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Croat farmers seek market niches before EU entry By Zoran Radosavljevic Wed Aug 13, 2008 8:38pm

DEZEVCI, Croatia (Reuters) - Damir Rosipal is proud of his organic tomatoes. The stocky Croat farmer says they taste infinitely better than the perfect-looking produce from the European Union.

"My tomatoes grow from the soil, with no additives ... Those from the EU are picture-perfect, as if made by Michelangelo. But mine are better and tastier and you can eat them as they come, no chemicals," he said at his estate in central Croatia as workers labored in the fields under the scorching sun.

He hopes his expensive products will fare well on EU markets after Croatia joins the Union, probably around 2011. "That is why I plan to increase hectares under apples, medicinal herbs and vegetables in the next two years," Rosipal said.

According to the Food and Agriculture Organisation (FAO), the world will spend over $1 trillion on importing food in 2008, $215 billion more than the record sum paid in 2007. Land prices in parts of Europe are climbing amid mounting demand for space to grow crops.

But in Croatia -- where for example annual tomato output at some 70,000 tonnes is a fraction of the 1.2 billion or so tonnes the FAO estimated Ukraine produced in 2005 -- farmers are striving for a segment of niche markets as large swathes of land remain uncultivated and the government resists foreign land purchases.

Nenad Matic of the Peasant Party, which is part of the ruling coalition and has put forward a "Renaissance of the Countryside" programme, said Croatia's opportunity lay in finding niches like wine or organic farming which should go well with its vibrant tourist industry.

"We cannot be a major exporter, we cannot compete with others in terms of quantity or price. We must look for particular market niches for our indigenous products, wine, cheese, plum brandy. And to sell our home-grown food to tourists," Matic said.

BAN ON LAND SALE

Agriculture experts estimate that more than a third of Croatia's 150,000 farms may fold unless they merge and improve standards and output before the country joins the EU.

"The problems are small and fractured estates, old and uneducated population, dated technology, poorly developed market infrastructure. Unfortunately, Croatia has never had a farming strategy to address those issues," said Damir Kovacic, a professor at Zagreb's Faculty of Agriculture.

Half of Croatia's 2.6 million hectares of arable land is unused, most of it owned by small farmers with estates averaging less than three hectares. "They did not find it profitable to work the land and there were no punitive measures for keeping the land unused, so it just lay there," Kovacic said.

Agriculture Minister Bozidar Pankretic said the unused land could be worth "at least 20 billion euros in a few years" and he is due to draft a strategy for its use by the end of this year.

The government has asked Brussels for permission to impose a 12-year ban on the sale of farmland to foreigners, to fend off foreign competition and prevent speculative real estate deals.

Matic said the aim was to give local farmers as much time as possible to increase estates, output and technology "and prepare for the competition once the market is fully open".

HOME-GROWN

Davorin Jakovina, who keeps a goat herd at nearby Brestovac and makes goats' cheese, said his only problem was the relatively small quantities he can produce.

"But the huge German cheese market, for example, has only two percent of goat cheese ... So I do see a big chance to sell our products abroad," he said.

Open-air farmers' markets grace every Croatian town, offering a dazzling palette of scent and color. The average family spends almost 40 percent of the monthly income on food, trade union data shows, but will often choose the more expensive local food.

"Our vegetables are perhaps a bit more pricey but they are home-grown, freshly picked, untreated with chemicals. Buyers always prefer our own products," said Nada Suskovic, a 48-year-old vendor at Zagreb's main farmers' market.

Croatia's economy is largely based on imports and retail. Last year, it imported food worth $2.2 billion and exported barely half of that in value, with a surplus only in sugar, tobacco and grains. Overall, farming accounts for about 6.5 percent of Croatia's annual GDP of 37 billion euros.

The new food strategy will aim to boost exports. "We know we don't produce enough and we'll always have to import, but we want to increase exports to improve the balance," Matic said.

However, incentives offered by the government to increase land under fruit, olive oil and wine and double the output before joining the EU have yielded little result so far.

WINE DRIVE

Like most Mediterranean countries, Croatia is a wine-drinking nation and takes huge pride in its heavy reds from the Adriatic coast and fruity white wines from the mainland, but wine-makers are still not certain what EU membership will bring.

"The EU has lower subsidies for wine. Therefore it will be a shock which we want to overcome by encouraging people to invest in technology and new vineyards and focus on quality, though there is not much time left," said Josip Kraljickovic, state secretary at the agriculture ministry.

Croatia produces some 731,000 hectoliters of wine a year, a fraction of the EU's annual output of 180 million hectoliters. Its northern neighbor and EU member Hungary, for example, produced 3 million hectoliters in 2007.

"Our wine-makers face uncertain times with the EU membership but some of them could really benefit. The EU has 500 million people so we should find a place. There is always room for original local varieties of wine," Kraljickovic said.

In Kutjevo, the wine centre of the "Vallis Aurea", or golden valley, in the fertile Slavonia region, authorities have set up a wine festival to promote the quality and image of local wines.

Croatia has some 130 native grapes from its terroir but has registered as trade mark only one red wine from the Adriatic -- 'Plavac mali', a close relative of America's Zinfandel. Many winemakers see a better opportunity with white wines, like the popular Grasevina, the local variety of Riesling.

"As far as red wine goes, I would not dream of competing with France or Spain," said Antun Adzic from Kutjevo, whose 8-hectare vineyard is considered small by EU standards.

"But Grasevina, Riesling, Pinot, I am sure I can compete with the big producers in quality and price."

(Editing by Richard Meares and Sara Ledwith)

LINK: http://www.reuters.com/article/inDepthNews/idUSL209665520080814?sp=true


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Added: Aug-14-2008 
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