New eu members and challanges facing european rural and agricultural policy
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New EU members and challanges facing European rural and agricultural policy. Martins Roze Minister of Agriculture The Republic of Latvia. Facts on Latvia. Area km 2 64 589 Population, m io . , (at beginning of 2004) - 2 , 3 19 Population density per 1 km 2 36 ,1.

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New eu members and challanges facing european rural and agricultural policy

New EU members and challanges facing European rural and agricultural policy

Martins Roze

Minister of Agriculture

The Republic of Latvia


Facts on latvia

Facts on Latvia

Area km264 589

Population, mio., (at beginning of 2004) - 2,319

Population density per 1 km236,1

Borderline 1862 km

including coastline 494 km

Length of the territory, km

from the North to the South 210

from the West to the East 450

Average elevation above the sea level 87 m

Highest point (Gaiziņkalns) 311,6 m

Mean monthly air temperature in Riga

January –4.70C

July+16,90C


Territorial structure of latvia at the beginning of 2005

Territorial structure of Latvia at the beginning of 2005


Reform of agricultural sector in the early 90 ties

Reform of agricultural sector in the early 90-ties

  • Decision of the Supreme Council “On agrarian reform in the Republic of Latvia” (13.06.1990) laid down:

    • land reform

    • reform of economic relations

    • management reform in agricultural sector

    • privatization of State establishments

  • radical changes in the system of agricultural and price support

  • liberalization of external trade


Distribution of the agricultural land area following the types of users

Distribution of the agricultural land area following the types of users

Source: Latvian State Institute of Agrarian Economics, basing on materials of the Land and Cadastre and Information headquarters of the State Land Service


Share of agriculture in gdp

Share of agriculture in GDP


Share of agriculture in the total gdp in the eu candidate countries in 2002

Share of agriculture* in the total GDP in the EU Candidate Countries in 2002

* -agriculture, hunting, forestry and fishing

** -2001


Share of population employed in agriculture

Share of population employed in agriculture


Share of population employed in agriculture in the eu candidate countries in 200 2

Share of population employed in agriculture* in the EU Candidate Countries in 2002

*incl. forestry, hunting and fisheries

** -provisional


Annual average fluctuations of the consumer price index cpi in latvia 1990 200 3

Annual average fluctuations of the Consumer Price Index (CPI) in Latvia, 1990–2003

Source: Latvian Central Statistical Bureau


Self sufficiency in agriculture products

Self-sufficiency in agriculture products %


Latvia s negotiation position in the chapter agriculture basic principles

Latvia’s negotiation position in the chapter „Agriculture” basic principles:

  • Development of Latvia’s sector of agriculture within the common economic domain of the European Union on the basis of equality;

  • Sufficiency of the production level to satisfy domestic market demands;

  • Efficient use of rural land areas in production and conservation of rural landscape;

  • Maintaining rural areas populated by encouraging retraining of workforce, made redundandant in agriculture, to get employment in non-agricultural sectors.


Production quotas

Production quotas

  • Latvia, similar to Estonia and Lithuania has considered that conditions offered by the EU need adjustment, taking into account:

    • restructuring of agriculture from the USSR collective and State farm system to free market system;

    • impact of Russian crisis.


Sapard challange for eu and accession countries

SAPARD challange for EU and accession countries

  • First EU financed decentralised support scheme for non-EU countries

  • Preparation of Rural Development programmes

  • Establishement of effective administration system

  • New type of aid for the farmers – demanding requirements


Sapard experience

SAPARDexperience

  • Aid applicants were active and able to prepare projects complying with SAPARD Program requirements, acquiring an experience in achieving conformity with the EU requirements;

  • MoA as the Monitoring Authority within SAPARD Program has facilitated its availability by preparing manifold amendments to the Program conditions;

  • RSS as the Program administration authority has been able to administrate a relatively large number of projects (the Program anticipated 600-700 projects per year in average, in 2002 RSS received 559 projects but in 2003 – 1536 projects) in a short period of time – two years since the start-up of the Program.


Major changes in policy instruments

Major changes in policy instruments

After accession

Before accession

EU Direct payments

State aid

Subsidies

Single Programming document

Rural Development plan

SAPARD

Credit guarantees

Credit guarantees

Credit programs

Credit programs

Reimbursement of the Excise tax

Reimbursement of the Excise tax


Direct p ayments in new ms compared to eu15 rate 2004

Arable

Potato

Suckler

Slaughter

Ewes

Milk

Overall

Total

crops

starch

cows

b

eef

national

payment

payment

rate

rate

EU15

100

100

100

100

100

100

0

100

Czech

X

100

X

X

X

X

23

48

Republic

Estonia

44

0

55

55

55

X

21

46

Hungary

38

0

X

0

X

X

30

48

Latvia

55

55

77

100

74

86

44

69

Lithuania

X

X

X

X

X

X

25

50

Poland

X

X

X

X

X

X

25.7

55.7

Slovak

X

X

X

X

X

X

27.5

52.5

Republic

1

Slovenia

n.a

n.a

n.a

n.a

n.a

n.a

60

85

Direct payments in new MS compared to EU15 rate, 2004

1. Malta and Slovenia do not apply the single area payment scheme.

Source: OECD


New eu members and challanges facing european rural and agricultural policy

Structural funds

European Agriculture Guidance and Guarantee fund

(Guarantee section)

European Regional Development Fund (ERADF)

European Social Fund (ESF)

European Agriculture Guidance and Guarantee fund

(Guidance section)

Fisheries Fund (FIFG)

Rural development plan

Sources of finance for rural development

Single programming document


Indicative financial allocations among the new member states in 2004 2006

Indicative financial allocations among the “new” Member States in 2004 - 2006


Distribution of finances in the single programming document 2004 2006

Distribution of Finances in the Single Programming Document 2004 - 2006

Total public (2004 – 2006) 137 mln EUR


Distribution of finances in rural development plan 2004 2006

Distribution of Finances in Rural Development plan 2004 - 2006

Total public (2004 – 2006) 410 mln EUR


National support after accession to european union

National support after accession to European Union

  • In August 2004, according to Annex IV of the Accession Agreement, the Commission was notified of the existing national support schemes within which the support is allocated also after May 1, 2004;

  • By 2007 all the existing support schemes must comply with the “Community Guidelines for State Aid in Agricultural Sector”.


National support measures in agriculture

National support measures in agriculture

  • Livestock farming development;

  • Crop farming development;

  • Dissemination of education, science and information;

  • Cofinancing of Latvia’s and foreign joint projects;

  • Investment enhancement in agriculture;

  • Development of agricultultural NGOs and agricultural service cooperative societies;

  • Development of organic farming;

  • Market promotion.


Total amount of subsidies

Total Amount of Subsidies

*

* Compensation for drought


Nacionally financed programs

Nacionally financed programs

  • Long-term investment credit program in agriculture

  • Credit program focused on purchase of agricultural land

  • Non-agricultural entrepreneurship development program


New eu members and challanges facing european rural and agricultural policy

Farm income and income of population employed in agriculture


New eu members and challanges facing european rural and agricultural policy

Balance of foreign trade in agricultural goods, mln LVL


New eu members and challanges facing european rural and agricultural policy

Structure of Latvia’s export goods by EU-25 and Third countries, mln LVL


New eu members and challanges facing european rural and agricultural policy

Structure of imported agricultural goods by EU-25 and Third countries, mln LVL


Latvia s participation in world trade organization before joining eu

Latvia`s participation in World Trade organization before joining EU

  • Since 1999 Latvia is WTO member and applies equal provisions to all WTO members in it`s agricultural policy and trade:

    (1) in domestic support pillar Latvia`s commitments of Amber box payments were:

    * until 2003 - 24 million SDR ( ~ 12,45 million Euro)

    * after 2003 - 5% from total agricultural production, which was never exceeded;

    (2) Latvia bound its import duties on agricultural products at a ceiling rate of 50%;

    (3) Latvia bound import duties within quotas of certain sensitive products;

    (4) Latvia committed to eliminate its provided export subsidies.


Latvia s participation in wto as eu member state i domestic support

Latvia`s participation in WTO as EU member state (I) – Domestic support

  • After enlargement EU-25 commitments in WTO were consolidated:

    (1) domestic support:

    * Allowable ceiling of EU Amber box payments is 67,2 mio Euro, but in 2005 planned Amber box payments for Latvia is ~ 6 mio Euro

    * Latvia is entitled to receive direct payments under production limiting programs (Blue box), which was not possible before:

    -) in 2005 the planned sum of SAPs is ~ 39 mio EUR,

    -) in 2005 the planned CNDP is ~ 61 mio Euro.

    * In 2005 the planned Green box payments in Latvia are ~ 208 mio Euro


Latvia s participation in wto as eu member state ii export competition

Latvia`s participation in WTO as EU member state (II) – Export competition

-) Latvia is entitled to receive alsoexport subsidies for exports of certain agricultural and processed agricultural products to third countries:

* EU ceiling of export subsidies is ~ 3,8 billion Euro.

* In 2004, Latvia`s exporters received export refunds in tune of 71 127,6 Euro for the following products


Latvia s participation in wto as eu member state iii market access

Latvia`s participation in WTO as EU member state (III) – Market access


Decisions and current activities on cap reform

Decisions andCurrent activities on CAP reform

Latvia has decided that the Single Area Payment scheme will be also applied in year 2006 and 2007

Activities:

  • Analysis of the CAP reform legislation still under process in the MoA

  • Economical calculation about the CAP reform impact on agricultural sector in Latvia will be finished at the end of this year

  • Informative campaign as well as discussion with society and farmers was organized by the MoA

  • Consultations with EC experts and regular workshops with Baltic colleagues


Calculator

Calculator


Opinions on cap reform

Opinions on CAP reform

  • Opinion/decision/ by Agricultural Joint Consultative Council: to introduce the reform from 2009, to regard Latvia as a single region and to tie up the support with production levels as much as possible.

  • Recommendation by the State Institute of Agrarian Economics – the scenario, which envisages implementation of the reform, as late as possible – in 2009, and providing a maximum interconnection between direct payments and production, gives a stronger development impetus to Latvia’s agriculture and a general income growth in the sector. The offered support to the reform does not provide support to agricultural production, moreover it does not reach countryside.


Opinions on cap reform1

50%

40%

30%

47%

43%

20%

10%

10%

0%

Early implementation

Later implementation

No answer

of the reform (2007)

of the reform (2009)

Opinions on CAP reform

  • Results of public opinion poll „What will Latvia’s agriculture and rural development look like in the next planning period from 2007 to 2013” (641 inquiry form) – the year of the reform implementation – 2009, to tie up the payments with production, to regionalize Latvia.

    Choice of respondents on implementation of CAP reform, %


Rural development programme 2007 2013

Rural Development Programme 2007 - 2013

  • Improving the competitiveness of the agricultural and forestry sector

  • Improving the environment and the countryside

  • The quality of life in rural areas and diversification of rural economy

  • LEADER


Main objective of latvia s rural development policy

Main objective of Latvia’s rural development policy

Prosperous people in inhabited rural areas of Latvia


Operational objectives for latvia

Operational objectives for Latvia

  • Establishement and development of high quality production chains targeted at consumer

  • Establishement of new economically active units

  • Development of human resources:

    • By training and consultations

    • By improvement of age structure


Operational objectives for latvia1

Operational objectives for Latvia

  • Preservation of agricultural land for production of agricultural products

  • Support for production of “public goods”

  • Development of production of non – agricultural products in rural areas


Thank you for your attention

Thank you for your attention!


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