Ministry of Agriculture, Forestry and Water Management

Swedish International Development Cooperation Agency

Project on

LAND CONSOLIDATION IN CROATIA

Project document

Zagreb, April 2006

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Field Code Changed

Table of Contents

1 INTRODUCTION ....................................................................................................... 1 2 PROJECT SETTINGS ................................................................................................ 2 2.1 Croatian Agr icultural Policy ...................................................................................... 2 2.2 Specific Issues Related to the Pilot Project ................................................................ 5 2.3 Croatian Agr icultural Policy and EU Common Agr icultural Policy ...................... 6 2.4 Key institutions for the implementation of the project ............................................ 8 3 AGRICULTURAL LAND IN CROATIA ............................................................... 10 3.1 Agr icultural Land Use ............................................................................................... 10 3.2 Far m Structure .......................................................................................................... 11 3.3 Cadastral and Land Book Register s ........................................................................ 14 3.4 Agr icultural Land Market ........................................................................................ 15 4 OPTIONS FOR LAND CONSOLIDATION IN CROATIA ................................. 22 4.1 Introduction ................................................................................................................ 22 4.2 Traditional land consolidation schemes ................................................................... 23 4.3 Integrated Approach ................................................................................................. 24 4.4 Options for Land Consolidation in Croatia ........................................................ 2425 5 PROJECT DESCRIPTION .................................................................................. 2728 5.1 Objectives ............................................................................................................... 2728 5.2 Project Outputs and Activities.............................................................................. 2829 6 SIDA PRIORITIES ............................................................................................... 3940 7 BUDGET..................................................................................................................... 41 7.1 Croatian Contr ibution ............................................................................................... 41 7.2 Swedish contr ibution ................................................................................................. 42 7.3 Project budget ............................................................................................................ 43 7.4 Budget management .................................................................................................. 43 8 MONITORING, ASSESSMENT AND REPORTING .......................................... 44 8.1 Monitor ing .................................................................................................................. 44 8.2 Meetings ...................................................................................................................... 45 8.3 Repor ting .................................................................................................................... 45 8.4 Assessment at the End of the Project ....................................................................... 45 Annexes Annex 1: Logical Framework Matrix Annex 2: Budget 2006 – 2009

Exchange rates as per February 2006

Currency 1.00 HRK 1.00 EUR 1.00 SEK HRK -- 7.45 0.79 EUR 0.13 -- 0.10 SEK 1.27 9.30 --

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1 INTRODUCTION

The government of Croatia has recognised the urgent need for firm actions to improve the competitiveness of the agricultural sector, not least in the light of the accession to the EU and its Common Agricultural Policy. One of the fields that need to be addressed is the uncompeti-tive farm structure characterised by small and fragmentised landed property. Land consolidation has been defined as an area for development cooperation based on numer-ous discussions between the governments of Sweden and Croatia. The Swedish International Development Co-operation Agency (Sida) responded by commissioning a discussion paper1 on land consolidation, which initiated the formulation process of the project Land Consolida-tion in Croatia (henceforth referred to as the Project). The Project comprises two phases, i.e. Inception Phase for the period of 9 months (from Sep-tember 2005) and Implementation Phase (starting in June 2006). The aim of the Inception Phase has been to prepare the project documents that will set the guidelines for the Implemen-tation Phase. The Inception Phase has included following activities:

• Formation of the Project Coordination Unit team that will be established at the Agri-cultural Land Department within the Ministry of Agriculture, Forestry and Water Management (MAFWM);

• Consultations with representatives of various institutions and with authorities at re-gional and local levels;

• Commissioning six national consultants entrusted with analysis of Croatian laws and regulations referring to land consolidation;

• Organizing workshop to discuss the preliminary findings of national consultants; and • Participation in international events to draw on the regional and international experi-

ences on land consolidation. The Project Document includes the Introduction, seven chapters and two annexes. The se-quence of the chapters is as follows: The Environment for the Implementation of the Pilot Project, Agricultural Land in Croatia, Options for Land Consolidation in Croatia, Project De-scription, Sida Priorities, Project Budget, and Monitoring, Assessment and Reporting. The annexes comprise Logical Framework Matrix and Project Budget. The pillar of the Project Document is chapter 5, Project Description, which outlines the Pro-ject (expected outcomes and planned activities). It has been prepared in close collaboration with the representatives of regional and local self-government units, as well as relevant insti-tutions at national level. Chapter 2, The Project settings, brings general information on agriculture and rural develop-ment in Croatia, and outlines institutions and authorities at national, regional and local levels relevant for the Project. Chapter 3, Agricultural Land in Croatia, outlines information on the area of agricultural land, farm structure and agricultural land market in Croatia. Chapter 4, Options for Land Consolidation in Croatia, discusses various land consolidation schemes and

1 Developing an Improved Farm Structure in Croatia – A Discussion Paper, Draft version, 2002-10-03

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lays down the arguments for the proposed project outline. It puts forward a hypothesis that an effective land market would resolve the farm structure issue, without significant expense for the government. Chapter 6, Sida Priorities, outlines the issues that Sida would like to be given importance during the implementation. Chapter 7, Project Budget, lists Swedish and Croatian contributions to the Project, and how to manage them. The monitoring, assessment and report-ing of the Project are presented in chapter 8, Monitoring, evaluation and reporting. The information presented in the Project Document refers to the whole of Croatia. Specific information on selected pilot locations can be found in the notes collected at the meetings with the representatives of selected pilot locations during the Preparation phase. At the begin-ning of the Implementation phase, reports on the conditions on the selected location with spe-cific information, based on statistical and other relevant data will be submited.

2 PROJECT SETTINGS

2.1 Croatian Agr icultural Policy The Agricultural Law from 2001 (Official Gazette 66/01 and 83/02) is a basis for the reform of agricultural policy in Croatia. The Agricultural Law sets out the objectives and measures of agricultural policy, defines beneficiaries, family households, institutional aid, monitoring and reporting in agriculture as well as administrative and inspection control. According to the Agricultural Law, the primary objectives of the Croatian agricultural policy are to:

• Ensure nutritional safety of the population by competitive domestic agricultural pro-duce;

• Promote a more efficient agricultural production and marketing for the purpose of competitiveness-building at both domestic and world markets;

• Ensure the farmers a fair standard of living and contribute to the stability of agricul-tural income;

• Ensure that consumers have access to suitable and stable food supplies, in line with their demands, in particular with regard to the price and quality of food and food safety;

• Preserve natural resources by promoting sustainable and organic agriculture; and • Preserve and develop rural areas and values.

National agricultural policy measures are economic measures for achieving the objectives of an agricultural policy. According to their field of action, they are classified under market and price policy measures, structural policy measures and land policy measures.

• Market and price policy measures influence the stability of domestic agricultural pro-duce market, while strengthening the competitiveness of the Croatian agriculture, and implementation of commitments within trade agreements. These include stipulated prices, financial assistance and compensations, interventions on domestic market, measures for sale and consumption stimulation, measures to redress the balance of supply.

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• Structural policy measures encompass a set of measures that should stimulate eco-nomic efficiency of agricultural production, thus ensuring stable income and fair stan-dard of living for farmers in rural areas, as well as balanced development of agricul-tural regions and rural areas. This includes support to less favoured areas, to the de-velopment of agriculture taking care of the environment and preservation of bio-diversity, to farm investments, to agricultural training, to u young farmers set-up, to early retirement schemes, and to regional development of agriculture and supplemen-tary activities on farms.

• Land policy measures include a set of measures influencing the rational management of agricultural land as a resource of the special national interest. These measures are: the disposal of the state-owned agricultural land, encouraging better management of agricultural land, and protection of agricultural land from pollution.

According to the Law on Agriculture (Official Gazette 66/01 and 83/02), an agricultural pol-icy is to be implemented in line with the National Programme for Agriculture and Rural Areas which sets short- and long-term objectives, measures, time sequence and deadlines for the re-alisation of these objectives, expected effects, as well as sums and sources of funding for the implementation of agricultural policy measures. The work on the National programme for Ag-riculture and Rural Areas 2006-2008 is underway. According to the Law on Agriculture, MAFWM and other institutions are responsible for set-ting-up and managing the Farm register. The Farm register is obligatory for all farms that market their products and apply for incentives and other types of agricultural support. The Farm register is a new data source, used as a basis for planning of incentives and other finan-cial support schemes in agriculture, forestry and fisheries. Apart from the land policy, the successful implementation of the project `Land Consolidation in Croatia´ demands particular structural policy measures that can indirectly give impetus to the development of the privately owned agricultural land market and improvement of the farm structure. 2.1.1 Suppor t Schemes in Agr iculture The Law on State Subsidies in Agriculture, Fisheries and Forestry (Official Gazette 17/02, 117/03, 82/04 and 12/05) marked the beginning of subsidy reform. A basic assumption behind subsidy reform is a division on commercial farms that market their products and non-commercial farms that do not market their products and use most of them themselves. One of the objectives of subsidy reform is to encourage non-commercial farmers to leave the agricul-tural production, and to create the conditions for the development of potential commercial farms. The Law on State Subsidies in Agriculture, Fisheries and Forestry (Official Gazette 17/02, 117/03, 82/04 and 12/05) stipulates four state subsidy schemes for agriculture, fisheries, forestry and rural development: production support scheme, income support scheme, capital investment scheme and rural development scheme.

• The production support scheme provides incentives for agricultural production on farms registered in the Farm Register and other registers. The production support scheme also includes subsidies for the cultivation of crops, seedlings, lasting olive tree plantations and olive oil, stockbreeding and livestock products, etc. Under this scheme, incentive payments are based on a hectare of agricultural land, an olive tree, a

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kilo of tobacco, one head of cattle, a litre of milk, bee-association, a head of feathered game, etc.

• The beneficiaries of the income support within the same scheme are non-commercial farms owning or using at the most 5 ha of arable agricultural land. The status of non-commercial farmer permanently excludes the possibility of changing the status or ap-plying for the subsidies within the production support scheme and capital investment scheme.

• The rural development scheme encompasses the programme for rural area develop-ment, the programme for the preservation of autochthonous and protected breed, and marketing of agricultural products. The aim of rural area development is a sustainable development of rural areas by ensuring adequate working and living conditions and preserving natural and cultural heritage.

• The aim of the capital investment scheme is to encourage investments in agricultural production and rural development, and development of business relationships between commercial banks and farmers. The grants in terms of capital investments refer to the funds within the state budget that MAFWM uses in financing the total value of in-vestment for which commercial banks extend loans to farms.

The participation of a farm in the production support scheme or the income support scheme depends on the total extent of its production. It can be calculated by summing up individual production units on a farm. The minimum extent of each production unit is 0.4 units. In order to get any incentive within these two schemes, the minimum sum of a farm has to equal 3 units. The long experience of the implementation of the income support model revealed it as an ob-stacle to the development of privately owned agricultural land due to the system of calculation of farm production extent. Thus, a non-commercial farm has to keep its land in order to get at least 3 production units, and the right to income support. Therefore, it is necessary to harmo-nise the income support model with the adequate EU support scheme regulations, with the aim of making the privately owned agricultural land market function, and to enable successful implementation of the Land Consolidation Pilot Project in Croatia. Relevant EU support is defined by the Article 23 on Early Retirement (EU Regulation 1698/2005 of September 20 2005 on rural development support provided by the EU Rural Development Agricultural Fund). The implementation of the Article 22 within the same Regulation on the Young Farm-ers` Set-up has similar effects. In 2004, MAFWM registered 2,262 applications for the in-come support, which corresponds to the sum of HRK 13,9 million. The outlays by far ex-ceeded the effects of the implementation of this scheme, if taking into account the fact that it did not encourage the development of the privately owned agricultural land market, and, con-sequently, the farm structure. The capital investment scheme also includes the support for the purchase of privately owned agricultural land. In 2004, according to MAFWM, there were only 18 applications for the re-turn of capital investment for the purchase of privately owned agricultural land, and 13 appli-cations thereof were granted HRK 0.3 million that MAFWM pays from the state budget. The capital investment scheme is an example of measures that stimulate the development of the agricultural land market, but at the same time can bring about unreal prices of agricultural land.

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The operative implementation of the market and structural support measures in agriculture is within the competence of the Bureau for Market and Structural Support at MAFWM.

2.2 Specific Issues Related to the Project 2.2.1 Rural Areas and Land Consolidation The living standard in most rural areas in Croatia is, generally speaking, very low and living conditions quite poor. The trend of rural-urban migration is continuing. A general characteris-tic of Croatian rural areas is poor access to physical infrastructure (underdeveloped public wa-ter supply and sewage systems; poor condition of local and unclassified roads). The existing situation has negative implications for the overall economic development in rural areas where agriculture is the major economic activity. Apart from improved infrastructure, non-agricultural economic activities should require promotion. There is a growing importance of diversification of the agricultural production, including non-agricultural services and commodities, such as rural tourism or added value on primary pro-duce. Investments in rural areas are badly needed in order to reduce a depopulation trend and stimulate economic and social development. Such investments not only include infrastructure investments, but also investments in human resources. Extremely fragmented agricultural holdings, underdeveloped human resources and underde-veloped infrastructure are main obstacles and barriers to the development of rural areas and growth of market orientation of the agricultural sector. Therefore, land consolidation repre-sents one of the priorities for national, regional and agricultural policy. 2.2.2 Far mers' associations

At the moment, farmers in Croatia have been organising into two basic association forms as follows: agricultural cooperatives and agricultural associations. According to the data from the Ministry of Agriculture, Forestry and Water Management, in the area of the Republic of Croatia in 1991 there were 290 agricultural cooperatives and 400 in 2004. The greatest num-ber of present agricultural cooperatives is engaged in purchase-sale activities and a smaller number in manufacturing-processing activities. In order to stimulate the development of the agricultural cooperative movement, the Ministry of Agriculture, Forestry and Water Man-agement has brought a Programme of development of the agricultural cooperative movement for the period 2005-2007 which includes the implementation of two projects as follows: the establishment of agricultural cooperatives and the development of agricultural cooperatives. In a period from 2004 to 2006 more specialised agricultural cooperatives have been estab-lished, but still their common access on the market and representation of the common interests are not enough developed. Nowadays, more and more agricultural family farms are becoming members of the agricultural cooperatives in order to access the global competitive market. It is evident that the agricultural cooperatives in Croatia are going to be developed in order to compete with the EU cooperatives in a near future.

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Until today, 655 agricultural associations have been registered in the associations register and they present their professional interests. Agricultural cooperatives and associations are essen-tial partners of the Project, and the development of the agricultural cooperatives in selected project areas is of great importance for the project. 2.2.3 Ir r igation of Agr icultural Land and Land Consolidation According to the Agricultural Census 2003, only 9,264 ha or 0.43 per cent of arable land are under irrigation system. When compared to other European countries, the total irrigation area is significant limited. In order to increase the competitiveness and export of agricultural produce, Croatia has to in-crease invest in irrigation system. Negative consequences of the 2003 drought draw the atten-tion of the Croatian government to this disturbing fact. The government gave an impetus to the creation of the National Program for irrigation and soil and water management or the Mas-ter plan, which envisages that the area under irrigation will increase to at least 30,000 ha in the next ten years. The master plan is a strategic project of the Croatian government, with the aim of organising the agricultural land irrigation policy. Past experience have shown that the most successful hydro-melioration solutions were applied in reclaimed areas, which were preceded by various land consolidation schemes. Since land consolidation is a precondition to the implementation of irrigation scheme, it is necessary to establish close links between the project `Land Consolidation in Croatia and the National program for irrigation and soil and water management. 2.2.4 Environmental Protection and Land Consolidation Agriculture has an important multifunctional role in rural areas. This means that agriculture does not only produce food, but also preserves natural resources and cultural environment in rural areas. Sustainable agriculture can contribute to an environmentally balanced and sus-tainable development. Agriculture is an important component of the Croatian economy and one of the rare economy sectors, which is for its most part is based on renewable resources. The physical planning strategy identifies the fragmentation of agricultural land as a problem and states that land improvement measures must be accompanied by environment protection measures, when so required. Therefore, during the implementation of specific activities, the project Land Consolidation in Croatia will have to take into consideration environment protection measures and cooperate with proper authorities and others on this issue.

2.3 Croatian Agr icultural Policy and EU Common Agr icultural Policy Croatia was granted formal candidate status in June 2004. The Stabilization and Accession Agreement came into force on February 1, 2005. In October 2005, formal negotiations for the EU accession started. The negotiations on specific chapters within the EU legal heritage are underway. These chapters concern agriculture and the agricultural land market, including Chapter 11 – Agriculture and rural development, Chapter 12 – Food safety, veterinary service and phytosanitary protection, Chapter 13 – Fisheries, and Chapter 14 – Free Capital Transac-tions.

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As a member state, Croatia will have to adopt the Common Agricultural Policy (CAP), with a transition period and/or exemption from certain parts of the CAP. The aim of the CAP is to provide more reasonable living standard for farmers and quality food at fair prices for con-sumers. Food safety, rural development and preservation of the rural environment with the use of sound farming practices are key elements of the EU Common Agricultural Policy. The negotiations for the EU accession will run concurrently with extremely demanding proc-ess of compliance of the national agro-food legislation with the EU legal requirements in ac-cordance with the Pre-accession Economic Programme 2005-2007 and National EU Acces-sion Programme for Croatia. These documents also include the agricultural sector, and lay emphasis on the need to harmonize structural policy measures, given the unfavourable farm structure in Croatia. In the pre-accession period, which is underway and will last until Croatia finally joins the EU, some of the high-priority will be to:

• Speed up structural changes by increasing support for the implementation of necessary structural policy measures and to proceed with the reform of support scheme with the aim of harmonization with the EU support scheme;

• Improve the competitiveness of the agricultural sector by stimulating investments in technical and market infrastructure (e.g. development of the irrigation and drainage system, improvement of storage and distribution capacities of basic agricultural prod-ucts);

• Administer the pre-accession Structural fund - SAPARD in accordance with the EU demands in the National Bureau for Market and Structural Support in agriculture, which will gradually grow into the National Paying Agency. It will be responsible for the implementation of the CAP after the accession to EU.

• Speed up the Integrated Administrative and Control System (IACS), which will also encompass the Geographic information system for the agricultural subsidy payment control, the Land Parcel Identification Systems (henceforth referred to as LPIS) as an upgrade to the existing Farm register. The establishment of LPIS will be extremely demanding for the Croatian agricultural policy due to large number of small land par-cels and frequently unregulated property right issues.

The funds under the EU pre-accession programme for agriculture and rural development, SA-PARD, are available to EU member states to support structural reforms and other measures in the agricultural sector for the adoption of the EU legal requirements. In order to qualify for SAPARD assistance, the Agriculture and Rural Development Plan was prepared, and he Bu-reau for Market and Structural Support has been made responsible for managing SAPARD. It is expected that the SAPARD funds will become available in 2006. The projects to be fi-nanced under the SAPARD programme will include: Investment in agricultural holdings, Processing and marketing of agricultural and fish products, and Development and improve-ment of rural infrastructure. The preparation of the Agriculture and Rural Development Plan will start during this year. It will be used as a basis to access new the pre-accession programme – IPARD. If possible, Croatia will use the possibility to propose the schemes for Early Retirement and Establish-

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ment of Young Farmer, which would have considerable influence on a land consolidation pol-icy in the future.

2.4 Key institutions for the implementation of the project The Government of Croatia is based on the separation of powers between legislative, execu-tive and judicial branch. The Croatian National Parliament is a representative body of all citi-zens, and holds the legislative branch of government in Croatia. The judicial branch of gov-ernment is exercised by courts of law; it is autonomous and independent. The judicial branch of government is within the competence of magistrates` courts, municipal courts, county courts and commercial courts, Higher magistrates, Court of Croatia, Higher Commercial Court, Administrative Court of Croatia, and Supreme Court of Croatia. The cen-tres and local jurisdiction of courts of law are regulated by law. Land registers/land books are situated in 106 land registry departments within county courts. General Attorney’s Office is an independent and autonomous legislative body representing Croatia. It is authorised to act in the interest of protecting the assets belonging to Croatia. General Attorney’s Office has, inter alia, jurisdiction over the protection of state-owned agri-cultural land. Law defines the domain, authority and jurisdiction of General Attorney’s Of-fice. Municipal attorney` offices are established for the territory within the domain of munici-pal courts, and county attorney` offices are established for the territory within the domain of county and commercial courts. The Government of Croatia is responsible for the executive branch; it makes regulations, submits bills and state budget, and enforces laws and other regulations enacted by the Croa-tian Parliament. Members of the Government of the Republic Croatia are: prime minister, vice prime ministers and ministers responsible for the functioning of the ministries. Law defines the organization and affairs of the ministries and public services and their procedures. An efficient implementation of the Land Consolidation Pilot Project in Croatia, as an interdis-ciplinary project, requires close collaboration of almost all ministries and civil administration services, the most important being ministries and state administration offices as follows: MAFWM, Ministry of Justice, and State Geodetic Administration. MAFWM manages administrative and legal affairs related to agriculture, forestry and water management. A part of these affairs, which are of utmost importance to the Land Consolida-tion Pilot Project, touch upon the issues of agricultural production, agricultural policy, rural development, implementation of subsidy policy measures in agriculture, the protection and disposal of state-owned agricultural land, coordination and harmonization of the Croatian ag-ricultural and rural development policy with the EU legal acquisition. The Project Coordinat-ing Unit is a constituent of the Agricultural Land Department within MAFWM. The Croatian Agriculture Extension Institute is a governmental institution with a mediation role in the implementation of family holdings and rural area development subsidy measures. The main task of the Institute is to provide technical recommendations, instructions and prac-tical examples in order to demonstrate new technologies and practices, and to disseminate available know-how and skills necessary for the development of agricultural produce on agri-cultural holdings. In addition to its advisory services, the Institute also provides advices and

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information to producers regarding the general administrative services provided by MAFWM and regional and local self-government. The Institute is organised into the head office in Za-greb, and 21 regional and 94 branch offices; it is staffed with various experts in the filed of agriculture. The Croatian Agriculture Extension Institute is a key partner for the implementa-tion of the Project, primarily in terms of information dissemination and creating a positive en-vironment for the implementation of the Project. The Ministry of Justice is responsible for administrative and legal affairs related to the fields of civil, criminal and commercial law, as well as administrative trials. A part of the adminis-trative and related affairs will have a significant influence over the project `Land Consolida-tion in Croatia´, including ownership rights, property rights issues in terms of land expropria-tion and other types of property-restrictions, property rights issues in terms of agricultural land and land transactions, agricultural operations that are not within the domain of other ad-ministrative body as well as the compensation for the property confiscated during the Yugo-slav communist government outside of competence of other state administration bodies. The State Geodetic Administration is a state administrative office responsible for surveying, cartography, cadastre, and photogrammetry, digitalisation of cadastre and geodetic and physi-cal system, official state cartography (1:5000, 1:25000, 1:100000, 1:200000), geodetic re-cords, statistical records on the real estate cadastre, physical units and pipe and cable net-works, surveying and cadastral issues for the state border. The State Geodetic Administration is organised into the head office in Zagreb and 112 cadastral offices. The State Geodetic Ad-ministration is a key partner for the implementation of the project `Land Consolidation in Croatia´. According to the Law on Local and Regional Self Government (Official Gazette 33/01), local self-government units are municipalities and towns, and regional self-government units are counties. Croatia is divided into 20 counties and the City of Zagreb. The counties have 425 municipalities and 122 towns. A municipality is a self-government unit covering several villages that represent natural, eco-nomic and social entity with common interests of the population. A town is a unit of local self-government and a county centre, with more than 10,000 inhabitants. It is an urban, his-toric, economic and social entity. A county is a unit of regional self-government. Its territory represents natural, historic, com-municational, economic, social and self-governmental entity. The focus of its constitution is regional. The county administration runs affairs within county jurisdiction. Administrative bodies are run by a department head, appointed by a county board, based on the job an-nouncement and at the suggestion of a county head. Most county administrations also include a Department for Agriculture and Forestry or Department for economic development, which is responsible for agriculture. A county is autonomous in making decisions of regional importance, especially the issues re-lated to education, health care, physical and urban planning, and networking of educational, health, community and cultural institutions.

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3 AGRICULTURAL LAND IN CROATIA

3.1 Agricultural Land Use There are two official sources of statistics in Croatia, containing, among others, figures on the use of the agricultural land: Agricultural Census from the year 2003 and Statistical Yearbook. The third source on the use of the agricultural land is the Farm register, used by the Ministry of Agriculture, Forestry and Water Management for administrative purposes as well as for the control of agricultural incentives. The figures on land use presented by these sources differ significantly depending on the use of statistical methods. Data for the Agricultural Census 2003 were provided directly by all households with agricul-tural production and by all agricultural companies. Its main shortcoming is, inter alia, the in-complete information on abandoned land. According to the Agricultural Census 2003, agricul-tural land totalled 1,077,404 hectares as shown in Table 1 below, which also provides details on the land use in the four counties with selected pilot locations. Table 1 Land use in selected Counties in the year 2003 (hectares)

County

Arable land and

gardens

Orchards Vineyards Meadows Pastures Total agricul-tural land

Primorsko-Goranska 767 542 268 3,154 13,010 17,742 Varaždinska 27,840 888 2,287 7,158 340 38,513 Vukovarsko-Srijemska 117,850 1,341 1,048 511 327 121,078 Zagrebačka 58,201 2,736 2,578 26,686 2,112 92,312 Total Croatia 808,202 31,163 27,688 149,790 60,561 1,077,404

Source: Agricultural Census 2003, Central Bureau of Statistics The figures in the Statistical Yearbooks are based on cadastre data and expert evaluation es-timates on the land use. According to the Statistical Yearbook 2005, the total agricultural land in Croatia is 2,695,000 hectares as shown in Table 2. However, due to the unreliable cadastre records and lack of the updates in a segment of cadastre records, the Statistical Yearbook fig-ures are considered to be less trustworthy than the data provided by the Agricultural Census 2003. The discrepancies between the figures in the Agricultural Census 2003 and the Statisti-cal Yearbook 2005 are significant, as demonstrated by comparing Table 1 and Table 2. It is therefore assumed that the data in Agricultural Census 2003 give the most realistic picture on the current situation of the agricultural land use in Croatia, although the data lack an appropri-ate verification and are not yearly updated. Table 2 Land use according (hectares) including unused arable land, gardens

Arable land and gardens*) Orchards Vineyards Meadows Pastures Total Agri-

cultural land Total Croatia 1,110,000 66,000 50,000 375,000 1,094,000 2,695,000

Source: StatisticalYearbook2004, Central Bureau of Statistics -Excluding non-cultivated arable land & gardens The third source of data is the Farm register established in the year 2003 in accordance with the Law on Agriculture (Official Gazette 66/01 and 83/02). All farms selling their produce on the market, and receiving direct payments and income support are obliged to be registered in

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Agricultural population in relation to the total population

0%

10%

20%

30%

40%

50%

1970 1975 1980 1985 1990 1995 2000 2005

the Farm register. This also applies to the farms receiving the incentives from the Ministry of Agriculture, Forestry and Water Management in accordance with the Law on incentives and compensations in agriculture and fisheries (Official Gazette 17/02, 117/03, 82/04 and 12/05). The farm register accordingly accounts for the land use by all registered agricultural holdings. In 2004, the total agricultural land registered in Farm register was 975,197 hectares, corre-sponding to approximately 90 % of the total agricultural land recorded by the Agricultural Census 2003. The Farm register 2004 confirms that Agricultural Census 2003 reflects the real situation and also gives evidence that total surface area of the agricultural land under cultiva-tion is much smaller than suggested by the Statistical Yearbook 2004.

Table 3 Land use according to Farm Register 2004, selected counties and Croatia (hectares)

County Arable land and gardens Orchards Vineyards Meadows Pastures Total Agricul-

tural land Primorsko-Goranska 698 1,642 210 807 3,684 7,042 Varaždinska 24,142 506 779 4,844 633 30,904 Vukovarsko-Srijemska 115,097 698 1,366 590 1,104 118,855 Zagrebačka 46,105 1,073 1,448 13,521 2,120 64,268 Total Croatia 766,005 15,604 16,818 102,851 73,919 975,197

Source: Farm register 2004, MAFWM

3.2 Far m Structure The agricultural population in relation to the total population has dropped from 29 per cent in 1971 to 5 per cent in 2001 as shown in the diagram below. Over a long period, the Croatian agriculture was characterised by the dual structure of ownership. In the past, during the socialist era, land ownership and development in-vestments were channelled to a small num-ber of large socially owned agricultural en-terprises, while small family agricultural holdings were marginalized. This resulted in the present uneven owner-ship structure, with a large number of family smallholdings, unable to generate a profit that would be sufficient for a decent living standard, and necessary investment for improved production. On the other hand, there are few agricultural holdings/legal entities in succession to former socially owned agrocombinates. The present ownership structure still largely reflects forty-years-long socialist system of gov-ernment and the application of lax inheritance laws. A dual structure of agricultural holdings in Croatia is demonstrated in Table 4 below. Table 4 Number and size of farms in Croatia in 2003

Farm size, Farm households Business entities Total

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ha no. ha no. Ha no. ha < 1 227,434 50,759 327 71 227,761 50,830

1 – 2 71,933 67,103 51 77 71,984 67,180 2 – 3 40,129 65,330 45 108 40,174 65,438 > 3 109,036 670,004 941 216,952 109,977 886,965

Total 448,532 853,196 1,364 217,208 449,896 1,070,404 Source: Agricultural census 2003, Central Bureau of Statistics 3.2.1 Family Sector According to the Agricultural Census 2003, there are 448,532 family farms, utilizing 602,183 hectares of arable land and gardens, corresponding to an average farm size of 2.0 hectares (see Table 6). Table 4 shows that three quarters of all family farms are smaller than 3 hectares, but cultivate only 21 % of all utilised agricultural land owned by the private sector. According to the Agricultural Census 2003, only 21,000 family farms had an average size of agricultural land larger than 10 hectares, as shown in Table 5. Table 5 Distribution of family farms in 2003, according to size of agricultural land

Area (ha) <1 1 – 3 3 – 5 5 – 10 10 – 20 >20 Total

Number of family farms

227,434 112,062 45,732 42,426 15,628 5,250 448,532

Share (%) 50.7 25.0 10.2 9.4 3.5 1.2 100 Source: Census of Agriculture 2003, Central Bureau of Statistics The family sector occupies approximately 80 per cent of the totally 853,196 hectares of agri-cultural land, holds 82 per cent of the livestock, owns 99 per cent of all tractors, and accounts for approximately 95 per cent of the total workforce in agriculture (Agricultural Census 2003, Central Bureau of Statistics). Large majority of family farms are extremely fragmentised. In average, one family household is divided into 4,4 parcels, with an average size of 0,45 hec-tares. Table 6 Land fragmentation of family holdings in 2003

Specification Value Household with utilised agricultural land, number 448,532 Utilised agricultural land, hectares 856,196 Parcels of utilised agricultural land, number 1,918,358 Average farm size, hectares 1,958 Source: Agricultural census 2003, Central Bureau of Statistics From figures in Table 6 it can be calculated that family farms are as an average divided into 4.4 parcels/farm and that the averages size of the parcels is 0.45 hectare, which makes up for the average size of the family farm of 2.0 hectares. As mentioned above, the fragmentation can mainly be ascribed to lax inheritance laws that do not contain restrictions for splitting up farms between heirs, even if they thereby become un-viable. Many family farms are therefore no longer competitive, or economically viable in me-dium and long-term perspectives. The owners may earn their living in other sectors, use the

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homesteads as dwellings and use the land for subsistence farming. Some of these smallhold-ings serve as a last resort for people without sufficient pensions or other income opportunities. Many of these farms are only producing for self-consumption and not for the market. 3.2.2 Agricultural Companies There are 1,364 legal entities with 217,208 hectares of agricultural land, according to the Ag-ricultural Census 2003. Table 7 Distribution of legal entities in 2003, according to size of agricultural land

Area, ha <1 1 – 5 6 – 10 11 – 50 51 – 100 >100 Total Number of

legal entities

327

175

127

359

145

231

1,364 Share (%) 24.0 12.8 9.3 26.4 10.6 16.9 100

Source: Agricultural Census 2003, Central Bureau of Statistics A significant difference between family farms and agricultural companies/legal entities, in terms of average size and degree of fragmentation, lies in the fact that a majority of the latter (mainly ex-agrocombinates) used the land that was consolidated through the arodonacija and komasacija land consolidation schemes. Table 8 Land fragmentation of legal entities in 2003

Specification Value Business entities, number 1,364 Utilised agricultural land, hectares 217,208 Parcels of utilised agricultural land, number 17,718 Average farm size, hectares 168 Source: Agricultural census 2003, Central Bureau of Statistics An averages farm size of business/legal entities is 168 hectares (Table 8). They are in average divided on 17 parcels with an average size of 13 hectares. 3.2.3 Analysis of Farm Register infor mation According to the Farm Register in 2004, there are 151,692 commercial farms, thereof 148,470 family farms 1,720 crafts and 1,502 legal entities, which are using 975,197 ha of agricultural land with an average surface area of 4,6 ha. In compassion to 2003, the number of registered farms increased by 11,000. Table 9 Agricultural land by user type, bland use categories and organisational types (ha)

County Land use category Area cultivated by family farms

Area culti-vated by

other types of farms

All farms

Primorsko-goranska

Agricultural land 5,345 1,697 7,042 - thereof cultivated 3,212 146 3,358

Varaždinska Agricultural land 22,035 8,868 30,904

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County Land use category Area cultivated by family farms

Area culti-vated by

other types of farms

All farms

- thereof cultivated 21,446 8,825 30,271 Vukovarsko-srijemska

Agricultural land 84,758 34,097 118,855 - thereof cultivated 84,138 33,613 117,751

Zagrebačka Agricultural land 56,954 7,314 64,268 - thereof cultivated 54,876 7,271 62,148

Croatia Agricultural land 754,470 220,727 975,197 - thereof cultivated 686,666 214,612 901,278

Source: Farm register 2004, MAFWM

3.3 Cadastral and Land Book Register s Since 1828 Croatia belongs to the dual Austro-Hungarian tradition of property registration system encompassing land book records and cadastral records. The key laws governing land registration in Croatia are: the Land Registration Law (Official Gazette 91/96), the State Sur-vey and Real Estate Cadastre Law (Official Gazette 128/99), and the Property and Other Ma-terial Rights Law (Official Gazette 91/96). Cadastral records are located in 112 cadastral offices (20 regional and 92 branch offices) of the State Geodetic Administration and The Office for Cadastre and Geodetic Affairs of the City of Zagreb, while 109 Land Registry Offices within the Municipal Courts manage the land book function. During the socialist era, cadastral records and land-book records were poorly maintained and updated, and these conditions prevailed until 1996. The land book and cadastral records are not coordinated, and often do not reflect the real situation. The lack of coordination is one of the main obstacles to the development of the real estate market, as well as the agricultural land market. The implementation of the Land Registers and Cadastral Offices Improvement Project (hence-forth referred to as the Land Register Project) was launched in 2003 with the aim of creating an efficient system of land registration management, which would contribute to render the real estate market more effective. Other purposes of the Land Register Project are:

• Speeding up the real estate registration in cadastral, as well as land registry system • Rationalization of the both systems • Coordination of the records within both systems, and guarantees that they reflect the

real situation on the ground, if necessary, by taking new cadastral surveys, improv-ing the registration procedure in the land registries and by their systematic recon-struction in certain parts of Croatia.

• Removing the obstacles to the implementation of efficient mortgage system. The State Survey and Real Estate Cadastre Law (Official Gazette No. 128/99) stipulates that the state survey and real estate cadastre are based on annual and several-years programmes. In the year 2001, the National Programme on State Survey and Real Estate Cadastre for the period 2001 – 2005 was launched. This programme defines the affairs and tasks under the scope of the State Geodetic Administration, and the areas in which these will be performed. The aim is to establish precise, reliable and up-to-date cadastral records based on the real

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situation. They would be coordinated with land books for the fixed locations with the aim of ensuring legal safety of the real estate ownership. The programme was implemented through four sub-programmes representing complete legal, technological, organizational and financial units. Sub-programme A) encompasses affairs and tasks related to the creation of the real-estate cadastre for the agricultural land which is of special interest to Croatia. The project en-visages organization of records for the area of 25, 000 hectares of agricultural land. The im-plementation of this Sub-programme will enable the realization of several aims:

• The process of harmonization between cadastral and land book records and the real situation on the field;

• The improvement of the cadastral and land book records with the aim of creating real estate cadastre;

• Enabling the disposal, especially the selling, of state-owned agricultural land • Improvement of water goods; • Improvement of road infrastructure; • Support to the tax evaluation and value of the land (new land classification following

the survey); • Creation of legal safety of real estate ownership;

Table 10 shows the condition of the survey of state-owned agricultural land according to the programme. The largest areas of state-owned agricultural land have been surveyed in Vukovarsko-Srijemska County, where one of the selected pilot locations is situated. It needs to be emphasised that 26,057 of the state-owned land has been surveyed, but updates for 22,240 hectares of that land still have not been made in land book and cadastral records. Table 10 The condition of the state-owned agricultural land survey County Surveyed and

registered Surveyed but not registered

In the process of survey

In the process of acquisition preparation

Osječko-Baranjska 2,344 3660 10,909 Vukovarsko-Srijemska 1,180 8,862 1,122 Brodsko-Posavska 2,437 6,771 6.397 915 Virovitičko-Podravska 1,581 26,321 Sisačko-Moslavačka 1,086 910 4,343 Bjelovarsko-Bilogorska 1,596 3,221 17,753 Koprivničko-Križevačka 200 1,756 1,277 Total 3,817 22,240 17,066 61,518 Source: State Geodetic Administration, 2006.

3.4 Agricultural Land Market Total agricultural land in Croatia consists of state and privately owned agricultural land. Ac-cording to the Statistical Yearbook 2005, the total surface area of agricultural land is 2,695,000 hectares of which 890,000 hectares are state-owned and 1,805,000 privately owned. The agricultural land market is regulated by general laws and regulations including the Own-ership and other Proprietary Rights Law (Official Gazette 91/96) and the Law on obligatory relations (Official Gazette 57/96, 68/98, 173/03 and 88/05). The state-owned agricultural land

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transactions are regulated by the Agricultural Land Law (Official Gazette 66/01, 87/02, 48/05 and 90/05), in addition to applicable general laws and regulations. Thus, the dualism of legal system has been held, governing the complete agricultural land market. 3.4.1 State-owned Agr icultural Land Market The Law on Agricultural Land from 1991 transferred the ownership of land that had previ-ously been socially owned to Croatia. Disposal of state-owned agricultural land was initiated in 1994 in accordance with the Law on Agricultural Land. The disposals could be in the form of lease, sale, concession, life tenancy, donations and others types. In the period 1994 – 2001, a total of 308,288 hectares were dis-posed of as detailed in Table 11.

Table 11: Disposal of state-owned agricultural land in the period 1994 – 2001 (hectares)

Type of disposal Agricultural land, hectares

Share, %

Sale 8,414 2.7 Donated 2,729 0.9 Leased 287,690 93.3 Life tenancy 4,339 1.4 Concessions 5,115 1.7 Total 308,388 100.0 Source: Agricultural Land Department, MAFWM Some of the lease agreements have been cancelled, or have expired. As a consequence, agri-cultural land is subject to disposal according to the Agricultural Land Law. In 2001, the new Law on Agricultural Land (Official Gazette 66/01, 87/02, 48/05 and 90/05) was adopted and later amended on several occasions in the period 2001 – 2005. According to the Agricultural Land Law in force, local self-government units have to prepare programmes for the disposal of the state-owned agricultural land under their jurisdiction. If they fail to do so, regional self-government units should prepare programmes for the state-owned land within their territory. Based on cadastral maps and records, such programmes have to contain information on the areas allocated for restitution, selling, concession, leasing and other uses. To date, 363 local units of self-government have submitted their programmes to MAFWM, of which 331 have been approved, comprising 522,777 hectares in total. However, 96 local self-government units have not yet submitted their programmes to MAFWM, while 73 do not have state-owned agricultural land within their territories. Table 12 shows different forms of dis-posal of agricultural land in the Programmes approved by MAFWM.

Table 12 Different forms of disposal of state-owned agricultural land in project selected coun-ties

County Restitution Sale Lease Concession Others Total area Primorsko-Goranska

315

2,682

9,470

3,046

216

15,729

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Varaždinska 523 994 122 232 144

2,015 Vukovarsko-srijemska 9,540 24,383 5,004 10,701 1,382

51,011

Zagrebačka 1,518 10,082 4,687 2,870 713 19,870

Total Croatia 52,280 215,338 112,086 122,428 13,937 522,777

Source: Agricultural Land Department 2006, MAFWM

According to the Law on Agricultural Land, state-owned agricultural land can only be dis-posed of when abiding public bidding procedures. Agricultural family farms and craftsmen, which are inscribed to the VAT system, have pre-emptive rights to purchase or lease state-owned agricultural land, if they meet other tender conditions stipulated by the Law on Agri-cultural Land. Business entities have pre-emptive rights for concession to the usage of state-owned agricultural land. Restitution procedures are regulated by the Law on the return of the property confiscated during former Yugoslav communist government (Official Gazette 92/96). The Ministry of Justice is responsible for the implementation. The decision to invite bids for buying or leasing state-owned agricultural land falls under re-spective municipal or town councils, which are also responsible for the selecting of the best bid. However, decisions have to be approved by MAFWM. If local self-governments do not announce a public tender, regional self-government unit has to do that. Table 13 Lease of the state owned agricultural land

County Local gov-ernment

unit

MAFWM approved decisions on inviting of bids

MAFWM approved deci-sions on selecting the best

bids ha No. ha No.

Primorsko-goranska

0 0 0 0

Varaždinska 4 385 4 158 3

Vukovarsko-srijemska

12 5,151 12 2,879 7

Zagrebačka 5 1,017 5 198 1

Total Croatia 144 72,500 149 39,968 93

Source: Agricultural Land Department 2006, MAFWM

Table 14 Sale of the state owned agricultural land

County Local self-government

unit

MAFWM approved decisions on inviting of bids

MAFWM approved deci-sions on selecting the best

bids

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ha No. ha No.

Primorsko-Goranska

0 0 0 0 0

Varaždinska 5 152 2 49 1 Vukovarsko-Srijemska

10 4,401 9 4,074 8

Zagrebačka 5 250 4 95 2 Total Croatia 115 34,581 124 21,478 86

Source: Agricultural Land Department 2006, MAFWM

Tables 13 and 14 show the conditions proceeding to decision-making for the four counties in which pilot locations are situated. According to these figures, the process of disposal is most advanced in Vukovarsko-Srijemska County, where agriculture is the main economic activity. On the basis of selection of the best bidder for selling/leasing of state owned agricultural land, the mayor of the municipality or town prepares a draft lease/sell agreement with the best bid-der. Draft agreement on selling/leasing of state owned agricultural land has to be delivered, before it is signed, to the State Attorney’s Office of Croatia for preliminary opinion. After be-ing approved by the State Attorney’s Office, municipal/town mayor enters into lease/sell agreement with the best bidder A local self-government unit and notary have to deliver one copy of the sale agreement to Land Registry Department of Municipal Court for the purpose of registering property changes, as well as to local cadastral office. Lease agreement has to be delivered only to local cadastral office. Government Administration Office-Economy Service registers buyer/lessee of the property on the basis of the state owned agricultural land sell/lease agreement. Local self-governments are not obliged to send concluded agreements to MAFWM, which implies that there is no relevant database of disposed state-owned agricultural land. That raises doubts about the accuracy of the information at MAFWM’s disposal. State-owned agricultural land may be sold only in those areas where the land registry records and cadastral records have been adjusted to the situation on the ground. If the land, which is under the Programme for Disposal of State-owned Agricultural Land assigned to sale, is not adequately accorded with land book and cadastral records, it can be leased (until it is sold) until the situation changes. The Government of Croatia makes decision on inviting public bids for granting of conces-sions, at the proposal of MAFWM. The Committee for Concessions for Exploitation of Agri-cultural Land owned by Croatia conducts public bidding. The Government of Croatia makes decision on granting concessions for the exploitation of state-owned agricultural land, at the proposal of MAFWM. The best bidder for concession is selected on the basis of the priority rights set by the Law on Agricultural Land in force. Draft contracts on concession of state-owned agricultural land have to be delivered, before it is signed, to the State Attorney’s Office of Croatia for a pre-liminary legal opinion. After being approved by the State Attorney’s Office of Croatia, Minis-ter enters into lease/sell agreement with the best bidder. MAFWM sends concluded agree-

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ments to cadastral office, Government Administration Office-Economy Service and to the Ministry of Finance. The Government of Croatia has also made 52 decisions on inviting pub-lic bids for granting of concessions for the total surface of 26,395.08 hectares. The Govern-ment of Croatia made 32 decisions to grant concession for the total surface of 14,057.63 hecta-res, and 29 concession agreements have been concluded for the total surface area of 16,536.66 hectares. Local tax authority has to determine starting prices for leasing/selling/concession, which have to correspond to the local market price. The tax authority also has to control compliance with the schedule for payments. 25 per cent of purchase price/rental fee has to be allocated to state budget, 25 per cent to the regional self-government and 50 per cent to relevant local self-government unit. Concession fees are to be paid on annual basis; 50 per cent of concession fee has to be allocated to the state budget and 50 per cent to the local self-government in case. If paying full amount of the selling price in one instalment, buyer shall be entitled to a dis-count equalling 20 percent of the selling price. In the areas under the special state care, time of payment by instalments can be 15 or 20 years. The Contract of sales can provide for pay-ment of the contracted amount by instalments. In the public bidding the price is limited (maximum is twice the figure of the starting price set by the Tax authority). The Tax Office Information system does not register the prices reached for state-owned agricultural land. The analysis of these data suggests that the disposal of state-owned agricultural land is a slow and insufficiently developed process. The obstacles hindering the improvement of efficiency of the state-owned agricultural land market are following:

• Land book and cadastre records on state-owned agricultural land do not correspond to the real situation on the ground, which is a significant problem in the preparation of the Programme for the disposal of state-owned agricultural land. It also prevents the sale of state-owned agricultural land;

• Lack of well-trained local and regional self-government staff that would be responsi-ble for the disposal of state-owned agricultural land, and that would work efficiently;

• Lack of complete database of the disposal of state-owned agricultural land, which makes the figures at the disposal to MAFWM questionable.

• Over-bureaucratic procedures of the disposal of state-owned agricultural land The slow process of the disposal of state owned agricultural land is one of the causes for the existence of large areas of uncultivated state-owned agricultural land. Similarly, the process of disposal of state-owned agricultural land, which was consolidated though the processes of arondacija and komasacija, causes reparcelling and fragmentation. Still, family farmers have been a unique opportunity for enlarging and consolidating their land and, thus, creating a ba-sis for making their agricultural produces competitive on the EU market. The existence of state-owned agricultural land is extremely important for the Land Consolidation Pilot Project because it will constitute a major land reserve that can be part of the Land Fund

3.4.2 Pr ivately-owned Agr icultural Land Market It has been already stated that general laws and regulations on property transactions regulate the privately owned agricultural land market. The privately owned land market is not well de-veloped, though there are significant differences in terms of market efficiency, depending on

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the area. The obstacles to the development of the privately owned agricultural land market are following:

• Agricultural land is very fragmentised due to inadequate inheritance laws; • Property rights on individual parcels are often not resolved and formal decisions on

inheritance not registered; • Inadequate taxation regulations on unused arable land and non-compliance with regu-

lations in force by some local self-government units; • The existence of the Tax on sales of agricultural land (double taxation when swapping

agricultural land); • The existence of mortgages/pledge right on agricultural land; • Non-existence of unique database of the privately-owned agricultural land market; • Income support does not encourage elderly family households on selling or leasing

their land; • Commercial banks are not interested in financing the purchase of agricultural land

under easy terms; and • Emotional attachment to land and a tradition of keeping family land as a security.

In 2004, MAFWM launched the Capital Investment Scheme for the purchase of privately owned agricultural land, with the aim of improving the efficiency of privately owned agricul-tural land. 3.4.3 2.4.3 Land Transactions and Pr ices The records on privately owned agricultural land market are partly registered by Tax Office Information system for the purpose of real estate taxation, but these records mainly show prices listed in sale contracts, which do not correspond to real prices. In sale contracts, a real price is often reduced to reduce the tax that the buyer has to pay (5 per cent of the value of real estate). The data provided by the Tax Authorities on the total surface area of the agricultural land that was sold or bought in 2004, 2003 and 2002 is incomplete. Namely, in case of exemption from real estate transactions taxation, in accordance with the Law on real estate transactions tax (Official Gazette No. 69/97, 26/00, 127/00 and 153/00), the Information system of the Tax Office is not obliged to register the land that is the subject of a sale contract. Tables 15 and 16 show average prices of agricultural land in Croatia (HRK per m2) in counties where pilot pro-ject locations are situated. The prices listed are based on agricultural land transactions with all necessary data. Comparing Table 15 and Table 16 shows that the agricultural land transactions increased in 2004. Since the largest part of Vukovarsko-Srijemska County, as an area of the special state care, is exempted from real estate transactions taxation, the data for that County is incomplete. It should be noted that the transactions of agricultural land not very often have the aim to im-prove the farm structure. The purpose, as reported by physical planning documents, is rather to buy agricultural land for its conversion into building areas. Table 15 Sale of agricultural land in 2002

Local Tax Office Number of Total value, Surface area, Average price

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applications HRK million Hectares HRK/ha

Zagreb 718 19.3 33.0 58,800

Varaždin 113 0.9 6.4 167,300

Rijeka 524 15.6 17.5 97,600

Vukovar 47 0.2 0.3 8,330

Total Croatia 4.151 100.3 164.0 61,500 Source: Tax Office Information system, Ministry of finances, Tax office-Central Bureau

Table 16 Sale of agricultural land in 2004

Local Tax Office Number of

applications

Total value,

HRK million

Surface area,

Hectares

Average price

HRK/ha

Zagreb 1,818 117.4 61.6 190,600

Varaždin 1,133 14.2 27.1 52,400

Rijeka 601 29.2 11.6 251,700

Vukovar 489 22.0 214.4 10,200

Total Croatia 13,199 451.0 930.1 48,500 Source: Tax Office Information system, Ministry of finances, Tax office-Central Bureau

For more information on the state-owned agricultural land price see chapter 2.4.1. 3.4.4 Lease of Agr icultural Land The government finds it essential that conditions are created for medium and long term leas-ing since this will encourage investment in agricultural production. The lease of state-owned agricultural land is regulated by The Agricultural Land Law(Official Gazette No. 66/01, 87/02, 48/05 and 90/05). The government is drafting a law to extend this protection to leases on private land, which would contribute to the improved structure and consolidation of farms. The share of the agricultural land under lease in Croatia is considerable as shown in Table 15 below.

Table 17 Croatian Lease Market in 2003 (hectares)

Land user Total utilized agri-cultural land

In owner-ship

Under lease agreement

Leased in Leased out Family farms 853,196 720,074 202,805 62,684 Legal entities 217,208 29,053 188,948 793 Total 1,077,403 749,127 391,753 63,477 Source: Agricultural Census 2003; Central Bureau of Statistics

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According to these figures, in 2003, the family farms leased in 24 per cent and owned 76 per cent of agricultural land they cultivated. Legal entities owned 13 per cent of the utilised agri-cultural land and leased in 87 per cent. For the entire sector, more than one third or 36 per cent of the utilised agricultural land was leased in 2003. 3.4.5 Implications Agricultural output fell as a result of the war in the -90s, but has recovered, with significant differences among specific products. Livestock production (especially beef and pork produc-tion) has fallen substantially. Milk production – though increasing – is below the pre-war lev-els. On the other hand, production of maize, sunflower, soya, some vegetables, olives and other crops nowadays exceeds pre-war levels. Trade has increased substantially, especially in the last half decade, following the signing of trade agreements with the EU and other coun-tries in the region. Exports have increased by 50 per cent by value over this period, from € 405 million in 1999 to € 616 million in 2004. However, rising demand due to higher incomes has resulted in food imports increasing even more, from € 663 million in 1999 to € 1.2 billion in 2004. Consequently, the trade balance declined, from € 258 million in 1999 to € 585 mil-lion in 2004, which correspond to € 132 per capita. Of particular concern is the declining competitiveness of the domestic production vis-à-vis EU. The present custom protection from EU competition will disappear upon the accession. The agricultural trade deficit with these countries has been increasing annually, and currently stands at around € 600 million. The only product grouping where Croatia has a trade surplus is tobacco products, but this is also under threat with the anti-smoking legislation in many EU countries. The Croatian Government needs to develop various agricultural policy tools in or-der to improve domestic production, i.e. export capacities. Land consolidation is, without any doubt, one of the tools for the improvement of farm structure.

4 OPTIONS FOR LAND CONSOLIDATION IN CROATIA

4.1 Introduction For centuries, land consolidation schemes have been practised in Europe to increase the size of farms and fields and to reduce the number of parcels per farm. Various approaches have evolved in the course of time, as a result of accumulated experience and technological ad-vances, but also as objectives have changed. Present-day land consolidation schemes in West-ern Europe are often designed for rural development and have broader focus than agricultural concerns. The collectivisation of farms in Central and Eastern Europe after WW II were also labelled as land consolidation programmes. Following the collectivisation, arondacija, komasacija and other schemes of land consolidation were applied. Since the beginning of the 1990s, countries of Central and Eastern Europe have introduced reform programmes for restoring the farm structure to the situation before the collectivisation. Farms (or land) are returned to the original owners or their heirs (restitution). When not pos-sible, compensation is offered in a form of comparable land (distribution) or in ready money. The privatisation process has also included sale of state-owned agricultural land to individu

23

als, cooperatives and companies. The intentions of the privatisation were honourable, but the procedures in many countries were bureaucratic, tedious and insufficiently transparent. In ad-dition, the redistribution of land has in some countries resulted in considerable fragmentation of farms, and reduced sector output and productivity. In some Central, East and South Euro-pean countries, the disposal, i.e. privatisation of state-owned agricultural land is still in proc-ess. In parallel, the cadastre and land registry systems in Central and Eastern Europe were poorly maintained, not to say neglected, in the socialist era. Most countries are therefore in the proc-ess of modernising these systems and updating the registers. Most former socialist countries have also been addressing the problem of small and frag-mented holdings, unable to market competitive produce. While only a few countries have re-vised the legal foundation, land consolidation programmes were launched in most of these countries. The project Land Consolidation in Croatia has been prepared by taking into consideration the experiences of similar programmes and projects in Europe.

4.2 Traditional Land Consolidation Schemes Traditionally, land consolidation projects are carried out on a selected and demarked area and often involve one cadastral unit in the area (a cadastral municipality or a part of it). Very im-portant initial activity is the awareness campaign to inform prospective participants on impor-tant parameters of the project: costs and benefits, demarcation of the intended project, esti-mated duration and timetable. Partnerships with farmers’ associations and local authorities are also important. In the initial stage, it is necessary to establish the sources for project funding and the willingness of landowners to participate in the project and to contribute to the costs. Having the central role in the implementation of these projects, surveyors coordinate all ac-tivities including the collection and compilation of information about landowners, surveys and land evaluations, and participation in negotiations with landowners and farmers. A board con-sisting of the representatives of the public sector and all project stakeholders makes the final decisions by approving the result of negotiations. When at hand, land reserves (state-owned land or land in the Land Fund) play an important catalyst role to facilitate and speed up the implementation of the projects. Smaller land consolidation project are normally based on voluntary participation. However, this is not feasible for larger projects when hundreds of owners are involved. In such cases participation is obligatory if a sufficient share of the landowners agrees – the size of that share depends on national regulations. The share of 80 per cent is a minimum in Slovenia. The process can normally take from 2 to 3 years for minor projects, and 5 to 10 years for lar-ger schemes, depending on a number of owners involved, the degree of fragmentation and the readiness of owners to participate in the final negotiations. Traditional approaches have been in use for centuries to enlarge and consolidate holdings, and thereby contribute to increased effectiveness of agriculture. Farmers have been interested to participate, not least because the governments normally subsidised the costs of the schemes.

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Drawbacks of traditional land consolidation schemes are the time factor and the frequent low economic cost-efficiency. It is believed that these projects address problems that an efficient land market could well solve gradually, with no additional expenses for a government.

4.3 Integrated Approach The principle of the integrated, broader rural development approach through the rural devel-opment in Western Europe also includes the importance of landscaping, protection of natural resources and improving public services in rural areas. The attempts to apply the integrated approach in Central and Eastern Europe are based on the need to activate rural areas characterised by high unemployment rate and agriculture as a main economic activity. De-fragmentation of agricultural land will not improve the situation fundamentally; in the broader context, land consolidation schemes may be an essential ele-ment, but still insufficient for accelerating rural development without accompanying rural de-velopment measures. The integrated approach is not solely focused on the interests of individual landowners, but also on overall rural population. To achieve impact for all rural dwellers, land consolidation project ought to be accompanied by activities aiming to improve the local infrastructure (roads, drainage, irrigation, water supply and sewage), etc. A practical way of attending the interest of all stakeholders is to prepare an Area Develop-ment Plan, which is normally a part of the integrated land consolidation process. This is done in a participatory manner through a series of workshops and debates. The land consolidation projects with the aim of highway construction, afforestation and/or nature protection are more efficient and low-cost if facilitated by a land reserve in the project area to offer as compensation.

4.4 Options for Land Consolidation in Croatia 4.4.1 Croatian Exper ience of Land Consolidation Since 1891, in the territory of the modern Republic of Croatia, the land was mainly enlarged by two schemes of land consolidation – arondacija and komasacija. The aims of the koma-sacija land consolidation scheme in the period 1891 – 1950 were different than those in the period 1954 – 1991. First land consolidation schemes were implemented at the end of the 19th century in the re-gions of Slavonija and Srijem in accordance with the old Land Consolidation Law. The main reasons were land fragmentation, lack of coordination between land book records and cadas-tral records, inadequate shape of land parcels, and unsolved inheritance issues - once owned by land unions. The komasacija schemes took the existing irrigation and drainage systems as well as other forms of land-improvement and unregulated water streams into consideration, not solving the issue of channel network. In total 405,193 hectares were consolidated in Croa-tia in the period 1891 – 1950.

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According to the Law on Agrarian Reform and Colonization of 1945 and other accompanying regulations, 10 hectares of land were stipulated an agrarian maximum. Individual owners with more than 10 hectares were deprived of their land, receiving compensation to the value of an-nual salary, and no compensation at all for larger landowners. The result was a land fund of 1,600,000 hectares of uncultivated agricultural land, which served as a basis for the estab-lishment of social sector in agriculture and large socially owned enterprises. These enterprises developed into large "agro-combinates", favoured by the contemporary government and bank system. The end result was a dual legal system. Land limit for private farms made the pri-vately owned agricultural land market virtually impossible. Land book registry was not made a basis for legal transactions. The arondacija and komasacija land consolidation schemes were mainly directed to the ad-vantage of the social sector since the private owners had a land limit. The Law on arondacija was enacted in 1976, and amended in 1984 and 1987 (Official Gazette 6/76, 5/84 and 5/87), stipulating that the aims of the arondacija land consolidation schemes were to create more favourable conditions for land cultivation, use of machinery in land culti-vation, land-improvement and anti-erosion works, creation of lasting plantations, and founda-tion and extension of fish farms. In 1954, a new Law on komasacija was enacted and later replaced in 1979. This law was amended on two occasions, in 1979 and 1984. According to the Komasacija Law (Official Gazette 10/99, 21/84 and 5/87), the aims of the komasacija land consolidation were more ef-ficient land use, creation of favourable conditions for the development of agricultural settle-ments, construction of paths and other types of communication, foundation and construction of hydromelioration facilities, equipment and works, and other types of land-improvement. Komasacija refers to consolidation of land into larger and more regular units. The results of the komasacija land consolidation schemes in the period 1954-1991 were fol-lowing:

• Komasacija was carried out in 274 cadastre municipalities, mainly in Slavonija. These schemes were accompanied by investments in new melioration systems. Thou-sands of kilometres of paths and drainage channels were built, old channel networks were reconstructed and a few thousand of hectares of socially and privately owned agricultural lands were drained. These schemes allowed for the introduction of large scale, planned agricultural production.

• The number of parcels of the privately owned agricultural properties fell by more than three times and the number of parcels of the agro-combinates fell by 40 times, and very comprehensive records on agricultural land were established.

• The real property rights were resolved, enabling the complete safety and records for every parcel.

• With the physical planning procedures, new building areas for further planned devel-opment of agricultural settlements were created.

In the same period, 654,413 ha of land were consolidated. Different state institutions sup-ported the komasacija land consolidation schemes. State Geodetic Administration provided the funds for surveying infrastructure, position networks, cadastral plans, cadastral records, and monitoring of surveying works. Apart from the state institutions and surveying compa-nies, various experts in civil engineering, agriculture, legislature and economics, together with

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large number of municipal and high court judges, participated in the implementation of the land consolidation schemes from 1955. Ever since 1991, land consolidation schemes have not been implemented. The war and all ac-tivities involved in the process of creation of integral and independent state put a stop to the land consolidation schemes. 4.4.2 General Considerations of a Land Consolidation Policy An important challenge for the national land consolidation policy is to find a model that cre-ates a structure of viable farms out of a present mosaic of parcels in the most cost-efficient way – both for the state and farmers. In many regions in Croatia, the fragmentation is severe. However, reallocating a high number of tiny parcels will not bring a substantial improvement of the standard of living and agricul-tural produce, while the surveying and transaction costs will be relatively high. To a certain extent, tenancy is desirable to allow for enlargement of farms in a cheap, infor-mal and flexible way. However, a dependency on short-term leases has a negative impact on justified investments in agricultural production (in irrigation and drainage systems, or dimen-sioning of buildings and purchase of machinery). The rapid structural erosion of the agricultural sector results in elderly smallholders dominat-ing as owners. For the development of an agricultural land market this is far from ideal, since many owners see their farms as a last resort for their retirement, and therefore unwilling to sell. The farm ownership structure is dynamic and in constant change; farms are inherited or sold on the open market and more expansive farmers buy or lease additional land. Farmers also agree to swap parcels to bring about improvements of the layout of their farms. In addition, land is being purchased or expropriated for construction of roads. Therefore land consolida-tion should not be seen as an event, but more in a gradual changing context. Experiences show that it is the combined effects of several means and instruments that usually determine the final result: an effective organisation of land consolidation, a conducive legal framework, an effective land market, fair and rational subsidy for agriculture and rural devel-opment, as well as the farmers` trust and confidence. An efficient agricultural land market can accelerate the consolidation process, but should avoid addressing problems that will be solved as a result of the sector’s inherent dynamics. 4.4.3 Choosing from Alternatives As mentioned above, the main purpose of the Project Land Consolidation in Croatia is to as-sist development of the national land consolidation policy in Croatia. A central measure of the proposed pilot project is to address obstacles to land consolidation and the development of an effective agricultural land market. In the inception phase, needs to revise laws and regulations and other actions with impact on land consolidation have been analysed. These analyses have resulted in recommendations, and the need to:

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- Draft amendments to and changes of the Law on komasacija (Official Gazette 10/79, 21/84 and 5/87) and procedures for agricultural land registration;

- Improve the efficiency of the agricultural land market by revision of laws and regulations in force that are the main reason for the inefficiency of agricultural land market; and give suggestions to amend and change them. These problems are: abandoned land, inheritance of homesteads, long-term lease of privately owned agricultural land, agricultural and rural development incentives, and land transaction taxes.

- Explore the possibilities to use state guarantees as collaterals, strengthening the mortgage instrument, and other means to attract banks to become more involved in providing long-term loans for the purchase of agricultural land.

It is also proposed to explore the feasibility of establishing The Croatian Land Fund and to suggest organisation, management, sources of finance, legal aspects as well as a degree of de-centralisation of the decision making power. The Land Fund in operation would be a very useful instrument to facilitate and target transactions of agricultural land for the purpose of land consolidation, and has proved to be an effective instrument in Western Europe. As far as the five land consolidation pilot projects are concerned, a traditional design is pro-posed, but with an initial pre-evaluation to scan the projects for cost-benefit. The proposed institutional set-up has been designed to ensure transparency, decentralisation and a rational division of competences between national and regional levels. Accordingly, it is proposed to establish The National Land Committee under MAFWM, which would be re-sponsible for normative issues, policy development and overall monitoring, and the County Land Committees in the four selected counties, to be responsible for implementation of the land consolidation pilot projects on five selected project locations.

5 PROJECT DESCRIPTION

5.1 Objectives 5.1.1 Overall Development Objective The overall objective of the project `Land Consolidation in Croatia´(henceforth referred to as the Project) is to contribute to the development of a competitive agricultural sector and sus-tainable rural development in Croatia. 5.1.2 Project Purpose: The Project purpose is to assist the development of a national land consolidation policy for Croatia by: • Designing and developing the necessary legal, organisational, institutional, technical and

managerial framework for the implementation of land consolidation; and • Improving the participatory capacity in decision-making processes of relevant interest

groups at national, regional and local levels.

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5.1.3 Specific Project Objectives Key Project components are: 1. Implementation of the land consolidation pilot projects in the town of Novi Vinodolski,

the town of Vrbovec, Tompojevci Municipality, Vidovec Municipality and Krašić Mu-nicipality;

2. Establishment of the Land Fund, as a support to the land consolidation pilot project activi-ties on these locations;

3. Establishment of the structures, which would enable the realisation of project objectives and which would in the future, if proven to be efficient, implement the land consolidation on national, regional and local levels. These structures are: • The National Land Committee (NLC) and the Project Coordinating Unit (PCU); • The County Land Committees (CLCs) and the County Land Offices (CLOs) in the

counties of Primorsko-Goranska, Zagrebačka, Varaždinska and Vukovarsko-Srijemska

4. Improvement of the efficiency of the agricultural land market by following measures: • Preparation of a draft of amendments to and changes of the existing regulations and a

draft of new regulations • Strengthening of the loan sector for the purchase of agricultural land

5. Capacity-building and promotion of public participation in land related issues. The implementation of the pilot project is an essential activity in the process of the design of the national land consolidation policy. These experiences are unique and a key to the success-ful land consolidation policy making. While the establishment of the Land Fund and organiza-tional structures represent key project measures, capacity-building and providing information to the public will develop in time, since these measures are necessary to project stakeholders, decision makers and others for an efficient land consolidation policy. By supporting private voluntary initiatives to consolidate parcels, the government would pro-vide a better environment for the improvement of the farm structure and development of more efficient land market. Most measures will require changes of the existing legal framework.

5.2 Project outOutputs and Activities 5.2.1 Output 1: National Land Committee (NLC) and the Project Coordinating Unit

(PCU) established. Activity 1.1

• Establish PCU • Draft PCU’s operative guidelines

PCU will be established by MAFWM and will be represented by the Project Director, Interna-tional Advisor, Project Manager and Project Assistant. PCU will function as a unit within the Agricultural Land Department of MAFWM. PCU will assist the establishment of NLC and act as the secretary of NLC during the imple-mentation of the Project.

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PCU will draft the PCU’s operative guidelines, which have to be approved by NLC. PCU’s operative guidelines will contain clearly defined PCU’s responsibilities and tasks, including:

• To coordinate day-to-day activities of the pilot project and liase with CLCs, CLOs, NLC and other stakeholders

• To implement the decisions of NLC and provide required assistance to ensure that NLC meetings are well prepared and conducive for the development of the pilot pro-ject

• To elaborate annual work plans and project budgets, which, amongst others, contain individual annual working plans and budgets of CLOs, for final approval by NLC

• To assist CLOs in preparing their annual work plans and project budgets, to be ap-proved by CLCs

• To prepare progress reports to be approved by NLC • To propose establishment of committees/working groups and their membership, and

draft Terms of Reference for final approval by NLC • To provide backstopping support to CLOs during the implementation of the land con-

solidation on the five locations • To compile information from CLOs on existing legal obstacles and barriers, which

show as a barrier to the development of the farm structure or the project implementa-tion, and to present them to NLC

• To develop promotion/marketing strategy together with CLOs; • To assess training needs together with CLOs for pilot project officials and staff, de-

velop training plans and organise appropriate training • To detect access to the relevant EU funds for land consolidation and rural develop-

ment, and present these possibilities to NLC • Other tasks to be defined.

PCU will supervise the activities of CLOs in accordance with the PCU’s operative guidelines. Activity 1.2

• Assist establishment of NLC • Draft NLC’s operative guidelines

The implementation of the pilot project will be guided and supervised by NLC. The minister of MAFWM will make a formal decision on establishing NLC and nominate its members. NLC will consist of ordinary members as follows:

• Minister or State Secretary of MAFWM (President) • Assistant Minister, the Agricultural Land Department, MAFWM • Representative of the Ministry of Justice, • Representative of the Faculty of Agriculture, • Representative of the Croatian Agricultural Extension Services, • Representative of the State Geodetic Administration, • Representative of the regional self-government authority • Representative of the local self-government authority, and • Representative of the farmers in the selected pilot areas • Others

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PCU will assist the establishment of NLC, which will hold 5 - 6 ordinary meetings per year, and when necessary. PCU will draft NLC’s operative guidelines which will contain clearly defined NLC’s respon-sibilities and tasks. PCU will present draft operative guidelines to be considered by NLC and finally approved by the minister of MAFWM. NLC’s tasks and responsibilities will include:

• To assume political responsibility for the project and development of the national land consolidation policy

• To monitor the Land Fund and the activities of CLCs • To ensure the development of a legal framework that is conducive to the project • To make decision to establish committees/working groups with specific tasks, on the

recommendation of PCU • To consider proposals made by committees /working groups • To consider various land consolidation initiatives taken and proposed by PCU, CLOs,

CLCs and other stakeholders • To set various criteria enabling the decision making for CLCs • To consider appeals and make recommendations to the minister of MAFWM • To secure the availability of official records from cadastre, land books and others, for

the needs of the project • To approve the project annual work plans and project budgets, proposed by PCU • To monitor the project and approve progress reports proposed by PCU • To ensure that the annual project accounts are audited; and • Others to be defined.

In the beginning of the implementation phase of the pilot project, NLC will explore the possi-bilities to enact and apply specific rules for the selected project areas, to be considered by the Croatian Government. 5.2.2 Output 2: Four County Land Committees (CLCs) and County Land Offices

(CLOs) established The four counties with selected pilot locations are Primorsko-Goranska, Zagrebačka, Va-raždinska, and Vukovarsko-Srijemska. These counties differ in terms of their location, surface area and value of agricultural land, as well as the economic importance of agriculture. Activity 2.1

• Assist establishment of CLOs within the four local self-government units • Draft CLOs’ operative guidelines

PCU will assist the establishment of CLOs within the regional self-government authorities in the four counties. Each CLO will be represented by a County Project Manager and, if neces-sary, a Project Assistant.

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CLOs will assist the establishment of the CLCs and will act as secretariats for CLCs during the implementation of the pilot project. CLOs will follow instructions given by NLC and con-sult PCU in these matters. PCU will assist the preparation of the draft operative guidelines for CLOs, to be considered by CLCs before being finally approved by NLC. CLO`s operative guidelines will include clearly defined responsibilities and tasks, including:

• To coordinate day-to-day project activities and liaise with all stakeholders at regional and local level and PCU

• To implement the decisions of NLC and CLCs, and provide required assistance to en-sure that CLC’s meetings are well prepared

• To elaborate annual work plans and budgets for the selected project areas, to be con-sidered by CLCs and finally approved by PCU

• To prepare progress reports to be approved by CLCs and forwarded to PCU • To manage the implementation of the land consolidation pilot project in close collabo-

ration with the local self-government units, based on frequent meetings with farmers, land owners, land users and others

• To accumulate experiences gained during the implementation of the pilot project and define obstacles and barriers to the improvement of the farm structure and implemen-tation of the project within the existing legal framework, and present them to CLCs and PCU

• To create and maintain a database of the agricultural land market in the pilot areas • To inform CLCs about possible land transactions identified during the implementation

of the land consolidation on selected locations, for the land banking purposes • To identify training needs for the project officials and staff, and present them to PCU • To disseminate the purposes and aims of the pilot project through public information

activities • To coordinate accompanying measures for agricultural and rural development that are

administrated at county and local levels • Others to be defined.

Activity 2.2

• Assist establishment of four CLCs • Assist drafting of CLCs’ operative guidelines

The implementation of the pilot project will be guided and supervised by CLCs in the area of their jurisdiction. Regional self-government authorities will make a decision to establish CLCs in selected areas, which will consist of members representing the following:

• Regional self-government authorities (President) • Local self-government unit where selected project area is based • Cadastre office • Municipal court • State Attorney Office • Land owner/land user representing the selected project area

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• Others. CLCs will meet on a monthly basis, and, if necessary, more often. CLOs will act as a secre-tary at their meetings. PCU and CLOs will draft CLCs` operative guidelines, which will contain clearly defined re-sponsibilities and tasks, including:

• To assume political responsibility for the pilot project and its implementation at county level, within the developing national policies for land consolidation as set out by NLC

• To provide support to CLOs in the implementation of the pilot project • To consider and approve annual work plans and project budgets, prepared by CLOs, to

be finally approval by NLC • To approve CLOs’ progress reports, prepared by CLOs, to be finally approved by

NLC • To monitor the implementation of the land consolidation pilot project on selected loca-

tions • To make recommendations and decisions on operational issues which cannot be

solved at field level • To make recommendations to NLC on possibilities in addressing obstacles to the im-

plementation of land consolidation within the existing legal framework • To make decisions about possible land transactions in accordance with the legal

framework for the Land Bank operations, to be developed • To approve all steps in the implementation of the pilot project, especially Inventories

of the existing situation (Plan 1) and Proposals on re-organisation of land parcels (Plan 2)

• To ensure that the purpose and aims of the pilot project are disseminated through CLOs’ promotion and information activities

• To consider appeals and make recommendations to NLC • To coordinate accompanying measures for agricultural and rural development admin-

istrated at county level • Others to be defined.

CLCs will make decisions within the national legal framework in matters related to the pilot project, while MAFWM will maintain its capacity as the normative entity and as an instance for appeal. CLCs will have the legal instruments related to the Land Bank, including:

• Disposal of state-owned agricultural land • Land transactions between willing buyers and willing sellers • Barter deals • Others to be defined.

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5.2.3 Output 3: A Land Fund established Activity 3.1

• Assist the appointment of the Land Fund Working Group • Draft Terms of reference for the Land Fund Working Group

NLC will appoint the Land Fund Working Group that will explore the options for establishing a Land Fund for Croatia and propose possible schemes. PCU will assist this process by draft-ing the Terms of Reference for the Land Fund Working Group with clearly defined tasks, in-cluding the suggestions for:

• Rationale • Institutional set-up • Management • Activities • Sources of financing • Others to be defined.

NLC will also approve Terms of reference for the Land Fund Working Group. The Land Fund Working Group will also draft the Land Fund Book of Statutes, to be considered by NLC. PCU will coordinate all activities between the Land Fund Working Group, NLC and others. Activity 3.2

• Assist the establishment of the Land Fund It is expected that the Land Fund will become operational in the implementation phase of the pilot project (2nd half of 2007) if NLC decides on forming it. It is assumed that the Land Fund will fall under NLC at the national level, and under CLCs at county level. However, the Land Fund Book of Statutes will clearly define the division of competences and responsibilities between NLC and CLCs. As far as activities of the Land Fund are concerned, the Land Fund Working Group will closely study and suggest the following:

• Purchase and sale of privately owned agricultural land to avoid unsuitable land repar-celling and to achieve land consolidation

• Use of state owned land for the land consolidation purposes • Use of a pre-emptive right to safeguard land required for the purposes of national, re-

gional or local interests, or for the land consolidation purposes • Purchase or lease of land as a part of the early retirement scheme (EU Regulation No.

1698/2005 on rural development support provided by The EU Rural Development Ag-ricultural Fund

• Others. 5.2.4 Output 4: Land consolidation pilot projects in selected areas implemented Output 4 concerns the five land consolidation projects in selected project areas.

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Regional self-

government unit

Local self-government unit

Selected loca-tion

Wider sur-face area

Narrower surface

area

Ownership

Primorsko-Goranska County

The town of Novi Vinodolski

Vinodol valley

cca 500 ha State-owned Pri-vately owned

Zagrebačka County The town of Vrbovec

Poljanski Lug cadastral mu-nicipality

cca 500 ha State-owned Privately owned

Vukovarsko-srijemska County

The Municipality of Tompojevci

2000 ha cca 500 ha State-owned Privately owned

Varaždinska County The Municipality of Vidovec

Vidovec ca-dastral mu-nicipality

cca 750 ha Privately owned

Zagrebačka County The Municipality of Krašić

Valley Kupčina

cca 770 ha Privately owned

CLOs will coordinate these undertakings and assess the needs for outsourcing specific ser-vices and, when so required, contract various consultants in the field of real-property rights, land surveying, land evaluation and others. The role of CLC is to confirm the selection of the particular area, and to monitor progress (approve the project activities). PCU will provide backstopping support to CLOs, as required. It is important to underline that the activities presented below will be tailor-made depending on the selected location, and, if necessary, they will follow other procedures. Activity 4.1.

• Assess the feasibility and cost-effectiveness of the project implementation on each pi-lot locations

• Prepare a financial plan for each pilot location The pilot locations were selected during the preparatory stage, on the principle "first come, first serve". Therefore, it is necessary to confirm the feasibility of the implementation of the project on each of the locations in terms of the potential and development of agricultural pro-duction as well as environmental value. CLOs will be responsible for a preliminary evaluation of the pilot project implementation on the selected location in terms of cost-effectiveness and feasibility, based on the following parameters:

• The willingness of the landowners to participate • Existing property rights issues on the location • The prospects for the agricultural productions on the location • The condition of land book and cadastral records • Environmental concerns • Other issues

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This evaluation will result in a report to CLC; it will then decide whether to initiate the proc-ess of land consolidation or not. Criteria for this filtering process have to be defined by NLC. In this phase, CLOs will also prepare a financial plan for each project to be implemented, and investigate other potential sources of funding at regional and local level. Activity 4.2

• Assist the establishment of the Committee of Participants (CP) CLOs will assist the establishment of CPs to represent the interests of farmers, landowners and land users from the selected project areas. The establishment of CPs depends on whether the landowners wish to be represented in that form, or directly. CPs will be a link between civil society (rural residents in selected project areas) and CLCs. Farmers, land-owners, land-users and representatives for other public interests. CP members will nominate the chairman and other CP officials. CPs will actively participate in the planning and implementation of the pilot project. The responsibilities of CP will be:

• To represent the interests and views of project participants • To assist the organization of meetings between CLO and project participants • To detect the implementation obstacles and barriers, and assist CLO to overcome these

problems on the field • To inform rural residents regularly on the development of the pilot project • To follow the implementation and development of the pilot project • To identify different pilot project issues that cannot be dealt with on the field, and to

keep CLO informed about these • Others

Activity 4.3

• Inventory of the existing situation (Plan 1) Supported by CPs and CLCs, CLOs will make an inventory of existing conditions in the se-lected project areas, including the collection of the following:

• Cadastral and land book records (land owner and land user records, cadastral maps, land values, existing mortgages, land litigations, types of land use, etc.);

• Information from the land owners and land users on the ground; and • Others to be defined during the implementation of the pilot project.

The objective of the inventory stage will be to prepare Plan 1, which is a graphical plan, de-picting the situation before the re-organization of agricultural land parcels. In order to reach the objective, CLOs will:

1. Organise and participate in public meetings to present requirements for the preparation of Plan 1 to project participants in selected project areas;

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2. Liaise with local cadastre offices, municipality courts and other data and information sources to make the analysis of available data;

3. Prepare the overview of real property rights, cadastre maps and land value for selected project area;

4. Identify the real property rights, the exact position, shape, surface area, type of use and right-holders of land unit for every stakeholder in the land reorganisation. They will compare the existing situation with the situation in the field and, if required, do the re-survey of the agricultural land and register necessary changes of the real property rights;

5. Propose options to CLCs for addressing objections, which have not been resolved dur-ing the field verification;

6. Finalise Plan 1, which includes: • Overview of real property rights, • The position, shape, surface area, type of use and right-holders of land unit for

every potential project stakeholder; 7. Present Plan 1 to CLCs for approval; 8. Make Plan 1 publicly available.

. PCU will provide backstopping support for CLOs during the preparation of Plan 1. CLOs may contract consultant to assist in the preparation of Plan 1 after approval by NLC and CLC, and/or to advice CLCs on appropriate ways and means to overcome barriers and problems. Activity 4.4

• Elaboration of a detailed land consolidation plan for each of selected locations (Plan 2) Plan 2 will contain the proposed reorganisation of land parcels. In order to prepare Plan 2, CLOs, in cooperation with CLCs and CPs and outsourced consultant specialists, will:

1. Organise and participate in public meetings to present requirements for the preparation of Plan 2 to project participants in a selected project area;

2. Draft a participation agreement form, to be signed by stakeholders (land-owners) and recognised by a notary;

3. Identify the preferences of each of the project participants; 4. Identify the value of each agricultural land parcel; 5. Develop several set of options for the reorganisation of land parcels, based on the sug-

gestions from the stakeholders; 6. Identify the ways in which the Land Fund interventions could facilitate the process; 7. Initiate negotiations with the participants, and find the best solutions for the reorgani-

zation of land units; 8. Finalize Plan 2 and present it to the stakeholders and CLCs 9. Document gained experiences in progress reports, and present them to CLCs for ap-

proval; 10. Make Plan 2 publicly available.

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PCU will be providing backstopping support to CLOs in the preparation of Plan 2.

Activity 4.5. • Implementation of land consolidation in selected locations in line with Plan 2

In cooperation with outsourced service providers (surveying companies, notaries, lawyers, etc.), CLOs will accomplish the physical land consolidation, including:

1. Preparation of the time schedule for the project activities; 2. Organisation of meetings and keeping project participants informed on the implemen-

tation time schedule; 3. Demarcation of the new parcel layout, in line with Plan 1, if necessary; 4. Preparation of transfer documents, agreements and contracts; 5. Finalization of Plan 2 by registering all changes in cadastral and land book records; 6. Making the ownership record.

5.2.5 Output 5: Legal fr amework for land consolidation revised Based on the experience of the implementation of the land consolidation pilot projects, the procedures will be analysed, with the intention to facilitate and speed up various steps. Such changes of the procedures will require amendments to and changes of various laws and regulations that constitute the legal framework for the arondacija and komasacija land con-solidation schemes. Activity 5.1

• Assist the appointment of the Working Group for komasacija/arondacija • Draft Terms of Reference for the Working Group for komasacija/arondacija

PCU will collect information and proposals from the pilot areas through CPOs and compile these in proposals to be considered by NLC. If NLC finds that the Act on aron-dacija/komasacija would benefit the development of the national land consolidation policy, the Working group will be appointed. The working group will be appointed by NLC, and responsible for:

- Revision of old regulations, including the Law on komasacija (Official Ga-zette No. 10/79, 21/84 and 5/87), the Law on arondacija (Official Gazette No. 6/76, 5/84 and 5/87), the Rules on land soil quality (Official Gazette No. 47/82) and

- Propose changes of and amendments to old regulations, and draft new regula-tions

PCU will prepare the Terms of Reference for the Working Group, to be approved by NLC. If required, PCU will provide assistance to the Working Group. 5.2.6 Output 6: The conditions for the agr icultural land mar ket improved

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Agricultural land market in Croatia is not efficient for several reasons, which we grouped into seven identified obstacles:

• Abandoned/unused agricultural land; • Land book and cadastral records do not correspond to the real situation; • High land transaction taxes related to land consolidation; • High fees for obtaining records (on ownership, possession, etc.) and high costs of

scanning of cadastral and land book records (surveying firms, notaries, lawyers, etc.); • Rural development and agricultural support schemes are not stimulating enough for

the development of the agricultural land market; • Non-existing medium and long-term leases of privately owned agricultural land; and • Inadequate inheritance regulations for agricultural land/farms. Other obstacles will be defined during the implementation of the project.

Activity 6.1

• Appoint committees/working groups for the analysis of the regulations defining the following obstacles: o Uncultivated agricultural land; o Agricultural and rural development support schemes; o Inheritance of agricultural holdings; o Land transaction costs and taxes; o Medium and long-term leases of privately owned agricultural land.

• Draft Terms of Reference for different committees/working groups

NLC and PCU, with the assistance from CLOs and CLCs, will analyse existing laws and regulations impeding the development of an efficient market for agricultural land. NLC will appoint different committees/working groups during the implementation of the pilot project. Each committee/working group will be responsible for:

• Revising laws and regulations; • Proposing amendments to and changes of laws and regulations; and • Proposing new laws and regulations.

Composition and mandate of each committee/working group will be defined in its Terms of Reference, which will be prepared by PCU and approved by NLC. If necessary, proposed changes of existing laws and regulations will have to be harmonised with the EU legal acquisition. NLC will be responsible for making reports to the minister of MAFWM. Activity 6.2

• Assist the appointment of the Working group for the loans for the purchase of agricul-

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tural land • Draft Terms of Reference for the Working group for the loans for the purchase of ag-

ricultural land NLC will appoint the Working group for the loans for the purchase of agricultural land, with the aim of analysing existing credit market and suggesting activities that would stimulate the involvement of commercial banks in financing the purchase of agricultural land under easy terms. The composition and mandate of the Working group for the loans for the purchase of agricultural land will be prepared by PCU, and approved by NLC. NLC will consider the following options:

• Providing state guarantees as collaterals for loans obtained to finance purchase of land in connection with land consolidation,

• Provide direct government loans under easy terms for the purchase of the land when related to land consolidation;

• Others 5.2.7 Output 7:Training of project officials, staff and all stakeholder s provided Activity 7.1

• Coordinate training activities based on needs assessment PCU will prepare an annual Training Plan, based on a training needs assessment of the exist-ing staff, officials and other stakeholders. PCU will prepare these plans in close collaboration with CLOs. PCU will get the technical assistance from international and Croatian experts. The NLC will approve the annual training plans. Topics expected to be included in training plan are:

• Project management (planning, budgeting, implementation and reporting); • Technical and legal aspects related to land consolidation; and • Issues related to the EU Common Agricultural Policy.

5.2.8 Output 8. Infor mation/promotion activities car r ied out Activity 8.1

• Identify information and promotion activities to be included in annual work plans Together with CLOs, PCU will identify information/promotion needs, define appropriate ac-tivities and include these in annual work plans and budgets, to be approved by NLC.

6 SIDA PRIORITIES

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Sida's work is guided by the parliamentary decision on Sweden’s Policy for Global Develop-ment (2003/04:UU3), by the annual appropriations directive and by internal documents ex-pressing Sida’s fundamental principles and values. Sida’s overall mission is poverty reduction and sustainable social and economic development. For the Project this implies e.g. to show consideration for elderly landowners’ needs and to liase with institutions to address rural development aspects. Cross-cutting issues of importance includes gender aspects, good governance and environ-mental concerns. Gender concerns are based on a mainstreaming approach, i.e. ensuring that policy and deci-sion-making take account of men’s and women’s different interests and needs. Compliance with the Sida gender policy involves making sure that women and men are considered equal and treated equally in terms of dignity and rights. Good governance is related to public authorities and the reforms that reinforce responsibility and accountability, openness and transparency. It also deals with decentralisation of the public sector, including the state's overall control of the economy from the perspective of participa-tion and democracy. Sida’s good governance policy has a bearing on the organisation and management of the pilot project and is related to decentralisation, transparency and participa-tion in the decision-making processes. Environmental concerns relate to the project’s field-related activities. In practical terms this implies that Environmental Impact Assessments shall be undertaken when so required.

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7 BUDGET

7.1 Croatian Contr ibution

Output 1 National Land Committee (NLC) and the Project Coordinating Unit (PCU) established.

• MAFWM staff engaged in the project • PCU Office and specific running expenses • Meeting fees for the NLC members

Output 2 Four County Land Committees (CLCs) and County Land Offices (CLOs) established

• Administrative support to the offices • Operational office expenses exceeding the

Sida lump-sum contribution • Meeting fees for members of the County

Land Committees Output 3 Land Fund established

• All costs accrued related to the Land Fund Working Group

• Financing the Land Fund (not part of the pro-ject budget)

Output 4 Land consolidation pilot projects in selected areas implemented

• Material and outsourced services (surveyors, notaries, lawyers, etc.)

Output 5 Legal framework for land consolida-tion revised

• All costs accrued related to the Working Group

Output 6 The conditions for the agricultural land market improved

• All costs accrued related to all commit-tees/working groups

Output 7 Training of project officials, staff and all stakeholders provided

Output 8 Information/promotion activities car-ried out

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7.2 Swedish contr ibution

Output 1 National Land Committee (NLC) and the Project Coordinating Unit (PCU) estab-lished.

• Technical assistance (long- and short-term) and accompanying expenses

• Acquisition of one car • Supervision and backstopping • Support to operational expenses of

PCU Output 2 Four County Land Committees (CLCs) and County Land Offices (CLOs) estab-lished

• Acquisition of four cars

• Salary for four CLO managers and

assistants

• Lump-slump support for the opera-

tional costs

Output 3 Land Fund established

• Indirect support through PCU activi-

ties, but with no specific funds

Output 4 Land consolidation pilot projects in se-lected areas implemented

• Co-financing of material and out-

sourced services (surveyors, notaries,

lawyers, etc.)

Output 5 Legal framework for land consolidation (komasacija/arondacija) revised

• Indirect support through PCU activi-

ties, but with no specific funds

Output 6 The conditions for the agricultural land market improved

• Indirect support through PCU activi-

ties, but with no specific funds

Output 7 Training of project officials, staff and all stakeholders provided

• Training Fund for the implementation

of a training plan (to be made)

Output 8 Information/promotion activities carried out

• Information/promotion activities fund

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7.3 Project budget in SEK

Outputs Sida Croatia Total

Output 1 National Land Committee (NLC) and the Pro-ject Coordinating Unit (PCU) established. 5.788.000 1.344.200 7.132.200

Output 2 Four County Land Committees (CLCs) and County Land Offices (CLOs) established 5.480.000 4.180.800 9.660.800

Output 3 Land Fund established 0 650.000 650.000

Output 4: Land consolidation pilot projects in selected ar-eas implemented 1.300.000 6.500.000 7.800.000

Output 5 Legal framework for land consolidation (koma-sacija/arondacija) revised 0 312.000 312.000

Output 6 The conditions for the agricultural land market improved 0 546.000 546.000

Output 7 Training of project officials, staff and all stake-holders provided 3.450.000 0 3.450.000

Output 8 Information/promotion activities carried out 475.000 0 475.000

Project backstopping 888.000 0 888.000

TOTAL

17.381.000

13.533.000

30.914.000

7.4 Budget management

7.4.1 Sida contr ibution In line with the agreement between Sida and the Nordic Consulting Group A/S (henceforth referred to as NCG), the latter will be responsible for managing the Swedish contribution, which is a part of the project budget, including the financial statements and regular auditing.

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The actions undertaken during the Interception phase will also be used during the Implemen-tation phase as follows:

1. Sida will occasionally remit the funds from the Swedish contribution, which is a part of the project budget, into NLC`s bank account to cover the implementation expenses in due time;

2. A part of the financial records will be kept in the NCG`s office in Denmark, including the travelling and other expenses for international consultants, and large payments previously approved by Sida;

3. NCG will transfer the funds from the Swedish contribution into the non-resident ac-count at Reiffeisen Austria Bank-Zagreb, which has been opened during the Imple-mentation phase of the project. The International Advisor and member of PCU will be responsible for administration of the Swedish contributions at Project level.

4. Monthly (or, if so decided, bi-monthly), the International Long-term Advisor will submit statements together with all invoices to the NCG office in Denmark. Before that, the statement has to be approved by the Project Director in order to ensure trans-parency and to gain a clear insight into allocated Sida funds.

7.4.2 Croatian contr ibution During the Interception phase, the expenses of the staff, office and equipment were covered by MAFWM budget. By accepting the Project Document, Croatia became responsible for providing the necessary funds for the project, according to the plan presented within this Document (6.1, 6.2, 6.3). The Croatian contribution will be managed by MAFWM in accordance with the regulations in force. The Minister of MAFWM will put forward a proposal to the representatives of the re-gional and local self-government units to take certain part in the Croatian contribution, in or-der to ensure commitment, ownership and responsibility at all levels of government. If governemnt decides to establish the Land Fund according to the activity 3.2., it will be necessary to reserve additional financial resources in the state budget and/or local and self-government budget. The Terms of Reference for the Working Group on the Land Fund will include the task to propose how the Fund could be financed. Rough estimates, based on the assumption that a land reserve of 1,000 hectares be built up at a cost of HRK 20,000/hectare, suggest a total value of the Land Fund of HRK 20 million or SEK 25 million by the end of the project pe-riod. The costs of the project activities mentioned under Results 4 are difficult to plan. As a consequence, additional financial resources will be reserved in the project budget during the 3 year project implementation, if necessary.

8 MONITORING, ASSESSMENT AND REPORTING

8.1 Monitor ing With the assistance of PCU, NLC will be responsible for monitoring the project implementa-tion. This process includes the comparison between expected outcomes, as shown in the Logi-

45

cal frame matrix, and real outcomes accomplished at national, regional and local levels. In that connection, PCU will propose indicators for monitoring the implementation and effec-tiveness, to be finally approved by NLC.

8.2 Meetings Every three months, PCU will send brief reports to and hold meetings with the Embassy of Sweden on the progress of the project In order to achieve necessary technical standard, a representative of FAO-Land Tenure Ser-vices will take part in one of the quarterly meetings and in annual meetings. Quarterly meetings have an informative purpose. Major decisions on the project budget and decisions on whether to depart from Project Documentation in certain project activities will be reached at annual meetings.

8.3 Repor ting 8.3.1 Progress repor t PCU and County Land Departments will regularly prepare technical and financial reports on the project progress, and these will also include information obtained at national, regional and local levels. These reports will be encompassed in a brief quarterly report on the project pro-gress and a more detailed annual report on the project progress. Annual progress reports should be approved and accepted by NLC. Annual report on the project progress should at least hold following elements:

• All changes of the general environment with a direct influence on the project imple-mentation;

• Upgrading the project by comparing the outputs and results in the Project Documenta-tion with the outputs and results accomplished;

• Summary of major issues, i.e. obstacles to the successful implementation of the pro-ject.

• A Financial Report

8.3.2 Final Repor t A draft version of the final report will be prepared and presented to the National Land Com-mittee at least three months before the end of the Implementation phase (February, 2009). The National Land Committee will consider the draft and give its approval. Adopted version of the final report will be presented to all stakeholders, indicatively at a completion workshop. The National Land Committee will bring a decision on the final report and submit it to MAFWM and Sida before June 1, 2009.

8.4 Assessment at the End of the Project If Sida or/and MAFWM decide to do so, independent consultants will assess the Project at the end of the Implementation phase.

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ANNEXES

Annex 1: Logical Framework Matrix Annex 2: Budget 2006 – 2009

Annex 1 Project Land Consolidation in Croatia

47

LOGICAL FRAMEWORK MATRIX: The Land Consolidation Pilot Project Objective: Devise a national land consolidation policy

Outputs: Activities Indicators Means of verification Pre-conditions Output 1. National Land Committee (NLC) and the Project Coordinating Unit (PCU) established.

Activity 1.1. - Establish PCU - Draft PCU’s operative guidelines

PCU as an independent unit within the Agricultural Land Department PCU’s operative guidelines approved by NLC

Minutes from NLC meet-ings

Activity 1.2. - Assist the establishment of NLC - Draft NLC’s operative guidelines

A formal decision of the Minister of MAFWM on the establishment of NLC NLC` operative guidelines approved by the Minister

Official MAFWM docu-ments

Output 2. Four County Land Committees (CLCs) and County Land Offices (CLOs) established

Activity 2.1. - Assist establishment of four CLOs within the ju-

risdiction of the four regional self-government units

- Assist drafting of CLOs’ operative guidelines

Four County Project Manag-ers employed CLO` s operative guidelines approved by CLCs and NLC

Minutes from NLC and CLCs meetings

The willingness of the counties to par-ticipate in the project

Activity 2.2 - Assist establishment of four CLCs - Assist drafting of CLC’s operative guidelines

A formal decision of the Minister of MAFWM on the establishment of CLC CLCs` operative guidelines approved by NLC

Minutes from NLC meet-ings Official documents of regional self-government units

The willingness of the counties to par-ticipate in the project

Annex 1 Project Land Consolidation in Croatia

48

Outputs: Activities Indicators Means of verification Pre-conditions Output 3. Land Fund estab-lished

Activity 3.1 - Assist the appointment of the Land Fund Working Group - Draft Terms of reference for the Land Fund Work-

ing Group

The Land Fund Working Group appointed by NLC Terms of reference approved by NLC The recommendation of the Land Fund Working Group considered by NLC and the minister of MAFWM ad-vised on appropriate actions

Minutes from NLC meet-ings Reports from the Working group

Political backing of the Land Fund

Activity 3.2 - Assist the establishment of the Land Fund

The Land Fund Book of Statutes accepted by NLC

Official documents

Political backing of a Land Fund

Output 4. Land consolida-tion pilot projects in selected areas implemented

Activity 4.1 - Assess the feasibility and cost-effectiveness of the project implementation on individual pilot locations - Prepare a financial plan for each pilot location

CLCs decided to start the implementation of the pilot project

Pre-evaluation reports and financial plans Minutes from CLCs meet-ings

Land owners` will-ingness to participate Positive cost-benefit analysis

Activity 4.2 - Assist the establishment of the Committee of Par-ticipants (CP)

CP established

Minutes from CP meet-ings

Land owners` will-ingness to participate

Activity 4.3 - Inventory of the existing situation (Plan 1)

Plan 1 completed and made publicly available

Plan 1 Minutes from CLCs meet-ings

Land book and cadas-tre records made available for the pro-ject

Activity 4.4 - Elaboration of a detailed land consolidation plan for each of the selected locations (Plan 2)

Plan 2 completed and made publicly available

Plan 2 Minutes from CLCs meet-ings

Land-owners agree and sign legal docu-ments on participa-tion in the project

Annex 1 Project Land Consolidation in Croatia

49

Outputs: Activities Indicators Means of verification Pre-conditions Activity 4.5 - Implementation of the land consolidation accord-ing to Plan 2

Land consolidation plans implemented

A new situation is regis-tered in land books and cadastre records

Output 5. Legal framework for land consolidation re-vised

Activity 5.1 - Assist the appointment of the Working Group for komasacija/arondacija - Draft Terms of Reference for the Working Group for komasacija/arondacija

The Working Group ap-pointed by NLC Terms of reference approved by NLC The recommendation of the Working Group considered by NLC and the minister of MAFWM advised on appro-priate actions

Reports from the Working Group Minutes from the NLC meetings

Output 6. The conditions for the agricultural land market improved

Activity 6.1 - Appoint committees/working groups for the analy-sis of the regulations defining the following obsta-cles:

o Uncultivated agricultural land; o Agricultural and rural development sub-

sidies; o Inheritance of agricultural properties; o Land transaction costs and taxes; o Medium and long-term leases of pri-

vately owned agricultural land. - Draft Terms of Reference for different commit-tees/working groups

Committees/working groups appointed by NLC Terms of reference of Com-mittees/Working Groups ap-proved by NLC The recommendation of the committees/working groups considered by NLC and the minister of MAFWM ad-vised on appropriate actions

Minutes from NLC`s meetings Reports from Commit-tees/Working Groups

Annex 1 Project Land Consolidation in Croatia

50

Outputs: Activities Indicators Means of verification Pre-conditions Activity 6.2. - Assist the appointment of the Working group for the loans for the purchase of agricultural land - Draft Terms of Reference for the Working group for the loans for the purchase of agricultural land

Working group appointed by NLC Terms of reference approved by NLC The recommendation of the Working Group for loans considered by NLC and the minister of MAFWM ad-vised on appropriate actions

Minutes from NLC meet-ings Reports from the Working group

Output 7. Training of Pro-ject Officials, Staff and other stakeholders provided

Activity 7.1. - Coordinate training activities based on needs as-

sessment

Training plans approved by NLC

Minutes from NLC meet-ings

Output 8. Information /promotion activities carried out

Activity 8.1 - Identify and design information/promotion activi-

ties to be included in annual work plans and budg-ets

Information/promotion ac-tivities approved by NLC

The Project progress re-port

Annex 2 Budget of the project Land Consolidation in Croatia

1

(SEK) Entry 2006 (7 months) 2007 2008 Sida Croatia Total Sida Croatia Total Sida Croatia Total

OUTPUT 1. NCL and PCU 1.108.750 241.800 1.350.550 1.960.500 520.000 2.480.500 1.875.500 429.000 2.304.500 OUTPUT 2. CLCs and CLOs 1.710.000 686.400 2.396.400 1.560.000 1.456.000 3.016.000 1.560.000 1.456.000 3.016.000 OUTPUT 3. Land Fund 0 286.000 286.000 0 364.000 364.000 0 0 0 OUTPUT 4. Pilot projects 260.000 1.300.000 1.560.000 390.000 1.950.000 2.340.000 390.000 1.950.000 2.340.000 OUTPUT 5. Law of land consolidation 0 78.000 78.000 0 156.000 156.000 0 78.000 78.000 OUTPUT 6. Land market 0 156.000 156.000 0 312.000 312.000 0 78.000 78.000 OUTPUT 7. Training 375.000 0 375.000 1.350.000 0 1.350.000 1.350.000 0 1.350.000 OUTPUT 8. Information and development 105.000 0 105.000 160.000 0 160.000 160.000 0 160.000 PROJECT BACKSTOPPING 158.000 0 158.000 296.000 0 296.000 296.000 0 296.000 TOTAL 3.716.750 2.748.200 6.464.950 5.716.500 4.758.000 10.474.500 5.631.500 3.991.000 9.622.500

Entry 2009 (5 months) Total Sida Croatia Total Sida Croatia Total

OUTPUT 1. NCL and PCU 843.250 153.400 996.650 5.788.000 1.344.200 7.132.200 OUTPUT 2. CLCs and CLOs 650.000 582.400 1.232.400 5.480.000 4.180.800 9.660.800 OUTPUT 3. Land Fund 0 0 0 0 650.000 650.000 OUTPUT 4. Pilot projects 260.000 1.300.000 1.560.000 1.300.000 6.500.000 7.800.000 OUTPUT 5. Law of land consolidation 0 0 0 0 312.000 312.000 OUTPUT 6. Land market 0 0 0 0 546.000 546.000 OUTPUT 7. Training 375.000 0 375.000 3.450.000 0 3.450.000 OUTPUT 8. Information and development 50.000 0 50.000 475.000 0 475.000 PROJECT BACKSTOPPING 138.000 0 138.000 888.000 0 888.000 TOTAL 2.316.250 2.035.800 4.352.050 17.381.000 13.533.000 30.914.000 Exchange rates SEK HRK SEK 1.00 - 0,769230769 HRK 1,30 -

Annex 2 Budget of the project Land Consolidation in Croatia

2

(HRK) Entry 2006 (7 months) 2007 2008 Sida Croatia Total Sida Croatia Total Sida Croatia Total

OUTPUT 1. NCL and PCU 852.885 186.000 1.038.885 1.508.077 400.000 1.908.077 1.442.692 330.000 1.772.692 OUTPUT 2. CLCs and CLOs 1.315.385 528.000 1.843.385 1.200.000 1.120.000 2.320.000 1.200.000 1.120.000 2.320.000 OUTPUT 3. Land Fund 0 220.000 220.000 0 280.000 280.000 0 0 0 OUTPUT 4. Pilot projects 200.000 1.000.000 1.200.000 300.000 1.500.000 1.800.000 300.000 1.500.000 1.800.000 OUTPUT 5. Law of land consolidation 0 60.000 60.000 0 120.000 120.000 0 60.000 60.000 OUTPUT 6. Land market 0 120.000 120.000 0 240.000 240.000 0 60.000 60.000 OUTPUT 7. Training 288.462 0 288.462 1.038.462 0 1.038.462 1.038.462 0 1.038.462 OUTPUT 8. Information and development 80.769 0 80.769 123.077 0 123.077 123.077 0 123.077 PROJECT BACKSTOPPING 121.538 0 121.538 227.692 0 227.692 227.692 0 227.692 TOTAL 2.859.038 2.114.000 4.973.038 4.397.308 3.660.000 8.057.308 4.331.923 3.070.000 7.174.231

Entry 2009 (5 months) Total Sida Croatia Total Sida Croatia Total

OUTPUT 1. NCL and PCU 648.654 118.000 766.654 4.452.308 1.034.000 5.486.308 OUTPUT 2. CLCs and CLOs 500.000 448.000 948.000 4.215.385 3.216.000 7.431.385 OUTPUT 3. Land Fund 0 0 0 0 500.000 500.000 OUTPUT 4. Pilot projects 200.000 1.000.000 1.200.000 1.000.000 5.000.000 6.000.000 OUTPUT 5. Law of land consolidation 0 0 0 0 240.000 240.000 OUTPUT 6. Land market 0 0 0 0 420.000 420.000 OUTPUT 7. Training 288.462 0 288.462 2.653.846 0 2.653.846 OUTPUT 8. Information and development 38.462 0 38.462 365.385 0 365.385 PROJECT BACKSTOPPING 106.154 0 106.154 683.077 0 683.077 TOTAL 1.781.731 1.566.000 3.347.731 13.370.000 10.410.000 23.780.000