Lari Hadelan

Impact of state aid on business decisions and financial stability of family farms in Croatia

The aim of this paper is to identify farmers attitudes towards the impact of state aid on business decisions and financial stability of farms. It will also identify the share of agricultural support in the total income of farms and the reasons for certain agricultural branches having unequal economic dependence on the support. Furthermore, it will investigate which of the two pillars of the CAP farmers consider being more important for their business and which factors would mostly contribute to the increase of production on their farms. The research involved 184 holders of family farms from all Croatian counties and the City of Zagreb. The data were analyzed using the univariate (frequency) and two-variate (chi-square test) method. The main production on the farms has a statistically significant (P<0.05) effect on the share of state support in the total income of the farm as well as on the influence of the amount of state support to business decisions. Most of the respondents engaged in animal husbandry and farming declared that their farms would not be financially viable in the case of state support abolition, while the situation is different in fruit growing, vegetable growing and floriculture. The paper also demonstrates the extent to which selected motivators (satisfactory state aid, higher purchase prices, less bureaucracy, lower taxes, assured market, cheap loans and availability of agricultural land) are important to farmers when deciding whether to increase the agricultural production on their farms. Overall, the two pillars of the CAP are equally important for the farmers but there is a statistically significant difference in the importance of each pillar of the CAP in regard to the prevailing production on the farm. The results of the study demonstrate both the importance of state support for the business of certain agricultural producers, especially herders, and the difference in sensitivity to possible changes in support policy.

Business Performance of Former State-Owned Large Farms (Agrocombinats) after Economic System Change: Deductions from the Croatian Stock Market

Large farms (usually called‘agrocombinats’, the state-owned large-scale agricultural enterprises analogous to agribusinesses) have played a very important role in Croatian agriculture over the past 50 years. Their monopolistic position during the period of socialism was exploited with regard to distribution, marketing and financing privileges, and helped them to achieve economies of scale, but it had little effect on business efficiency. When that period ended, agrocombinats were transformed into joint-stock companies, which, using new business strategies, sought to become profitable firms on behalf of their shareholders. According to data from the Croatian Stock Market, investment in agrocombinats stocks yielded high returns, but the volatility of the share prices indicated a significant level of speculation and a lack of confidence in their future business performance.

Il ruolo e l’importanza della gestione del rischio e dell’assicurazione per le aziende ortofrutticole croate

Results of research collected in the first phase of an ongoing project “Risk Management and Crop Insurance in Croatian Agriculture” are presented. The main body of the paper contains results of an horticultural farms’ survey. In the form of closed questions and using Likert type scale, farmers’ decision making processes, risk perceptions and risk management strategies have been investigated. The survey put emphasis on crop insurance, trying to find evidence about its use and role for farmers. The results show a considerable gap between crop insurance importance as perceived by farmers and its application as the risk management strategy. About 75% of farmers never used crop insurance. The main reasons are: high premium price, small number of perils covered by the insurance policy and insufficient supply of crop insurance. Further research should evaluate risk management strategies and their effects on farm business results.