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Croatia's food industry challenges
By Nenad N. Bach | Published  12/24/2006 | Business | Unrated
The Croatian government is aware of the problem, but efforts to address it have been ineffective.

Croatia's food industry challenges

The Croatian government is aware of the problem, but efforts to address it have been ineffective.

Despite its rich natural resources, Croatia remains one of the worlds top food importers.
By Kristina Cuk for Southeast European Times in Zagreb  21/12/06

For Croatian farmers, it can be expensive and unprofitable to grow the crops needed for food products. [Getty Images]
In EU countries, most of the food bought by consumers comes from domestic markets. The countries generally import only those food items that are hard to produce at home.

Croatia, by contrast, imports most of its food from neighbouring countries -- Bosnia and Herzegovina, Hungary and Slovenia. Although Croatia has ample resources that would enable it to supply the market with domestic products, the comparatively high cost of food production -- combined with steep tax rates -- make it cheaper to bring in food products from abroad.

Agricultural purchase prices in Croatia are low and guaranteed, but state subsidies are meagre or non-existent. As a result, it is expensive and often unprofitable for farmers to grow the crops needed for food products.

This is especially true regarding raw materials used to produce oil and sugar. Croatia has the capacity not only to meet domestic market requirements, but also to export to foreign markets. Local farmers, however, have been refusing to grow sugar beets and sunflowers -- and for good reason. The purchase prices set by factories do not cover farming expenses, and the farmers end up with enormous losses.

While the state has pledged subsidies for some crops, the promised financial help often fails to materialise. Increasingly, debt-ridden farmers are leaving agriculture altogether.

In the last three years, 21,000 jobs have disappeared, mainly in rural areas. Job scarcity in the countryside has led over a million agricultural workers to seek better jobs in the city, leaving behind villages and farmlands. The deserted farming soil cannot stay agriculturally fertile for much longer. The disappearance of the small family farm -- a mainstay of Croatian life -- has an impact that is both social and economic.

The Croatian government is aware of the problem, but efforts to address it have been ineffective. The authorities have identified two sectors -- the food industry and tourism -- as vital to the country's development. But so far, Croatia has been far more successful in boosting tourism. Were the problems of food production resolved, a strong food industry would be a powerful complement to the revenues flowing in from holidaymakers.

Formated for CROWN by Nenad Bach
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