Production and Trade Impacts of CAP Post 2022 Reform on Main Croatian Crop and Livestock Markets—Partial Equilibrium Modelling Approach

Abstract

The Latest Common Agricultural Policy reform intends to expand and strengthen environmental and social support and to liberalise the delivery model carried out through strategic planning. This paper aims to assess the potential impacts of the new CAP reform on the main agricultural markets in Croatia. The impact assessment is analysed using the AGMEMOD model where, in addition to the baseline scenario, three scenarios of potential changes are developed and compared to the baseline. Changes in market patterns (production, yield and net trade) at the end of the simulated period are compared with the baseline scenario results by 2030. The reduction in support levels to production, abolishment of voluntary coupled supports and introduction of additional environmental constraints have a significant impact on the main Croatian agricultural markets. Crop markets prov to be less dependent on subsidies, so that market pattern changes will not mean the loss of Croatia’s net export status for soft wheat, maize and soy beans, while barley no longer holds this status. Livestock sectors, especially beef and dairy, in addition to demonstrating a distinct lack of competitiveness even before the Croatian accession to the EU, additionally suffer significant production volume losses along with an increase in imports. Although significant, changes to the Croatian agricultural market are not dramatic enough to cause a complete production breakdown by 2030.

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“…However, many observers suggest that redistribution payment brakes the structural changes, as it artificially supports ineffective farms. The impact of agricultural subsidies on productivity was also stated, and it showed that excessive support slows down structural transformations in the agricultural sector [37][38][39][40][41][42][43].…”