Project on LAND CONSOLIDATION IN CROATIA

Transcription

1 Ministry of Agriculture, Forestry and Water Management Swedish International Development Cooperation Agency Project on LAND CONSOLIDATION IN CROATIA Project document Zagreb, April 2006

2 i Field Code Changed Table of Contents 1 INTRODUCTION PROJECT SETTINGS Croatian Agricultural Policy Specific Issues Related to the Pilot Project Croatian Agricultural Policy and EU Common Agricultural Policy Key institutions for the implementation of the project AGRICULTURAL LAND IN CROATIA Agricultural Land Use Far m Structure Cadastral and Land Book Registers Agricultural Land Market OPTIONS FOR LAND CONSOLIDATION IN CROATIA Introduction Traditional land consolidation schemes Integrated Approach Options for Land Consolidation in Croatia PROJECT DESCRIPTION Objectives Project Outputs and Activities SIDA PRIORITIES BUDGET Croatian Contribution Swedish contribution Project budget Budget management MONITORING, ASSESSMENT AND REPORTING Monitoring Meetings Reporting Assessment at the End of the Project Annexes Annex 1: Logical Framework Matrix Annex 2: Budget Exchange rates as per February 2006 Currency 1.00 HRK 1.00 EUR 1.00 SEK HRK EUR SEK i

3 1 INTRODUCTION The government of Croatia has recognised the urgent need for firm actions to improve the competitiveness of the agricultural sector, not least in the light of the accession to the EU and its Common Agricultural Policy. One of the fields that need to be addressed is the uncompetitive farm structure characterised by small and fragmentised landed property. Land consolidation has been defined as an area for development cooperation based on numerous discussions between the governments of Sweden and Croatia. The Swedish International Development Co-operation Agency (Sida) responded by commissioning a discussion paper 1 on land consolidation, which initiated the formulation process of the project Land Consolidation in Croatia (henceforth referred to as the Project). The Project comprises two phases, i.e. Inception Phase for the period of 9 months (from September 2005) and Implementation Phase (starting in June 2006). The aim of the Inception Phase has been to prepare the project documents that will set the guidelines for the Implementation Phase. The Inception Phase has included following activities: Formation of the Project Coordination Unit team that will be established at the Agricultural Land Department within the Ministry of Agriculture, Forestry and Water Management (MAFWM); Consultations with representatives of various institutions and with authorities at regional and local levels; Commissioning six national consultants entrusted with analysis of Croatian laws and regulations referring to land consolidation; Organizing workshop to discuss the preliminary findings of national consultants; and Participation in international events to draw on the regional and international experiences on land consolidation. The Project Document includes the Introduction, seven chapters and two annexes. The sequence of the chapters is as follows: The Environment for the Implementation of the Pilot Project, Agricultural Land in Croatia, Options for Land Consolidation in Croatia, Project Description, Sida Priorities, Project Budget, and Monitoring, Assessment and Reporting. The annexes comprise Logical Framework Matrix and Project Budget. The pillar of the Project Document is chapter 5, Project Description, which outlines the Project (expected outcomes and planned activities). It has been prepared in close collaboration with the representatives of regional and local self-government units, as well as relevant institutions at national level. Chapter 2, The Project settings, brings general information on agriculture and rural development in Croatia, and outlines institutions and authorities at national, regional and local levels relevant for the Project. Chapter 3, Agricultural Land in Croatia, outlines information on the area of agricultural land, farm structure and agricultural land market in Croatia. Chapter 4, Options for Land Consolidation in Croatia, discusses various land consolidation schemes and 1 Developing an Improved Farm Structure in Croatia A Discussion Paper, Draft version,

4 lays down the arguments for the proposed project outline. It puts forward a hypothesis that an effective land market would resolve the farm structure issue, without significant expense for the government. Chapter 6, Sida Priorities, outlines the issues that Sida would like to be given importance during the implementation. Chapter 7, Project Budget, lists Swedish and Croatian contributions to the Project, and how to manage them. The monitoring, assessment and reporting of the Project are presented in chapter 8, Monitoring, evaluation and reporting. The information presented in the Project Document refers to the whole of Croatia. Specific information on selected pilot locations can be found in the notes collected at the meetings with the representatives of selected pilot locations during the Preparation phase. At the beginning of the Implementation phase, reports on the conditions on the selected location with specific information, based on statistical and other relevant data will be submited. 2 PROJECT SETTINGS 2.1 Croatian Agricultural Policy The Agricultural Law from 2001 (Official Gazette 66/01 and 83/02) is a basis for the reform of agricultural policy in Croatia. The Agricultural Law sets out the objectives and measures of agricultural policy, defines beneficiaries, family households, institutional aid, monitoring and reporting in agriculture as well as administrative and inspection control. According to the Agricultural Law, the primary objectives of the Croatian agricultural policy are to: Ensure nutritional safety of the population by competitive domestic agricultural produce; Promote a more efficient agricultural production and marketing for the purpose of competitiveness-building at both domestic and world markets; Ensure the farmers a fair standard of living and contribute to the stability of agricultural income; Ensure that consumers have access to suitable and stable food supplies, in line with their demands, in particular with regard to the price and quality of food and food safety; Preserve natural resources by promoting sustainable and organic agriculture; and Preserve and develop rural areas and values. National agricultural policy measures are economic measures for achieving the objectives of an agricultural policy. According to their field of action, they are classified under market and price policy measures, structural policy measures and land policy measures. Market and price policy measures influence the stability of domestic agricultural produce market, while strengthening the competitiveness of the Croatian agriculture, and implementation of commitments within trade agreements. These include stipulated prices, financial assistance and compensations, interventions on domestic market, measures for sale and consumption stimulation, measures to redress the balance of supply. 2

5 Structural policy measures encompass a set of measures that should stimulate economic efficiency of agricultural production, thus ensuring stable income and fair standard of living for farmers in rural areas, as well as balanced development of agricultural regions and rural areas. This includes support to less favoured areas, to the development of agriculture taking care of the environment and preservation of biodiversity, to farm investments, to agricultural training, to u young farmers set-up, to early retirement schemes, and to regional development of agriculture and supplementary activities on farms. Land policy measures include a set of measures influencing the rational management of agricultural land as a resource of the special national interest. These measures are: the disposal of the state-owned agricultural land, encouraging better management of agricultural land, and protection of agricultural land from pollution. According to the Law on Agriculture (Official Gazette 66/01 and 83/02), an agricultural policy is to be implemented in line with the National Programme for Agriculture and Rural Areas which sets short- and long-term objectives, measures, time sequence and deadlines for the realisation of these objectives, expected effects, as well as sums and sources of funding for the implementation of agricultural policy measures. The work on the National programme for Agriculture and Rural Areas is underway. According to the Law on Agriculture, MAFWM and other institutions are responsible for setting-up and managing the Farm register. The Farm register is obligatory for all farms that market their products and apply for incentives and other types of agricultural support. The Farm register is a new data source, used as a basis for planning of incentives and other financial support schemes in agriculture, forestry and fisheries. Apart from the land policy, the successful implementation of the project `Land Consolidation in Croatia demands particular structural policy measures that can indirectly give impetus to the development of the privately owned agricultural land market and improvement of the farm structure Support Schemes in Agriculture The Law on State Subsidies in Agriculture, Fisheries and Forestry (Official Gazette 17/02, 117/03, 82/04 and 12/05) marked the beginning of subsidy reform. A basic assumption behind subsidy reform is a division on commercial farms that market their products and noncommercial farms that do not market their products and use most of them themselves. One of the objectives of subsidy reform is to encourage non-commercial farmers to leave the agricultural production, and to create the conditions for the development of potential commercial farms. The Law on State Subsidies in Agriculture, Fisheries and Forestry (Official Gazette 17/02, 117/03, 82/04 and 12/05) stipulates four state subsidy schemes for agriculture, fisheries, forestry and rural development: production support scheme, income support scheme, capital investment scheme and rural development scheme. The production support scheme provides incentives for agricultural production on farms registered in the Farm Register and other registers. The production support scheme also includes subsidies for the cultivation of crops, seedlings, lasting olive tree plantations and olive oil, stockbreeding and livestock products, etc. Under this scheme, incentive payments are based on a hectare of agricultural land, an olive tree, a 3

6 kilo of tobacco, one head of cattle, a litre of milk, bee-association, a head of feathered game, etc. The beneficiaries of the income support within the same scheme are non-commercial farms owning or using at the most 5 ha of arable agricultural land. The status of noncommercial farmer permanently excludes the possibility of changing the status or applying for the subsidies within the production support scheme and capital investment scheme. The rural development scheme encompasses the programme for rural area development, the programme for the preservation of autochthonous and protected breed, and marketing of agricultural products. The aim of rural area development is a sustainable development of rural areas by ensuring adequate working and living conditions and preserving natural and cultural heritage. The aim of the capital investment scheme is to encourage investments in agricultural production and rural development, and development of business relationships between commercial banks and farmers. The grants in terms of capital investments refer to the funds within the state budget that MAFWM uses in financing the total value of investment for which commercial banks extend loans to farms. The participation of a farm in the production support scheme or the income support scheme depends on the total extent of its production. It can be calculated by summing up individual production units on a farm. The minimum extent of each production unit is 0.4 units. In order to get any incentive within these two schemes, the minimum sum of a farm has to equal 3 units. The long experience of the implementation of the income support model revealed it as an obstacle to the development of privately owned agricultural land due to the system of calculation of farm production extent. Thus, a non-commercial farm has to keep its land in order to get at least 3 production units, and the right to income support. Therefore, it is necessary to harmonise the income support model with the adequate EU support scheme regulations, with the aim of making the privately owned agricultural land market function, and to enable successful implementation of the Land Consolidation Pilot Project in Croatia. Relevant EU support is defined by the Article 23 on Early Retirement (EU Regulation 1698/2005 of September on rural development support provided by the EU Rural Development Agricultural Fund). The implementation of the Article 22 within the same Regulation on the Young Farmers` Set-up has similar effects. In 2004, MAFWM registered 2,262 applications for the income support, which corresponds to the sum of HRK 13,9 million. The outlays by far exceeded the effects of the implementation of this scheme, if taking into account the fact that it did not encourage the development of the privately owned agricultural land market, and, consequently, the farm structure. The capital investment scheme also includes the support for the purchase of privately owned agricultural land. In 2004, according to MAFWM, there were only 18 applications for the return of capital investment for the purchase of privately owned agricultural land, and 13 applications thereof were granted HRK 0.3 million that MAFWM pays from the state budget. The capital investment scheme is an example of measures that stimulate the development of the agricultural land market, but at the same time can bring about unreal prices of agricultural land. 4

7 The operative implementation of the market and structural support measures in agriculture is within the competence of the Bureau for Market and Structural Support at MAFWM. 2.2 Specific Issues Related to the Project Rural Areas and Land Consolidation The living standard in most rural areas in Croatia is, generally speaking, very low and living conditions quite poor. The trend of rural-urban migration is continuing. A general characteristic of Croatian rural areas is poor access to physical infrastructure (underdeveloped public water supply and sewage systems; poor condition of local and unclassified roads). The existing situation has negative implications for the overall economic development in rural areas where agriculture is the major economic activity. Apart from improved infrastructure, nonagricultural economic activities should require promotion. There is a growing importance of diversification of the agricultural production, including nonagricultural services and commodities, such as rural tourism or added value on primary produce. Investments in rural areas are badly needed in order to reduce a depopulation trend and stimulate economic and social development. Such investments not only include infrastructure investments, but also investments in human resources. Extremely fragmented agricultural holdings, underdeveloped human resources and underdeveloped infrastructure are main obstacles and barriers to the development of rural areas and growth of market orientation of the agricultural sector. Therefore, land consolidation represents one of the priorities for national, regional and agricultural policy Far mers' associations At the moment, farmers in Croatia have been organising into two basic association forms as follows: agricultural cooperatives and agricultural associations. According to the data from the Ministry of Agriculture, Forestry and Water Management, in the area of the Republic of Croatia in 1991 there were 290 agricultural cooperatives and 400 in The greatest number of present agricultural cooperatives is engaged in purchase-sale activities and a smaller number in manufacturing-processing activities. In order to stimulate the development of the agricultural cooperative movement, the Ministry of Agriculture, Forestry and Water Management has brought a Programme of development of the agricultural cooperative movement for the period which includes the implementation of two projects as follows: the establishment of agricultural cooperatives and the development of agricultural cooperatives. In a period from 2004 to 2006 more specialised agricultural cooperatives have been established, but still their common access on the market and representation of the common interests are not enough developed. Nowadays, more and more agricultural family farms are becoming members of the agricultural cooperatives in order to access the global competitive market. It is evident that the agricultural cooperatives in Croatia are going to be developed in order to compete with the EU cooperatives in a near future. 5

8 Until today, 655 agricultural associations have been registered in the associations register and they present their professional interests. Agricultural cooperatives and associations are essential partners of the Project, and the development of the agricultural cooperatives in selected project areas is of great importance for the project Irrigation of Agricultural Land and Land Consolidation According to the Agricultural Census 2003, only 9,264 ha or 0.43 per cent of arable land are under irrigation system. When compared to other European countries, the total irrigation area is significant limited. In order to increase the competitiveness and export of agricultural produce, Croatia has to increase invest in irrigation system. Negative consequences of the 2003 drought draw the attention of the Croatian government to this disturbing fact. The government gave an impetus to the creation of the National Program for irrigation and soil and water management or the Master plan, which envisages that the area under irrigation will increase to at least 30,000 ha in the next ten years. The master plan is a strategic project of the Croatian government, with the aim of organising the agricultural land irrigation policy. Past experience have shown that the most successful hydro-melioration solutions were applied in reclaimed areas, which were preceded by various land consolidation schemes. Since land consolidation is a precondition to the implementation of irrigation scheme, it is necessary to establish close links between the project `Land Consolidation in Croatia and the National program for irrigation and soil and water management Environmental Protection and Land Consolidation Agriculture has an important multifunctional role in rural areas. This means that agriculture does not only produce food, but also preserves natural resources and cultural environment in rural areas. Sustainable agriculture can contribute to an environmentally balanced and sustainable development. Agriculture is an important component of the Croatian economy and one of the rare economy sectors, which is for its most part is based on renewable resources. The physical planning strategy identifies the fragmentation of agricultural land as a problem and states that land improvement measures must be accompanied by environment protection measures, when so required. Therefore, during the implementation of specific activities, the project Land Consolidation in Croatia will have to take into consideration environment protection measures and cooperate with proper authorities and others on this issue. 2.3 Croatian Agricultural Policy and EU Common Agricultural Policy Croatia was granted formal candidate status in June The Stabilization and Accession Agreement came into force on February 1, In October 2005, formal negotiations for the EU accession started. The negotiations on specific chapters within the EU legal heritage are underway. These chapters concern agriculture and the agricultural land market, including Chapter 11 Agriculture and rural development, Chapter 12 Food safety, veterinary service and phytosanitary protection, Chapter 13 Fisheries, and Chapter 14 Free Capital Transactions. 6

9 As a member state, Croatia will have to adopt the Common Agricultural Policy (CAP), with a transition period and/or exemption from certain parts of the CAP. The aim of the CAP is to provide more reasonable living standard for farmers and quality food at fair prices for consumers. Food safety, rural development and preservation of the rural environment with the use of sound farming practices are key elements of the EU Common Agricultural Policy. The negotiations for the EU accession will run concurrently with extremely demanding process of compliance of the national agro-food legislation with the EU legal requirements in accordance with the Pre-accession Economic Programme and National EU Accession Programme for Croatia. These documents also include the agricultural sector, and lay emphasis on the need to harmonize structural policy measures, given the unfavourable farm structure in Croatia. In the pre-accession period, which is underway and will last until Croatia finally joins the EU, some of the high-priority will be to: Speed up structural changes by increasing support for the implementation of necessary structural policy measures and to proceed with the reform of support scheme with the aim of harmonization with the EU support scheme; Improve the competitiveness of the agricultural sector by stimulating investments in technical and market infrastructure (e.g. development of the irrigation and drainage system, improvement of storage and distribution capacities of basic agricultural products); Administer the pre-accession Structural fund - SAPARD in accordance with the EU demands in the National Bureau for Market and Structural Support in agriculture, which will gradually grow into the National Paying Agency. It will be responsible for the implementation of the CAP after the accession to EU. Speed up the Integrated Administrative and Control System (IACS), which will also encompass the Geographic information system for the agricultural subsidy payment control, the Land Parcel Identification Systems (henceforth referred to as LPIS) as an upgrade to the existing Farm register. The establishment of LPIS will be extremely demanding for the Croatian agricultural policy due to large number of small land parcels and frequently unregulated property right issues. The funds under the EU pre-accession programme for agriculture and rural development, SA- PARD, are available to EU member states to support structural reforms and other measures in the agricultural sector for the adoption of the EU legal requirements. In order to qualify for SAPARD assistance, the Agriculture and Rural Development Plan was prepared, and he Bureau for Market and Structural Support has been made responsible for managing SAPARD. It is expected that the SAPARD funds will become available in The projects to be financed under the SAPARD programme will include: Investment in agricultural holdings, Processing and marketing of agricultural and fish products, and Development and improvement of rural infrastructure. The preparation of the Agriculture and Rural Development Plan will start during this year. It will be used as a basis to access new the pre-accession programme IPARD. If possible, Croatia will use the possibility to propose the schemes for Early Retirement and Establish- 7

10 ment of Young Farmer, which would have considerable influence on a land consolidation policy in the future. 2.4 Key institutions for the implementation of the project The Government of Croatia is based on the separation of powers between legislative, executive and judicial branch. The Croatian National Parliament is a representative body of all citizens, and holds the legislative branch of government in Croatia. The judicial branch of government is exercised by courts of law; it is autonomous and independent. The judicial branch of government is within the competence of magistrates` courts, municipal courts, county courts and commercial courts, Higher magistrates, Court of Croatia, Higher Commercial Court, Administrative Court of Croatia, and Supreme Court of Croatia. The centres and local jurisdiction of courts of law are regulated by law. Land registers/land books are situated in 106 land registry departments within county courts. General Attorney s Office is an independent and autonomous legislative body representing Croatia. It is authorised to act in the interest of protecting the assets belonging to Croatia. General Attorney s Office has, inter alia, jurisdiction over the protection of state-owned agricultural land. Law defines the domain, authority and jurisdiction of General Attorney s Office. Municipal attorney` offices are established for the territory within the domain of municipal courts, and county attorney` offices are established for the territory within the domain of county and commercial courts. The Government of Croatia is responsible for the executive branch; it makes regulations, submits bills and state budget, and enforces laws and other regulations enacted by the Croatian Parliament. Members of the Government of the Republic Croatia are: prime minister, vice prime ministers and ministers responsible for the functioning of the ministries. Law defines the organization and affairs of the ministries and public services and their procedures. An efficient implementation of the Land Consolidation Pilot Project in Croatia, as an interdisciplinary project, requires close collaboration of almost all ministries and civil administration services, the most important being ministries and state administration offices as follows: MAFWM, Ministry of Justice, and State Geodetic Administration. MAFWM manages administrative and legal affairs related to agriculture, forestry and water management. A part of these affairs, which are of utmost importance to the Land Consolidation Pilot Project, touch upon the issues of agricultural production, agricultural policy, rural development, implementation of subsidy policy measures in agriculture, the protection and disposal of state-owned agricultural land, coordination and harmonization of the Croatian agricultural and rural development policy with the EU legal acquisition. The Project Coordinating Unit is a constituent of the Agricultural Land Department within MAFWM. The Croatian Agriculture Extension Institute is a governmental institution with a mediation role in the implementation of family holdings and rural area development subsidy measures. The main task of the Institute is to provide technical recommendations, instructions and practical examples in order to demonstrate new technologies and practices, and to disseminate available know-how and skills necessary for the development of agricultural produce on agricultural holdings. In addition to its advisory services, the Institute also provides advices and 8

11 information to producers regarding the general administrative services provided by MAFWM and regional and local self-government. The Institute is organised into the head office in Zagreb, and 21 regional and 94 branch offices; it is staffed with various experts in the filed of agriculture. The Croatian Agriculture Extension Institute is a key partner for the implementation of the Project, primarily in terms of information dissemination and creating a positive environment for the implementation of the Project. The Ministry of Justice is responsible for administrative and legal affairs related to the fields of civil, criminal and commercial law, as well as administrative trials. A part of the administrative and related affairs will have a significant influence over the project `Land Consolidation in Croatia, including ownership rights, property rights issues in terms of land expropriation and other types of property-restrictions, property rights issues in terms of agricultural land and land transactions, agricultural operations that are not within the domain of other administrative body as well as the compensation for the property confiscated during the Yugoslav communist government outside of competence of other state administration bodies. The State Geodetic Administration is a state administrative office responsible for surveying, cartography, cadastre, and photogrammetry, digitalisation of cadastre and geodetic and physical system, official state cartography (1:5000, 1:25000, 1:100000, 1:200000), geodetic records, statistical records on the real estate cadastre, physical units and pipe and cable networks, surveying and cadastral issues for the state border. The State Geodetic Administration is organised into the head office in Zagreb and 112 cadastral offices. The State Geodetic Administration is a key partner for the implementation of the project `Land Consolidation in Croatia. According to the Law on Local and Regional Self Government (Official Gazette 33/01), local self-government units are municipalities and towns, and regional self-government units are counties. Croatia is divided into 20 counties and the City of Zagreb. The counties have 425 municipalities and 122 towns. A municipality is a self-government unit covering several villages that represent natural, economic and social entity with common interests of the population. A town is a unit of local self-government and a county centre, with more than 10,000 inhabitants. It is an urban, historic, economic and social entity. A county is a unit of regional self-government. Its territory represents natural, historic, communicational, economic, social and self-governmental entity. The focus of its constitution is regional. The county administration runs affairs within county jurisdiction. Administrative bodies are run by a department head, appointed by a county board, based on the job announcement and at the suggestion of a county head. Most county administrations also include a Department for Agriculture and Forestry or Department for economic development, which is responsible for agriculture. A county is autonomous in making decisions of regional importance, especially the issues related to education, health care, physical and urban planning, and networking of educational, health, community and cultural institutions. 9

12 3 AGRICULTURAL LAND IN CROATIA 3.1 Agricultural Land Use There are two official sources of statistics in Croatia, containing, among others, figures on the use of the agricultural land: Agricultural Census from the year 2003 and Statistical Yearbook. The third source on the use of the agricultural land is the Farm register, used by the Ministry of Agriculture, Forestry and Water Management for administrative purposes as well as for the control of agricultural incentives. The figures on land use presented by these sources differ significantly depending on the use of statistical methods. Data for the Agricultural Census 2003 were provided directly by all households with agricultural production and by all agricultural companies. Its main shortcoming is, inter alia, the incomplete information on abandoned land. According to the Agricultural Census 2003, agricultural land totalled 1,077,404 hectares as shown in Table 1 below, which also provides details on the land use in the four counties with selected pilot locations. Table 1 Land use in selected Counties in the year 2003 (hectares) County Arable land and gardens Orchards Vineyards Meadows Pastures Total agricultural land Primorsko-Goranska ,154 13,010 17,742 Varaždinska 27, ,287 7, ,513 Vukovarsko-Srijemska 117,850 1,341 1, ,078 Zagrebačka 58,201 2,736 2,578 26,686 2,112 92,312 Total Croatia 808,202 31,163 27, ,790 60,561 1,077,404 Source: Agricultural Census 2003, Central Bureau of Statistics The figures in the Statistical Yearbooks are based on cadastre data and expert evaluation estimates on the land use. According to the Statistical Yearbook 2005, the total agricultural land in Croatia is 2,695,000 hectares as shown in Table 2. However, due to the unreliable cadastre records and lack of the updates in a segment of cadastre records, the Statistical Yearbook figures are considered to be less trustworthy than the data provided by the Agricultural Census The discrepancies between the figures in the Agricultural Census 2003 and the Statistical Yearbook 2005 are significant, as demonstrated by comparing Table 1 and Table 2. It is therefore assumed that the data in Agricultural Census 2003 give the most realistic picture on the current situation of the agricultural land use in Croatia, although the data lack an appropriate verification and are not yearly updated. Table 2 Land use according (hectares) including unused arable land, gardens Arable land and gardens *) Orchards Vineyards Meadows Pastures Total Agricultural land Total Croatia 1,110,000 66,000 50, ,000 1,094,000 2,695,000 Source: StatisticalYearbook2004, Central Bureau of Statistics -Excluding non-cultivated arable land & gardens The third source of data is the Farm register established in the year 2003 in accordance with the Law on Agriculture (Official Gazette 66/01 and 83/02). All farms selling their produce on the market, and receiving direct payments and income support are obliged to be registered in 10

13 the Farm register. This also applies to the farms receiving the incentives from the Ministry of Agriculture, Forestry and Water Management in accordance with the Law on incentives and compensations in agriculture and fisheries (Official Gazette 17/02, 117/03, 82/04 and 12/05). The farm register accordingly accounts for the land use by all registered agricultural holdings. In 2004, the total agricultural land registered in Farm register was 975,197 hectares, corresponding to approximately 90 % of the total agricultural land recorded by the Agricultural Census The Farm register 2004 confirms that Agricultural Census 2003 reflects the real situation and also gives evidence that total surface area of the agricultural land under cultivation is much smaller than suggested by the Statistical Yearbook Table 3 Land use according to Farm Register 2004, selected counties and Croatia (hectares) County Arable land Total Agricultural land Orchards Vineyards Meadows Pastures and gardens Primorsko-Goranska 698 1, ,684 7,042 Varaždinska 24, , ,904 Vukovarsko-Srijemska 115, , , ,855 Zagrebačka 46,105 1,073 1,448 13,521 2,120 64,268 Total Croatia 766,005 15,604 16, ,851 73, ,197 Source: Farm register 2004, MAFWM 3.2 Far m Structure The agricultural population in relation to the total population has dropped from 29 per cent in 1971 to 5 per cent in 2001 as shown in the diagram below. Over a long period, the Croatian agriculture was characterised by the dual structure of ownership. In the past, during the socialist era, land ownership and development investments were channelled to a small number of large socially owned agricultural enterprises, while small family agricultural holdings were marginalized. 50% 40% 30% 20% Agricultural population in relation to the total population This resulted in the present uneven ownership structure, with a large number of family 0% smallholdings, unable to generate a profit that would be sufficient for a decent living standard, and necessary investment for improved production. On the other hand, there are few agricultural holdings/legal entities in succession to former socially owned agrocombinates. The present ownership structure still largely reflects forty-years-long socialist system of government and the application of lax inheritance laws. A dual structure of agricultural holdings in Croatia is demonstrated in Table 4 below. 10% Table 4 Number and size of farms in Croatia in 2003 Farm size, Farm households Business entities Total 11

14 ha no. ha no. Ha no. ha < 1 227,434 50, ,761 50, ,933 67, ,984 67, ,129 65, ,174 65,438 > 3 109, , , , ,965 Total 448, ,196 1, , ,896 1,070,404 Source: Agricultural census 2003, Central Bureau of Statistics Family Sector According to the Agricultural Census 2003, there are 448,532 family farms, utilizing 602,183 hectares of arable land and gardens, corresponding to an average farm size of 2.0 hectares (see Table 6). Table 4 shows that three quarters of all family farms are smaller than 3 hectares, but cultivate only 21 % of all utilised agricultural land owned by the private sector. According to the Agricultural Census 2003, only 21,000 family farms had an average size of agricultural land larger than 10 hectares, as shown in Table 5. Table 5 Distribution of family farms in 2003, according to size of agricultural land Area (ha) < >20 Total Number of family farms 227, ,062 45,732 42,426 15,628 5, ,532 Share (%) Source: Census of Agriculture 2003, Central Bureau of Statistics The family sector occupies approximately 80 per cent of the totally 853,196 hectares of agricultural land, holds 82 per cent of the livestock, owns 99 per cent of all tractors, and accounts for approximately 95 per cent of the total workforce in agriculture (Agricultural Census 2003, Central Bureau of Statistics). Large majority of family farms are extremely fragmentised. In average, one family household is divided into 4,4 parcels, with an average size of 0,45 hectares. Table 6 Land fragmentation of family holdings in 2003 Specification Value Household with utilised agricultural land, number 448,532 Utilised agricultural land, hectares 856,196 Parcels of utilised agricultural land, number 1,918,358 Average farm size, hectares 1,958 Source: Agricultural census 2003, Central Bureau of Statistics From figures in Table 6 it can be calculated that family farms are as an average divided into 4.4 parcels/farm and that the averages size of the parcels is 0.45 hectare, which makes up for the average size of the family farm of 2.0 hectares. As mentioned above, the fragmentation can mainly be ascribed to lax inheritance laws that do not contain restrictions for splitting up farms between heirs, even if they thereby become unviable. Many family farms are therefore no longer competitive, or economically viable in medium and long-term perspectives. The owners may earn their living in other sectors, use the 12

15 homesteads as dwellings and use the land for subsistence farming. Some of these smallholdings serve as a last resort for people without sufficient pensions or other income opportunities. Many of these farms are only producing for self-consumption and not for the market Agricultural Companies There are 1,364 legal entities with 217,208 hectares of agricultural land, according to the Agricultural Census Table 7 Distribution of legal entities in 2003, according to size of agricultural land Area, ha < >100 Total Number of legal entities ,364 Share (%) Source: Agricultural Census 2003, Central Bureau of Statistics A significant difference between family farms and agricultural companies/legal entities, in terms of average size and degree of fragmentation, lies in the fact that a majority of the latter (mainly ex-agrocombinates) used the land that was consolidated through the arodonacija and komasacija land consolidation schemes. Table 8 Land fragmentation of legal entities in 2003 Specification Value Business entities, number 1,364 Utilised agricultural land, hectares 217,208 Parcels of utilised agricultural land, number 17,718 Average farm size, hectares 168 Source: Agricultural census 2003, Central Bureau of Statistics An averages farm size of business/legal entities is 168 hectares (Table 8). They are in average divided on 17 parcels with an average size of 13 hectares Analysis of Farm Register infor mation According to the Farm Register in 2004, there are 151,692 commercial farms, thereof 148,470 family farms 1,720 crafts and 1,502 legal entities, which are using 975,197 ha of agricultural land with an average surface area of 4,6 ha. In compassion to 2003, the number of registered farms increased by 11,000. Table 9 County Agricultural land by user type, bland use categories and organisational types (ha) Land use category Area cultivated by family farms Area cultivated by other types of farms All farms Primorskogoranska Agricultural land 5,345 1,697 7,042 - thereof cultivated 3, ,358 Varaždinska Agricultural land 22,035 8,868 30,904 13

16 County Land use category Area cultivated by family farms Area cultivated by other types of farms All farms - thereof cultivated 21,446 8,825 30,271 Agricultural land 84,758 34, ,855 - thereof cultivated 84,138 33, ,751 Vukovarskosrijemska Zagrebačka Agricultural land 56,954 7,314 64,268 - thereof cultivated 54,876 7,271 62,148 Croatia Agricultural land 754, , ,197 - thereof cultivated 686, , ,278 Source: Farm register 2004, MAFWM 3.3 Cadastral and Land Book Registers Since 1828 Croatia belongs to the dual Austro-Hungarian tradition of property registration system encompassing land book records and cadastral records. The key laws governing land registration in Croatia are: the Land Registration Law (Official Gazette 91/96), the State Survey and Real Estate Cadastre Law (Official Gazette 128/99), and the Property and Other Material Rights Law (Official Gazette 91/96). Cadastral records are located in 112 cadastral offices (20 regional and 92 branch offices) of the State Geodetic Administration and The Office for Cadastre and Geodetic Affairs of the City of Zagreb, while 109 Land Registry Offices within the Municipal Courts manage the land book function. During the socialist era, cadastral records and land-book records were poorly maintained and updated, and these conditions prevailed until The land book and cadastral records are not coordinated, and often do not reflect the real situation. The lack of coordination is one of the main obstacles to the development of the real estate market, as well as the agricultural land market. The implementation of the Land Registers and Cadastral Offices Improvement Project (henceforth referred to as the Land Register Project) was launched in 2003 with the aim of creating an efficient system of land registration management, which would contribute to render the real estate market more effective. Other purposes of the Land Register Project are: Speeding up the real estate registration in cadastral, as well as land registry system Rationalization of the both systems Coordination of the records within both systems, and guarantees that they reflect the real situation on the ground, if necessary, by taking new cadastral surveys, improving the registration procedure in the land registries and by their systematic reconstruction in certain parts of Croatia. Removing the obstacles to the implementation of efficient mortgage system. The State Survey and Real Estate Cadastre Law (Official Gazette No. 128/99) stipulates that the state survey and real estate cadastre are based on annual and several-years programmes. In the year 2001, the National Programme on State Survey and Real Estate Cadastre for the period was launched. This programme defines the affairs and tasks under the scope of the State Geodetic Administration, and the areas in which these will be performed. The aim is to establish precise, reliable and up-to-date cadastral records based on the real 14

17 situation. They would be coordinated with land books for the fixed locations with the aim of ensuring legal safety of the real estate ownership. The programme was implemented through four sub-programmes representing complete legal, technological, organizational and financial units. Sub-programme A) encompasses affairs and tasks related to the creation of the realestate cadastre for the agricultural land which is of special interest to Croatia. The project envisages organization of records for the area of 25, 000 hectares of agricultural land. The implementation of this Sub-programme will enable the realization of several aims: The process of harmonization between cadastral and land book records and the real situation on the field; The improvement of the cadastral and land book records with the aim of creating real estate cadastre; Enabling the disposal, especially the selling, of state-owned agricultural land Improvement of water goods; Improvement of road infrastructure; Support to the tax evaluation and value of the land (new land classification following the survey); Creation of legal safety of real estate ownership; Table 10 shows the condition of the survey of state-owned agricultural land according to the programme. The largest areas of state-owned agricultural land have been surveyed in Vukovarsko-Srijemska County, where one of the selected pilot locations is situated. It needs to be emphasised that 26,057 of the state-owned land has been surveyed, but updates for 22,240 hectares of that land still have not been made in land book and cadastral records. Table 10 The condition of the state-owned agricultural land survey County Surveyed and registered Surveyed but not registered In the process of survey Osječko-Baranjska 2, ,909 Vukovarsko-Srijemska 1,180 8,862 1,122 Brodsko-Posavska 2,437 6, Virovitičko-Podravska 1,581 26,321 Sisačko-Moslavačka 1, ,343 Bjelovarsko-Bilogorska 1,596 3,221 17,753 Koprivničko-Križevačka 200 1,756 1,277 Total 3,817 22,240 17,066 61,518 Source: State Geodetic Administration, In the process of acquisition preparation 3.4 Agricultural Land Market Total agricultural land in Croatia consists of state and privately owned agricultural land. According to the Statistical Yearbook 2005, the total surface area of agricultural land is 2,695,000 hectares of which 890,000 hectares are state-owned and 1,805,000 privately owned. The agricultural land market is regulated by general laws and regulations including the Ownership and other Proprietary Rights Law (Official Gazette 91/96) and the Law on obligatory relations (Official Gazette 57/96, 68/98, 173/03 and 88/05). The state-owned agricultural land 15

18 transactions are regulated by the Agricultural Land Law (Official Gazette 66/01, 87/02, 48/05 and 90/05), in addition to applicable general laws and regulations. Thus, the dualism of legal system has been held, governing the complete agricultural land market State-owned Agricultural Land Market The Law on Agricultural Land from 1991 transferred the ownership of land that had previously been socially owned to Croatia. Disposal of state-owned agricultural land was initiated in 1994 in accordance with the Law on Agricultural Land. The disposals could be in the form of lease, sale, concession, life tenancy, donations and others types. In the period , a total of 308,288 hectares were disposed of as detailed in Table 11. Table 11: Disposal of state-owned agricultural land in the period (hectares) Type of disposal Agricultural land, hectares Share, % Sale 8, Donated 2, Leased 287, Life tenancy 4, Concessions 5, Total 308, Source: Agricultural Land Department, MAFWM Some of the lease agreements have been cancelled, or have expired. As a consequence, agricultural land is subject to disposal according to the Agricultural Land Law. In 2001, the new Law on Agricultural Land (Official Gazette 66/01, 87/02, 48/05 and 90/05) was adopted and later amended on several occasions in the period According to the Agricultural Land Law in force, local self-government units have to prepare programmes for the disposal of the state-owned agricultural land under their jurisdiction. If they fail to do so, regional self-government units should prepare programmes for the state-owned land within their territory. Based on cadastral maps and records, such programmes have to contain information on the areas allocated for restitution, selling, concession, leasing and other uses. To date, 363 local units of self-government have submitted their programmes to MAFWM, of which 331 have been approved, comprising 522,777 hectares in total. However, 96 local selfgovernment units have not yet submitted their programmes to MAFWM, while 73 do not have state-owned agricultural land within their territories. Table 12 shows different forms of disposal of agricultural land in the Programmes approved by MAFWM. Table 12 County Restitution Sale Lease Concession Others Total area Different forms of disposal of state-owned agricultural land in project selected counties Primorsko- Goranska 315 2,682 9,470 3, ,729 16

19 Varaždinska Vukovarskosrijemska ,540 24,383 5,004 10,701 1,382 2,015 51,011 Zagrebačka 1,518 10,082 4,687 2, ,870 Total Croatia 52, , , ,428 13, ,777 Source: Agricultural Land Department 2006, MAFWM According to the Law on Agricultural Land, state-owned agricultural land can only be disposed of when abiding public bidding procedures. Agricultural family farms and craftsmen, which are inscribed to the VAT system, have pre-emptive rights to purchase or lease stateowned agricultural land, if they meet other tender conditions stipulated by the Law on Agricultural Land. Business entities have pre-emptive rights for concession to the usage of stateowned agricultural land. Restitution procedures are regulated by the Law on the return of the property confiscated during former Yugoslav communist government (Official Gazette 92/96). The Ministry of Justice is responsible for the implementation. The decision to invite bids for buying or leasing state-owned agricultural land falls under respective municipal or town councils, which are also responsible for the selecting of the best bid. However, decisions have to be approved by MAFWM. If local self-governments do not announce a public tender, regional self-government unit has to do that. Table 13 County Lease of the state owned agricultural land Local government unit MAFWM approved decisions on inviting of bids MAFWM approved decisions on selecting the best bids ha No. ha No Varaždinska Primorskogoranska Vukovarskosrijemska 12 5, ,879 7 Zagrebačka 5 1, Total Croatia , , Source: Agricultural Land Department 2006, MAFWM Table 14 County Sale of the state owned agricultural land Local selfgovernment unit MAFWM approved decisions on inviting of bids MAFWM approved decisions on selecting the best bids 17