English

Abstract

Milk in terms of production value has the second biggest share in Croatian agricultural sector in 2013 (CBS, 2014). It could be speculated that after the abolition of quotas in the European Union, the declining trend in domestic production will continue and that exposure to free European market will significantly affect the competitiveness of domestic production. The aim of this paper is to analyse the prospects of Croatian dairy industry (sector) under certain conditions of the EU Common Agricultural Policy (CAP) and to present projections simulated with the help of partial equilibrium model AGMEMOD. The main model inputs are policy and macroeconomic variables, supply-use balances of agro-food products and producer prices. The Baseline projections has shown that in 2025 in line with the CAP implementation there might be a decrease of dairy cows number by 33 %, the raw milk price by 14 % and the collected cow’s milk amount by 13 % compared to the five-year average of 2008-2012. The positive effect was noted in productivity, according to the simulation, with an increase by 25 %, which consequently may lead to increased deliveries to dairies for about 17 %. Therefore preliminary results show that accounting for milk processing the dairy sector in Croatia might obtain a favourable situation by 2025. Taking into account the EU market situation, there is an opportunity to increase milk processing given the current level of prices in the EU market and global markets, and taking into account the abolition of milk quotas. Also, the results suggest, according to the experience of other states, that the utilization of funds of 1 st and 2 nd pillar of the CAP (utilization measures across projects) in order to improve the production structure and efficiency will play an important role.