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

Abstract

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.

State and challenges of financing family farms in Bosnia and Herzegovina

“…Ranogajec et al (2009) wrote about agriculture as a low-productive activity in Croatia, with small possibilities of accession to the relatively expensive loans, because the government is trying to foster agriculture by obtaining some more favourable funds for investment in agriculture: lower interest rates, longer repayment periods, contracting the grace periods, etc. Jež-Rogelj et al (2017) found that for most of the surveyed farms, subsides make up to 30% of income. Radović (2011) wrote about the model of transition of Slovenian agriculture.…”