Business Performance of Former State-Owned Large Farms (Agrocombinats) after Economic System Change

Abstract

Large farms (usually called‘agrocombinats’, the state-owned large-scale agricultural enterprises analogous to agribusinesses) have played a very important role in Croatian agriculture over the past 50 years. Their monopolistic position during the period of socialism was exploited with regard to distribution, marketing and financing privileges, and helped them to achieve economies of scale, but it had little effect on business efficiency. When that period ended, agrocombinats were transformed into joint-stock companies, which, using new business strategies, sought to become profitable firms on behalf of their shareholders. According to data from the Croatian Stock Market, investment in agrocombinats' stocks yielded high returns, but the volatility of the share prices indicated a significant level of speculation and a lack of confidence in their future business performance.