Abstract
Croatia is very close to meeting the requirements for becoming a member of the European Union (EU). Obviously, the agricultural sector and food processing chain are core issues within the negotiation process. This paper discusses the competitiveness of Croatia’s agro-food sector, specifically dairy products, within the EU-25 market. Two analytical methods are employed: (1) the domestic resource costs (DRC) and (2) the revealed comparative export advantage index (RXA). The DRC analysis is based on a 2007 survey of dairy farms. Primary data was complemented with trade figures from 2000 to 2007. The analyses indicate that Croatia’s dairy production is not competitive in its present structure. This lack of competitiveness at the farm level can be compensated somewhat at the processing level.
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Notes
A regulation on the quality of fresh milk is completely in accordance with the EU regulations. The regulation on conditions for farms and conditions for animal welfare on farms sets the rules for building new farms or adaptation of existing objects. It is compatible with EU measures related to environment protection, animal welfare, and sanitation.
Many of the small dairy farms in Croatia still do not deliver their milk to a dairy at all and the quality of milk is not comparable with that of the EU, where more than 90% of the milk meets the international norms for l extra class; in Croatia only 40% of fresh milk meets the international standards (Kovačić and Božić 2009).
International competitiveness can rely on two factors: price competitiveness or product quality. In the former case, long-run competitive advantage depends on securing a lower comparative cost structure (Porter 1990).
As Gorton and Davidova (2001) point out, DRCs have been widely used in the analysis of agricultural policy and to identify areas in which productivity should be improved in Central and Eastern Europe (CEE). By comparing DRCs from nine countries in CEE, they find that in general crop production is more internationally competitive than livestock farming.
NMS-10 = Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia.
Some horticultural commodities (natural honey, plants, and parts of plants for pharmaceutical purposes) also belong to the aggregate of agro-food products.
These are meat of bovine animals, fresh or chilled; meat and edible meat offal, not elsewhere specified (n.e.s.); liver of any animal, prepared or preserved; meat, offal of bovine and poultry, prepared or preserved, n.e.s.; fish, fresh (live or dead) or chilled; fish salted but not dried or smoked, fish in brine; crustaceans, other than frozen; other beet or cane sugar and pure sucrose, in solid; sauces, mixed condiments and seasonings, mustard; soups and broths and preparations therefore.
Because export data from Croatia to the EU-25 market was not available, the data for the imports by the EU-25 from Croatia were taken instead to calculate the respective RXA values. These data were obtained from EUROSTAT (2008).
The export data of the EU-25 to Croatia was obtained indirectly. UNSD (2008) provided the data on imports of each member of the EU-25 to Croatia. These figures were then summed up to get the total of the EU-25 in order to calculate the respective RXA values.
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Acknowledgements
The authors are grateful to seminar participants in Rome, Ghent, and Zagreb for helpful comments. Many thanks go to Štefan Bojnec for his valuable suggestions regarding the methodology; he also co-authored a preliminary draft of this paper. We are indebted to two anonymous reviewers. Financial support by Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) under the project “Croatia’s EU Accession: Socio-economic Assessment of Farm Households and Policy Recommendations” is gratefully acknowledged.
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Frohberg, K., Zier, P., Möllers, J. et al. Croatia’s Dairy Sector—Can it Compete in the European Market?. Int Adv Econ Res 16, 223–236 (2010). https://doi.org/10.1007/s11294-009-9253-4
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DOI: https://doi.org/10.1007/s11294-009-9253-4