.000.000 26.500.000 129.400.000,00 100,0%


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Source: MAFRD - DRD, 2009

Table 7-5: Percentage allocation of EU contribution by measure 2007-2013 for monitoring purpose

EU Contribution

2007-2009 2010 2011 2012 2013

Priority Axes and Measures % % % %

Priority Axis 1 - Improving market efficiency and implementing Community Standards

65% 63% 62% 62% 62%

Measure 1: Investments in agricultural holdings 24% 23% 23% 23% 23%

Measure 2: Support for producer groups 0% 0% 0% 0% 0%

Measure 3: Investments in the processing and marketing of agriculture and fishery products

41% 40% 39% 39% 39%

Priority Axis 2 - Preparatory actions for the implementation of agri-environmental measures and Leader

3% 5% 6% 7% 7%

Measure 4 Preparation for implementation of actions relating to environment and the countryside

1% 2% 3% 3% 3%

Measure 5: Preparation and implementation of local rural development strategies

2% 3% 3% 4% 4%

Priority Axis 3 - Development of the rural economy 30% 30% 30% 29% 29%

Measure 6: Improvement and development of rural infrastructure

17% 17% 17% 17% 17%

Measure 7: Diversification and development of rural economic activities

14% 13% 13% 12% 12%

Measure 8: Improvement of training 0% 0% 0% 0% 0%

Measure 9: Technical assistance 3% 2% 2% 2% 2%

TOTAL 100% 100% 100% 100% 100% Source: MAFRD - DRD, 2009


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8. INFORMATION AND PROMOTION IPA Implementing Regulation (EC) No. 718/2007, Article 62 sets the obligation to inform the public, especially final beneficiaries, about the purpose, goals and modes of use of the pre-accession programme IPARD. In addition to the final beneficiaries, the wider public must be informed of the role and contribution of European Union.

Informing and promotional activities will be jointly designed and implemented by the Department for sustainable development of rural areas, the Division for pre-accession programmes of the EU and promotional activities and the Directorate for Market and Structural Support, Division for information and EU relations of the MAFRD.

One of the preconditions for satisfactory administration of the IPARD Programme is informing all stakeholders. Given the fact that implementation of the projects financed under this programme implies a very wide range of activities and documentation, it is necessary to keep involved state administration bodies informed because they will be contacting final beneficiaries. Institutions such as the CAEI, Croatian Livestock Centre, entrepreneurial centres and incubators, the network of extension officers for small and medium-sized entrepreneurs, will indeed be the referral institutions for potential final beneficiaries. County offices of state administration which collect applications for national incentives – direct payments, agricultural county offices as well as local -administrative bodies will also be referral points for potential final beneficiaries.

CAEI is one of the main institutions to carry out education and inform the farmers about all programmes undertaken by the Ministry of Agriculture, Fisheries and Rural Development. It will be actively working on informing final beneficiaries.

Activities of the Croatian Chamber of Economy are supplementary to those of the Ministry of Agriculture, Fisheries and Rural Development related to informing, promotion and overall preparations for implementation of the IPARD Programme.

Information and promotional activities are performed through direct lecturing and presentations, and also through medial presentation. They are important for understanding the role of the European Union in harmonisation of the agricultural and rural development sectors in the process of Croatia’s accession. These activities are also aimed at notifying the public about co financing possibilities and investments arising from the IPARD Programme and also overall promotion of aid in the process of accession to the EU. It is important that all stakeholders, including administrative bodies, private and public sector as a potential beneficiaries are informed in programme content and implementation procedures to a high level of detail, so as to increase the capacity for understanding and use of the pre-accession programmes.

Key persons from the involved administrative bodies will be informed and trained in workshops, on following comprehensive content, in order to distribute the information and advise potential beneficiaries, associations, NGOs:

General Information Seminar: (minimum 1 seminar in each County) - Context: EU accession instruments and programmes for the agricultural and rural sector: role of the EC especially regarding its co financing tasks and conditions, main objectives and functioning of IPARD (2007 – 2013)

IPARD in Croatia: Brief presentations of the IPARD Agricultural and Rural Development Plan 2007-2013:

Priority Axis 1 with investment measures “Investments in agricultural holdings” and “Investments in the processing and marketing of Agricultural and Fishery Products” including their objectives, sub-measures, eligible investments and costs, beneficiaries, eligibility criteria, financing criteria and the frame of the administrative procedures (application and supporting documents, checking of applications, approval, payments claims, payments, control system).

Priority Axis 2 with Agri - Environmental measures and LEADER measure “Action to improve the environment and the countryside (pilot project)” and “Preparation and implementation of local rural development strategies” including their objectives, sub-measures, eligible


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investments and costs, beneficiaries, eligibility criteria, financing criteria and the frame of the administrative procedures (application and supporting documents, checking of applications, approval, payments claims, payments, control system).

Priority Axis 3 with development measures “Improvement and development of rural infrastructure” and “Diversification and development of rural economic activities” including objectives, sub-measures, eligible investments and costs, beneficiaries, eligibility criteria, financing criteria and the frame of the administrative procedures (application and supporting documents, checking of applications, approval, tendering procedures, payments claims, payments, control system).

Technical Assistance measure “Technical Assistance, Information and Publicity Campaigns” incl. objectives, eligible projects, beneficiary, tendering procedures.

IPARD presentations will be targeted to final beneficiaries as defined per priority axes and measures under chapter 5.

Additionally MAFRD and Paying Agency will continue to elaborate and issue different information materials on IPARD:

Leaflets, Posters:

Concise information in simple language on the 3 Priority Axis and their measures with the same content as stated above

Newspapers

Articles on the IPARD Programme and the contribution of its measures for the agricultural and rural development in Croatia in the general press and in professional newspapers including interviews with representatives of the MAFRD coordinated by the Public Relation Department of the MAFRD

TV and radio

Presentation of the IPARD Programme and the contribution of its measures for the agricultural and rural development in Croatia in TV and Radio including interviews with representatives of the MAFRD coordinated by the Public Relation Department of the MAFRD

Web

General information on the IPARD Plan for Agricultural and Rural Development in Croatia including concise information on the objectives of the EU IPARD programme, its legal framework, and the context of the 7 measures on the website of the MAFRD.

Detailed information on the procedures for application, approval, payments and control for each measure on the website of the MAFRD/ Paying Agency (at time when the procedures are on the way to be accredited).

Other

Preparation of a Beneficiary Guide per IPARD measure (free of charge and for downloading from the Websites of the MAFRD / Paying Agency) with detailed information specified for each measure/ sub-measure (objectives, eligible investments and costs per sub-measure, eligibility criteria, beneficiary, co-financing mechanism), and the accredited administrative procedures (application, contracting, payment, tendering procedures, control).

Presentation of the IPARD programme and the contribution of its measures for the agricultural and rural development in Croatia on national and regional fairs, exhibitions etc.


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9. MONITORING AND EVALUATION

9.1. MONITORING The monitoring of the IPARD Programme is one of the crucial segments of Programme implementation. Monitoring is a core management responsibility, which involves the systematic and regular collection, analysis, communication and use of information for the purposes of management and decision-making, concerning the direction of the programme, including at priority, measure and project level.

Monitoring is carried out according to the pre-determined and agreed output, results and impacts indicators set out in Chapter 4 and explained under each measure. Also, the monitoring has a qualitative dimension as well since not all results and impacts can be measured in numbers and figures e.g. performance needs to be described and explained. In order to be able to take decisions, monitoring includes not only assessment of any variance against the Plan, but also analysis of the reason for such variances.

According to IPA Implementing Regulation (EC) No. 718/2007 article 193 it is the obligation of beneficiary country to send annual progress reports not later than 6 months after the end of each full calendar year of programme implementation to EC and National IPA co-ordinator after Monitoring Committee approves that report. Such annual reports shall contain information regarding:

• the implementation progress, covering in particular, the attainment of set objectives

• the problems encountered in managing the programme, and the measures taken,

• financial execution,

• monitoring and evaluation activities carried out

These annual Reports shall be submitted to Monitoring Committee for prior assessment before sending them to EC.

Final report shall be submitted to EC not later than six months after the final date of eligibility of expenditure under the programme.

9.1.1. Monitoring Committee In line with Article 192 and in accordance with the provisions of Article 59 of IPA Implementing Regulation (EC) No. 718/2007, a sectoral Monitoring Committee shall be set up by the beneficiary country within three months following the Commission’s decision approving the programme. Its members will be the representatives of state administration, social, economic and environmental partners and representatives from the private entrepreneurial sector, local administration and regional administration. The Secretariat of the Monitoring Committee is responsible for documentation, reports, work programme and conclusions of the meetings. Also, the Monitoring Committee must establish and keep the database necessary for programme implementation.

The Monitoring Committee is to monitor implementation of the Programme, particularly:

• to consider and give an opinion on the criteria for selecting and for ranking the projects under each measure assess performance and quality of Programme implementation

• to check occasionally the progress of achievements through specific goals of the aid

• to check the implementation results, particularly accomplishment of the goals for different measures

• to review and approve financial reports before they are delivered to EU Commission


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• to review and approve every proposal for amendment of the Plan before it is delivered to the Commission.

Further provisions for monitoring and reporting may be set out in the sectoral and financing agreements.

9.1.2. Data collection Collection of data for monitoring purposes is the most sensitive task to be carried out. The amount of data needed is quite substantial and collection can be also quite time consuming. It is necessary to build up such system, which can be updated even daily. A crucial part of this system is to develop application forms and business plans that collect data of the baseline indicators cf. the measure sheets.

Having that in mind, DMSSA, future IPARD Paying Agency, has formed a Department for Reporting under Sector for Finances (see organigram on 403), which is responsible for collection of data due to fact that MA will not be responsible for project approval.

Department is formed in such way that it can respond daily on requests from MA, but as it was set out during the SAPARD period, they are obligated to send quarterly, half-yearly and yearly reports on previously defined and agreed tables. The Department will prepare a set of tables, which will include all relevant and necessary data for monitoring. When the IPA programme start, the Department will receive all the data from other departments within the Agency.

The tables are set out according to pre-described indicators in this document and in line with EC recommended tables for monitoring.

Upon receiving and formatting the data, MA will precede the data to the Monitoring Committee, which will than approve or reject them and ask for changes to be made.

9.2. EVALUATION The monitoring indicators for the IPARD Plan should not only enable the effective implementation of the constituent activities, but will also allow for evaluation of both socio-economic and environmental impact at the micro level, and developmental impacts for administrative capacity

Evaluation is concerned with assessing the relevance and utility, efficiency, effectiveness of the financial assistance, which has been committed as well as the impact and sustainability of the outputs and results achieved.

Ultimately, evaluation is about drawing out lessons and best practices from these findings in order to improve the design of the IPA programme itself, both in the preparatory stage (ex ante evaluation), during real-time implementation of the OPs, so that immediate adjustments can be made (ongoing and interim evaluation) and on completion of the programme with a view to shaping future programmes based on evolving needs (ex post evaluation).

The obligation to evaluate IPARD Programme has been set by Article 57 and 191 of IPA Implementing Regulation (EC) No. 718/2007 saying that the programme shall be subjected to ex ante, ex post and, where appropriate, interim evaluations carried out by independent evaluators under the responsibility of the Managing Authority. These evaluations are aimed at assessment of the performance of the programme and of its effects. During the period of implementation of the programme, where appropriate, interim evaluation can be carried out, and specifically when the monitoring of the programme reveals significant departure from the goals initially set.

The evaluation should address the following aspects:

• The original validity of the plan rationale

• The degree to which objectives have been achieved

• The public expenditure/resource costs involved


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• The progress made by beneficiaries in meeting Community standards

• An estimate of economic, social and environmental benefits (in net terms where possible) and their sustainability

• Revisiting the effectiveness and efficiency of implementation arrangements thus providing recommendations for improvement

General conclusions and recommendations regarding costs in relation to net benefits in qualitative and quantitative terms; also, any action needed for improvement of the programme’s efficiency and effectiveness, regardless of whether there is a need for continued intervention or not.

Also the direct and indirect benefits, its economic impact, the gross and net costs per project assisted as well as evidence of deadweight and displacement effects will be assessed.

There will be:

The ex – ante evaluation of the IPARD Plan was made by ORBICON A/S in May 2007 (findings are presented in Table 11-1).

Ongoing and interim evaluations will make an important contribution to the real-time management and where appropriate, re orientate the programme

There is a report on ex-ante evaluation and conclusions integrated in this Plan and described in Chapter 11.1.

More broadly, the role and importance of evaluation will be communicated to all stakeholders, and particularly, potential and actual beneficiaries, so that they are aware of the contribution of the three types of evaluation and their obligation to cooperate and participate in these studies as they arise.


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10. PARTNERSHIP DRD – Managing Authority of SAPARD/IPARD programme is appointed as competent state body responsible for the coordination of the fifth IPA component – Rural development and for the preparation of Agriculture and rural development plan 2007 – 2013.

In this purpose, DRD has established preparation committee for the elaboration of IPARD plan consisting of three levels.

First two levels include representatives of all Directorates of the MAFRD and also members from the Ministry of Culture, Ministry of the Sea, Tourism, Traffic and Development, Faculty of Agriculture and Office for Agriculture and Forestry of City of Zagreb.

The first and the second level of the preparation committee have constructed the first draft of the plan, including sector analysis and have specified main priorities in accordance with the objectives of IPARD.

The preparation committee of the first and the second level has been appointed by the ordinance from the Minister of Agriculture on 7th of April 2006.

Third level comprises other Ministerial and also economy, social and ecological partners listed bellow:

1. Ministry of Environment Protection, Spatial Planning and Construction

2. Ministry of Foreign Affairs and European Integrations

3. Ministry of Finance

4. Ministry of Economy, Labour and Entrepreneurship

5. Central State Office for Development Strategy and Coordination of EU Funds

6. Central Bureau of Statistics

7. State Institute for Protection of Nature

8. Croatian Chambers of Economy

9. Croatian Chambers of Crafts

10. Croatian Livestock Centre

11. Croatian Agricultural Extension Institute

12. Croatian Cooperatives' Alliance

13. Union of Municipalities and Towns

14. Municipality Turopolje

15. Croatian Union of Counties

16. Croatian Union of Employers

17. Green Forum – association for nature, environment and sustainable development

18. Croatian Network for Rural Development

19. Tourism Association, Sisak

20. Park of Nature Lonjsko polje

21. Association of HF Cattle Breeders

22. Association of Simmental Cattle Breeders

23. Union of Croatian Associations of Vegetable Producers

24. Association of Croatian Poultry Breeders


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25. Association of Pigs Breeders, Križevci

26. Croatian Fruit Association

27. Association of Private Forests Owners ‘Ivanščica’

28. Association ‘Krasno plus’, LEADER type

29. Institute for Tourism

30. Croatian Agricultural Cooperatives Union

31. Agrovoće d.o.o. – fruit and vegetable industry

32. Danica d.o.o. – meat industry

33. Cooperative Kali – Fishery

On the 25th September 2006, the decision upon appointing the third level of the preparation committee was brought by Minister of Agriculture, and by the decision amended on the 9th October 2006, in the preparation committee was also appointed:

34. Croatian Union of Agricultural Associations

First and second level of the preparation committees had following meetings:

20th April 2006: to the members were presented: Council regulation (EEC) no. 1698/2005 on rural development support from the European Agricultural Fund for the Rural Development (EAFRD), selected measures and sub – measures in the SAPARD programs of other countries and first list of proposed measures for the IPARD programme. Committee members were introduced to their obligations for the elaboration of sector analysis in accordance to the EC guidelines.

12th May 2006: Rules of the Procedures of the committee were adopted, proposal for the representatives of the third level of the committee were discussed and first versions of the sector analysis, sub measures proposals, criteria and beneficiaries were discussed and agreed further improvements.

4th October 2006: improved sector analysis, sub measures, general, specific and ranking criteria, allocation of funds, final beneficiaries were discussed and drafts of sector analysis for the agri environment measures and rural tourism, prepared by the external consultants in the frame of CARDS 2003 project were presented to the members.

On 24th October 2006; fourth meeting of the preparation committee was held on which participated members of the preparation committee from the first, second and third level together with the representatives of the General Directorate for the Agriculture and Rural Development (DG AGRI) of the European Commission. At the meeting legal framework of IPA was presented, previous activities in the preparation of IPARD plan, proposed measures and sub measures and an indicative budget of IPARD programme. Members of the committee were also informed about submission of the request to the World Bank on 11 October 2006 for the financing of the external independent evaluation of the sector analysis and about the course of preparations for the ex ante evaluation for the IPARD plan.

Draft IPARD plan was presented at three MC SAPARD meetings (May and October 2006). In May 2007 it was presented to stakeholders group consisted of future MC IPARD members.

Comments on draft IPARD plan are listed below, including committee members’ and stakeholders comments.

Besides consultations with the third level of the IPARD preparation committee, draft of the IPARD Plan was presented at various stages of preparation and discussed at number of manifestations, workshops and meetings held all over Croatia:

• Fodder Crops Days, Koprivnica, May 6, 2006

• TAIEX Seminar on Leader Type Rural Development Measures, Zagreb, May 18 – 19, 2006


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• Croatian Rural Development Network, National Rural Development Conference, Zagreb, July 10 – 11, 2006

• Embassy of the Republic of Austria, Zagreb, September 7, 2006

• Agricultural Fair, Gudovac, September 8, 2006

• Agricultural Association Novo Selo Palanječko, Round Table “Agriculture and EU Accession”, Sisak, September 19, 2006

• International Conference on Sustainable Development of Rural Areas – Candidate Countries and Use of Pre-accession EU Funds, Eko-Etno Fair, Zagreb, September 21, 2006

• Croatian Employers Association, Seminar “Croatian Pre-accession Programs SAPARD and IPARD”, Zagreb, November 8, 2006

• Croatian Agro economists Society, International Conference on Rural Development, Topusko, November 23, 2006

• MAFRD, Directorate for Agricultural Land, “Land Consolidation Project Workshop”, Vukovar, November 28, 2006

• Croatian Agricultural Extension Institute, Annual Meeting, Dugo Selo, November 30, 2006

• Ministry of Culture, Workshop on Nature Protection Areas, Zagreb, December 5, 2006

• Agricultural Cooperative Marčik, Conference “Energy in Agriculture”, Osijek, December 19, 2006

• Presentation “Pre-accession funds SAPARD and IPARD in Croatia”, Orahovica, March 16, 2007

• From March to June 2007, in cooperation with Croatian Employee Association, major presentations of draft IPARD programme were held in Bjelovar, Zadar and Vukovar.

• Presentation “IPARD programme in Croatia” - Križevci, 30th June 2007

• Presentation “IPARD Programme in Croatia – Wine” – Vivodina, Ozalj, 1st of July 2007

• Presentation “IPARD Programme in Croatia” – Grubišno Polje, 24th of August 2007

• Presentation “IPARD Programme in Croatia” – Čakovec, REDEA (Regional Development Agency), 27th of September 2007

• Presentation “IPARD Programme in Croatia – Olive oil” – Punat - Krk, 12th of October 2007

• TAIEX – Seminar on Rural Tourism – Presentation of Diversification Measure – Šibenik 5th of November and Osijek 7th of November 2007

On the above mentioned events selected measures, proposed priority sectors, eligible investments, beneficiaries and indicative financial allocations were presented to and discussed with various audiences (farmers, representatives of local authorities, food-processing companies, counties development agencies and public institutions, agricultural advisors, etc.). In adition regarding environmental aspects of the programme, it was discussed at specific meetings with Ministry of Environment Protection, Spatial Planning and Construction, Ministry of Culture – State Institute for Nature Protection (MC – SINP). They received programme at various levels of programming and they all gave positive opinion on it. MC - SINP gave special positive opinion on AE measures and concept.

Results of consultations are listed in the following table.

Table 10-1: Results of consultations on draft IPARD Plan Proposal Proposed by Result


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Inclusion of table grapes as eligible for investment under fruit and vegetable sector within Measure 101: Investments in agricultural holdings

Group of producers Accepted: table grapes are classified as fruits

Inclusion of mushrooms as eligible for investment under Measure 101.: Investments in agricultural holdings

Group of producers

Accepted partially: contributes to the diversification of activities and as additional source of income, included under Measure 302.: Diversification of economic activities

Inclusion of seed treatment and packaging as eligible for investment under cereals and oil seeds sector within Measure 101: Investments in agricultural holdings

Group of producers in cooperation with Directorate for Agriculture of MAFRD

Not accepted – it is not recognized as a priority

Higher amount of eligible investments in project under Measure 101.: Investments in agricultural holdings for eggs sector aiming to increase animal welfare by harmonization with Community standards concerning keeping hens in cages

Group of egg producers in cooperation with Croatian Chamber of Economy

Accepted: proposal is justified due to costly investments related to Community standards

Inclusion of storage facilities for fruits as eligible for investments under fruit and vegetable sector within Measure 101.: Investments in agricultural holdings

Croatian Fruit Association Accepted: contributes to quality of products

Inclusion of wine sector as eligible for investments within Measure 101.: Investments in agricultural holdings

Representatives of food processing industry in cooperation with Croatian Chambers of Economy

Accepted partially concerning equipment for wineries: contributes to quality and sanitary conditions

Inclusion of olive oil sector as eligible for investments within Measure 101.: Investments in agricultural holdings


Accepted partially concerning investments in laboratory equipment and equipment for olive pomace utilization: contributes to quality and sanitary conditions. Reconstruction and equipment facilities for olive oil are not accepted, as not eligible for support according to EC regulation 2080/2005

Storage facilities for olive oil are not accepted as not recognized as priority sector according to IPARD objectives

Exclusion of criteria for final beneficiaries being VAT payers within all measures

Several members of consultation groups

Not accepted – regulated taxation obligations are obligatory

Inclusion of bee keeping sector within Measure 101.: Investments in agricultural holdings

Several members of consultation groups

Not accepted - not recognized as priority sector according to IPARD objectives

Inclusion of planting fast growing trees within Measure 201.: Actions to improve environment and countryside

Directorate for Forestry of MAFRD

Not accepted: not eligible under IPARD

Inclusion of wood processing industry as eligible sector

Directorate for Wood industry of MAFRD

Not accepted: it is not primary processing, eligible for support according to MIPD

Inclusion of meat processed products under Measure 103:

Representatives of meat processing industry in

Not accepted: it is not primary processing, eligible for support


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Processing and marketing of agricultural and fishery products

cooperation with Croatian Chambers of Economy

according to MIPD

Inclusion of storage facilities for fodder within Measure 101.: Investments in agricultural holdings


Not accepted: not recognized as priority according to IPARD objectives

Increase of maximum capacities on 10.000 tones for storage facilities for cereals under Measure 101.: Investments in agricultural holdings


Not accepted: not in line with main objective of this eligible sector (on-farm capacities)

Inclusion of beneficiaries with EU export number as eligible for support under Measure 103.: Processing and marketing of agricultural and fishery products


Economical Interest Association „Croatiastočar“

Not accepted: it is not in line with MIPD and IPARD objectives (upgrading to Community standards)

Inclusion of all beneficiaries regardless size (big companies) as eligible under Measure 1: Investments in agricultural holdings and Measure 103: Processing and marketing of agricultural and fishery products



Not accepted: according to main IPARD objectives and limited funds per beneficiary

Inclusion of setting-up and equipment facilities for milk buy-in stations and equipment for milk quality measuring including software for direct link with CMLK under Measure 103.: Processing and marketing of agricultural and fishery products


Accepted partially: investments in cooling tanks and special vehicles for raw milk transportation are eligible

Inclusion of marine aquaculture (fish farming) and equipment for vessels under Measure 103.: Processing and marketing of agricultural and fishery products

Directorate for Fishery of MAFRD


Not accepted: refused by EC as sea fish farming is not eligible under IPARD

Freshwater fish farming included under Measure 6: Diversification of economic activities as contribution to the diversification of activities and as additional source of income

Inclusion of medium enterprises as final beneficiaries under Measure 302.: Diversification of economic activities, for renewable energy sector


Not accepted: it is not in line with IPA Regulation and definition of beneficiaries

Inclusion of equipment facilities for cattle fairs as eligible under Measure 301: Development of rural infrastructure


Not accepted: it is not line with the identified priorities of IPARD

Source: MAFRD – DSDRA, 2007.


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11. PRIOR ASSESSMENTS RDP is subjected to various assessments and constant harmonisation with EC comments and recommendations.

11.1. EX ANTE EVALUATION In February 2007 in late phase of programming IPARD Plan the Danish firm ORBICON A/S was contracted in order to deliver ex-ante report. The tender was published and financed by the World Bank in the framework of the Croatian Agricultural Acquis Cohesion Project. In May 2007 MAFRD – DSDRA received final report which was accepted.

The report was presented for MAFRD staff, stakeholders European Commission representatives at a meeting held in Zagreb, 23rd of May, 2007.

The purpose of Ex-ante evaluation report was to assess the appropriateness of the IPARD Plan and to contribute to ensure that it fulfils the EC Regulations 1085/2006 for IPA and 1698/2005 for Rural Development in Member States.

The Article 85 of the Regulation 1698/2005 defines the purpose: An ex ante evaluation shall:

• form part of drawing up each rural development programme and aim to optimize the allocation of budgetary resources and improve programming quality.

• It shall identify and appraise the medium and long term needs;

• the goals to be achieved;

• the results expected;

• the quantified targets particularly in terms of impact in relation to the baseline situation;

• the Community value-added; the extent to which the Community’s priorities have been taken into account;

• the lessons drawn from previous programming;

• the quality of the procedures for implementation, monitoring, evaluation and financial management.

Main conclusions and recommendations of the ex-ante evaluation were following:

• the description and analysis of the current situation is very comprehensive and detailed, which is considered to be useful and informative. However, description is too extensive making the IPARD document rather unbalanced.

• the SWOT analysis is very detailed and useful in determining the priorities for each sector. However, ranking of problems and needs and the prioritization of these needs to each other could be emphasized stronger in the analyses.

• the IPARD objectives are developed in accordance with the analysis of the current situation in Croatia on the one hand and in accordance with relevant EU regulations on the other. Development, modernization and restructuring of the agricultural sector and the food sector are urgently needed.

• the indicators developed in the IPARD so far can be improved

• IPARD as such and the objective hierarchy at programme level is well structured.

Although Strategic Environmental Report (SEA) as such was not a task of the ex ante evaluation, meetings with the relevant state institutions (Ministry of Culture, Ministry of Environment) as well as with the consultants responsible for preparing the AE-study have been conducted. It was concluded for all the measures described in the IPARD programme that there can be possible positive impact on nature and/or environment or similarly reduction of


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negative impact. In relation to eligibility of applications under the measures it is generally stated that he activities needs to comply with minimum national and EU standards, concerning environmental issues as well.

Full list of recommendations and whether they were accepted and in what way or rejected is given in Table 11-1


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Table 11-1: List of recommendations and acceptance/rejection by MAFRD - DSDRA No. Subject Recommendations (ex ante draft final report on 4/5/2007) MA Comments

General and cross-cutting issues

1

The description of the current situation takes up approximately 200 pages out of 344. This is assessed being too much taking away focus from the core of the strategy, and it is therefore recommended to shorten down the description in a more summarized description, and to move the detailed and again very informative current description to annexes. Concrete suggestions are provided in the evaluation report.

Accepted

2

The sector analyses are comprehensive and detailed, and we understand that an independent assessment of these analyses is being made. We have therefore no qualitative comments, but recommend that the sections are summarized in the main text and the chapter moved to annexes, see recommendation 1.

Accepted partially – only tables were moved to the annex and the text was revised.

3

The section on the HACCP system implementation under 1.3.6.5 is very long and very detailed. It is recommended that this part is shortened down, and only introductory and the most important and needed information is left in the main text of the programme,

Accepted

4 The same recommendation is valid for the subsequent section on inspection and control system,

Accepted

5 The section on the fishery sector (1.3.6.6) needs either to be shorten downed or even deleted taking into consideration the comments from the EC Commission regarding support for fishery,

Accepted

6 Tables 1-127, 1-128, 1-129 and 1-130 on Fresh Fruit import and export and processing could with advantages be moved to an annex (page 150 – 154),

Accepted

7 It is recommended to consider the relevance of the section regarding the forestry sector (1.3.6.11) taking into account that no forestry or forestry related measures is expected to be implemented as a part of the IPARD,

Accepted

8

Section 1.3.9 outlines the different public services in agriculture and food industry. The information is considered relevant, but the volume of it seems to be too comprehensive and could therefore with advantages be shorten down.

Accepted

9

Analysis

Croatia still lacks standards in Good Agricultural Practice. It is recommended by the evaluator that the work defining Good Agricultural Practice is undertaken as soon as possible.

Accepted


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10

The ex ante evaluator is however aware of initiates taken by the MAFRD on the Leader issue and that negotiations with the Commission has been finalized regarding how to finance the Leader approach. This said, it is of course advised to include a section in the chapter on the current situation presenting the status of local governance, public-private partnerships and bottom-up approaches. Likewise, a technical sheet is needed following the measure fiche developed by the Commission for the Leader approach.

Accepted

11

In order to make the strategy-building potential of the SWOT more obvious it could be considered including a section that reflects upon how the identified internal Strengths and Weaknesses on the one hand and external Opportunities and Threats on the other hand can be turned into possible strategies ensuring that internal strengths are utilized and internal weaknesses eliminated in order to take advantage of the external opportunities and to meet the external threats

Not accepted – it is considered that SWOT analysis presented as such give good overview of situation in sectors

12

The coherence between the description of the current situation and the SWOT-analysis and vice versa needs to be double-checked e.g. ‘new highway network and telecommunication network constructed’, is listed as an opportunity, but is not mentioned in the description of the current situation. The same goes for the strength ‘local government structure experienced in local development’. The question is if this is justified as strength in the description of the current situation. Similar goes for the threat about ‘low organization degree of rural society’.

Accepted

13

There is a need to go through the SWOT analyses in order to ensure that the content of each analysis is of relevance for the described sector. For instance, what is the relevance of mentioning ‘no official Rural Development Strategy’ under the SWOT for Agri environment?

Accepted

14 ‘Low labour cost’ is expected considered strength compared to EU countries. Why is this not mentioned in the SWOT-analyses?

Accepted

15

It is noted that insufficient water pipeline connections in rural areas is mentioned as a weakness in the SWOT, which is fine. However the link is not clear to the measure sheet since this issue is not addressed in the measure. It is recommended that the argumentation for addressing this aspect in measure 5 is justified and presented in the measure sheet as well.

Accepted

16

The problems and disparities to be addressed by measure 6 are to a wide extent included in the SWOT analyses. However, one of the focus areas - ‘renewable energy resources’ - is left out of the SWOT and should be addressed in the SWOT section in the Plan.

Accepted

17

SWOT

The problems and disparities to be addressed by measure 3 on Agri Environment are to a good extent included in the SWOT analyses. The two main problems that the measure will focus upon is however not underlined

Accepted


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or described in detail in the SWOT analysis. These consist of the abandonment and overgrowth of the habitats/grasslands in question and threats from intensification of agricultural production in certain areas. However indirectly these – and other problems – are included in the SWOT analysis and the measure will indeed target these problems and issues. The SWOT analysis includes also weaknesses, opportunities and treats which cannot be targeted directly by AE measure, but indeed by other measures, which is also to some extent the case.

18 Regional disparities

It is recommended that the section on Regional development disparities and Inequities with respect to the European Union be further developed if possible. For instance, the table on differences between Croatia and EU countries could be bettering explained; currently the reader is expected to make his own interpretation of the table. Furthermore, additional socioeconomic indicators outlining disparities within Croatia is available e.g. distribution and types of jobs, age etc. could with advantages be added as well.

Accepted

19

A solid objective hierarchy is characterized by having a clear link from the global/overall level down to the operational level. The links in the current IPARD are to a great extent made clear, but in order to make it more evident it is recommended to ensure that there is coherence between the text outlined in chapter 3 and figure 3-1.

Accepted

20

Especially, there seems to be disharmony between table 3-1 and figure 3-1 concerning description of priorities and specific objectives. These two are adequately divided into separate formulations in the table 3-1 whereas the specific objectives in figure 3-1 are presented as being equal to priorities.

Accepted

21

Objective hierarchy

One comment could also be addressed to the wording of the first priority. Improving market efficiency will, if we take the words literally, have to do with an improvement of the way the market functions. Our recommendation is that the text of priority 1 is changed reflecting the objectives of the programme expressed as specific and measure objectives, if this is then intention of the plan.

Not accepted - Wording is taken over from the EC draft implementing regulation, of March 23, 2007, Article 171 paragraph 1(a)

22 Indicators

Baseline data, results as well as impacts indicators have not been defined and quantified for the priorities at the programme level. This is however a requirement from the EC Commission and it is therefore a task, which the MAFRD will be expected to handle. It is recommendable to insert a section regarding indicators after the presentation of the objective hierarchy. An example is provided in the evaluation

Accepted

23 Lisbon and Göteborg declarations

It is not an explicit requirement to pre-accession countries to relate the rural development plan to the Lisbon and Göteborg declarations, but it is our view that time and resources anyhow could be put into explaining and linking the IPARD to those two declarations more explicitly.

Accepted


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24 Lessons learned

It is suggested to enhance the section on lessons learned to include also experiences from other relevant - ended or ongoing - projects e.g. PHARE projects in order to point out good as well as bad experiences and best practices. Experiences and lessons learned are considered useful in order to ensure an effective and successful implementation of the IPARD Plan. It is recommended to assess the potential sources of lessons learned from the SAPARD programme – even though that the implementation of projects is limited - in order to improve the design of the IPARD Plan. More precise examples are provided in the evaluation.

Accepted

25 Demarcation lines

The demarcation lines between the IPARD Plan and the other 4 components under the IPA regulation (EC1085/2006) are missing. This description is recommended included in order to show how the demarcation lines are agreed making it evident for the beneficiaries when to apply for support under the IPARD Plan and when to make use e.g. the component on Regional Development or Human Resource Development. This demarcation line is furthermore essential in relation to avoiding any double payments between the funds for the same activity.

Accepted

26

The administrative setup for the IPARD Plan is not explicitly described in the current draft. It is though the understanding of the evaluator that the administrative set up largely will build on experiences from the SAPARD programme. Attention needs though to be paid - at least at the start of the programming period - to the accreditation and administrative preparations for implementation of new measures, and to establishment of an efficient monitoring system.

Accepted

27 It is recommended to include a chapter in the IPARD Plan that includes a description of the administrative set-up and the division of functions between the involved administrative bodies a central and regional level.

Accepted

28 It is suggested that the monitoring system is better described in the Plan e.g. outlining how the data will be collected and who will be responsible for the data collection.

Accepted

29 The description of the monitoring systems could also with advantages outline the methods applied for data gathering. So far, the reporting at beneficiary level is not organised and/or explained.

Accepted

30

Monitoring and evaluation system

It is recommended that a central monitoring system is built and, correspondingly, be described in the programme.

Accepted

31 Information plan

The section on information plan/campaign is currently a bit unstructured and it could with advantages be clearer on the purpose of the information activities, the administrative bodies that are responsible for these activities. This would provide a basic framework for the information plan.

Accepted


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32 It is recommended to be more specific on defining the different target groups outlining how the target group will be involved and when.

Accepted

33 It is suggested to insert an indicative budget for implementing the information plan

Not accepted – due to fact that it will be financed from national and other available sources other than EU

34

Regard adding further communication tools than those suggested - posters, leaflets, information material, TV and radio spots etc. - it could for instance be considered to make use of posters and billboards and production of promotional material e.g. brochures including cases from the SAPARD programme.

Accepted

35 Partnership

It is highly recommended that MAFRD develops the partnership model for the implementation of the Plan. The partnership involvement is an ongoing process and not just related to the preparation phase. One way to ensure this is to include and actively involve social and economic partners in the Monitoring Committee, for example providing the stakeholders training in order to be able to participate actively.

Accepted

Measure specific recommendations

36 All measures

A general recommendation relates to establishment of an objective hierarchy at the measure level, and to the quantification of objectives and targets. It is recommended to prepare measure objective hierarchy for each measure, also linking it to the quantification of targets. A generic example is provided in the evaluation.

Accepted – priorities at the measure level are defined by indicative financial allocation

37

Indicators have been developed for measure 1 at output, result and impact level. However, the indicators are not entirely sufficient. The indicators could in the case of the output indicators go more into detail with the type of investments and in the case of the result indicators they could go more into detail the extend of the actual improvements. Also impact indicators could be improved. It is recommended done.

Accepted partially – it would over burden the system if indicators would be prepared on investment level

38

The measure sheet does not express any experiences from previous programmes. We are informed that experiences from the SAPARD programme are collected in this regard (eligibility criteria) and that steps have been taken to make the administration in line with these experiences. This could be included.

Accepted - Experiences and lessons learned from SAPARD program are further elaborated under chapter 3.2.11.1.

39

Measure 101

The ranking criteria seem very operational, however, we do not understand why beneficiaries located in LFAs are ranked higher than beneficiaries located outside these areas. LFAs are defined according to national regulation and ranking farmers here higher than in other parts of the country where conditions are better for agricultural production seem to be contradictory to the objective of improving the competitiveness of the agricultural sector as such. All other things being equal, the competitiveness will be improved more through investments in the best and

Accepted - LFAs are higher ranked because of sustainability of these areas and declining of depopulation.


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most fertile areas.

40

Additional support is made available for young farmers, but age is not included as ranking criteria. Is that a mistake or is it deliberately excluded? We recommend considering to include this as ranking criteria making the criteria in line with the support rates.

Accepted

41 Concerning eligible expenditures, it is not clear whether or not investments in farm machinery, including tractors, are eligible. This could be clarified.

Not accepted - these investments are not eligible according to negotiations with EC. Eligible expenditures are taken over from EC draft implementation regulation.

42

There are no indications that the administrative procedures will lead to bottlenecks or other administrative problems. However, we find that it could be better explained, how applications will be reviewed: Will it be in the order of their submission following a first in first served approach, or will the applications be compared according to the ranking system making it possible to support late comers on the expense of the first in applications?

Accepted

43 Measure 103

The eligibility and ranking criteria seem to be adequate. However, we have the same reservations concerning priority to LFAs as mentioned under measure 1, and we have also the same comments concerning restrictions and limitations in project volume and numbers of projects as discussed for measure 1. With regard ranking criteria 2 (Enterprise has a contract with domestic producers for raw material supply), it should be ensured that these kind of contracts typically will be formalized and written on paper so that copies can be send to the administrative authority.

Accepted

44

The expected results and impacts are described on a general level and are found in full accordance with programme objectives and SWOT analysis (and AE specific analysis). With missing indicators the expected results are also only described to a limited extent. Baseline data is not available in the presentation of the measure and comparison can naturally not be done.

Accepted

45

Measure 201

Objectives are not quantified in the description of the measure. The measure has character of a “pilot approach” targeting 3 specific sites with individual selection criteria for activities to be funded, but they are not quantified and nothing can in that context be analyzed related to realism.

Accepted

46

It is our assessment that there is a clear relationship between the measure objectives and the objective hierarchy of the IPARD resulting in a satisfactory argumentation from main problems/disparities to objectives and to measures. It is however noted that insufficient water pipeline connections in rural areas – mentioned as a weakness in the SWOT – are not addressed in the measure. The argumentation for addressing this aspect should be presented.

Accepted

47

Measure 202

The identification of expected results and impacts are not adequate in the submitted draft. Additional working time and resources are needed in order

Accepted


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to ensure that this is taken care of.

48

The evaluator recommends that a clear objective hierarchy is presented in the measure sheet following the output-result-impact logic and that this corresponds to the adjusted indicators to be presented in the measure description.

Accepted

49

Measure 301

The expected results and impacts are not sufficiently described in the current version. It is therefore recommended that a more detailed and quantified description of expected results is included following the logic of the objective hierarchy.

Accepted

Source: Orbicon A/S, MAFWM – DSDRA, 2007


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11.2. EXTERNAL EVALUATION OF SECTORAL ANALYSIS

External evaluation of sectoral analysis which are an integral part and core substance of this document was additionally evaluated by the Faculty of Agriculture of Zagreb University. According to IPA Implementing Regulation (EC) No. 718/2007 Article 184 (2)(b) in-depth analysis of the sectors concerned, involving independent expertise is obligatory.

The evaluators were contracted in April 2007 in order to assess the quality and objectiveness of each sectoral analysis content, SWOT analysis. Also they were contracted to assess the justifiability of proposed measures in chapter 4 related to each sector and finally to give recommendations for eventual improvement for each sector.

In May 2007 DSDRA received final report and asked recommendations and they are also made an integral part of this document as presented in following table.


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Table 11-2: Results and findings of external evaluation of sub sector analysis Sub-sector Quality and objectivity Quality and objectivity of SWOT

analysis Justifiability of the proposed measures MAFRD comments

Milk production and dairy processing

Situation analysis is quality and objective

New statistical data should be included

Conclusion on modernization need in micro and small dairy plants in order to harmonize with Community standards is correct

Conclusion on need for investments in new specific products in small series in micro dairies is correct

As a "strength" is stated the sufficient quantity of fodder, but in practice there is no organized fodder market

In "strengths" should be put a production tradition and in last 2 - 3 years well developed system of professional training for dairy producers organized by larger dairy plants, local government in cooperation with agricultural support services and professional (high) schools

In "threats" is stated the lack of fattening calves due to a decreasing number of dairy cows, which doesn't belong to this sector

Proposed measures are justified and acceptable

Measures intended for milk processing and marketing in family dairies should be stimulated more

The financing can be expected to be oriented to farms with up to 50 heads

Recommendations were taken into consideration, when applicable concerning legal framework and objectives of IPARD

Measures are adopted to micro and small processing plants and dairy farms from minimum 20 up to 100 cows

Sub-sector Quality and objectivity Quality and objectivity of SWOT analysis Justifiability of the proposed measures MAFRD comments

Pig meat

Situation analysis is quality and objective


Trends in pig number show unbalanced support for production, lack of cooperation between sows, piglets and fatteners producers on one side and processors on the other side

Constant production growth is not possible without efficient cooperation between producers and processors, including development of fodder market (cereals – maize and maize silage firstly) as source of quality and cheap fodder

In "strengths" is properly put complementarities with arable crop production, but since the majority of pig producers produce for their own needs, rather small production areas they have represent limitations to development. It is hard to expect that pig producers will benefit from the potential state-owned areas or from small producers that may left agricultural production

Therefore in "weaknesses" should be put the lack of fodder market

As a "strength" is stated the possibility of achieving a high price of meat, which is questionable, because for the majority of small producers with a small number of animals and with traditional type of raising

By strict obey of the existing measures and regulations, the lack of hygiene and health standards in slaughter houses

Proposed measures are not quite adjusted to the specific situation in production and of producers.

Insufficiently is emphasized necessity for business associating and survival of farms without own land property.

It is necessary to stimulate a greater number of rather smaller entrepreneurial projects which would increase the number of investors into pig production out of small producer group with lower level of economic profitable production (calculations show these would be farms with 20 - 30 sows as well as 200 - 400 fattening pigs in shift)


Measure is adopted for small pig producers by decreasing minimum level of production


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should not be "weaknesses"


Beef


Description of the situation in beef production is not detailed enough, as well as relations between business actors in beef production

Relations between specialized beef breeders and small producers is not emphasized enough

In the "strength" are properly put complementarities with arable crop production, but in practice small number of crop producers deal with production just for the beef fattening requirement

Illegal import of beef is noted as a "threat", which shouldn’t be threat if the responsible institutions operated properly

It is well noted the "threat" of high use of dairy breeds in fattening

Occurrence of diseases that influence domestic demand should be avoided by applying the regulations

Danger for export is not worth to mention within the current foreign trade balance

Measure will ensure support distribution into strategically important and insufficiently used areas and toward qualified producers

Support of a bigger number of rather smaller farms (80-100 heads) should be supported, that will ensure employment and existence of the average family farm


Measure is adopted for small beef producers by decreasing minimum level of production


Poultry and eggs

In a smaller family farms systems in the egg production changes should be expected, by production modernization, both in industrial or traditional production

As a government interest is well noticed the need for reconstruction of the existing capacities according to the poultry keeping standards, as well as environmental and ecological standards together with the necessity for increasing the sector's competitiveness

The tradition in production and well known technology should be included into the sector's "strengths", as well as existing poultry feed market

As the "opportunity" of the sector should be additionally mentioned that there is no limitation for the poultry production development dependent on production areas

In the "threats" is stated the egg market price decreasing. This shouldn't be a problem for specialized farms with the minimum profitable capacities

The proposed measures in the poultry sector are adequate in the part of the support for the poultry meat and egg production facilities, especially from the aspects of environmental and animal health protection

For the part of small-size farms is noted that they have accepted modern way of production. They should be stimulated to enlarge their capacities

Support for the development of alternative types of poultry raising for the commercial meat and egg production should be emphasized


Measure is adopted for smaller poultry and eggs producers by decreasing minimum level of production

Sub-sector Quality and objectivity Quality and objectivity of SWOT analysis Justifiability of the proposed MAFRD comments


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measures

Meat processing industry

Food safety and quality standards are well emphasized

Analysis should include statistical data on production, consumption, import, export and market

Considerable ownership concentration in the meat processing sector and vertical integration should be emphasized

Influence of livestock diseases on the sector should be emphasized

SWOT analysis is not elaborated

Proposed measure with investments in slaughterhouses as well as investments into centres for collecting animal waste are justifiably and necessary, particularly because they are directed toward achieving standards in the field of environment protection, animal health protection and food safety

Opportunity for small and medium enterprises in the sector in traditional products, products with labels of quality and origin should be emphasized


SWOT analysis was elaborated

As measure is focused on first processing sequence only with specific investments into slaughterhouses and centres for collection of animal waste analysis was structured differently from other sectors


Fishery

Due to lack of systematically data collecting as well as the lack of organized market that will enable continuity, control and evidence over the fish products turnover, statistical data do not present actual situation

Limiting factors in aquaculture could be better explained

The sector analysis did not take into complete consideration the integration trends that in a great part determine the application of legal and spatial variable of the capture fishing, aquaculture and marketing in the following period

Insufficient education of fisherman should be included in „weaknesses“

In the "weaknesses“ should be included lack of purification centres construction of which can be seen as „opportunity“

Instead of „unorganized market“ formulation „unorganized fish market“ could be better

In the „opportunities“ construction of wholesale markets and market organization in accordance with Community standards should be included

Proposed measures are justified and necessary, as structural support for fishery sector is necessary (i.e. fleet modernization, wholesale markets establishment, production insurance researches, etc)

However, EC comments should be considered (continental processing capacities can be supported to meet the Community standards. The small vessels can't be supported even the system of cooling is involved.


As EC position was respected regarding sea farming and investments in vessels, analysis was revised (shorten) as well as eligible investments



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Cereals and oil crops

It is well stressed the share of competitive producers in the total number, as a potential actors of future production and users of the proposed measure

Current situation in sectors of grains and oil crops is described in a greater part correctly, impartially and in details enough

Processing industry is shortly explained

The level of attainment of Community standards is not described in a special chapter, but the analysis shortly describes and estimate (un)sufficient harmonization of the production standards with the Community standards

The SWOT analysis is basically well stated and it is obvious that conclusions are the result of good knowledge of the situation in these sub sectors and well surveyed documentation

The opportunity to increase yields should be moved to the "opportunities" and in "strengths" should be put the arguments that justify this opportunity

in the "strengths" it can be anticipated the complementarity with the livestock production

in "weaknesses" should be put weak sense on possibilities of risk management

Proposed measures are justified

However, because of the existing opportunities stated in the SWOT analysis (increasing yields and profitability), this measure should be supported by investments in technology of production, as well as by programs of land parcels enlargement and/or business association, particularly for the cereal sub sectors


Regarding significance of this sector, compared with others, measure was not extended by additional eligible investments


Fruits


Traditional fruit production and modern, plantage based production should be better explained and differences emphasised

SWOT analysis for fruits should be elaborated separately from vegetables

In the "weaknesses" important precondition for improving the economic efficiency of the fruit producers, inexistence of the producer organizations, should be mentioned.

Establishment of producers organizations can be also seen as opportunity for sector improvements

Proposed measures are justified as necessary precondition for achieving the increased value added in the fruit production and to complying with the Community standards


As EC position was respected regarding investments in irrigation systems and regarding significance of this sector, compared with others, list of eligible investments was shorten

SWOT analysis was separated from vegetables


Vegetables

Current situation analysis should be improved by new statistical data

In the analysis there are no data on producers (family

SWOT analysis for vegetables should be elaborated separately from fruits

There are a number of "weaknesses" that should be stressed: a small number of sorts and varieties of vegetables in a

Proposed measures are justified with regard to the current situation, needs and potentials in the vegetables sector

Investments in the processing


As EC position was respected


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farms, business entities) commercial production; limited and seasonal supply; production "only" for the domestic (Croatian) market; unorganized producers and lack of market infrastructure; lack of the irrigation systems, sorting and storage facilities, cold-storage plants for fresh vegetables; the vegetable processing is one of the less developed segments of the food industry

As the "opportunity" it should be noted the development of the export strategy for the vegetables sector, increasing the yields and decreasing the production costs, implementation of new technologies for a prolonged production period; increasing the specialization; preparing the quality standards in line with the EU legislation

and marketing will contribute to the vegetables processing as one of the less developed segments of the food industry

regarding investments in irrigation system and regarding significance of this sector, compared with others, list of eligible investments was shorten

SWOT analysis was separated from fruits


Fruits and vegetables processing industry

Situation analysis could be improved by new statistical data

Increase in production of frozen fruits and vegetables, minimum processed fruits and vegetables, semi-processed products for fruit and vegetable juices, processed products from potato and tomato, canned fruits and candied fruits, low pickled and pasteurized vegetables, including organic fruits and vegetables should be emphasized

The increase of competitiveness in production of fruit and vegetables for processing is correctly stated as the opportunity, because it will make direct impact on the economic efficiency of the fruit and vegetable processing sub sector by prices and better product quality

The problem of land organization (arondation) should be stated as well, regarding the return to scale criteria in fruit and vegetables production

Due to the lack of processing capacities, the investments in construction or reconstruction of processing facilities, including equipment, are justified

Within measure Diversification and development of rural economic activities under the small processing facilities on the farm, besides the investments in micro and small processing plants for dairy and meat products, facilities for processing products from fruits and vegetables should be supported as well


Implementation of investments was put in close relation with setting up of the producer organizations

Small processing on farm facilities were included under Diversification measure


Grape and wine

Fact that in Croatia there are different sources of statistical data, used in the analysis, on

As "weaknesses" should be mentioned: fragmented production areas, great number of grape varieties and wine

Investments in construction and/or reconstruction and/or equipment facilities of wineries

Recommendations were taken into consideration, when applicable concerning legal framework and


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production areas, and yields in grape production, as well as on wine, should be emphasized

Regarding the producers and the wine production, it should be stressed that recently was noticed the significant phenomenon of specialized wine-grape growers

It should be stressed that during the past few years the trend has been noted of building a greater number of smaller wineries with modern production, high quality of products and successful appearance on the wine markets

sorts, production only for domestic Croatian market, weak organization of producers work, lack of irrigation systems

As "opportunities" should be mentioned: developing the strategy of wine export (together with planned dynamism of wine and viticulture development), increasing yields and decreasing costs in production of grapes, implementation of new technologies in production, creating the quality standards according to the EU legislation (ISO and HACCP systems), protection of wine origin, guarantee for product authenticity and purity on its way to the consumers, joined supply, control over procedures and disloyal competition

are justified because of the lack of processing capacities

Production of vine-seedlings, construction of (new) plantations and grape production should also be supported

objectives of IPARD

Regarding significance of this sector, compared with others, measure was not extended by additional eligible investments


Olives and olive oil

Fact that in Croatia there are different sources of statistical data, used in the analysis, on production areas, and yields should be emphasized

The market of olive oil in Croatia is still unorganized which has to be stressed

In the "strengths" should be included: tradition in production of olives and olive oil

In the "weaknesses" should be put: low yields and utilization level in olive production, high unit costs, lack of technological disciplines and high dependence on weather conditions, weak market organization and marketing of olive products (olive oil, table olives), disloyal competition and "grey market"

In the "opportunities" should be put: maintaining stable prices at the level of production cost under the domestic production circumstances (by decreasing unit costs and increasing technological disciplines), increasing the average yield and keeping its stable level (by introducing the irrigation systems), better market organization, introducing the cadastre of olives, production and market control, producers' education

Proposed measures are justified


As EC position was respected regarding investments in construction of olive mills and regarding significance of this sector, compared with others, list of eligible investments was shorten


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Source: FA (Final report), MAFWM – DSDRA, 2007


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12. ANNEX

12.1. NATIONAL LEGISLATION Chapter below contains legal provisions and strategies directly or indirectly concerning measures which are an integral part of the Plan for Agriculture and Rural Development of the Republic of Croatia (IPARD Programme).

In total, 63 acts and strategies have been taken into consideration.

12.1.1. Agriculture, fishery and forestry 1. Agriculture Act (OG 66/01 of 20 July 2001 and 83/02 of 16 July 2002)

Articles 7-14 of this Act cover the measures of the policy on markets and prices. The policy on markets and prices influences the stability of the domestic market of agricultural products and, at the same time, it strengthens the competitiveness of the Croatian agriculture and the implementation of obligations deriving from international trade agreements. The policy on markets and prices comprises the following sets of measures: prescribed prices, financial incentives and benefits, interventions on the domestic market, measures for encouraging sale and consumption, measures for balancing the supply and trade measures.

Part of these measures helps the eco-friendly agriculture and the agriculture that supports biodiversity. Benefits for the development of the eco-friendly agriculture and the agriculture supporting biodiversity are intended for: (I) the use of technologies in the agricultural production which foster natural resources, such as agricultural land and water, and the natural environment in general; (II) safeguarding the ecologically endangered areas and the prevention of the creation of non-planned, not cultivated and non-maintained agricultural surfaces on farms; and (III) the maintenance of the agricultural biodiversity of eco-systems.

2. Agriculture and Fishery Strategy of the Republic of Croatia (OG 89/02 of 25 July 2002)

This strategy is a document defining long-term development guidelines for the Croatian agriculture. New objectives of the (new) Strategy place the emphasis on a competitive domestic production that satisfies the need for foodstuffs and on the “expansion” of agricultural goals to the entire rural area on the basis of the CAP definitions. A new element is the importance of food safety and eco-friendly agriculture within a special system of sustainable management and opportunities offered by the system itself.

Special goals are structured according to determined priorities: (a) agrarian structure; (b) financing of agriculture; (c) market organisation; (d) rural development, nature and environmental protection; (e) business cooperation and market infrastructure; (f) food safety; (g) institutional support to agriculture.

Each of the said priorities encompasses several strategic goals and implementation measures. The national policy and strategy is divided into following sectors:

Management of forest eco-systems;

Forest administration and legislation;

Non-wood forest-based products – tourism, hunting and other forest-based products and products from forest-covered areas;

Wood-processing industry;

Environment and physical planning;

Scientific research and international cooperation;

Public relations and promotion.


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Each sector contains a general introduction, after which the policy goals and strategic activities for reaching those goals are dealt with. Each activity has got the organisation and the institution responsible for its implementation defined. Where possible, partner organisations with an important role in cooperation shall be identified, even though they shall not have the primary responsibility for the implementation. The said activities are attributed one of the three priority degrees:

Priority I – Short-term priorities implemented in the period 2003 - 2006

Priority II - Medium-term priorities implemented in the period 2006 - 2008

Priority III – Long-term priorities implemented after 2008

It is important to state that the implementation documentation containing conditions, instructions and expenses shall be processed according to the priority degree for each activity defined in the document.

3. Act on State Support to Agriculture, Fishery and Forestry (OG 87/02 of 23 July 2002, 117/03 of 23 July 2003, 82/04 of 17 June 2004, 12/05 of 24 January 2005, 85/06 of 26 July 2006 and 141/06 of 27 December 2006)

The new Act on State Aid to Agriculture, Fishery and Forestry, which has entered into force on 1 January 2003, envisages the following changes in the agricultural policy:

splitting of commercial from non-commercial farms;

compulsory registration of all producers in the “Register of Agricultural Holdings”;

compulsory integration of all commercial farms in the value added tax (VAT) system in 2008.

4. Agricultural Land Act (OG 66/01 of 20 July 2001, 87/02 of 23 July 2002, 48/05 of 13 April 2005 and 90/05 of 25 July 2005)

This Act describes the objectives and the development programme for agriculture and rural areas until 2005 in the part referring to the structure of farms, agriculture and the environment.

The Act on agricultural land (OG 66/01) defines the task of the local self-government (districts and towns) to manage directly the state-owned agricultural land.

Districts and towns have the right and duty to develop their plans for land management (sale, leasing, concession and donation) on the basis of the guidelines contained in the “Strategy on management of state-owned agricultural land” (Government of the Republic of Croatia, 15 October 2001) and the “Measures and conditions for privatisation of the agricultural land” (OG 13/02).

5. Food Act (OG 46/07 of 7 May 2007)

This Act determines:

general principles and requirements related to hygiene and the sanitary safety of food and feed;

obligations of subjects in dealing with food and feed regarding hygiene and the sanitary safety of food and feed;

powers and responsibilities of competent institutions concerning food and feed manufactured in the Republic of Croatia or imported and marketed in the Republic of Croatia;

This Act is to be applied on all stages of production, processing, warehousing and distribution of food and feed, except from the primary production, preparation, handling and warehousing of food intended for personal use or feed for farm animals not intended for sale.

6. Act on Special Conditions for Marketing Flour (OG 48/04 of 14 April 2004, 130/04 of 20 September 2004, 140/05 of 28 November 2005 and 143/05 of 5 December 2005)

This Act determines the manner and the procedure for registering and labelling the produced, the imported or the exported flour, which must have register labels in order to be marketed.

According to this Act, flour is a product obtained from grinding wheat, rye and corn and intended for human nutrition. The marketing of flour implies its sale, transport, warehousing


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and storage for sale, as well as any kind of exchange, substitution or cession of flour against payment or free of charge, supply of flour for the service of wheat, rye and corn grinding, own processing, and import and export of flour.

The Act strictly defines the rights and obligations of persons in charge for labelling of flour, record-keeping, supervision, etc.

7. Act on Geographical Indications and Designations of Origin of Products and Services (OG 173/03 of 31 October 2003 and 186/03 of 24 November 2004)

This Act determines the manner of acquisition, protection system and obtaining of rights on the use of geographical indications and the designations of origin of products and services.

The provisions of this Act are not applied on products and services where the acquisition, protection system and obtaining of rights on the use of the geographical indication and the designation of origin are determined by special regulations.

The geographical indication contains the name of the region, a specific place or, in special cases, the name of the country; it is used for labelling products or services originating from the given region, place or country and detaining a certain quality, prestige or other properties ascribed to the relevant geographical origin; the manufacturing and/or processing and/or preparation of the given products or services is to be carried out in the relevant geographical area.

The geographical indication may also be another label on products and services from a certain geographical area, if complying with the conditions contained in paragraph 1 of this Article.

The designation of origin contains the name of the area, a specific place or, in special cases, the name of the country; it is used for labelling products or services originating from the given area, a specific place or country and detaining a certain quality or properties that essentially or exclusively are a result of special natural or human factors in the relevant geographical area; the manufacturing, processing and preparation of the given products or services is to be entirely carried out in the relevant geographical area.

8. General Product Safety Act (OG 158/03 of 7 October 2003)

This Act determines the general safety of marketed products.

This Act applies to all products defined in accordance with this Act in cases in which a special Act or regulation adopted for the implementation of such Act do not solve the safety issue of a certain product.

Pursuant to this Act, a product is deemed safe:

if it fulfils all requirements contained in technical regulations referring to it;

where appropriate technical regulations are lacking, if it complies with Croatian Acts based on European regulations, the list of which has been published in the Croatian Official Gazette;

where appropriate technical regulations or Acts are lacking, if the product complies with Croatian Acts that have not yet been harmonised with European regulations, with technical rules and rules which ensure safety and protect the health of consumers in the common practice.

9. Act on Fertilisers and Soil Improvers (OG 163/03 of 16 October 2003)

This Act determines the quality, quality control, labelling, transport and transport supervision of fertilisers (mineral and organic) and soil improvers, as well as the production and control of organic fertilisers and soil improvers.

Pursuant to this Act, fertilisers are not deemed to be substances for the protection of plants from harmful organisms and diseases and substances influencing the life cycle of plants without affecting their nutrition.

10. Plant Protection Act (OG 10/94 of 11 February 1994, 19/94 of 11 march 1994 and 117/03 of 23 July 2003)


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This Act determines the protection of plants and plant products from harmful organisms, the sanitary control of plants transported, the transport of substances for the protection of plants and devices for their use and the prevention of negative consequences that the use of substances for the plant protection might have on the health of people, animals, plants and the environment, as well as other important issues regarding the enforcement of a single plant protection system in the Republic of Croatia.

11. Act on Plant Health (OG 75/05 of 20 June 2005)

The Act describes and prescribes protection of plant health, including biological plant protection, prevention of dissemination of plant diseases, collecting, monitoring and exchange of data, financing and implementation of plant health measures and inspection control.

12. Sea Fishery Act (OG 48/05 of 13 April 2005)

The Act describes and prescribes the most important aspects of sea fishery, sea fishery management and control.

Fish and other marine organisms are a renewable natural resource. They are subject to a special state concern pursuant to the provisions of this Act.

With the exception of special protected natural areas, fish and other marine organisms may be harvested, collected or bred in accordance with the conditions of this Act and regulations adopted on the basis of this Act.

13. Fresh-water Fishery Act (OG 106/01 of 30 November 2001, 174/04 of 10 December 2004, 10/05 of 19 January 2005 and 49/05 of 15 April 2005)

According to this Act, fresh-water fishery implies the management of fresh-water fish and includes harvesting, ranching, aquaculture, protection of fish and fresh water.

The fish is bred and/or caught in accordance with the conditions of this Act and regulations adopted on the basis of this Act.

14. Maritime Code (OG 181/04 of 21 December 2004)

The provisions of this Code define the maritime and the submarine territory of the Republic of Croatia, as well as the legal relations within them, navigation safety in the inland waterways and the territorial sea of the Republic of Croatia, protection and safeguarding of natural marine resources and the marine environment, fundamental material and legal relations concerning vessels, contracting and other compulsory relations concerning vessels, registering of vessels, limitations of the ship-owners’ responsibility, enforcement and insurance of vessels.

The Republic of Croatia encourages the regional cooperation, especially with neighbouring countries, with the aim of adopting common plans for urgent actions in case of accidents which might pollute the marine environment; it protects sensitive eco-systems, habitats of species and other marine life forms, which are rare, endangered or in extinction, with special measures.

15. Maritime Domain and Seaports Act (OG 158/03 of 7 October 2003)

This Act defines the legal status of the maritime domain, its limitations, management and protection, use and diffusion of seaports, sea areas, establishment of port authorities, port activities and their implementation, building of ports and use of port super- and substructures, as well as other important issues regarding seaports.

The general use of the maritime domain implies the right to its use with respect to the nature and the purpose of use.

The special use of the maritime domain does not comprise only the general and commercial use of the maritime domain.

The commercial use of the maritime domain implies the use of the maritime domain with the aim of performing economic activities with or without using the existing facilities or other objects present on the maritime domain, and with or without building new facilities or other objects on the given maritime domain.

The local authorities are in charge of managing and maintaining the publicly used part of the maritime domain, which is located inside its territory.


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16. Strategy and Action Plan of Biological and Landscape Diversity of the Republic of Croatia (OG 81/99 of 3 August 1999)

In distinction from most European countries, Croatia’s eco-systems and habitats are very diversified, which is also reflected in the richness and diversity of plants, fungi and animals. Such diversity is conditioned by Croatia’s position on the crossroads of several bio-geographical regions, by an indented relief, by geologic, pedological, hydrologic and climate conditions and partially by human activities. Those features, combined with various local traditions of physical planning, which have developed on the basis of different economic and historical conditions, have contributed to the extraordinary richness of landscape diversity.

In comparison with eco-systems of most other Central and Western European countries, the nature in Croatia is very well preserved. Next to extremely small natural habitats and environments (water springs, cliffs, quagmires, forests, mountain meadows), there are many partially natural habitats (certain forests, extensive pastures) influenced by the man, although they have maintained mainly autochthon species, typical for such habitats. Anthropogenic habitats, which have developed under human influence and which are very different from natural habitats due to their structure and the presence of species, are not dominant, as in a large part of Europe.

17. Livestock Act (OG 70/97 of 7 July 1997, 36/98 of 17 March 1998, 151/03 of 24 September 2003 and 132/06 of 6 December 2006)

This Act determines the rearing and the production of breeding animals, insemination of farm animals, trade in breeding animals, zoo-hygienic conditions of keeping farm animals, protection of the environment in rearing and exploiting farm animals, quality of feed and animal-based products, structure and implementation of rearing of breeding animals and other issues concerning the efficiency and the promotion of livestock farming.

The animal rearing has the following goals:

the increase of efficiency of the production of farm animals and the

reservation or the improvement of their vitality;

the increase of the economy of the livestock farming production;

the increase of the quality of livestock farming products;

the preservation of the genetic diversity of farm animals.

18. Forest Act (OG 52/90 of 12 December 1990, 9/91 of 28 February 1991, 76/93 of 16 August 1993, 160/04 of 18 November 2004 and 140/05 of 28 November 2005)

This Act defines the most important aspects of forest and forest areas management and control. Numerous benefits offered by forests are particularly obvious since forests preserve the soil, roads and other facilities from erosion, torrents and floods; influence the water regime and the hydro-energetic system, the fertility of soil and the agricultural production, as well as the climate; protect and improve the human environment; influence the production of oxygen and the purification of the atmosphere; contribute to the beauty of landscapes and create favourable conditions for medical treatments, convalescence, rest and recreation; contribute to the development of tourism, hunting and general defence.

19. Strategy for the Development of the Industrial Processing of Wood and Paper (OG 114/04)

20. Act on the Classification of Wood in the Rough (OG 180/04)

21. Act on Organic Production of Agricultural Products and Foodstuffs (OG 12/01 of 14 February 2001 and 14/01 of 21 February 2001)

This Act determines the organic production, processing and marketing of agricultural products and foodstuffs as important elements in the human health and life, consumer protection, protection of the nature and the environment. The Ordinances (OG 91/01, 13/02, 66/02, 67/02, 81/02 and 85/02) also apply to control terminals and laboratories authorised for the inspection of crops and the production, and define the transition period for switching from the conventional to the organic production.


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22. Veterinary Act (OG 41/07, of 21 April 2007)

This Act determines the protection of animal health, implementation of measures of veterinary public health, improvement of the reproduction of animals, veterinary protection of the environment, organisation and implementation of the protection of animal health, organisation of the veterinary inspection and other relevant veterinary issues.

This Act also defines the carrying out of activities of the inspection. According to the Act, the inspectors’ tasks are the following: inspection of animals and animal products is as veterinary-sanitary examination, control and inspection conducted on animals, animal products, animal semen and fertilised eggs, facilities, equipment and instruments, for the purpose of protecting human and animal health, veterinary protection of animal welfare and determination of animal health, as well as the sanitary safety of animal products, which may be carriers of human and animal infectious diseases or endanger in another way both human and animal health.

23. Act on Veterinary Medicinal Products and Veterinary Medical Devices (OG 79/98 of 5 July 1998)

This Act determines the manners of testing, release for circulation, production and manufacturing, circulation, control, advertising, information and entering into the Register of the Ministry of Agriculture, Forestry and Water Management of veterinary medical products and medicinal additives for the health protection of animals, especially concerning their quality, efficiency and safety. The Act also aims at protecting human health from the medicine residues in foodstuffs of animal origin, veterinary, medical and homeopathic products and controlling animal medical products.

24. Animal Welfare Act (OG 135/06 of 13 December 2006)

This Act defines all aspects of animal welfare and their keeping, accommodation, protection and curing. It also determines the persons authorised for conducting the said activities, as well as the rights arising from their competence.

Act on Seeds, Planting Material and Registration of Varieties of Agricultural Plants (OG 131/97 of 5 December 1997, 163/03 of 16 December 2003, 137/04 of 1 October 2004 – consolidated text and 140/05 of 28 November 2005)

This Act determines the production and trade in agricultural seeds, seedlings, mycelia of edible and medicinal fungi, agricultural planting material and the registration of varieties of agricultural plants and other relevant issues for the implementation of the single agricultural seed-growing and transplanting system.

The activities regarding seed-growing, transplanting and registration of varieties of crops, vegetables and flowers are conducted by the Institute for seed-growing and transplanting. The activities regarding the registration of varieties of fruit are conducted by the Institute for fruit-growing, while the activities regarding the registration of varieties of vine are conducted by the Croatian institute for wine-growing and wine-selling.

25. Wine Act (OG 96/03 of 10 June 2003)

The Wine Act regulates production, trade, processing of grapes intended for wine production (except for the processing to grape juice and concentrated grape juice), production and trade of wine and other products from grapes and wine, distillation, designation, protection of geographic origin, production and trade of fruit wines and other products based on fruit wines, tasks of the Croatian Institute of viticulture and oenology (hereinafter: the Institute), production and management of vineyard cadastre and other issues important for the implementation of a unified system of production and trade of grapes intended for wine production, must, wine and other products from grapes and wine, fruit wines and other products containing wine or fruit wine.


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12.1.2. The environmental protection The protection of the environment has a long tradition in Croatia. Many Acts and strategies deal with the issues concerning the environmental protection, biological and landscape diversity, physical planning and the protection of the cultural heritage in rural areas. The most important Acts are the following: Environmental Protection Act (OG 82/94, 128/99), Ordinance on the Environmental Impact Assessment (OG 59/00, 136/04), Air Protection Act (OG 178/04, 48/95), Nature Protection Act (OG 30/94, 72/94, 107/03, 162/03, 70/05), Physical Planning Act (OG 30/94, 68/98, 61/00, 32/02, 100/04), Physical Planning Strategy of the Republic of Croatia, June 1997, Physical Planning Programme of the Republic of Croatia, May 1999, Forest Act (OG 52/90, 9/91, 76/93), Water Act (OG 107/95, 150/05), National Strategy and Action Plan for the Protection of the Biological and Landscape Diversity (OG 81/99), National Environmental Protection Strategy and the National Plan on Environmental Impact (OG 46/02), Act on the Protection and Preservation of Cultural Goods (OG 69/02).

26. Environmental Protection Act (OG 82/94 of 11 November 1994 and 128/99 of 30 November 1999)

This Act defines the area of the environmental protection for the purpose of safeguarding the environment, reducing life and health risks for people, ensuring and improving the life quality for the wellbeing of the present and future generations.

The Ministry of Environment Protection, Physical Planning and Construction has started with the creation of new regulations, which shall be harmonised with the EU legislation and which refer to the environmental protection (EC Directive 85/337 on the environmental impact assessment, standards and practices of the EU).

It is envisaged that the new Environmental Protection Act, as an umbrella regulation, shall enter into force in 2007. It shall determine all horizontal issues, which have not yet been dealt with by the current regulations in this sector.

27. Water Act (OG 107/95 of 27 December 1995 and 150/05 of 21 December 2005)

This Act determines the legal status of water and water domain, manner and conditions of water management (use of water, water protection, management of watercourses and other waters, protection from the negative influence of water), organisation methods and implementation of water management activities, basic conditions for the implementation of water management activities, responsibilities and obligations of the state administration and other state institutions, units of local self-government and other legal subjects, as well as all other issues regarding water management.

28. Air Protection Act (OG 48/95 of 14 July 1995 and 178/04 of 16 December 2004)

This Act defines measures, organisation, protection and methods for improving the air quality, being the air part of the environment and public property of special concern of the Republic of Croatia.

The main goals of the air quality protection and improvement are the following:

protection of human, plant and animal health, as well as cultural and material values;

the best possible air quality;

prevention or reduction of the pollution, which influences climate change;

creation, maintenance or improvement of an integral air quality management system on the Croatian territory.

29. Waste Act (OG 151/03 of 24 September 2003, 178/04 of 16 December 2004 and 153/05 of 28 December 2005)

This Act defines rights, obligations and responsibilities of legal and physical persons regarding waste management.

Waste management must acknowledge the principles of the environmental protection and the requirements of the international Act.


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The provisions of this Act do not comprise the management of:

radioactive waste;

waste waters released into surface waters and sewage, except from liquid waste;

gas substances released into the atmosphere;

waste generated from research, extraction, processing and storing of mineral raw material and waste from quarries;

animal carcasses, faeces and other natural harmless substances used in agriculture;

waste generated from the search for, extraction, transport and final processing or disposal of mines, explosive and other deadly devices and explosive substances, which are dealt with by other special Acts.

30. Nature Protection Act (OG 30/94 of 5 May 1994, 72/94 of 10 October 1994 and 70/05 of 8 June 2005)

This Act determines eight protected space categories: national parks, nature parks, game preserves, natural monuments, protected landscapes, forest-parks and monuments of park architecture.

31. Fire Protection Act (OG 58/93 of 18 June 1993 and 33/05 of 14 March 2005)

The provisions of this Act cover the protection of human life and property from fire, special measures and procedures for the elimination of causes of fire, prevention of the creation and spreading of fire, fire detection and extinguishing, determination of the causes of fire and providing for aid for the elimination of the consequences of fire.

32. National Environmental Protection Strategy (OG 46/02 of 29 April 2002)

The National Environmental Protection Strategy raises two very important issues, which shall have an enormous impact on the long-term environmental protection in the Republic of Croatia and the forming of the relevant Strategy: (1) adjustment of the Republic of Croatia to the concept of long-term development and (2) association and accession of the Republic of Croatia to the European Union (EU). Even though both issues transcend the environmental protection and encompass the entire development strategy of the Republic of Croatia, the environmental protection remains the essential part thereof.

The Strategy supports the introduction of the environmental protection in all other strategic plans of the Republic of Croatia and therefore the integration of the environmental protection in all segments of the overall strategy of the Republic of Croatia and in a later moment in the entire policy, programmes, as well as all development plans and projects.

12.1.3. Physical planning and infrastructure Construction Act (OG 175/03 of 4 November 2003 and 100/04 of 20 July 2004)

This Act determines planning, construction, use and removal of buildings, technical properties, usability of construction products and the organisation of the building inspection. It contains essential requirements and other conditions for constructed objects; it defines the implementation of administrative and other procedures, as well as rights and obligations on the matter of the state administration and legal and physical persons.

33. Act on Regulation of Energy-Related Activities (OG 177/04 of 15 December 2004)

This Act defines the establishment and the implementation of the energy-related activities system, the procedure of the founding of institutions for the regulation of energy-related activities, as well as other relevant issues for the regulation of energy-related activities, aimed at improving the urban and the rural infrastructure for energy supply.

Basic goals of the energy-related activities management are the following:

to ensure objective, transparent and impartial performance of energy-related activities;

to ensure the implementation of the principle of a planned access to the network/system;


version of 14. 12. 2007;


to establish a methodology for determining tariff items within tariff systems;

to establish en efficient and competitive energy market;

to protect the energy consumers and subjects.

The planning of energy-related activities encourages:

an efficient and rational use of energy;

energy-related entrepreneurship;

investments in the energy sector;

environmental protection.

34. Public Roads Act (OG 180/04 of 20 December 2004 and 138/2006 of 20 December 2006)

This Act defines the legal position of public roads, classification of public roads, planning, building, reconstruction and maintenance of public roads; protection measures for public roads and traffic, concessions, management, financing and control of public roads.

Pursuant to this Act, public roads are roads classified in one of the following four categories, on the basis of their social, transport and economic importance: motorways, state roads, county roads and local roads.

Croatian Motorways, a limited company with headquarters in Zagreb, is in charge of managing, building, reconstructing and maintaining motorways.

Croatian Roads, a limited company with headquarters in Zagreb, is in charge of managing, building, reconstructing and maintaining state roads.

County Road Administrations, legal persons founded by single counties, are in charge of managing, building, reconstructing and maintaining county and local roads.

The financing sources for public roads are: the annual fee for the use of public roads, which is paid upon registration of motor vehicles and trailers, tolls for the use of motorways and objects for which a fee is charged (bridges, tunnels, viaducts, etc.), fees for the use of public roads charged to motor vehicles and trailers registered outside the Republic of Croatia, fees for special transports, fee for the excessive use of a public road, fee for the use of road areas, fee for performing supplementary activities, concession fee, finances from the state budget, county budget, or the budget of the City of Zagreb, fees for the financing of the construction and maintenance of public roads and other sources.

35. Communal Economy Act – consolidated text (OG 26/03 of 20 February 2003, 82/04 of 17 June 2004, 110/04 of 11 August 2004 and 178/04 of 16 December 2004)

This Act contains the principles, manners of conducting and financing of the communal economy, as well as other issues concerning a purposeful conducting of communal activities.

Pursuant to this Act, communal economy implies the conducting of communal activities, in particular the provision of communal services relevant for physical and legal persons, financing of the construction and maintenance of objects and facilities pertaining to the communal infrastructure as a comprehensive system on the level of municipalities, towns and the City of Zagreb, as well as counties where prescribed by this Act.

36. Road Traffic Safety Act (OG 105/04 of 28 July 2004 and 142/06 of 28 December 2006)

This Act defines the basic principles of mutual relations and behaviour of participants and other subjects of the road traffic, and basic conditions the roads must comply with for the purpose of traffic safety. It prescribes traffic rules on roads, the system of road signs and signs exhibited by authorised persons, obligations in case of a road accident, driving school, driving exams and conditions for obtaining a driving licence, trailing of vehicles, compulsory equipment and devices on vehicles, size, total weight and axle weight of vehicles, and conditions that the vehicles in traffic must comply with.

37. Energy Act (OG 68/01 of 27 July 2001 and 117/04 of 15 December 2004)


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This Act defines: measures for a safe and reliable energy supply and its efficient production and use, acts on the basis of which the energy policy and energy development planning are determined and implemented, conducting of energy-related activities on the market or as part of public services, and basic issues regarding energy-related activities.

The goals of the energy development strategy are: to ensure a safe and reliable energy supply and its efficient production and use, especially the use of various and renewable energetic resources and the environmental protection in all areas of energy-related activities; to encourage competition on the energy market on the basis of the principle of impartiality and transparency; to protect the energy consumers and to connect the Croatian energy system or its parts to the European energy system or the energy systems of other countries, starting from the economic development and the energy needs; to develop national energy-related programmes, the necessary investments, investment benefits regarding renewable energy sources and energetic efficiency, as well as environmental protection measures.

38. Act on Oil and Oil Products Market (OG 68/01 of 27 July 2001 and 57/06 of 24 May 2006)

Energy-related activities: manufacturing of oil products, oil transport by pipelines or other means of transport, transport of oil products by pipelines or other means of transport, wholesale of oil products, retail of oil products, storage of oil and oil products are all market activities, regulated by this Act.

39. Act on Gas Market (OG 68/01 of 27 July 2001 and 87/05 of 18 July 2005)

Concepts of this Act have the meaning as in the Energy Act.

40. Physical Planning Act (OG 30/94 of 15 April 1994, 68/98 of 12 May 1998, 35/99 of 12 April 1999, 61/00 of 23 June 2000, 32/02 of 28 March 2002 and 100/04 of 20 July 2004)

This Act determines the physical planning system, conditions and manners of the creation, adoption and implementation of documents regarding physical planning, as well as the competences of the state administration and the local self-government institutions and administration concerning the enforcement of measures and activities, which ensure physical planning in the Republic of Croatia.

12.1.4. Other legal provisions 41. Public Procurement Act (OG 117/01 of 24 December 2001, 197/03 of 17 December

2003 and 92/05 of 27 July 2005)

These Act prescribe conditions and procedures of public procurement, which are followed by the conclusion of contracts for providing goods and services and business contracting, with the aim of ensuring and efficient use of budget finances and other funds and promoting a free market competition in tenders.

The institutions in charge of managing the procurement of goods and service and business contracting according to Public Procurement Act are listed in the List of Obligatory Application of Public Procurement (OG 18/06 of 15 February 2006) and they include:

Institutions of the state administration of the Republic of Croatia

Public and educational institutions owned by or established by Government decision

Institutions of the local self-government

Institutions of the regional self-government

Legal persons.

42. Craft Act – consolidated text (OG 49/03 of 27 March 2003)

This Act defines handicraft as an independent and permanent performance of allowed economic activities by physical persons with the aim of obtaining profit through production, transport or providing services on the market. Furthermore, it prescribes the conditions that a


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physical person must fulfil in order to conduct the activities prescribed by the Act. The Act also prescribes rules that the craftsman must comply with, specific rules arising from the Act itself and the obligations of persons who conduct the activities prescribed by the Act. It also prescribes the conditions for qualification and training of persons who wish to conduct a craft.

43. Cooperatives Act (OG 36/95 of 1 June 1995, 67/01 of 24 July 2001 and 12/02 of 6 February 2002)

The Cooperatives Act defines the concept of the “cooperative member”, obligations stemming out of the participation in a cooperative, specific rules and obligations, such the headquarters, financing, manner of foundation and end of business, the organs of the cooperative, property and its business conducting.

44. Associations Act (OG 88/01 of 11 October 2001)

This Act determines the foundation, registration, legal position and end of existence of associations. It prescribes conditions for association membership, activities and management.

45. Land Register Act (OG 91/96 of 28 October 1996, 114/01 of 20 December 2001 and 100/04 of 20 June 2004)

This Act determines the main aspects related to land registers (cadastre), land entry-books, keeping of the documentation regarding owners’ rights and other legal principles defined by the Act.

46. Act on Property and Other Real Rights (OG 91/96 of 28 October 1996, 73/00 of 21 July 2000 and 114/01 of 20 December 2001)

This Act determines the basic principles of personal property of objects; the provisions of this Act are applied also on the property of objects subject to a special legal system, where not in contradiction with the given system.

47. Act on Financing of Local Self-government Units (OG 117/93 of 31 December 1993, 33/00 of 25 March 2000, 73/00 of 30 June 2000, 59/01 of 30 June 2001, 107/01 of 5 December 2001, 117/01 of 24 December 2001, 150/02 of 17 December 2002 consolidated text and 147/03 of 18 September 2003.)

This Act defines the sources of financing of activities belonging to the competences of the self-government of counties, municipalities and towns, within limits prescribed by the Act which deals with single issues, where not otherwise prescribed by the provisions of this Act.

48. Act on Promotion of Small Business (OG 29/02 of 22 March 2002)

This Act defines basis for implementation of simulative measures aimed at reconstruction and market adjustments of small business.

The Act is harmonized with European legislation with the exception of amount of recorded total annual turnover for small business. That amount is smaller in Croatian legislation than in European legislation.

Small business includes entities, that:

Employ on the average less than 250 employees annually

Record total annual turnover of up to 8.196.721 EUR (60.000.000 HRK), or whose balance sheet total, if they are obliged to pay profit taxes, fixed assets, if they are obliged to pay income taxes, amount up to 4.098.360 EUR (30.000.000 HRK).

Small business entities are natural and legal persons that perform their authorized activities independently and permanently with the objective of generating profits, i.e. creating income on the market.

According to the Act on the promotion of small business, small business entities are divided to micro, small and medium entities according to their size.

Micro entities are natural and legal persons that employ on the average less than 10 employees annually.

Small entities are natural and legal persons, that:


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Employ on the average less than 50 employees annually,

Record total annual turnover of up to 2.185.792 EUR (16.000.000 HRK), or whose balance sheet total, if they are obliged to pay profit taxes, or fixed assets, if they are obliged to pay income taxes, amount up to 1.092.896 EUR (8.000.000 HRK)

Medium entities are natural and legal persons, that annually employ on the average more employees and whose total annual turnover or balance sheet total, i.e. fixed assets exceed amounts stated for small entities.

Table 12-1: Division of small business entities in EU Micro entities Small entities Middle entities

Definition

Employees <10 <50 <250

EU Turnover/ balance sheet

<2.000.000€/ 2.000.000€

<10.000.000€/ 10.000.000

<50.000.000€/ 43.000.000€

Source: Act on the promotion of small business (Official Gazette 29/02); 2003/361/EC

49. Act on Foundations and Trust-funds (OG 36/95 of 1 June 1995 and 64/01 of 16 July 2001)

The Act on Foundations and Trust-funds stipulates the manner of the establishment and functioning of a specific type of civil society organization – foundations, which are properties intended to independently, or through their generated income, permanently serve the realization of some generally beneficial or charity cause.

It is necessary to amend the Act on Foundations and Trust-funds in order to simplify the procedure for the establishment of foundations and simultaneously encourage the activities of a larger number of home foundations in the Republic of Croatia. In relation to that, it is also necessary to amend tax Acts in order to encourage philanthropy and provide for certain exemptions due to investments for public benefit.

50. Act on Institutions (OG 76/93 of 16 August 1993)

The Act on Institutions regulates the establishment and activities of institutions as organizations for permanent performance of activities related to education, science, culture, information, sport, physical education, technical culture, child care, health care, social welfare, care for disabled persons and other activities, if they are not performed for the purpose of generating profit. An institution can be established by citizens as natural persons, thus it can belong to civil society organizations, while public institutions are mostly established by the state or regional and local self-government units.

51. Act on Humanitarian Aid (OG 96/03 of 10 June 2003 and 83/92 of 2 December 1992)

The Act on Humanitarian Aid is applied to associations, religious communities and other domestic and foreign non-profit legal persons, one of the statutory objectives of which is the provision of humanitarian aid, the so-called “humanitarian organizations”.

52. Act on Organizing Games of Fortune and Price Winning Games (OG 83/02 of 16 July 2002)

The Act contains provisions stipulating distribution of revenues from the games of fortune and price winning games, the beneficiaries of which are civil society organizations through public tender procedures. The areas of activities of civil society organizations recognized by the Act are as follows: development of sports, fight against drugs and all other forms of addiction, social and humanitarian activities, problems and satisfying the needs of disabled persons, technical culture, culture, extra-institutional learning, education of children and youth and civil society development. The Decree on Criteria for Establishing Beneficiaries and the Manner of Distribution of a Part of Income from Games of Fortune elaborates more precisely the manner


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of distribution of a part of income from games of fortune. The Act on Organizing Games of Fortune and Award Winning Games stipulates the obligation of financing eight different activity areas of civil society organizations, from development of sports to civil society development, in the amount of 50% of the total income from games of fortune.

53. Customs Act (OG 78/99 of 23 July 1999)

The Customs Act stipulates that goods that satisfy basic human needs, such as food, medicine, clothes, bed linen, hygienic items, imported by registered humanitarian organizations for the purpose of distributing them for free to endangered persons and victims of natural and other disasters, shall be exempt from customs fees. Likewise, customs fees shall not be paid by humanitarian organizations and associations of blind and deaf, or hearing–impaired persons, as well as persons who suffer from muscular and neuromuscular disorders, for specific equipment, devices, instruments and spare parts and consumable material for those persons that are not produced domestically along with goods donated to institutions involved in culture or other non-profit legal persons from cultural life, independent artists or artists for the performance of their activities, based on the opinion of the Ministry of Culture.

54. Catering Activity Act (OG 49/03 of 27 March 2003 and 138/06 of 20 December 2006)

This Act defines terms and manner in which legal and natural persons may perform catering (gastronomy) service.

Gastronomy service means preparing food and providing food service, preparing and serving drinks and beverages, as well as accommodation services, as well as preparing food for consummation on another place (in means of transport, at events, etc.) and supplying the food (catering).

Gastronomy service may be performed by companies, cooperatives, individual traders and artisans, public institutions managing national parks and nature parks, gastronomy educational institutions, pupil and student dormitories, and certain gastronomy service may be provided by citizens.

55. Act on Providing Services in Tourism (OG 68/07 of 2 July 2007)

This Act defines manner and conditions of performing tourist service. Tourist service means travel agency service, tourist guide, friend, leaders, representatives, providing services in nautical, farm, health, congress, sport, hunting and other forms of tourism, providing of other tourist services, etc.

Tourist trade may be performed by companies, individual traders and artisans, fulfilling conditions prescribed for its performance, if by this Act and Nature Protection Act (OG No. 30/94 and 72/94) has not been said differently. Under conditions prescribed by this Act and regulations adopted on the basis of this Act, certain tourist services may be provided by citizens.

12.1.5. Less favoured areas The Republic of Croatia has special regulations with aid lists intended for target groups of users and areas. These laws are applied in less developed areas or former war-areas.

They are: the Islands Act, the Act on Hilly and Mountainous Areas, the Act on Reconstruction and Development of the Town of Vukovar, the Act on Areas of Special State Concern, the Act on the Fund for Regional Development of the Republic of Croatia with the appropriate sub-acts on their implementation and programmes for the implementation of provisions contained in the given acts.

56. Act on Areas of Special State Concern, OG 26/03 of 20 February 2003(consolidated text), 42/05 of 1 April 2005, 90/05 of 25 July 2005)

This Act defines the areas which are of special state concern, as well as stimulation measures for their reconstruction and development. These measures are intended for physical and legal


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persons with residence/habitual residence or seat in the given areas. The purpose of this Act is to establish the areas of special state concern in order to:

eliminate the consequences of the war,

encourage a more rapid return of the displaced population,

stimulate demographic and economic progress and

obtain a more even development of all areas in the Republic of Croatia.

The areas of special state concern are divided into three groups by a numeration system of single local units or their parts.

The first group of the areas of special state concern includes towns and municipalities which were occupied during the war in the 1990’s and are near the state border; the centre of the town/municipality is not located more than 15 km as the crow flies from the state border and the given town/municipality does not have more than 5.000 inhabitants according to the 1991 population census. This group also includes all other areas, towns, municipalities and villages in the Podunavlje region (Danube region), that were occupied during the Homeland War in the 1990’s.

The second group comprises towns, municipalities and villages which do not qualify for the first group, but were occupied during the Homeland War in the 1990’s.

The third group of areas of special state concern includes municipalities deemed to be in the underdeveloped parts of the Republic of Croatia, according to the evaluation procedure based on four development criteria:

economic development criterion

structural difficulties criterion

demographic criterion

special criterion.

For that reason this Act belongs to the category of laws the starting point of which is the territorial approach to regional development.

Mechanisms applied for the fulfilment of the basic purposes of this Act are the following: housing for the population in areas of special state concern by determining the criteria for the assignation of houses, housing units, construction sites and material; tax relieves for transport and purchase of real estate in areas of special state concern, tax relieves on heritage and donations, fee for the exploitation of mineral raw material. In areas of special state concern the administrative, notary and other fees are not charged for all procedures conducted in accordance with the provisions of this Act.

The implementation of this Act befalls to several ministries, while the Ministry of the Sea, Tourism, Transport and Development monitors the implementation thereof.

57. Islands Act (OG 34/99 of 9 April 1999, 149/99 of 31 December 1999, 32/02 of 28 March 2002, 33/06 of 24 March 2006)

The Islands Act belongs to the group of laws combining different approaches to regional development. The most important is the territorial approach to regional development, which is determined by the specific position and significance of islands for the overall development of the Republic of Croatia, since the islands are under special state concern.

Through a numeration system, the Act divides the islands into two main groups by a combination of two criteria: development/underdevelopment criterion and population density criterion of single islands or archipelagos. The Act prescribes several measures intended for the fulfilment of the primary purpose of this Act.

The measures for stimulating the economic development include those for the stimulation of single activities for sustainable island development, production of original island products by introducing the Designation of Origin (Croatian island products), granting of loans under favourable conditions for single stimulated activities, granting of incentives for employers with


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workers having permanent residence on islands, renting of state buildings under favourable conditions, privileges regarding water supply, establishment of a common body for the common conducting of communal activities by several units.

58. Reconstruction Act (OG 24/96 of 26 March 1996, 54/96 of 8 July 1996, 87/96 of 16 December 1996, 57/00 of 9 July 2000)

This Act defines the reconstruction of property destroyed or damaged during the war and the elimination of consequences caused during the Homeland war from the beginning of the Serbian aggression to the conclusion of a peaceful re-integration of hit areas.

The right to reconstruction in accordance with this Act is granted to owners or co-owners of housing premises, protected lessees of premises in the said buildings, as well as owners of other destroyed or damaged material goods, who are citizens of the Republic of Croatia or who had residence in the Republic of Croatia in 1991.

59. Act on Reconstruction and Development of the Town of Vukovar (OG 44/01 of 16 May 2001, 90/05 of 25 July 2005)

This Act determines the stimulation measures for reconstruction and development of the town of Vukovar and aims at eliminating the consequences of the war from the 1990’s. The town is located in an area of special state concern due to the fact that all facilities of this town were entirely destroyed during the war.

Stimulation measures for the accomplishment of the basic purpose of this Act are mainly directed towards: buildings destroyed or damaged during the war, de-mining, return of refugees and displaced persons, employment and the creation of new jobs, computerisation of economic and social subjects and the state administration and local self-government bureaus, technical and technologic modernisation, education and training, development of entrepreneurship and environmental protection.

Every year, not later than 60 days after the entry into force of the state budget, the Government of the Republic of Croatia adopts a Plan and programme for the reconstruction and development of the town of Vukovar, containing specific projects and defining obligations and manner of their financing, as well as time-limits for their implementation.

The reconstruction and development of the town of Vukovar is stimulated also through other special measures.

60. Act on Hilly and Mountainous Areas (OG 12/02 of 6 February 2002, 32/02 of 28 March 2002, 117/03 of 23 July 2003, 42/05 of 1 April 2005, 90/05 of 25 July 2005)

This Act defines hilly and mountainous areas as areas of special state concern. Its goal is the creation of prerequisites for the development of the said areas in order to encourage their demographic recovery and population, as well as laying the basis for the best possible exploitation of natural and economic resources for the purpose of economic growth. The development of these areas is encouraged through specific measures prescribed by law, which mainly comprise the right to collect forest fruits without payment of fees, priority for the realisation of the right to lease agricultural and forest land, priority to lease and obtain the fishing licence, fee for the exploitation of mineral raw material, tax relieves concerning the profit tax and the income tax, temporary granting of financial means from the profit tax and the income tax to local units in hilly and mountainous areas, priority right to obtain wood from the wood-based biomass for physical and legal persons conducting the activities of wood treatment and processing in the given area. Act on the Fund for Regional Development of the Republic of Croatia (OG 107/01 of 5 December 2001) The provisions of this Act refer to the establishment of the Fund for Regional Development as a special body in charge of the implementation of the National programme. The activities of the Fund consist in encouraging an even regional development of the Republic of Croatia in accordance with the Regional Development Programme of the Republic of Croatia. The Fund’s activities are above all directed towards the war-hit areas, scarcely populated areas, areas of special state concern, development of islands, hilly and mountainous areas, border and near-border areas, areas with structural problems, areas with a gross domestic product lower than


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65% of the average national GDP and other areas comprised by the Regional Development Programme of the Republic of Croatia.

61. Value Added Tax Act (OG 47/95, 106/96, 164/98, 105/99, 54/00, 73/00, 48/04, 82/04, 90/05)

Value added tax is paid: on the delivery of all kinds of goods (products, goods, newly-built buildings, equipment and so on) and all services rendered inland for compensation, on own consumption, on the delivery of goods and services rendered without compensation and with a personal discount, on the import of goods inland, on services that a foreign entrepreneur performs for a domestic entrepreneur inland.

62. Profit Tax Act (OG 177/04, 90/05, 57/06)

A taxpayer shall be a company or another legal or natural person resident in the Republic of Croatia, who is permanently and independently engaged in an economic activity for the purpose of deriving a profit, an income or revenue or other assessable economic benefits. A taxpayer shall also be a resident permanent establishment of a non-resident entrepreneur. A taxpayer shall also be a natural person who derives income pursuant to the income tax regulations, if he/she declares that he/she intends to pay profit tax instead of income tax. A taxpayer shall also be an entrepreneur – a natural person who derives income from small business or the activities equalised therewith, if: his/her total revenue in the preceding tax period exceeded of 270.000 EUR (HRK 2.000.000), or his/her total income in the preceding tax period exceeded of 54.000 EUR (HRK 400.000) or the value of his/her fixed assets exceeds 270.000 EUR (HRK 2.000.000) or he/she employed more than 15 employees on average during the preceding tax period. The state administration bodies, bodies of regional and local self-government, and the Croatian National Bank shall not be liable to pay profit tax, unless otherwise provided in this Act.

63. Income Tax Act (OG 177/04)

A taxpayer shall be a natural person who acquires an income. If several natural persons jointly acquire an income, each natural person separately shall be a taxpayer, in respect of his/her share in the jointly acquired income. A taxpayer shall also be an heir in respect of all tax liabilities arising from an income acquired by the testator until his/her death. An heir shall also be a taxpayer in respect of the income coming from inherited sources of income.


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12.2. ANNEX Table 12-2: Selected industrial products processing (2000 - 2004)

Product Measurement unit 2000 2001 2002 2003 2004 Index 04/03

Beef, fresh or frozen t 17.846 16.276 16.310 17.794 19.166 108

Pork, fresh or frozen t 31.963 32.824 36.237 41.280 40.328 98

Fresh poultry meat t 40.645 48.494 52.264 57.542 57.925 101

Sausages t 35.244 39.882 43.735 46.428 46.309 100

Canned meat t 13.699 12.632 15.945 14.948 15.431 103

Canned fish t 10.469 11.468 12.804 1.248 8.855 710

Fruit juices hl 554.039 586.833 579.937 679.248 676.668 100

Preserved vegetables t 7.160 7.342 7.695 10.235 10.141 99

Vegetables preserved in vinegar t 8.244 10.367 17.986 10.967 11.632 106

Olive oil t 1.392 1.110 2.454 882 1.471 167

Refined oil t 33.860 38.438 38.616 50.520 50.270 100

Margarine t 15.747 16.414 17.869 17.824 18.052 101

Butter t 2.171 2.626 2.530 2.184 2.346 107

Cheeses t 21.153 22.674 22.395 21.798 20.448 94

Ice cream and similar addible frozen products t 9.503 9.293 10.491 12.803 11.049 86

Wheat flour t 276.424 278.916 299.038 297.938 305.269 102

Animal feed t 483.550 524.270 524.220 537.333 516.713 96


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Fresh bread t 118.915 118.980 121.368 116.960 122.677 105

Cookies and similar products t 19.746 21.822 23.118 25.422 26.021 102

Sugar t 56.729 130.693 171.613 140.973 214.934 152

Chocolate and cocoa products t 11.445 12.230 14.165 14.019 15.630 111

Bonbons and similar sweets, including white chocolate t 5.555 6.167 5.746 5.675 5.122 90

Pasta t 6.155 6.564 7.192 8.382 8.121 97

Coffee t 7.011 7.955 8.216 6.389 7.088 111

Coffee products t 783 743 747 600 807 135

Sauces, mixed spices and meal additives t 18.592 18.879 21.916 21.893 24.327 111

Children food t 4.131 4.268 4.182 4.510 4.783 106

Distilled alcoholic beverages hl 182.016 163.328 151.702 143.621 132.458 92

Ethyl alcohol stronger than 80% hl 112.531 89.383 106.978 96.231 77.194 80

Natural wines hl 497.695 524.523 463.353 474.969 500.559 105

Beer hl 3.847.452 3.799.271 3.623.893 3.679.481 3.593.088 98

Vermouth and other aromatized wines hl 19.022 21.462 11.451 4.886 1.688 35

Mineral and sparkling water 000 l 230.735 243.512 252.178 260.873 224.484 86

Other soft beverages hl 1.575.622 1.781.125 2.095.078 2.389.148 2.500.681 105

Fermented tobacco t 7.732 11.206 7.554 8.211 13.531 165

Cigarettes million pieces 13.692 14.716 15.047 15.613 15.374 98

SOURCE: CCE, 2006


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12.3. ANNEX Table 12-3: Cereals production in the period 2000 - 2004

Crop 2000 2001 2002 2003 2004 2005

area (000 ha) 236 240 234 206 214 146

production (000 t) 1.032,09 965,15 988,18 609,26 920,31 601,75 Wheat

yield (t/ha) 4,40 4,00 4,20 2,95 4,30 4,11

area (000 ha) 389 406 407 425 432 319

production (000 t) 1.526,17 2.211,52 2.500,48 1.569,15 2.468,43 2.206,73 Maize

yield (t/ha) 3,93 5,45 6,13 3,86 5,70 6,92

area (000 ha) 46 51 51 54 56 50

production (000 t) 151,44 161,49 170,95 134,24 181,87 162,53 Barley

yield (t/ha) 3,27 3,16 3,37 2,49 3,30 3,23

area (000 ha) 20 21 19 20 19 n.a

production (000 t) 51,14 47,63 50,00 34,12 48,80 n.a Oats

yield (t/ha) 2,51 2,32 2,60 1,71 2,60 n.a

area (000 ha) 24 23 22 4 5 n.a

production (000 t) 74,27 89,31 91,70 70,33 14,52 n.a Others

yield (t/ha) 3,62 3,91 4,30 2,88 3,20 n.a

area (000 ha) 715 741 733 709 726 n.a

production (000 t) 2.835,10 3.475,10 3.801,30 2.417,10 3.633,90 n.a Total production

yield (t/ha) 4,00 4,60 5,20 3,40 5,01 n.a.


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Source: MAFWM, 2006


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12.4. ANNEX Table 12-4: Food and beverages consumption per inhabitant (2000 - 2005)

Consumed food and beverages quantities Group of products Measurement unit

2000 2001 2002 2003 2004

Corn products kg 96,86 97,77 107,4 125,98 124,51

Bread and other bakery products kg 69,01 68,10 65,50 85,48 82,67

Flour and other corn kg 21,4 23,57 21,69 23,87 24,16

Meat and meat products kg 64,90 66,78 62,32 66,72 65,85

Beef and veal kg NA 11,6 10,89 10,63 11,40

Pork kg NA 17,61 14,66 18,14 16,44

Mutton, goat-meat, lamb kg NA 0,96 0,70 1,27 1,03

Poultry kg NA 19,31 19,26 19,30 19,03

Dried, smoked and salted meat kg NA 13,50 13,30 13,68 15,63

Fish and fish products kg 9,92 10,41 8,76 8,08 8,29

Milk, dairy products and eggs

Milk l NA NA 91,95 83,34 84,60

Cheeses of all kinds kg NA NA 6,80 6,90 7,10

Consumption eggs and powder eggs kg 9,32 10,81 10,72 8,12 8,15

Oils and fats

Butter and margarine kg 3,25 2,72 2,82 2,47 2,63

Addible oils l 14,29 14,77 14,73 13,48 13,65

Other oils and fats l 1,69 1,25 1,46 1,63 1,63

Fruits and fruit products kg 53,06 55,53 57,22 49,07 52,91


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Fruits (fresh, cold and frozen) kg 51,2 53,96 55,36 47,17 50,77

Canned and processed fruits, children food, diet products kg 0,52 0,39 0,50 0,60 0,47

Vegetables and vegetable products kg 104,81 112,51 108,97 104,66 112,85

Vegetables (fresh, cold and frozen) kg 56,07 54,59 53,32 52,19 56,20

Dried vegetables kg 5,38 3,84 3,76 2,90 3,02

Canned and processed vegetables, children food and diet food kg 7,55 6,72 6,90 6,65 7,63

Potato, consumption and sweet products on potato basis kg 36,16 47,70 44,79 42,92 46,00

Sugar, jam, chocolate and confectionaries kg 22,15 20,73 18,23 18,36 17,91

Sugar kg 14,59 13,63 12,39 12,61 12,13

Other food products kg 14,97 12,92 13,67 11,86 11,75

Soft drinks

Coffee kg 3,77 3,59 3,24 3,54 3,38

Tea, cocoa kg 1,13 0,86 0,60 0,61 0,63

Mineral water l 22,19 30,27 37,72 36,84 31,95

Soda, fruit juices, syrups and concentrates for preparation of drinks l 26,17 31,55 32,05 32,90 32,29

Alcoholic beverages l 30,57 39,61 42,66 36,14 33,78

Wine l 11,04 10,96 12,93 12,79 11,86

Beer l 18,56 27,9 28,89 22,27 20,94

Source: CBS, 2004 (tourism consumption not included)


version of 14. 12. 2007;


12.5. ANNEX Table 12-5: Direct payments per unit in HRK

PRODUCTION SUBSIDY SCHEME UNIT BASIC PAYMENT PER UNIT (KN)

LESS FAVOURED AREAS

Cereals, industrial crops, vegetables

Wheat, rye ha 2.250,00

Beer barley and soy ha 1.650,00

Other cereals ha 1.250,00

Oil plants ha 2.250,00

Oil rape for bio diesel production ha 2.550,00

Other industrial plants ha 1.250,00

Forage ha 1.250,00

Sugar beat ha 3.000,00

Tobacco kg 5,00

Vegetables ha 1.250,00

Vegetables for industrial processing ha 3.000,00

Medicinal plants ha 1.250,00

Seed crops of:

Wheat, triticale, rye, barley, oat ha 2.850,00

Corn ha 6.500,00

Soy and oil rape ha 4.500,00

Sunflowers, sugar beat and tobacco ha 10.000,00

Potatoes ha 13.000,00

Forage, vegetables and other plants ha 3.000,00

Planting material, permanent crops and olive oil

Fruit seedlings - certified pieces 4,00

Fruit seedlings - standard pieces 2,00

Vine seedlings - certified pieces 4,00

Vine seedlings - standard pieces 2,00

Olive tree seedlings pieces 5,00

Balms of vine grafts (new plantation) ha 35.000,00

Balms of fruit grafts (new plantation) ha 25.000,00

Vineyards (annual payments) ha 2.500,00 3.400,00

Vineyards (new plantation) ha 33.600,00 45.400,00

Fruit-orchards I and II group (annual payments) ha 2.500,00


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Strawberries and hop (annual payments) ha 1.250,00

Fruit-orchards I group and hop (new plantation) ha 24.000,00 32.400,00

Fruit-orchards II group (new plantation) ha 16.800,00 22.700,00

Processing of olives kg 1,00

Olive trees (new plantation) ha 20.000,00 27.000,00

Olive oil extra virgin litre 10,00

Lavender and pyrethrum (annual payments) ha 1.250,00

Lavender (new plantation) ha 14.000,00

Livestock farming and livestock farming products

Milk (cow) litre 0,65 1,05

Milk (sheep and goat) litre 1,20 1,56

Domestic fattened beef head 1.800,00

Fattened beef from imported calves head 800,00

Fattening calves for white meat head 400,00

Domestic fattened pigs head 100,00

Fattened pigs from imported piglets head 50,00

Fattened rabbits head 6,00

Dairy cows head 500,00 675,00

Breedable cows under dairy production control head 1.000,00

Dairy cows with first calf head 1.500,00

Cows in the cow-calf system head 3.000,00

Suckling cows head 1.000,00

Bulls from the performance test (one time basis) head 3.900,00

Breeding sheep and goats head 100,00

Breedable breeding sheep, rams, goats and male goats head 300,00

Lambed one-year sheep and kidded goats head 400,00

Rams and male goats from the performance test (one time basis) head 800,00

Breeding sows head 200,00

Breedable breeding sows (mother head) head 400,00

Sows with first piglet head 600,00

Boars (one time basis) head 800,00

Boars from the performance test (one time basis) head 1.000,00

Breeding mares head 1.000,00

Breedable breeding mares and studs (mother head) head 1.500,00

Mother breeding mares with first foal head 1.750,00

Bee-hives hive 50,00

Honey kg 2,20

Queen-bees pieces 15,00


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Breeding fowl (grandfather and parent flocks of hens and turkeys) head 9,00

Females of breedable rabbits head 14,00

Bull semen:

Elite dose 10,00

Positively tested bulls dose 7,00

Sperm of breeding hogs dose 5,00

Meadows and pastures head/ha 100,00

Fishery

Breeding of autochthon white salt-water fish species kg 5,40 7,30

Cultivation of clams-mussels kg 0,80

Cultivation of clams -oysters pieces 0,50

Fish offspring pieces 0,25

Breeding of fresh-water fish of the I group kg 3,50

Breeding of fresh-water fish of the II group kg 4,80

Catch of small blue fish kg 0,35

Fish products of I group kg 4,70 6,20

Fish products of II group kg 2,30 3,10

Fish products of III group kg 1,80 2,50

Fish products of IV group kg 1,20 1,80

Source: MAFWM, 2007


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12.6. ANNEX Table 12-6: Minimum supported quantities

Production subsidy scheme Unit Min. supported quantity

Cereals, industrial crops and vegetables

Bread cereals and beer barley ha 3,00

Soy ha 3,00

Other cereals ha 3,00

Oil plants ha 3,00

Oil rape for bio diesel ha 3,00

Other industrial plants ha 3,00

Forage ha 3,00

Sugar beat ha 3,00

Tobacco kg All quantities delivered

Vegetables ha 0,50

Vegetables for industrial processing ha 0,50

Mercantile potato ha 2,00

Medical plants (for each culture) ha 1,00

Seed crops ha All certified crops

Planting material, permanent crops and olive oil

Planting material pieces All certified material

Balms of vine and fruit beds (new plantation) ha 0,10

Balms of vine and fruit grafts (new plantation) ha 0,10

Vineyards (annual payments) ha 0,25

Vineyards (new plantation) ha 0,25

Fruit-orchards (annual payments) ha 0,50

Strawberries and hop (annual payments) ha 0,50

Fruit-orchards I group and hop (new plantation) ha 0,50

Fruit-orchards II group (new plantation) ha 0,50

Olives tree 50,00

Processing of olives kg 800,00

Olives (new plantation) ha 0,50

Olive oil litre 100,00

Lavender and pyrethrum (annual payments) ha 0,25

Lavender (new plantation) ha 0,25


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Livestock farming and livestock farming products

Milk (cow) litre 6.000

Milk (sheep and goat) litre 500

Fattened beef head 20

Fattened calves for white meat head 10

Fattened pigs head 75

Fattened rabbits pieces 500

Dairy cows head 4

Cows with first calf head 1

Cows in the cow-calf system head 25

Suckling cows head 1

Breeding sheep, rams, goats and male goats head 20

Breeding sows head 10

Breeding mares and studs head 3

Mares with first foal head 1

Parent breeding fowl pieces 1.000

Bee-hives hive 30

Honey kg 450

Queen-bees pieces 100

Females of breedable rabbits pieces 25

Organic production

Organic production (total for all cultures) ha 0,5

Fishery

Breeding of autochthon white salt-water fish species kg 3.000

Cultivation of clams-mussels kg 3.000

Cultivation of clams -oysters pieces 3.000

Fish offspring pieces 100.000

Breeding of fresh-water fish of the I group kg 3.000

Breeding of fresh-water fish of the II group kg 2.000

Catch of small blue fish kg 10.000

Fish products of I group kg 250

Fish products of II group kg 1.000

Fish products of III group kg 2.000

Fish products of IV group kg 3.000

RURAL DEVELOPMENT SCHEME

Programme of preservation of autochthon and protected breeds


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Cattle head 1

Horses head 1

Pigs head 1

Sheep head 1

Goat head 1

Donkeys head 1

Hen “Hrvatica” head 5

Turkey from Zagorje (Zagorski puran) head 5

Source: MAFWM, 2007


version of 14. 12. 2007;


12.7. ANNEX Table 12-7: Direct payments for the period 2001 - 2005 (HRK)

Sector 2001 2002 2003 2004 200542

Plant production 971.094.375 986.248.283 1.075.446.857 911.498.475 1.006.445.738

Bread cereals (wheat, rye, triticale)

309.487.894 251.814.731 229.868.281 180.714.608 175.493.200

Beer barley 13.514.565 14.355.139 16.384.733 10.393.884 6.656.499

Corn 249.053.017 261.626.516 267.387.983 208.066.956 168.572.574

Other cereals intended as feed (oat, barley)

20.725.088 29.047.626 47.044.279 40.693.569 29.538.566

Soy 72.531.592 80.069.840 87.502.567 57.291.479 70.136.105

Oil plants (sunflower, oil rape)

85.619.832 94.150.034 103.603.391 93.039.678 157.672.586

Other industrial plants

20.982

Forage 39.982.303 33.178.416 53.882.973

Sugar beat 71.377.879 68.206.825 91.662.314 79.733.805 72.693.372

Vegetables (for

12.212.958 13.237.416.58 13.478.334

42 The 2005 column includes the obligations arisen on the basis of the production year level (the largest part was paid in 2006)


version of 14. 12. 2007;


industrial processing and other)

Tobacco 54.072.720 68.554.200 60.666.865 60.749.543 54.567.612

Medicinal plants 3.069.047 3.328.513 4.011.787

Agricultural seeds I 32.216.054 34.115.803 44.273.983 30.596.257 63.654.721

Agricultural seeds II 1.733.216 3.179.560 3.729.204 2.694.981

Nursery- annually 7.316

Nursery - new plantations

397.495

Planting material 1.451.941 2.541.761 2.979.458 5.285.174 6.253.823

Vineyards - annually 10.267.382 10.315.753 13.652.275 29.621.731 25.245.820

Vineyards - new plantations

11.601.454 10.304.512 11.927.212 19.280.194 33.319.610

Orchards I, II group and hop - annually

5.082.135 12.948.834 11.092.668

Orchards I, II group and hop - new plantations

7.993.710 8.594.851 11.971.787 8.252.977 21.648.057

Strawberry - annually 89.341

Olives43 28.921.891 48.420.000 22.142.098 22.093.542 37.743.164

Lavender - annually

526.141 951.131 238.186 243.683 230.863

43 Includes the processing of olives, extra virgin oil and new plantations


version of 14. 12. 2007;


/oil

Lavender - cultivation 65.800 53.235 38.270

Livestock farming 544.851.623 626.025.350 905.643.830 785.440.167 890.112.232

Meadows and pastures

2.032.503 1.762.521 1.363.315

Milk44 363.414.463 415.048.531 457.236.094 430.797.331 498.873.887

Fattening beef and calves - domestic

18.294.407 17.675.500 10.981.641 41.406.883 18.085.812

Fattening beef and calves - imported

32.625.174

Fattening pigs - domestic

54.494.978 61.714.187 75.271.550 55.617.240 32.214.706

Fattening pigs - imported

7.348.447

Fattening rabbits 1.174.872

Dairy cows 3.550.400 4.950.300 139.346.480 96.937.124 143.956.411

Cows in the cow-calf system

6.780.820 10.315.300 4.445.400 5.888.764 4.942.742

Female calves 32.059.920 34.824.200 54.076.500 40.712.867 41.240.834

Bulls (test) 140.800 288.200 222.300 222.300 152.880

44 Includes milk, sheep and goat milk


version of 14. 12. 2007;


Breeding sheep 32.829.615 41.403.700 98.485.280 65.438.699 61.108.745

Breeding goat 7.042.615 6.942.832

Breeding horses 791.350 898.450 785.700 992.452 1.206.300

Female foals 1.010.100 1.080.400 736.500 462.950 973.829

Breeding female pigs

5.446.480 6.395.760 26.787.900 15.240.800 15.249.579

Boars (test) 668.000 526.780 457.700

Bee-hives / honey, queen-bees

10.050.128 14.328.759 15.131.050 16.072.527 12.850.167

Chicks of game birds 1.341.230 1.438.302 1.500.000

Other measures in livestock farming

14.646.932 15.663.761 17.936.931 6.318.315 9.343.999

Fishery 65.615.128 65.745.181 68.381.352 66.837.000 61.138.778

TOTAL 1.581.561.126 1.678.018.815 2.049.472.039 1.763.775.642 1.957.696.748

Source: MAFWM, 2007


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12.8. ANNEX Table 12-8: Implementing institutions for production subsidies scheme and their tasks

Type of benefit

Collection and processing of requests

Procedure control

Inspection of agricultural farms Payments

Plant production – annual payments per surface

Local state administration office

Ministry of Agriculture, Fisheries and Rural Development

County agricultural inspectorate and the agricultural inspectorate of the Ministry of Agriculture, Fisheries and Rural Development

Ministry of Agriculture, Fisheries and Rural Development - Directorate for Market and Structural Support to Agriculture

Plant production – new permanent plantations

Ministry of Agriculture, Fisheries and Rural Development – Directorate for Market and Structural Support to Agriculture




Plant production – payments per product (tobacco, oil, seeds)

Ministry of Agriculture, Fisheries and Rural Development – Directorate for Market and Structural Support to Agriculture




Livestock Farming

Croatian Livestock Centre




Fishery

Ministry of Agriculture, Fisheries and Rural Development – Fishery Administration




Source: MAFWM, 2006


version of 14. 12. 2007;


12.9. ANNEX Table 12-9: Average number of pigs per holding (2003)

Average number of pigs per holding

County Family holdings Legal entities TOTAL


Zagreb County 7 2.372 10

Vukovar–Srijem 11 512 13


Bjelovar–-Bilogora 11 71 12

Brod–-Posavina 10 131 10


Varaždin 6 1.086 7

Virovitica - Podravina 9 1.309 11

Međimurje 8 349 9



Karlovac 4 5 4



Istria 3 9 3


Lika - Senj 3 464 3

Zadar 3 195 3

Dubrovnik - Neretva 3 0 3

Primorje - Gorski Kotar 3 4 3

CROATIA TOTAL 8 464 9

Source: CBS, Agricultural census 2003


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12.10. ANNEX Assessment of economic viability of beneficiaries

The beneficiary shall demonstrate in the business plan the economic viability of the holding/enterprise and of the project at the end of the investment. The criteria specified below shall be used to calculate the economic viability:

Table 12-10: Methodology of assessment of economic viability for beneficiary

SIMPLIFIED FORM OF BUSINESS PLAN (FOR INVESTMENTS UP TO 27.000 EUR)

Profitability = net profit must be positive

COMPLETE BUSINESS PLAN (FOR INVESTMENTS EXCEEDING 27.000 EUR)

Family farms and crafts Legal entities

Debt/Equity ratio= (short term obligations + long term obligations) / equity and inventory

Current Liquidity Ratio = current assets / short term obligations

Revenue/Expenditure Ratio = revenue / expenditure

Debt/Equity Ratio = (short term obligations + long term obligations) / equity and inventory

Source: MAFWM - DSDRA 2007

Table 12-11: Methodology of assessment of economic viability for projects

SIMPLIFIED FORM OF BUSINESS PLAN (FOR INVESTMENTS UP TO 27.000 EUR)

Liquidity= cumulative of financial flow must be positive

COMPLETE BUSINESS PLAN (FOR INVESTMENTS EXCEEDING 27.000 EUR)

Internal Rate on Return

Net Present Value for Investment

Return Time for Investment Source: MAFWM – DSDRA, 2007

If the beneficiary is the beginner, only economic viability of the project shall be demonstrated.


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12.11. ANNEX Table 12-12: National minimum standards

Name and number

Ordinance on environmental impact assessment (OG 59/00 ,136/04 of and 85/06)

Ordinance on environmental labels (OG 64/96)

Ordinance on the Environmental Emission Register (OG 36/96)

List of legal persons with granted approval for performing professional environmental activities (OG 71/05)

Ordinance on the method and terms for calculation and payment of the special environmental charge for motor vehicles (OG 20/04)

Ordinance on the method and terms for calculation and payment of charges for emission into the environment of sulphur oxides, in the form of sulphur dioxide, and nitric oxides, in the form of nitric dioxide (OG 95/04)

Ordinance on the method and terms for calculation and payment of charges for burdening the environment with waste (OG 95/04)

Ordinance on the form, content and method of keeping the register of parties subject to payment of the charge for emissions into the environment of sulphur oxides, in the form of sulphur dioxide (OG 120/04)

Ordinance on the form, content and method of keeping the register of parties subject to payment of the charge for emissions into the environment of nitric oxides, in the form of nitric dioxide (OG 120/04)

Ordinance on the form, content and method of keeping the register of parties subject to payment of the charge for burdening the environment with waste (OG 120/04)

Ordinance on waste types (OG 27/96)

Ordinance about highest accept levels noise in environment where people live and stay (OG 145/04)

Ordinance on the monitoring of zoonosis and zoonotic agents (OG 52/05)

Ordinance of veterinary and health conditions to whom objects registered for treatment, processing and storing products of animal origin on family holdings, must comply with (OG 149/03, 9/07

Ordinance on veterinary-sanitary checks and controls of ostriches (OG 150/02)

Ordinance on veterinary-sanitary conditions for establishments that produce, product and place fish and crabs on the market (OG 148/99)

Ordinance on conditions for establishments for production of animal feed and storage facilities (OG 159/98)

Ordinance on fresh, raw milk quality (OG 102/2000)

Ordinance on requirements in slaughterhouses, establishments for treatment, processing and storing of animal products (OG 52/93)

Ordinance on requirements for railway stations, river ports and airports intended for loading, transhipment and unloading of consignments of animals (OG 52/93)

Ordinance on obligatory identification of domestic animals, their registration in the central register and record keeping (OG 110/04)

Ordinance on monitoring measures for specific substances and their residues in live animals and animal products (OG 118/04)

Ordinance on keeping records on animals used for experimental purposes and types of experiments (OG 176/04)

Ordinance laying down veterinary sanitary condition for production, harvesting, purification and placing on the market live bivalve molluscs (OG 117/04)

Ordinance on the way of loading transport und unloading of consignments of animals, products and waste of animal origin and hygienic and technical conditions of vehicles and consignments in internal and international trade (OG 13/05 )

Ordinance on the way of handling animal carcasses and waste of animal origin and destruction thereof (OG 24/03)

Ordinance laying down veterinary sanitary checks and controls of animals before slaughtering and products of animal


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origin (OG 53/91,and 111/00 )

Ordinance on keeping record in Register of approved establishments (OG 88/03)

Ordinance concerning the implementation of obligatory measures in approved establishments in order to reduce microbiological and other contamination of meat, meat products and other products of animal origin intended for human consumption (OG 74/97, 5/07 and14/07)

Ordinance on Animal Food Quality (OG 26/98, 120/98,55/99 and 76/03)

Ordinance on conditions for production, putting in circulation and use medicated feeding stuffs (OG 101/05)

Ordinance laying down the conditions and arrangements for approving establishments and intermediaries operating in the animal feed sector (OG 96/05)

Ordinance of General Food Declarations and Food Labelling (OG 114/04, 128/04 and 34/05)

Ordinance on basic technical-technological requirements in production of wine and fruit wines including conditions for selling wine and other products from grape and wine and fruit wines (OG 102/04, 91/05 and 71/06)

Ordinance on fruit, vegetable and mushroom quality (OG 53/91 and 114/04)

Ordinance on the quality of the fresh raw milk (OG 102/00 and 111/00)

Ordinance on conditions with which farms must comply and conditions for the protection of farm animals (OG136/05)

Ordinance of quality of beef carcasses and halves on the slaughter line (OG 20/04, 10/05 and 40/07)

Ordinance on conditions to be complied by establishments for slaughtering of animals, treatment, processing and storing of products of animal origin (OG 20/92, 75/93 and 9/07)

Ordinance on measures for monitoring particular compounds and their residues in live animals and in products of animal origin (OG 118/04)

Ordinance on detecting residues of particular compounds in living animals and in products of animal origin OG 106/99

Ordinance for animals shipments and shipments of products of animal origin which fall under veterinary and health control and do not need resolution issued from Directorate of Veterinary (OG 130/04)

Ordinance on procedure with animal carcasses and waste of animal origin and their destruction (OG 24/03)

Ordinance on Catering Services on Agricultural Holding (OG 48/95, 47/97, 25/99, 29/00, 196/03)

Agriculture Act (OG 66/01 and 83/02 )

Agricultural Land Act (OG 66/01 87/02 48/05 and 90/05)

Food Act (OG 46/07)

Act on Special Conditions for Marketing Flour (OG 48/04, 130/04, 140/05, 143/05)

Act on Geographical Indications and Designations of Origin of Products and Services (OG 173/03, 186/03 and 76/07)

General Product Safety Act (OG 158/03 and 107/07)

Act on Fertilisers and Soil Improvers (OG 163/03 and 40/07)

Plant Protection Act (OG 10/94, 19/94 and 117/03)

Act on Plant Health (OG 75/05)

Sea Fishery Act (OG 46/97, 48/05)

Fresh-water Fishery Act (OG 106/01, 174/04, 10/05 and 49/05)

Livestock Act (OG 70/97, 36/98, 151/03 and 132/06)

Forest Act (OG 52/90, 9/91, 76/93, 160/04, 140/05 and 82/06)

Act on Organic Production of Agricultural Products and Foodstuffs (OG 12/01, 14/01 and 79/07)

Veterinary Act (OG 41/07)

Act on Veterinary Medicinal Products and Veterinary Medical Devices (OG 79/98)

Animal Welfare Act (OG 135/06)


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Wine Act (OG 96/03)

Environmental Protection Act (OG 110/07)

Water Act (OG 107/95 and 150/05)

Air Protection Act (OG 48/95 and 178/04)

Waste Act (OG 151/03, 178/04, 153/05 and 111/06)

Nature Protection Act (OG 30/94, 72/94 and 70/05)

Fire Protection Act (OG 58/93, 33/05 and 107/07)

Physical Planning and Construction Act (OG 76/07)

Act on Regulation of Energy-Related Activities (OG 177/04 and 23/07)

Public Roads Act (OG 180/04 and 138/2006)

Energy Act (OG 68/01 117/04 and 76/07)

Act on Oil and Oil Products Market (OG 68/01 and 57/06)

Act on Gas Market (OG 68/01 87/05 and 40/07)

Physical Planning Act (OG 30/94, 68/98, 35/99, 61/00, 32/02 100/04 and 76/07)

Public Procurement Act (OG 110/07)

Act on Promotion of Small Business (OG 29/02 and 63/07)

Catering Activity Act (OG 49/03 and 138/06)

Act on Providing Services in Tourism (OG 68/07)


An updated list of national minimum standards is kept by IPARD Agency.


version of 14. 12. 2007;


12.12. ANNEX Table 12-13: Structure of family farms with vineyards by size and geographical distribution, 2003

Area (ha) County 0 >

0,1 0,1 >0,5 0,5 > 1 1 > 2 2> 3 3 > 5 5 > 10 10 > 20 ≥ 20

Total No. / County

Zagreb County 116 2.080 1.844 2.969 2.171 2.913 2.901 965 155 16.114

Krapina - Zagorje 135 3.599 4.185 6.067 3.176 2.241 797 125 19 20.344

Sisak - Moslavina 43 684 422 585 425 552 547 200 52 3.510

Karlovac 56 465 477 824 593 842 795 238 41 4.331

Varaždin 338 4.589 3.856 4.809 2.508 2.334 1.287 215 37 19.973

Koprivnica - Križevci 119 1.860 1.155 1.484 1.103 2.164 2.921 1.133 189 12.128

Bjelovar - Bilogora 34 616 371 498 398 780 1.238 635 175 4.745

Primorje - Gorski Kotar 159 754 246 295 118 109 117 54 22 1.874

Lika - Senj 2 56 39 44 17 18 21 9 7 213

Virovitica - Podravina 62 1.046 588 709 423 615 769 379 142 4.733

Požega - Slavonia 24 266 218 284 191 261 265 117 25 1.651

Brod - Posavina 42 710 339 442 337 372 356 116 32 2.746

Zadar 67 2.317 1.690 1.740 858 694 446 102 41 7.955

Osijek - Baranja 83 850 401 417 257 323 442 202 124 3.099

Šibenik - Knin 127 2.650 1.853 1.791 762 596 307 61 10 8.157

Vukovar - Srijem 69 298 138 165 80 96 174 98 68 1.186

Split - Dalmatia 614 6.540 3.822 3.107 1.217 961 634 188 72 17.155

Istria 80 1.287 987 1.542 1.169 1.428 1.726 886 204 9.309

Dubrovnik - Neretva 61 1.287 883 1.094 686 613 455 224 90 5.393


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Međimurje 85 1.224 973 1.017 537 467 309 92 12 4.716

City of Zagreb 108 1.905 852 764 379 362 210 52 6 4.638

Total: 2.424 35.083 25.339 30.647 17.405 18.741 16.717 6.091 1.523 153.970



version of 14. 12. 2007;


12.13. ANNEX Table 12-14: Structure of legal entities with vineyards by size and geographical distribution, 2003

Area (ha) County 0 >

1 1 > 2 2 > 3 3 > 5 5 > 10 10 > 20 20 >

30 30 > 50

50 > 100 ≥ 100 Total No. /

County

Zagreb County 5 3 5 1 7 1 1 3 26

Krapina - Zagorje 1 1 1 3


Varaždin 1 1 1 3

Koprivnica-Križevci 1 1

Bjelovar - Bilogora 1 1 1 3


Lika - Senj

Virovitica - Podravina 1 1 2 4

Požega - Slavonia 4 1 2 3 3 1 2 2 18


Zadar 1 1 1 1 4

Osijek - Baranja 1 2 1 6 10


Vukovar - Srijem 1 1 2 1 1 5 11

Split - Dalmatia 3 1 3 1 2 10

Istria 2 1 3 4 4 3 2 19

Dubrovnik - Neretva 1 1 1 1 2 2 8

Međimurje 1 1 1 4 1 1 9

City of Zagreb 1 1

Total 17 8 11 15 28 16 3 10 10 28 146


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12.14. ANNEX Table 12-15: List of traditional crafts Name of traditional craft

Cooper

Copper – smith

Brushmaker

Chimney – sweeper

Umbrella – maker

Milliner

Hatmaker

Bookbinder

Basket – maker, hay and brushwood items construction

Blacksmith

Roofer (tiller)

Furrier

Potter

Miller

Stove – maker (construction and composing of ceramic stoves)

Sign – writer

Shoe – maker (hand made shoes and shoe repairing)

Harness – maker

Restoration and hand made furniture

Glazier

Candle – maker, producer of mead and gingerbread

Carpenter

Lathe operator

Weave on the loom

Watchmaker

Rope – maker

Wig – maker

Production of souvenirs on a traditional way


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12.15. ANNEX Table 12-16: List of olive varieties

Name Desription

Oblica

is the most important and also is the most abundant olive variety and it is grown where no other culture could do. This variety is autochthonic of the Adriatic littoral. Provides oil of the very good quality and it turns out to be good for the preservation

Drobnica and Sitnica are more susceptible to drought and low temperatures than Oblica. They give oil of better quality than Oblica and are more fruitful compared with Oblica

Buža variety is of excellent quality intended for the production of oil and also as table olive, gives oil of outstanding quality

Lastovka

has regular yield, which is at the older trees about 90 kg and reproduction of oil is about 20 – 22%. Olive fruit is used exclusively for the oil production and its very good quality. Its drought endurance is very good.

Leccino

is Italian variety, with share of 80% in intensive olive growth in Istria. This variety is auto sterile therefore it is also necessary for the variety Pendolino as a pollinator to be planted. It gives satisfactory yields, quantity of oil in fruit reaches 20%; oil is of high quality. It can also be used as table olive

Source: MAFWM, 2006


version of 14. 12. 2007;


12.16. ANNEX Table 12-17: Structure of cereal producers by farm size and geographical distribution 2003

0>2 ha 2>5 ha 5>10 ha 10>20 ha >20 ha TOTAL

Zagreb County 15.162 6.842 2.783 745 188 25.720

City of Zagreb 3.576 1.072 243 54 15 4.960

Krapina - Zagorje 19.054 2.928 340 65 14 22.401

Varaždin 18.823 4.002 919 163 32 23.939

Bjelovar - Bilogora 6.435 4.895 3.449 1.512 439 16.730

Virovitica - Podravina 6.626 2.814 1.757 844 453 12.494

Požega - Slavonia 4.026 2.207 1.114 431 150 7.928

Brod - Posavina 6.620 3.274 1.501 572 289 12.256

Osijek - Baranja 12.319 4.603 2.848 1.249 744 21.763

Vukovar - Srijem 6.209 2.714 2.134 1.254 921 13.232

Sisak - Moslavina 10.161 4.365 1.882 631 231 17.270

Karlovac 8.407 3.190 1.202 290 56 13.145

Lika – Senj 1.786 1.830 834 196 31 4.677


Istria 4.292 1.588 544 182 53 6.659

Zadar 2.145 842 190 40 3 3.220

Šibenik - Knin 976 308 54 15 4 1.357

Split - Dalmatia 5.527 509 76 15 4 6.131

Međimurje 9.347 2.562 851 276 93 13.129

Dubrovnik - Neretva 80 15 3 1 99

Koprivnica - Križevci 6.813 5.244 3.376 1.135 237 16.805

Total 148.813 55.852 26.136 9.680 3.958 244.439

Source: CBS, 2003


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12.17. ANNEX Table 12-18: Basic infrastructure endowment at county level (2001)

COUNTY Population/ km roads

Density of road network in km/km2

Total water supply per capita

(m3/capita)

Waste water from public sewage system

(m3/inhab.)

Number of inhabit. per one telephone connection

Zagreb County 160,4 0,6 59,5 113,3 3,9

Krapina - Zagorje 151,2 0,8 32,9 10,7 3,1

Sisak - Moslavina 90,7 0,5 43,7 34,8 3,2

Karlovac 86,6 0,4 50,5 34,0 2,9

Varaždin 166,0 0,9 59,3 54,8 3,1

Koprivnica - Križevci

112,9 0,6 38,6 52,2 3,1

Bjelovar - Bilogora 90,7 0,5 25,4 26,4 3,1

Primorje - Gorski Kotar 199,1 0,4 110,3 75,0 2,1

Lika - Senj 28,3 0,3 93,8 18,3 2,4

Virovitica - Podravina 102,4 0,4 34,7 26,0 3,2

Požega - Slavonia 116,6 0,4 37,3 30,0 3,3

Brod - Posavina 192,0 0,4 29,1 23,2 3,2

Zadar 95,9 0,5 74,2 34,5 2,4

Osijek - Baranja 200,0 0,4 43,6 37,3 3,0

Šibenik - Knin 92,7 0,4 80,2 38,1 2,5

Vukovar - Srijem 195,7 0,4 39,3 18,4 3,5

Split - Dalmatia 185,2 0,5 93,8 63,7 2,6

Istria 110,8 0,7 121,1 52,8 2,2

Dubrovnik - Neretva 124,9 0,5 89,7 32,9 2,5

Međimurje 212,9 0,7 39,9 16,0 3,3

City of Zagreb 1.039,2 1,2 105,5 112,5 2,1

CROATIA 155,8 0,5 71,7 43,1 2,7

Source: CBS population Census 2001


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12.18. ANNEX Table 12-19: Housing quality at county level (2001) should be moved to the annex)

Household units

COUNTY total no. %

total

Electricity

Water supply system

Sewage disposal system

Central heating

Kitchen, toilet and bathroom

Zagreb County 91.376 6,43 99,50 92,17 91,36 49,42 85,53

Krapina - Zagorje 42.402 2,98 99,47 90,05 83,34 38,04 76,04

Sisak - Moslavina 60.541 4,26 98,44 87,29 89,71 25,71 80,40

Karlovac 47.839 3,37 98,37 91,79 91,38 35,50 80,88

Varaždin 53.832 3,79 99,40 93,96 88,95 50,30 80,97

Koprivnica - Križevci 38.215 2,69 99,19 87,50 83,68 27,28 71,08

Bjelovar - Bilogora 43.091 3,03 99,10 83,55 81,41 23,62 68,46

Primorje - Gorski Kotar 108.662 7,64 99,89 99,03 98,85 27,34 94,28

Lika - Senj 19.075 1,34 98,33 85,96 88,92 12,81 75,16

Virovitica - Podravina 30.372 2,14 99,09 83,77 80,81 16,50 69,94

Požega - Slavonia 25.975 1,83 99,36 87,60 85,07 30,44 77,43

Brod - Posavina 52.178 3,67 98,98 85,52 85,11 29,52 77,75

Zadar 50.622 3,56 99,24 95,83 96,52 12,82 91,42

Osijek - Baranja 107.987 7,60 99,49 89,63 88,85 32,09 82,08

Šibenik - Knin 38.467 2,71 99,33 92,82 91,70 10,54 85,35

Vukovar - Srijem 59.147 4,16 99,45 92,78 89,85 24,72 83,57

Split - Dalmatia 138.491 9,74 99,83 96,07 95,76 13,26 91,51

Istria 70.562 4,96 99,90 99,07 97,67 25,87 93,58

Dubrovnik - Neretva 37.346 2,63 99,78 97,99 97,88 11,86 93,67

Međimurje 34.243 2,41 99,19 92,23 90,91 56,77 84,41

City of Zagreb 271.183 19,08 99,89 98,98 99,17 70,84 95,66

CROATIA 1.421.623 100 99,48 93,66 92,75 36,18 86,52

Source: CBS population Census 2001


version of 14. 12. 2007;


12.19. ANNEX Table 12-20: List of cities, municipalities and settlements according to tourist class

City Municipality Settlement Class

Zagreb county

Dugo Selo D

Ivanić Grad D

Jastrebarsko D

Jastrebarsko C

Samobor D

Samobor A

Sveti Ivan Zelina D

Velika Gorica D

Velika Gorica B

Vrbovec D

Zaprešić D

Zaprešić C

Kloštar Ivanić D

Kloštar Ivanić C

Krašić D

Krašić C

Križ D

Križ C

Pisarovina D

Rugvica D

Sveta Nedjelja D

Krapina – Zagorje

Donja Stubica D

Donja Stubica B

Klanjec D

Klanjec B

Krapina D

Krapina B

Oroslavje D

Pregrada D

Zabok D

Zlatar D

Zlatar C


version of 14. 12. 2007;


Desinić D

Gornja Stubica D

Gornja Stubica C

Hum na Sutli D

Krapinske Toplice D

Krapinske Toplice A

Kumrovec D

Kumrovec B

Lobor D

Mače D

Marija Bistrica D

Marija Bistrica A

Mihovljan D

Stubičke Toplice D

Stubičke Toplice A

Tuhelj D

Tuheljske Toplice A

Zagorska Sela D

Miljana B

Sisak - Moslavina

Glina D

Hrvatska Kostajnica D

Kutina D

Kutina C

Novska D

Novska C

Petrinja D

Petrinja C

Sisak D

Sisak B

Dvor D

Gvozd D

Hrvatska Dubica D

Jasenovac D

Jasenovac C

Lekenik D

Lipovljani D

Martinska Ves D

Popovača D


version of 14. 12. 2007;


Sunja D

Topusko D

Topusko B

Karlovac

Duga Resa D

Karlovac D

Karlovac C

Ogulin D

Ozalj D

Slunj D

Barilovići D

Bosiljevo D

Cetingrad D

Draganić D

Generalski Stol D

Josipdol D

Krnjak D

Lasinja D

Netretić D

Plaški D

Rakovica C

Saborsko D

Vojnić D

Žakanje D

Varaždin

Ivanec D

Lepoglava D

Ludbreg D

Varaždin D

Varaždin B

Varaždinske Toplice D

Varaždinske toplice A

Bednja D

Trakošćan A

Gornji Kneginec D

Maruševec D

Vinica D

Koprivnica - Križevci

Đurđevac D


version of 14. 12. 2007;


Đurđevac B

Koprivnica C

Križevci D

Križevci C

Drnje D

Ferdinandovac D

Ferdinandovac C

Gola D

Hlebine C

Kloštar Podravski D

Legrad C

Molve D

Rasinja D

Sveti Petar Orehovec D

Bjelovar - Bilogora

Bjelovar D

Bjelovar C

Čazma D

Daruvar D

Daruvar B

Garešnica D

Grubišno Polje D

Berek D

Kapela D

Sirač D

Veliki Grđevac D

Veliko Trojstvo D

Primorje – Gorski Kotar

Bakar D

Bakar C

Cres D

Beli B

Cres A

Martinšćica A

Miholašćica C

Stivan C

Valun A

Crikvenica D

Crikvenica A


version of 14. 12. 2007;


Dramalj A

Jadranovo A

Selce A

Čabar D

Delnice D

Delnice C

Kastav D

Kraljevica D

Bakarac C

Kraljevica B

Krk D

Kornić C

Krk A

Mali Lošinj D

Ćunski B

Ilovik C

Mali Lošinj A

Nerezine A

Osor A

Punta Križa A

Susak C

Unije C

Veli Lošinj A

Novi Vinodolski D

Klenovica B

Novi Vinodolski A

Povile B

Opatija D

Ičići A

Ika B

Opatija A

Vela Učka A

Rab A

Rijeka B

Vrbovsko D

Baška D

Baška A

Jurandvor C

Brod Moravice D


version of 14. 12. 2007;


Čavle D

Dobrinj D

Klimno B

Šilo B

Fužine D

Fužine C

Jelenje D

Kostrena D

Kostrena Sveta Lucija C

Lokve D

Lokve C

Lovran D

Lovran A

Medveja A

Malinska-

Dubašnica D

Malinska A

Porat B

Matulji D

Matulji B

Mošćenička Draga D

Mošćenička Draga A

Mrkopalj D

Omišalj A

Punat B

Punat A

Ravna Gora D

Skrad D

Vinodolska općina D

Vrbnik D

Vrbnik B

Lika - Senj

Gospić D

Novalja D

Lun C

Metajna C

Novalja A

Stara Novalja C

Otočac D


version of 14. 12. 2007;


Ličko Lešće C

Senj D

Jablanac C

Lukovo C

Senj B

Sveti Juraj C

Brinje D

Donji Lapac D

Karlobag D

Baške Oštarije C

Karlobag B

Perušić D

Plitvička Jezera D

Jezerce B

Korenica C

Plitvička Jezera A

Udbina D

Vrhovine D

Virovitica - Podravina

Orahovica D

Orahovica C

Slatina D

Virovitica D

Gradina D

Pitomača D

Suhopolje D

Špišić Bukovica D

Voćin D

Požega – Slavonia

Lipik D

Lipik B

Pakrac D

Pleternica D

Požega D

Požega C

Brestovac D

Novo Zvečevo B

Čaglin D

Jakšić D


version of 14. 12. 2007;


Kutjevo D

Velika D

Velika C

Brod – Posavina

Nova Gradiška D

Nova Gradiška C

Slavonski Brod D

Slavonski Brod C

Cernik D

Cernik C

Oprisavci D

Stara Gradiška D

Stara Gradiška C

Staro Petrovo Selo D

Staro Petrovo Selo C

Zadar

Benkovac D

Benkovac C

Biograd na Moru D

Biograd na Moru A

Nin D

Grbe C

Nin A

Vrsi C

Zaton A

Obrovac C

Pag D

Kolan C

Pag A

Vlašići C

Zadar D

Ist C

Kožino C

Olib B

Petrčane A

Silba A

Veli Iž C

Zadar A

Bibinje D


version of 14. 12. 2007;


Gračac D

Jasenice D

Jasenice C

Kali C

Kukljica A

Novigrad D

Novigrad C

Pakoštane D

Pakoštane A

Pašman D

Pašman B

Ždrelac C

Polača D

Posedarje D

Posedarje C

Povljana C

Preko C

Preko B

Privlaka C

Ražanac D

Sali D

Božava A

Sali B

Starigrad C

Seline B

Starigrad A

Tribanj B

Sukošan D

Sukošan A

Sveti Filip i Jakov D

Sveti Filip i Jakov A

Turanj B

Tkon B

Vir D

Vir C

Osijek - Baranja

Beli Manastir D

Belišće D

Donji Miholjac D


version of 14. 12. 2007;


Đakovo B

Našice D

Našice C

Osijek D

Osijek B

Valpovo D

Bilje D

Bizovac D

Bizovac B

Draž D

Erdut D

Levanjska Varoš D

Breznica Đakovačka C

Šibenik - Knin

Drniš D

Knin D

Knin C

Skradin D

Skradin B

Šibenik D

Grebaštica C

Kaprije C

Krapanj C

Šibenik B

Zlarin B

Žirje C

Vodice D

Prvić Luka B

Srima B

Tribunj B

Vodice A

Pirovac B

Pirovac A

Primošten D

Primošten A

Rogoznica D

Rogoznica B

Tisno B

Betina A


version of 14. 12. 2007;


Jezera A

Murter A

Tisno A

Vukovar - Srijem

Ilok D

Ilok B

Vinkovci B

Vukovar D

Županja C

Babina Greda D

Borovo D

Bošnjaci D

Gunja D

Nijemci D

Otok D

Vrbanja C

Split - Dalmatia

Hvar D

Hvar A

Sveta Nedjelja C

Imotski D

Kaštela D

Kaštel Lukšić C

Kaštel Stari C

Kaštel Štafilić B

Komiža D

Komiža B

Makarska D

Makarska A

Omiš D

Lokva Rogoznica B

Mimice B

Omiš B

Pisak C

Sinj D

Sinj C

Solin D

Split D

Split B


version of 14. 12. 2007;


Stobreč C

Stari Grad D

Stari Grad A

Supetar D

Supetar A

Trilj D

Trilj C

Trogir D

Trogir B

Vis D

Vis B

Vrgorac D

Vrlika D

Baška Voda D

Baška Voda A

Bratuša B

Krvavica B

Promajna B

Bol D

Bol A

Brela A

Dugi Rat D

Jesenice C

Gradac B

Jelsa D

Jelsa A

Pitve B

Vrboska A

Klis D

Marina D

Marina B

Vinišće B

Milna D

Milna B

Nerežišća D

Okrug D

Okrug Donji C

Okrug Gornji B

Otok D


version of 14. 12. 2007;


Podgora D

Drašnice B

Igrane A

Živogošće B

Podgora A

Podstrana B

Postira B

Proložac D

Pučišća D

Pučišća C

Seget D

Seget Donji B

Seget Vranjica B

Selca D

Povlja B

Selca C

Sumartin C

Sućuraj D

Sućuraj B

Sutivan B

Šolta D

Grohote B

Maslinica B

Stomorska B

Tučepi A

Istria

Buje B

Buzet D

Buzet C

Sveti Ivan C

Labin D

Rabac A

Novigrad A

Pazin D

Pazin C

Poreč A

Pula D

Pula A

Rovinj A


version of 14. 12. 2007;


Umag A

Bale D

Bale C

Brtonigla B

Cerovlje D

Gradinje C

Grožnjan D

Grožnjan C

Kanfanar D

Kaštelir-Labinci D

Kršan D

Ližnjan D

Ližnjan C

Marčana D

Krnica B

Medulin A

Motovun D

Motovun C

Oprtalj D

Oprtalj C

Pićan D

Raša D

Sveta Marina C

Sveta Nedelja D

Svetvinčenat C

Višnjan D

Vižinada D

Vodnjan D

Fažana B

Vodnjan C

Vrsar D

Funtana A

Vrsar A

Žminj D

Dubrovnik - Neretva

Dubrovnik D

Dubrovnik A

Koločep B

Lopud A


version of 14. 12. 2007;


Orašac B

Šipanska Luka B

Trsteno C

Zaton B

Korčula D

Korčula A

Metković D

Opuzen D

Ploče D

Baćina C

Ploče C

Blato Dubrovačko C

Primorje D

Slano A

Janjina D

Drače C

Janjina C

Sreser C

Konavle D

Cavtat A

Molunat C

Lastovo D

Lastovo C

Lumbarda B

Mljet D

Goveđari A

Pomena A

Saplunara B

Orebić D

Lovište B

Orebić A

Trstenik C

Viganj C

Slivno D

Blace C

Duboka C

Klek B

Komarna C

Smokvica C


version of 14. 12. 2007;


Ston D

Brijesta C

Broce C

Luka C

Metohija C

Putniković C

Ston C

Žuljana C

Trpanj D

Trpanj A

Vela Luka A

Župa Dubrovačka D

Mlini A

Međimurje

Čakovec D

Čakovec C

Mursko Središće D

Prelog D

Kotoriba D

Nedelišće D

Sveti Martin na Muri D

Štrigova D

City of Zagreb

Grad Zagreb C

Zagreb A

Source: Ordinance on Classification of touristic settlements into classes


version of 14. 12. 2007;


12.20. ANNEX Table 12-21: List of institutions and operative programmes for training

No. INSTITUTION NAME OPERATIVE PROGRAMMES FOR TRAINING

1 Open University Samobor Goat breeder, bee keeper, producer and processor of medicinal and aromatic plants

2 Open University Kutina Mowing machine operator

3 Open University Novska Manager of agricultural farm

4 Open University Bjelovar Bee keeper

5 Secondary school Bartol Kašić, Grubišno Polje Bee keeper

6 Open University Marinković, Garešnica Forest tractor operator

7 Railway – technical high school Moravice Bee keeper

8 Open University Slatina Bee keeper, fungi grower and picker, grower and picker of medicinal plants, fruit grower, grape grower, vegetable grower, milk producer, florist

9 Link University, adult education institution, Požega

Scythe operator, tractors and tractor connections machinery operator, combine harvester operator, sugar beet picking line operator

10 Open University Automobile club Nova Gradiška Mowing machine operator

11 Secondary school Matija Antun Reljković, Slavonski Brod Bee - keeper, flower arranger

12 DIDAKTA – occupational health education institute, Osijek

Operator: machinery in agricultural production and fruit growing, machinery for the ground works, mowing machine – reclamation machine

13 Open University Osijek Bee keeper

14 Open University Poetika, Osijek Fruit grower – grape grower – wine producer

15 Slavonijainspekt - Eduka institution for adult education, Osijek Mowing machine operator

16 Technical school Vinkovci

Self - propelled mowing machines operator, combine harvester operator, bee keeper, florist, organic farmer, producer and processor of medicinal and spice plants, grape grower and wine producer

17 PODUKA school, Solin Mowing machine operator, equipment and mechanized tools operator in maintaining green areas, horticulture

18 Open University ITINERIS, Buzet Mowing machine operator

19 Education centre Narona, Metković Mowing machine operator

20 Open University Čakovec Milk producer, bee keeper

21 Secondary school Blato Grape grower - wine producer

22 Open University Novak, Mala Subotica Mowing machine operator


version of 14. 12. 2007;


23 Agricultural school Čakovec Grape grower and wine producer

24 Apiculture school Zagreb Bee keeper

25 Agricultural school Zagreb Bee keeper

26 Open University Zagreb

Goat breeder, bee keeper, processor of medicinal and spice plants, snail breeder, organic farmer, freshwater fisherman, sea water fisherman, grape grower and wine producer

27 University MAGISTRAE VITAE, Zagreb Mowing machine operator

28 Open university Osijek Fruit and grape grower, indoor fruit, vegetable and flower grower

29 Secondary school Buzet Mowing machine operator

30 Open University Čakovec Goat breeder

31 Secondary school Bartol Kašić, Grubišno Polje

Milk producer, fruit grower, grape grower and wine producer, producer and processor of medicinal and aromatic plants, fungi grower, goat breeder, beef breeder

32 Open University Đurđevac Forestry machinery operator

33 Open University Split

Bee keeper, fruit grower, grape grower and wine producer, olive grower, organic plant and plants products grower, medicinal and spice plants grower and picker

34 Open University Sinj

Vegetable grower, dairy farmer - cheese producer, sheep and goat breeder, poultry breeder, beef breeder – milk producer, horse breeder, grape grower and wine producer, bee keeper, producer and processor of medicinal and aromatic plants

35 Open University Varaždin Bee keeper

36 Open University Knin Smoked ham producer

Source: Ministry of Science, Education and Sports, March 2007


version of 14. 12. 2007;


12.21. ANNEX Table 12-22: Big wine producers, 2005

Number Name Released on market, hl Share

1 Istravino d.d. 81.087 12,14%

2 Badel 1862 d.d. 76.931 11,52%

3 Kutjevo d.d. 50.258 7,53%

4 Dalmacijavino d.o.o. 40.710 6,10%

5 Vinoplod - Vinarija d.d. 36.160 5,41%

6 IPK Erdutski vinogradi d.o.o. 29.119 4,36%

7 Đakovačka vina d.d. 27.292 4,09%

8 Iločki podrumi 27.179 4,07%

9 Agrolaguna d.d. 24.568 3,68%

10 Vinski podrum Belje d.d. 16.005 2,40%

11 Mladina d.d. 12.818 1,92%

12 Feravino d.o.o. 12.233 1,83%

13 Blato 1902 d.d. 11.989 1,80%

14 Imota d.d. 10.370 1,55%

15 Vino Šeperić d.o.o. 9.938 1,49%

16 Segestica d.o.o. 9.261 1,39%

17 PZ Jedinstvo 8.850 1,33%

18 Agromeđimurje d.d. Čakovec 8.081 1,21%

19 PP Orahovica 6.974 1,04%

20 PZ Putniković 6.350 0,95%

21 PZ Vrbnik 5.900 0,88%

22 PZ Plešivica 4.164 0,62%

23 Agroilok d.d. 4.146 0,62%

24 Dubrovački podrumi d.d. 3.738 0,56%

25 PZ Bol 3.642 0,55%

26 Vupik d.d. Vukovar 3.426 0,51%

27 Frajona d.o.o. 3.214 0,48%

28 Vinogradarstvo i podrumarstvo Krauthaker 3.074 0,46%

29 Zlatan Otok d.o.o. 3.010 0,45%

30 Vinarija Novigrad d.o.o. 2.933 0,44%

31 PZ Pošip 2.881 0,43%

32 PZ Dingač 2.598 0,39%

33 Stari podrum d.o.o. 1.991 0,30%

34 PZ Gospoja 1.802 0,27%


version of 14. 12. 2007;


35 PZ Kuna 1.771 0,27%

36 F&F Ravalico vinarstvo 1.729 0,26%

37 Đakovačko srijemska biskupija 1.672 0,25%

38 M&G International d.o.o. 1.638 0,25%

39 Bibić Alan 1.551 0,23%

40 Kattunar Franco 1.489 0,22%

41 Veralda poljoprivredni obrt 1.355 0,20%

42 PZ Podšpilje 1.367 0,20%

43 PZ Vis 1.233 0,18%

44 Vina Miličić 1.189 0,18%

45 Vinova 1.186 0,18%

46 Zdjelarević proizvodnja grožđa i vina 1.157 0,17%

47 PZ Komiža 1.065 0,16%

48 Otium d.d. 1.039 0,16%

49 Badel 1862 d.d. Vinarija Benkovac 1.000 0,15%

50 Karlotti d.o.o. 1.000 0,15%

TOTAL BIG PRODUCERS 574.133 85,97%

OTHERS 93.732 14,03%

TOTAL CROATIA 667.865 100,00%

Source: CIVO, 2006


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12.22. ANNEX Table 12-23: Number of associations and foundations per counties

COUNTIES NUMBER OF ASSOCIATIONS

NUMBER OF

FOUNDATIONS

Bjelovar - Bilogora 954 2

Brod - Posavina 966 1

Dubrovnik - Neretva 1.142 7


Istria county 1.662 3

Karlovac 958 0

Koprivnica - Križevci 927 1

Krapina - Zagorje 828 1

Lika - Senj 391 0

Međimurje 869 1

Osijek - Baranja 2.339 4

Primorje – Gorski Kotar 2.551 5


Sisak - Moslavina 1.291 1

Split - Dalmatia 2.704 4

Varaždin 1.183 3

Virovitica - Podravina 626 0

Vukovar - Srijem 1.123 1

Zadar 894 1


Šibenik–Knin 787 1

TOTAL 31.209 100

Source: Central State Administrative Office for Public Administration, Register of Associations and Foundations, December, 2006.


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12.23. ANNEX Table 12-24: Vegetable production for processing, 1990 - 2003

Product name, OG no. 18/97 1990 1996 1997 1998 1999 2000 2001 2002 2003

Processing and preservation of vegetables

Frozen peppers 2 130 35

Frozen spinach 405 118 100 303

Frozen mixed vegetables 5 76

Frozen other vegetables, except mixed one 61

Tomatoes, prepared and preserved, except in vinegar, in one piece or parts. 0 0 93 147 215 213 249 230

Tomato purée, incl. 30% of dry matter, unconcentrated 1.776 1.385 15

Tomato concentrate 479 0 925 951 1.662 1.152

Mushrooms and truffles, prepared and preserved 0 0 64 108 125 98

Cultivated mushrooms, prepared and conserved 0 0 12 12 2

Sauerkraut, not frozen 790 1.765 1.245 1.041 1.455 603 1.267 2.335 2.588

Peas, prepared, except in vinegar, not frozen 1.922 114 1.216 1.388 1.395 1.338 1.677 952 1.398

French beans, prepared, except in vinegar, not frozen 994 397 151 608 220 159 391 245 239

Olives, prepared, except in vinegar, not frozen 173 236 168 81 338 2.619 1.372 1.349 594

Đuveč, not frozen 0 55 48 21 21

Ajvar, not frozen 223 862 1.298 1.204 981 1.839 1.775 2.280 1.820

Other prepared vegetable dishes, not frozen 44 5 2 31 29 31 25

Sour turnip, not frozen 0 0 21 42 168 109 98 370 278

Other vegetables, not frozen, d.n. 307 22 368 494 346 110 229 133 55

Mixed vegetables, not frozen, d.n. 136


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Pickled cucumbers, in vinegar or acetic acid 4.365 8.590 5.872 9.186 4.203 3.627 5.247 8.321 6.381

Pickled peppers, in vinegar or acetic acid 3.471 1.306 708 2.905 1.868 1.564 1.462 5.256 1.599

Sour beetroot, in vinegar or acetic acid 3.320 1.775 1.573 1.367 2.192 1.078 1.753 1.856 757

Pickled chilli peppers, in vinegar or acetic acid 3.078 1.255 664 862 738 926 681 705 691

Pickled mixed salads and other mixed vegetables, in vinegar 1764 1227 399 382 374 157 484 420 401

Other vegetables preserved in vinegar or acetic acid 583 61 390 693 585 892 740 1.428 985

TOTAL PROCESSED VEGETABLES 23.696 19.303 15.161 21.547 16.847 15.404 17.709 26.060 19.291

Source: CBS, 2006


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12.24. ANNEX Table 12-25: Fresh fruit import from 2000 - 2003

2000 2001 2002 2003

IMPORT IMPORT IMPORT IMPORT

FRUIT t USD t USD t USD t USD

coconuts, cashews 25 92.180 47 140.387 44 96.651 51 89.554

drupes 1.672 3.510.655 2.106 5.211.940 2.612 6.456.722 2.617 7.728.519

bananas 43.642 15.359.497 43.176 19.110.836 45.077 20.979.233 50.715 24.139.946

dates, figs, pineapples 610 464.578 654 674.061 850 932.331 989 1.632.961

oranges 29.693 7.650.227 27.686 8.124.916 25.982 8.388.057 27.707 11.633.074

tangerines 2.076 623.184 1.430 602.543 2.007 810.514 2.071 974.892

other citrus fruit 12.838 4.457.169 11.660 4.531.962 12.363 5.073.014 13.476 8.427.473

grapes 8.771 3.743.742 9.011 5.353.164 7.608 4.928.648 10.237 8.484.768

watermelons, melons 4.513 1.021.848 8.098 1.771.628 7.792 1.889.985 7.925 2.759.994

apples 14.252 4.687.838 18.072 5.279.153 33.339 9.540.299 13.693 8.305.546

pears, quinces 2.673 1.109.779 5.160 2.523.978 5.439 2.859.559 10.237 3.155.114

apricots 1.570 598.173 1.312 737.923 1.532 827.117 1.729 1.429.010

cherries, sour cherries 209 99.329 908 422.280 542 274.688 378 296.133

peaches 8.123 2.848.238 7.193 4.268.205 9.898 4.715.476 6.552 6.351.138

plums 1.685 400.304 1.954 518.357 1.336 457.737 4.242 1.172.467

strawberries, raspberries, cranberries… 736 415.026 857 628.355 699 528.606 309 451.815

kiwi 2.538 975.945 1.930 1.089.501 1.604 11.376.443 114 112.850

other fresh fruits 250 975.946 261 135.042 339 192.977 363 276.481

TOTAL 135.876 49.033.658 141.515 61.124.231 159.063 80.328.057 153.405 87.421.735

Source: CBS, 2004


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12.25. ANNEX Table 12-26: Fresh fruit export 2000 - 2003

2000 2001 2002 2003

EXPORT EXPORT EXPORT EXPORT

FRUIT t USD t USD t USD t USD

coconut, cashew 0 1.122 0 2.298 1 5.830 0 1.025

drupes 250 254.777 561 891.051 242 345.040 440 700.775

bananas 1.779 741.721 20 15.802 23 19.519 124 110.498

Dates, figs, pineapple… 1 2.582 2 3.877 9 10.575 16 16.137

oranges 4 2.848 2 1.820 24 19.669 46 32.063

tangerines 2.762 1.216.173 6.232 2.768.649 2.376 1.402.948 1.829 1.488.166

Other citrus fruit 17 9.211 24 12.104 27 13.070 20 12.306

grapes 10 8.262 1 1.050 32 53.154 23 37.334

watermelons, melons 210 68.264 71 39.880 745 201.484 253 141.736

apples 1.942 140.506 161 50.674 813 86.713 3.388 381.126

pears, quinces 10 9.783 3 2.272 3 3.027 2 1.713

apricots 0 0 2 1.945 1 918 0 383

cherries, sour cherries 0 0 0 114 0 65 0 0

peaches 7 6.063 11 9.346 12 10.533 5 3.407

plums 16 13.919 26 12.457 13 11.311 4 3.308

Strawberries, raspberries, cranberries… 3 12.255 0 296 0 0 0 102

kiwi 8 6.015 28 19.713 12 11.187 8 7.753

Other fresh fruits 1 553 0 309 0 75 2 678

TOTAL 7.020 2.494.054 7.144 3.833.657 4.333 2.195.118 6.160 2.938.510

Source: CBS, 2006


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12.26. ANNEX Table 12-27: Export - import balance of fresh, half processed and dried vegetables (1999 – 2003)

1999 2000 2001 2002 2003

EXPORT tons USD tons USD tons USD tons USD tons USD

Half-processed and dried vegetables 111 250.826 247 458.329 311 404.429 258 450.759 339 719.974

Frozen vegetables 73 114.488 92 135.150 65 93.114 59 104.616 103 141.675

Temporarily preserved vegetables 0 42 0 103 14 18.382 21 28.983 10 17.926

Dried vegetables, in whole, cut and other 16 87.442 125 294.953 112 257.061 99 284.243 194 536.624

Dried leguminous vegetable in grains 22 48.854 30 28.123 120 35.872 79 32.917 32 23.749

Tapioca, sweet potato and similar roots

Processed vegetable 4.272 5.341.236 3.805 4.710.588 4.037 4.908.582 5.249 6.027.306 3.437 6.036.676

Vegetable and fruit preserved 2.634 2.063.990 1.666 1.330.251 1.946 1.446.054 2.368 1.739.475 1.141 1.101.856

Tomato prepared without vinegar 179 448.479 183 351.697 235 381.517 183 422.707 153 484.265

Mushrooms and truffles prepared or preserved 2 7.712 13 23.218 12 30.698 13 100.415 15 189.352

Other frozen vegetable 17 19.269 41 25.117 3 2.747 476 222.799 142 139.975

Other not frozen vegetable 1.440 2.801.786 1.902 2.980.305 1.841 3.047.566 2.209 3.541.910 1.986 4.121.228

TOTAL 4.383 5.592.062 4.052 5.168.917 4.348 5.313.011 5.507 6.478.065 3.776 6.756.650

IMPORT 1999 2000 2001 2002 2003

Half-processed and dried vegetables 10.262 14.129.274 12.796 11.853.047 15.195 12.806.973 15.563 14.470.693 17.347 17.595.153

Vegetables, frozen 3.979 2.726.810 5.218 2.985.297 5.490 3.304.503 6.480 4.192.379 7.499 5.913.014


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Vegetables temporarily preserved 463 545.411 752 686.266 1.038 1.103.146 826 872.672 262 303.799

Dried vegetable, in whole, cut and the rest 3.887 9.324.852 2.698 5.753.601 2.799 5.126.999 3.563 6.422.182 3.612 7.398.627

Dried leguminous vegetable in grains 1.932 1.530.180 4.058 2.421.102 5.784 3.264.715 4.647 2.886.809 5.974 3.979.444

Tapioca, sweet potato and similar roots 1 2.021 70 6.781 84 7.610 47 96.651 0 269

Processed vegetable 15.879 15.905.554 18.933 16.020.879 24.002 19.436.230 30.685 25.446.849 34.883 34.195.998

Vegetable and fruit preserved 1.627 2.141.706 1.457 1.819.030 2.171 2.471.006 5.134 4.417.133 4.524 4.757.544

Tomato prepared without vinegar 4.995 3.691.522 6.142 3.645.129 6.663 3.539.288 9.165 4.935.719 9.526 6.826.892

Mushrooms and truffles prepared or preserved 951 1.415.174 1.256 1.672.712 1.309 1.594.716 1.361 1.662.936 1.558 2.111.769

Other frozen vegetable 4.562 3.082.560 5.182 2.761.675 7.059 3.464.729 6.820 3.853.857 9.459 6.016.371

Other not frozen vegetable 3.744 5.574.592 4.896 6.122.333 6.800 8.366.491 8.205 10.577.204 9.816 14.483.422

TOTAL 26.141 30.034.828 31.729 27.873.926 39.197 32.243.203 46.248 39.917.542 52.230 51.791.151 Source: CBS, 2006


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12.27. ANNEX Table 12-28: Production of fruit for processing

Production

Product name, OG No. 18/97 1990 1996 1997 1998 1999 2000 2001 2002 2003

Fruit, walnut etc. drupes, raw or boiled, frozen 0 0 25

Jams from other fruit 6.613 233 292 118 163 170 217 294 429

Marmalade from other fruits 627 344 340 297 488 768 799 852 774

Rose hip marmalade 1.060 655 483 558 536 590 731 601 730

Marmalades from one kind of fruit, besides the rose hip 1.585 652 932 907 992 1.191 1.339 1.451 1.171

Mixed marmalades, from other fruit 2.109 1.767 1.944 1.633 1.472 1.586 1.806 1.423 1.135

Fruit jellies, and purée and fruit pastes, walnuts and cetera, drupes 0 0 224 133 148 147 166 152 256

Peanuts, roasted, salted or prepared in any other way 570 487

Walnuts and similar drupes, roasted, salted or prepared in any other way 682 484 742 708 954 4 4

Fruit, walnuts and similar drupes, temporarily preserved ,inappropriate for direct nutrition 76 81 102 118

Dry figs 4 4

Other dry fruit 82 68

Canned fruit from one or more kinds of fruit 6.398 490 219 147 56 163 297 847 591


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Fruit pulp and paste, pasteurized 4.174 2.814 338

Fruit pulp and paste, frozen 2.193 917 100 428 180

Fruit pulp and paste, preserved chemically 2.761 431 1.505 2.038 1.717 2.253 1.921 2.346 1.843

Pasteurized fruit 292 272 75 238 146

Other fruit prepared and preserved, d.n. 5 0 21 127 238 300 241 250

TOTAL PROCESSED FRUIT 27.817 8.575 7.163 7.006 6.621 7.890 8.611 9.111 7.856

Source: CBS, 2006


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12.28. ANNEX List of cities and municipalities covered by Mountain and Hill Area Act

Cities: Buzet, Čabar, Delnice, Imotski, Lepoglava, Ogulin, Orahovica, Senj, Sinj, Trilj, Vrbovsko and Vrgorac

Municipalities: Bistra, Budinšćina, Cerovlje, Čavle, Dicmo, Đurmanec, Fužine, Gračišće, Jelenje, Jesenje, Kalnik, Kaptol, Karlobag, Klana, Klis, Lobor, Lokve, Lovreć, Lupoglav, Ljubešćica, Matulji, Motovun, Mrkopalj, Muć, Novi Golubovec, Podbablje, Primorski Dolac, Radoboj, Ravna Gora, Skrad, Stubičke Toplice, Šestanovac and Vinodol


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12.29. ANNEX Table 12-29: List of cities and municipalities

Zagreb County 309.696 Krapina –

Zagorje County 142.432 Sisak – Moslavina County

185.387 Karlovac County

141.787

Municipalities Cities Cities Cities

Bedenica 1.522 Donja Stubica 5.930 Glina 9.868 Ozalj 7.932

Bistra 6.098 Klanjec 3.234 Hrvatska Kostajnica 2.746 Slunj 6.096

Brckovljani 6.816 Oroslavje 6.253 Municipalities Municipalities

Dubrava 5.478 Pregrada 7.165 Donji Kukuruzari 2.047 Barilovići 3.095

Dubravica 1.586 Zabok 9.365 Dvor 5.742 Bosiljevo 1.486

Farkaševac 2.102 Zlatar 6.506 Gvozd 3.779 Cetingrad 2.746

Gradec 3.920 Municipalities Hrvatska Dubica 2.341 Draganić 2.950

Jakovlje 3.952 Bedekovčina 8.482 Jasenovac 2.391 Generalski Stol 3.199

Klinča Sela 4.927 Budinščina 2.793 Lekenik 6.170 Josipdol 3.987

Kloštar Ivanić 6.038 Desinić 3.478 Lipovljani 4.101 Krnjak 2.164

Krašić 3.199 Đurmanec 4.481 Majur 1.490 Lasinja 1.938


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Kravarsko 1.983 Gornja Stubica 5.726 Martinska Ves 4.026 Netretić 3.333

Križ 7.406 Hrašćina 1.826 Sunja 7.376 Plaški 2.292

Luka 1.419 Hum na Sutli 5.476 Topusko 3.219 Rakovica 2.623

Marija Gorica 2.089 Jesenje 1.643 Velika Ludina 2.831 Ribnik 583

Orle 2.145 Konjščina 4.074 - - Saborsko 860

Pisarovina 3.697 Kraljevec na Sutli 1.815 - - Tounj 1.252

Pokupsko 2.492 Krapinske Toplice 5.744 - - Vojnić 5.495

Preseka 1.670 Kumrovec 1.854 - - Žakanje 3.193

Pušća 2.484 Lobor 3.669 - - - -

Rakovec 1.350 Mače 2.715 - - - -

Rugvica 7.608 Marija Bistrica 6.612 - - - -

Stupnik 3.251 Mihovljan 2.234 - - - -

Žumberak 1.185 Novi Golubovec 1.073 - - - -

- - Petrovsko 3.022 - - - -

- - Radoboj 3.513 - - - -

- - Stubičke Toplice 2.752 - - - -

- - Sveti Križ Začretje 6.619 - - - -


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- - Tuhelj 2.181 - - - -

- - Veliko Trgovišće 5.220 - - - -

- - Zagorska Sela 1.197 - - - -

- - Zlatar-Bistrica 2.830 - - - -

Varaždin County 184.769 Koprivnica-

križevci County 124.467 Bjelovarsko-bilogorska 133.084 Primorsko-

goranska 305.505

Cities Cities Cities Cities

Lepoglava 8.718 Đurđevac 8.862 Čazma 8.895 Bakar 7.773

Ludbreg 8.668 Municipalities Grubišno Polje 7.523 Cres 2.959

Varaždinske Toplice 6.973 Drnje 2.156 Municipalities Čabar 4.387

Municipalities Đelekovec 1.824 Berek 1.706 Delnice 6.262

Bednja 4.765 Ferdinandovac 2.107 Dežanovac 3.355 Kastav 8.891

Beretinec 2.288 Gola 2.760 Đulovac 3.640 Kraljevica 4.579

Breznica 2.304 2.035 Hercegovac 2.791 Krk 5.491

Breznički Hum 1.575 Hlebine 1.470 Ivanska 3.510 Mali Lošinj 8.388

Cestica 5.678 Kalinovac 1.725 Kapela 3.516 Novi Vinodolski 5.282

Donja Voća 2.844 Kalnik 1.611 Končanica 2.824 Rab 9.480


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Donji Martijanec 4.327 Kloštar Podravski 3.603 Nova Rača 4.077 Vrbovsko 6.047

Gornji Kneginec 5.259 Koprivnički Bregi 2.549 Rovišće 5.262 Municipalities

Jalžabet 3.732 Koprivnički Ivanec 2.361 Severin 1.038 Baška 1.554

Klenovnik 2.278 Legrad 2.764 Sirač 2.546 Brod Moravice 985

Ljubešćica 1.959 Molve 2.379 Šandrovac 2.095 Čavle 6.749

Mali Bukovec 2.507 Novigrad Podravski 3.161 Štefanje 2.347 Dobrinj 1.970

Maruševec 6.757 Novo Virje 1.412 Velika Pisanica 2.151 Fužine 1.855

Petrijanec 4.994 Peteranec 2.848 Velika Trnovitica 1.661 Jelenje 4.877

Sračinec 4.714 Podravske Sesvete 1.778 Veliki Grđevac 3.313 Klana 1.931

Sveti Đurđ 4.174 Rasinja 3.818 Veliko Trojstvo 3.092 Kostrena 3.897

Sveti Ilija 3.532 Sokolovac 3.964 Zrinski Topolovac 1.000 Lokve 1.120

Trnovec Bartolovečki 6.852 Sveti Ivan Žabno 5.628 - - Lovran 3.987

Veliki Bukovec 1.578 Sveti Petar Orehovec 5.137 - - Malinska-

Dubašnica 2.726

Vidovec 5.539 Virje 5.197 - - Mošćenička Draga 1.641

Vinica 3.747 - - - - Mrkopalj 1.407


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Visoko 1.641 - - - - Omišalj 2.998

- - - - - - Punat 1.876

- - - - - - Ravna Gora 2.724

- - - - - - Skrad 1.333

- - - - - - Vinodolska općina 3.530

- - - - - - Viškovo 8.907

- - - - - - Vrbnik 1.245

Lika – Senj 53.677 Virovitica – Podravina 93.389 Požega –

Slavonia 85.831 City of Zagreb

779.145

Cities Cities Cities City quarters

Novalja 3.335 Orahovica 5.792 Lipik 6.674 - -

Senj 8.132 Municipalities Pakrac 8.855 - -

Municipalities Crnac 1.772 - - - -

Brinje 4.108 Čačinci 3.308 Municipalities - -

Donji Lapac 1.880 Čađavica 2.394 Brestovac 4.028 - -

Karlobag 1.019 Gradina 4.485 Čaglin 3.386 - -

Lovinac 1.096 Lukač 4.276 Jakšić 4.437 - -


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Perušić 3.494 Mikleuš 1.701 Kaptol 4.007 - -

Plitvička Jezera 4.668 Nova Bukovica 2.096 Kutjevo 7.472 - -

Udbina 1.649 Sopje 2.750 Velika 5.888 - -

Vrhovine 905 Suhopolje 7.524 - - - -

- - Špišić Bukovica 4.733 - - - -

- - Voćin 2.421 - -

- - Zdenci 2.235 - - - -

Međimurje 118.426 Dubrovnik – Neretva 122.870 Istria 206.344 Split -

Dalmatia 463.676

Cities Cities Cities Cities

Mursko Središće 6.548 Korčula 5.889 Buje 5.340 Hvar 4.138

Prelog 7.871 Opuzen 3.242 Buzet 6.059 Komiža 1.677

Municipalities Municipalities Novigrad 4.002 Stari Grad 2.817

Belica 3.509 Blato 3.680 Pazin 9.227 Supetar 3.889

Dekanovec 832 Dubrovačko primorje 2.216 Vis 1.960

Domašinec 2.459 Vrgorac 7.593


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Donja Dubrava 2.274 Vrlika 2.705

Donji Kraljevec 4.931 Janjina 593 - -

Donji Vidovec 1.595 Konavle 8.250 Municipalities - -

Goričan 3.148 Kula Norinska 1.926 Bale 1.047 - -

Gornji Mihaljevec 2.046 Lastovo 835 Barban 2.802 - -

Kotoriba 3.333 Lumbarda 1.221 Brtonigla 1.579 - -

Mala Subotica 5.676 Mljet 1.111 Cerovlje 1.745 - -

Orebić 4.165 Fažana 3.050 - -

Orehovica 2.769 Pojezerje 1.233 Gračišće 1.433 - -

Podturen 4.392 Slivno 2.078 Grožnjan 785 Municipalities

Selnica 3.442 Smokvica 1.012 Kanfanar 1.457 Baška Voda 2.924

Strahoninec 2.728 Ston 2.605 Karojba 1.489 Bol 1.661

Sveta Marija 2.433 Trpanj 871 Kaštelir - Labinci 1.334 Brela 1.771

Sveti Juraj na Bregu 5.279 Vela Luka 4.380 Kršan 3.264 Cista Provo 3.674

Sveti Martin na Muri 2.958 Zažablje 912 Lanišće 398 Dicmo 2.657

Šenkovec 2.770 Župa dubrovačka 6.663 Ližnjan 2.945 Dugi Rat 7.305


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Štrigova 3.221 Lupoglav 929 Dugopolje 3.120

Vratišinec 2.213 - - Marčana 3.903 Gradac 3.615

- - - - Medulin 6.004 Hrvace 4.116

- - - - Motovun 983 Jelsa 3.656

- - - - Oprtalj 981 Klis 4.367

- - - - Pićan 1.997 Lećevica 740

- - - - Raša 3.535 Lokvičići 1.037

- - - - Sveta Nedelja 2.909 Lovreć 2.500

- - - - Sveti Lovreč 1.408 Marina 4.771

- - - - Sveti Petar u Šumi 1.011 Milna 1.100

- - - - Svetvinčenat 2.218 Muć 4.074

- - - - Tinjan 1.770 Nerežišća 868

- - - - Višnjan 2.187 Okrug 2.980

- - - - Vižinada 1.137 Otok 5.782

- - - - Vodnjan 5.651 Podbablje 4.904

- - - - Vrsar 2.703 Podgora 2.884

- - - - Žminj 3.447 Podstrana 7.341


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- - - - - - Postira 1.553

- - - - - - Prgomet 797

- - - - - - Primorski Dolac 839

- - - - - - Proložac 4.510

- - - - - - Pučišća 2.224

- - - - - - Runovići 2.643

- - - - - - Seget 4.904

- - - - - - Selca 1.977

- - - - - - Sućuraj 492

- - - - - - Sutivan 759

- - - - - - Šestanovac 2.685

- - - - - - Šolta 1.479

- - - - - - Tučepi 1.763

- - - - - - Zadvarje 277

- - - - - - Zagvozd 1.642


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- - - - - - Zmijavci 2.130

Vukovar – Srijem 204.768 Šibenik – Knin 112.891 Osijek –

Baranja 330.506 Zadar 162.045

Cities Cities Municipalities Cities

Ilok 8.351 Drniš 8.595 Antunovac 3.559 Benkovac 9.786

Municipalities Skradin 3.986 Bilje 5.480 Biograd na Moru 5.259

Andrijaševci 4.249 Vodice 9.407 Bizovac 4.979 Nin 4.603

Babina Greda 4.262 Municipalities Čeminac 2.856 Obrovac 3.387

Bogdanovci 2.366 Biskupija 1.669 Darda 7.062 Pag 4.350

Borovo 5.360 Civljane 137 Donja Motičina 1.865 Municipalities

Bošnjaci 4.653 Ervenik 988 Draž 3.356 Bibinje 3.923

Cerna 4.990 Kijevo 533 Drenje 3.071 Galovac 1.190

Drenovci 7.424 Kistanje 3.038 Đurđenovac 7.946 Gračac 3.923

Gradište 3.382 Murter 2.075 Erdut 8.417 Jasenice 1.329

Gunja 5.033 Pirovac 1.846 Ernestinovo 2.225 Kali 1.731

Ivankovo 8.676 Primošten 2.992 Feričanci 2.418 Kukljica 650


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Jarmina 2.627 Promina 1.317 Gorjani 1.832 Lišane Ostrovičke 764

Lovas 1.579 Rogoznica 2.391 Jagodnjak 2.537 Novigrad 2.368

Markušica 3.053 Ružić 1.775 Kneževi Vinogradi 5.186 Pakoštane 3.884

Negoslavci 1.466 Tisno 3.239 Koška 4.411 Pašman 2.004

Nijemci 5.998 Unešić 2.160 Levanjska Varoš 1.266 Polača 1.434

Nuštar 5.862 - - Magadenovac 2.239 Poličnik 4.664

Otok (Vinkovci) 7.755 - - Marijanci 2.719 Posedarje 3.513

Privlaka 3.776 - - Petlovac 2.743 Povljana 713

Stari Jankovci 5.216 - - Petrijevci 3.068 Preko 3.871

Stari Mikanovci 3.387 - - Podgorač 3.314 Privlaka 2.199

Tompojevci 1.999 - - Podravska Moslavina 1.451 Ražanac 3.107

Tordinci 2.251 - - Popovac 2.427 Sali 1.820

Tovarnik 3.335 - - Punitovci 1.850 Stankovci 2.088

Trpinja 6.466 - - Satnica Đakovačka 2.572 Starigrad 1.893

Vođinci 2.113 - - Semeljci 4.858 Sukošan 4.402

Vrbanja 5.174 - - Strizivojna 2.759 Sveti Filip i Jakov 4.482

- - - - Šodolovci 1.955 Škabrnje 1.772


version of 14. 12. 2007;


- - - - Trnava 1.900 Tkon 707

- - - - Viljevo 2.396 Vir 1.608

- - - - Viškovci 2.060 Zemunik Donji 1.903

- - - - Vladislavci 2.124 - -

- - - - Vuka 1.312 - -

Brod – Posavina County Brod – Posavina County Brod – Posavina County 176.765

Municipalities Municipalities Municipalities

Bebrina 3.541 Gornji Bogićevci 2.319 Sibinj 7.549 - -

Brodski Stupnik 3.526 Gundinci 2.294 Sikirevci 2.707 - -

Bukovlje 2.739 Klakar 2.417 Slavonski Šamac 2.649 - -

Cernik 4.235 Nova Kapela 5.118 Stara Gradiška 1.717 - -

Davor 3.259 Okučani 4.224 Staro Petrovo Selo 6.352 - -

Donji Andrijevci 4.393 Oprisavci 2.942 Velika Kopanica 3.570 - -

Dragalić 1.282 Oriovac 6.559 Vrbje 2.906 - -

Garčin 5.586 Podcrkavlje 2.683 Vrpolje 4.023 - -


version of 14. 12. 2007;


Gornja Vrba 2.559 Rešetari 5.171 - - - -

Source: CBS, Census 2001


version of 14. 12. 2007;


12.30. ANNEX Map 12-1: Organigram of DMSSA– - future IPARD Paying Agency


version of 14. 12. 2007;


Source: MAFWM – DMSSA, 2007


version of 14. 12. 2007;


12.31. ANNEX Map 12-2: Organigramme of the DRD IPARD MA


version of 14. 12. 2007;


Source: MAFRD, DRD 2008