Sugar sector in Croatia: competitive or not?

The sugar sector is small in agricultural sector, occupying 1.5% of the cultivable land areaand accounting for approximately 1.2% of agricultural GDP (excluding processing which probablyaccounts for a further 1%). It does, however, account for 6.5% of all budgetary payments toagriculture, showing its disproportionate dependence on taxpayers' money. Sugar production inCroatia is characterized by high production costs, struggling with a strong competition at the worldmarket. Despite the results of the competitiveness study, in which the DRC calculation showed thatsugar production is not internationally competitive, one of the basic characteristics of our foreigntrade in sugar till 2003 was high exports. Sharp shift in the EU sugar policy will result in sugar pricedecrease due to the WTO rules, which will affect the Croatian sugar industry. Therefore, Croatia willhave to apply measures for decreasing production costs and increasing production, with the finalgoal of price decrease for about 20%. For these reasons, it will be necessary to strive for the quota atthe level of average production of three Croatian sugar - plants.