Structural Change in Rural Croatia—Is Early Retirement An Option?

Abstract

Structural change in agriculture, although often connected with social hardship of uncompetitive small-scale farms and a loss of tradition, is inevitable. It is the basis for successful rural development. We discuss whether early retirement schemes (ERS) are a good value for public money in terms of the necessary adaptations of the farming sector in the course of economic development, and if they are an option for the EU candidate country Croatia. In Croatia, the small scale farm structure leads to widely uncompetitive farms. A study on farmers’ socioeconomic situation as well as actual and expected reactions to policy support is based on results of a household survey. The sample includes farm households from two Croatian regions: The peri-urban Zagreb county and the typically rural region of Bjelovar-Bilogora. Despite unfavourable economic conditions and insufficient farm incomes, rural people are often reluctant to give up farming. We present results on the age structure, income and production structure of farms and farmers’ likely reactions on ERS. We discuss incentives which push farmers to leave the farming sector and ask in which direction farm families plan their future. We conclude with a synthesis of the theoretical advantages and disadvantages of early retirement schemes and link them with possible outcomes in the Croatian case.