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Expectations, strategies and prospects of farmers in view of Croatia's pending EU accession.

Article Excerpt
Abstract In Croatia, farmers prepare themselves for the impending EU accession and consider their future economic opportunities in and outside agriculture. This study on farmer's strategies reviews empirical evidence of a unique household survey conducted in early 2007 in Croatia. The main objective of this paper is to present new insights on the transition dynamics in one of the EU candidate states with good prospects to accede within the coming years. Based on empirical data we present a multinomial regression model on drivers of farm household's livelihood strategies. Farm exit, farm expansion and the combination of farm and non-farm incomes are the main strategies which are tested against socio-economic variables with a potential influence on them.

Keywords Croatia * EU Accession * Agriculture

JEL Q12 * Q18

Introduction

Structural change in the farming sector is forceful in Europe's transition economies. For policy makers it is a challenging task to promote necessary adaptations and, at the same time, to avoid excessive out-migration, social exclusion, and poverty in rural areas (OECD 2006). The changes of farm structures, rural livelihoods, and labor markets often cause fear and economic stress for farmers during the adaptation phase.

In Croatia, farmers are in a process to prepare for the impending EU accession. While the negotiations on the agricultural chapter are ongoing, farmers are considering their future economic opportunities in and outside agriculture.

This study on farmer's expectations, prospects, and strategies in view of Croatia's EU accession, review recent empirical evidence; the household survey on which we base our analysis was conducted in spring of 2007. The case study includes 138 farm households from two Croatian regions: The peri-urban Zagreb county and the typically rural region of Bjelovar and Bilogora. It looks at the hitherto widely disregarded socio-economic situation of Croatia's farm sector, including employment opportunities on and off farm. Our analysis focuses on driving forces of farm household strategies. The main objective of this paper is to present new insights on the transition dynamics in one of the EU candidate states with good prospects to accede within the next years. Questions with regard to rural development policies and farmer's expectations and livelihood strategies were thus explicitly included in the survey. Based on this data we present descriptive statistics and a multinomial regression model on drivers of farm household strategies in Croatia.

Croatia's Family Farms: Where Do They Stand and What Do They Expect from the EU Accession?

Farmers in rural areas of Croatia usually have limited access to land and are in need of additional income sources (Franic 2006; Mollers and Fellmann 2007). This section examines the household structures and the economic key characteristics of Croatian farm families. We will shed light on the current starting point of the forceful structural change that is to be expected for the coming years.

Sample and Survey Design

A farm household survey was conducted in Croatia in the spring of 2007. The main objective of this empirical work was to fill existing gaps concerning socio-economic characteristics of Croatian farms. The results are not representative for the national level; however, they offer highly detailed and otherwise not available insights into Croatia's rural households.

The survey refers to two selected research areas within Croatia. The two distinct regions were chosen as to reflect different employment opportunities offered to the rural population: Zagreb county represents a region with a more peri-urban character and thus better market opportunities, particularly with regard to the non-farm labor market. Bjelovar-Bilogora was selected as a typically rural region of Croatia. The number of farm households that were included in the analysis totalled 138; we gathered information on all 565 household members.

The questionnaire that was used for this study contained several customized sections to capture farming activities, sources of income, driving forces of income diversification, attitudes towards farm and non-farm activities, policy support and plans for future farming and employment strategies.

Socio-Economic Structures and Farm Characteristics

The average family size of our rural sample households is four household members (Table 1). The dependency ratio is calculated as the relation of active and dependent family members. Persons in active age, i.e. those who are between 16 and 64 years old, account for 70% of all household members. Each person in active age supports on average 0.5 children or elderly persons.

Table 1 Household demography and education Demographic Mean Highest Level Percent of Indicators of Education Households Household size 4.09 (SD = 1.45) Children 0.62 (SD = 0.98) Elementary or lower 14.60 Elderly persons 0.64 (SD = 0.73) Vocational school 8.03 Active age 2.82 (SD = 1.23) Secondary school 59.12 Dependency ratio 0.53 (SD = 0.59) Higher education 18.25 Source: Own calculation. Active age refers to the average number of household members who are older than 15 years and younger than 65 years. Dependency ration refers to the relation of active (15-64 years) and dependent family members ( 64 years).

Almost 40% of the household members went only to elementary school. The biggest share, 47%, has secondary education. Both, vocational education and higher education make up relatively small proportions of 11% and 8%, respectively. The figures in Table 1 reveal that about 15% of the surveyed households have to rely on the lowest educational level: More than two thirds of the families have at least one household member with vocational or secondary education and the proportion of households with higher education reaches 18% if the highest level of education in a household is the criterion.

The most important economic asset of a rural household is typically its farm land. Access to land is the basis for agricultural incomes and hence is most decisive in terms of income strategies of rural people. Only if the land resources are sufficient or can be expanded will a household decide to rely on farm income sources in the longer term. If the farm is considered uncompetitive, it can be...