The impact of subsidies on agricultural income in The Republic of Croatia

Abstract

Establishment of FADN in Croatia enabled the assessment of the importance of subsidies for the agricultural producer’s income. Low and variable farm income has been a main rationale for heavy government intervention in agricultural markets and income transfers to farmers. According to the analysed data subsidies have the greatest importance for the types such as grazing livestock and dairy farms, while the least dependent on subsidies are horticultural crops. The smallest share of the subsidies in gross farm output has the largest holdings (>500,000 EUR) and the smallest (4,000-8,000 EUR), and the largest one has an economic size of 50,000-500,000 EUR.). The share of subsidies in the total output is the same in both the Adriatic and Continental regions and does not depend on the age of the farm holder. Since Croatian farms are heavily dependent on subsidies, and in the light of the announced changes in the new Common Agricultural Policy (2021-2027), it is possible to expect a reduction of gross farm income, where the most vulnerable types are cattle, sheep and goat.