Technical Assistance for Development of a Strategy for Alignment with Common Market Organisation (CMO) Requirements TR2014/AG/10-A1-01/001 This Project is co-financed by the European Union and the Republic of Turkey Implementation of contractual relations in the EU Member States in sugar sector: case study Croatia Miroslav Božić Ankara, 10th May, 2018

Content Importance of sugar sector in Croatia Contract system and challenges in the future

First sugar rafinery in Europe: Rijeka in Croatia! Maria Theresa, anno domini 1750 „Urbano Arnoldt & Co”, Antwerpen Austria, NL, Italy and Croatia „Zuccheriera” with 700 employees … What do Austria, Netherlands and Croatia have in common? Konrad hint iz 2016. Godine u RH tri šećerane: oldest Osijek and most modern VIRO! Joke! 1826 bankruptcy; 1851 tobacco; & 1970 protected cultural heritage 3

good or bad for sugar industry? Accession to the EU: good or bad for sugar industry? SUGAR the most sensitive item for Croatia in EU negotiations! Beet quota sugar: 192.877 t Import of raw cane sugar ↘ Production levy ↗ My role in negotiations! PLEWA and others … Christmas and Jesus Zorilla!!! Refinery status for all 3 factories 4

Sugar production in Croatia: before and after the EU accession Results after 5 years of EU membership: Lower production of beet sugar Higher production of cane sugar High volatility of prices and profitability However, sugar remained No. 1 in Croatia’s agri-food export! But … TOLLING NOT INCLUDED!!! Double the share of second (cigarettes!) unhealthy! 5

„Sugar Tigers of South East Europe” Total export from Croatia and Serbia in period 2002 - 2016 Croatia’s sugar export: 2,7 mil t / 2,0 bill. USD Export in 1.000 MT 12,5 million of EU consumers! Last decade or so … Hrvatska poljoprivreda u odnosu na EU: Šećer po važnosti na 2. mjestu ! Serbia’s sugar export: 2,9 mil t / 2,0 bill. USD 6

Contracting in sugar sector after accession to the EU First mandatory contracts after joining the EU Role of Association of sugar beet growers Communication to the competent authority Two out of 3 factories concluded agreements Delivery contracts in compliance to EU rules Main challenges in implementation: Renegotiation in 2015 due to low sugar prices Transport, loading and beet cleaning costs

Example of value sharing in Croatian sugar beet contracts for 2018/19 Basic price for standard quality beet: 31 EUR/t

Future of sugar industry in Croatia Is there a future after quota termination ?… CAP as the framework for further development in post-quota period Coupled payments for beet until 2020 → guarantee for survival Rural development program → productive & non-productive investments Partnership between bet growers & industry + strategic partnership! Potential growth of export on global (MENA) & regional markets The biggest challenges: Sugar yields increase & restructuring / consolidation We do believe in CAP and Europe! Still 9

This publication has been produced with the financial assistance of the European Union The contents of this publication is the sole responsibility of NIRAS IC Sp. z o.o. and can in no way be taken to reflect the views of the European Union

Opportunities & Threats SWOT Opportunities Sugar deficit on regional markets Hugh potential for sugar yield increase Industrial sugar use outside human consumption & energy Good logistics and hub for trade SWAT Threats Change of beet with other crops Climate change: droughts, floods Strong competition by large scale global producers & isoglucose production Subsidy policy in the EU, less coupling 11