The ambivalence of the eu agricultural policy and the future of small and medium-sized family farms in Croatia

Croatia has 2.95 million hectares of farmland, of which it uses only 1.2 million hectares. The areas are exploited to produce inefficiently, and so is the system of incentives and subsidies. Therefore, Croatia is highly dependent on food imports. Although there are still one in three people living in agricultural households, only a few food products are being produced in quantities sufficient for national needs. On food imports such as the one in 2008, Croatia has spent $ 1.5 billion. Rural areas occupy about 85 percent of the territory, and 85 percent of villages are affected by depopulation. Residents of rural areas are characterized by increasing life expectancy and a fifth of the rural population aged between 25 and 40 years wants to move to the cities. In fact, almost half of agricultural land is classified in the group threatened by erosion. Nearly a third of all agricultural land suffers from acidity. More and more farmland is lost by converting agricultural land into construction land. For these reasons, the strategic goal of increasing agricultural production will not be easy to achieve. To achieve this we need to change priorities in national policy towards agriculture and rural areas. It is considered that a major obstacle in the way of raising productivity is the small area (approximately 1.9 hectares) owned by agricultural households. These households, on the other hand, have approximately 80 percent of agricultural resources. Fragmentation of agricultural land does not adopt the global economy, but emphasizes large, easier and faster cost-effective systems. Small agricultural households are facing destruction, and without them there is no life in rural areas and caring for the environment. The imperative to raise productivity in agriculture comes into conflict with the objectives of rural development and sustainable development. In order to counter such trends, the EU wants to use incentives to adjust small and medium-sized farms to market conditions. However, the distributional impact of incentives is such that large manufacturers picked the most money, rather than small and medium producers. This effect leads to land consolidation, the creation of large landowners and the development of profitable food industry. Deregulation and the promotion of competitiveness in agriculture and food industry further complicate the survival of viable rural communities. In surviving villages, the EU wants to develop the competitiveness and diversification of agricultural production in rural households (e.g. tourism and rural crafts). In this paper we explore the ambivalence of European agricultural policy and its impact on Croatian agriculture and countryside, and try to answer the question whether this policy, in the case of Croatia, will lead to the collapse of local agriculture, the disappearance of rural communities and food price increases. Based on experiences of other countries and theoretical models, the paper gives outlines of a national agricultural policy which would, for example, through the development of cooperatives and clusters protect family farms and households living in rural areas. At the same time such a policy could affect the increase in agricultural yield and income of small and medium-sized farmers.