Farmers, what does July 1st mean for your sector?

The entry of Croatia into the EU brings changes in the financing of subsidies and direct payments in agriculture, as well as the opportunity to utilize funds from agricultural and rural development funds. It also means the abolition of all previous customs restrictions on the import and export of agricultural and food products, while Croatia retains restrictions on the purchase of agricultural land.

Thus, seven years after joining the EU, foreigners will not be able to purchase agricultural land, with the possibility of extending the deadline for another three years, according to the Ministry of Agriculture in explanations of the changes that will occur with Croatia’s entry into the EU.

Croatia’s entry into the EU also means the abolition of the remaining customs duties in trade between the EU and Croatia, allowing Croatia to export agricultural and food products to the EU market of half a billion consumers without these restrictions, while simultaneously opening its market to imports from the EU.

Croatia enters this large market with a new product – jam. Namely, Croatia is allowed to sell a product called ‘jam’ on the EU common market, even though it is not provided for by the relevant EU legislation. Thus, jam from Croatia becomes a novelty in the EU market, as emphasized by the relevant Ministry.

Croatia enters the EU market with currently only 12 protected products at the national level, such as Poljički soparnik, Krk and Drniš prosciutto, or Varaždin cabbage. After joining the EU, within a year, Croatia will be able to register and protect products at the EU level, according to the Ministry’s explanation, along with designations of origin, geographical indications, and traditional reputation of agricultural and food products.

The list of traditional expressions in the EU will include designations for wines Opolo and Plavac, as well as Samoborski bermet, along with geographical indications for strong alcoholic beverages – Croatian grape, Croatian herbal liqueur, Pelinkovac, Croatian old plum brandy, Slavonian plum brandy, and Zadar maraschino.

The Ministry also notes that, according to Croatian and European regulations, the production of alcoholic beverages for personal needs (such as distilling rakija) will still be possible. However, the sale of alcoholic products implies compliance with quality and labeling. Likewise, numerous unregistered rakija sellers at markets and along roads will have to adapt primarily to Croatian regulations, and thus to EU regulations.

They also remind that with Croatia’s entry into the EU, it will not be possible to plant new vineyards, but existing ones may be renewed. Namely, the ban on planting vineyards for all EU members is in effect until the end of 2015.

Croatia, upon entering the EU, retains the production of traditional products such as cheese and cream, as well as the custom of pig slaughtering, but compliance with regulations and hygiene conditions is required for sale.

Thus, in the production and sale of traditional products such as cheese and cream, hygiene conditions must be respected.

Croatian citizens will still be able to practice the custom of pig slaughtering and produce everything that derives from it (homemade sausages, kulen, ham, bacon, prosciutto, cracklings). However, meat intended for the market (markets, butcher shops, stores) must come from slaughterhouses and meat processing facilities that operate in accordance with EU regulations regarding hygiene and humane slaughter of animals, the Ministry explains, reminding that EU regulations concerning animal slaughter do not allow unnecessary suffering of animals, so the practice of stunning must also be applied in Croatia.

As Croatia becomes part of the single internal market upon entering the EU, veterinary inspections at internal borders between member states (with Hungary and Slovenia) will be abolished, while veterinary controls at the loading and destination points of shipments will be intensified.

Animal food products will no longer need to be accompanied by a veterinary certificate in the EU market (except in some cases, such as live fish and live shellfish), but only for export to third countries. Namely, new rules are being introduced in the EU for the import of live animals and animal products from third countries, and imports from countries and facilities not approved for import into the EU will no longer be possible.

In the case of commercial movement of animals (trade), they must be accompanied by prescribed veterinary certificates and other veterinary documents.

Croatian citizens will be able to freely purchase animal food products as finished products in other EU member states. Likewise, they will be able to ship animal food products produced in Croatia to other member states if they are produced in accordance with EU legislation.

Furthermore, as border controls on plants are abolished at the borders with Hungary and Slovenia, Croatian citizens will be able to freely bring in plants originating from EU member states (seeds, houseplants, garden plants, etc.) for their own needs, as well as order plants via the Internet, provided that they originate from the EU.

The procedure for traveling with pets – dogs, cats, and ferrets – has also been simplified.

Thus, the entry into the EU from third countries of up to 5 pets for non-commercial purposes, accompanied by their owner, will take place under the supervision of Customs officials and will be possible at all border crossings where customs officers are present, and these pets must be accompanied by an EU passport issued by an authorized veterinarian in Croatia.

In the case of bringing in more than 5 pets, the animals must be accompanied by a veterinary certificate, and this can only be done at border crossings where there is also a border veterinary inspection.

Requirements for the movement of other pets are not harmonized in all member states, so citizens should check the conditions that that country prescribes for specific species before traveling there.

While trade relations with EU countries will be much simpler from July 1st, trade relations between Croatia and other countries will also change, as trade agreements and free trade agreements that Croatia has concluded will cease to be valid. The greatest impact will be the withdrawal of Croatia from the CEFTA agreement, considering that the CEFTA countries’ market is currently the most important export market for Croatian agricultural and food products.

Also, as of the day of accession, Croatia’s international border becomes part of the EU’s external border – towards Bosnia and Herzegovina, Montenegro, and Serbia – there will be 7 border inspection posts at the external borders – 4 road (Bajakovo, Stara Gradiška, Karasovići, and Metković), one air (Pleso), and two sea (Rijeka and Ploče). The import of food will be possible at all border inspection posts, while the import of live animals will only be possible at the Bajakovo and Stara Gradiška border inspection posts, including the import of registered hoofed animals at the Metković border inspection post, the relevant Ministry notes.

With its entry into the EU, Croatia will retain the current level of direct payments in agriculture of 373 million euros, will be able to use funds for rural development, will have additional financial envelopes for mined land and for the wine sector, has secured a transitional period of three years for national support for some sectors, and will also have the right to use the national reserve, i.e., additional payment rights in some sensitive sectors.

The financial envelope for direct payments in agriculture for Croatia is set at 373 million euros annually, and the transitional period for financing from the EU budget is 10 years, with co-financing from the national budget of up to 100 percent from the first year of membership.

This means that Croatia will retain the same level of direct payments from the first year of membership as it pays today.

Namely, in the first years of membership, the Union’s share in direct payments to Croatian farmers will gradually increase, while the share from the national budget will gradually decrease. In the first year of membership, the EU share will be 25 percent, in the second 30 percent, in the third 35 percent, in the fourth 40 percent, and from the fifth year onwards, it will increase by 10 percentage points until it reaches 100 percent in the tenth year of membership.

In addition, Croatia has an additional envelope for mined land of 9.6 million euros, and for mined and mine-suspected areas that will be returned to agricultural use after demining.

The important wine sector in Croatia will also have a financial envelope of 10.8 million euros available.

Croatia has also secured a transitional period of three years from the accession to the EU for the application of existing state aid for sugar beet, extra virgin and virgin olive oil, tobacco, dairy cows, and breeding sows.

It has also ensured the possibility of direct payments, i.e., the determination of additional payment rights in certain sensitive sectors, specifically for milk production, cattle fattening, sheep and goat production, and tobacco production.

For the milk and sugar sectors, production quotas have been established for Croatia – for the milk sector, the production quota is 765 million kilograms, and the reference content of milk fat is set at 4.07 percent, while in the sugar sector, the quota for white sugar is set at 192,877 tons annually and the quota for the import of raw sugar for refining is set at 40,000 tons annually.

Within the Common Agricultural Policy (CAP), Croatian farmers have access to two major funds – the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD).

The EAGF fund guarantees a stable income for farmers, and the minimum area that a farmer must use to receive support is 1 hectare of land.

Money from the EAFRD fund is awarded through competitions, the project must be financed with own funds, and only after the investment is completed can the farmer apply for a non-repayable support that amounts to 50 percent or more, while local self-government units (up to 10,000 inhabitants) can even receive 100 percent reimbursement of invested funds.

From 2014, fishing will be financed through the European Maritime and Fisheries Fund, and with Croatia’s entry into the EU, Croatian fishermen will be able to achieve better prices for their products as they will be able to enter that market without current intermediaries, as well as due to better delivery conditions given the abolition of border crossings and controls.