RIGA - The main task now for the agricultural industry is to work together with the government to compensate farmers for what they believe are the European Union’s unsatisfactory direct payments, with Latvia’s own national resources – through a change in tax policy and by reducing the bureaucracy, the Farmers’ Saeima group chief Juris Lazdins said after a meeting with Prime Minister Valdis Dombrovskis on Feb. 14.
The meeting was organized at the initiative of the farmers, reports Nozare.lv. The prime minister spoke to them about the results of the European Council’s summit on the bloc’s multi-annual budget for 2014-2020.
“We have defined a vision for the next seven years to maintain competitiveness and we have also received support from the prime minister regarding several matters. We will continue working to compensate for the bloc’s balance of direct payments to Latvia, with national resources – a tax policy and reducing the administrative burden. National resources are powerful instruments. It is possible to ensure the competitiveness of Latvian farmers in the future by rationally planning and implementing these resources,” said Lazdins.
The Farmers’ Saeima group was then to meet with the finance minister and the State Revenue Service’s director general to implement the required changes as soon as possible.
Latvian Agricultural Cooperatives’ Association board chairman Indulis Jansons in turn pointed out that the prime minister was interested in the farmers’ proposals and the industry will await swift solutions, “taking into account that we did not achieve the expected progress regarding direct payments.”
Acting like children
If in 2014 direct payments to Latvian farmers are at 42 percent of the European Union’s average level, farmers will also observe EU requirements by 42 percent, representatives from the Agricultural Organizations’ Cooperation Council said to reporters after a Feb. 13 meeting with Prime Minister Dombrovskis.
Agricultural Organizations’ Cooperation Council board member Aija Balode said after the Saeima committee’s meeting that farmers were feeling let down.
“Most of the money we receive from the EU goes back to the EU when we buy expensive farm machinery and spare parts. We want 100 percent equality with the other EU member states regarding the direct payments. If the payments are at 42 percent of the EU average level, we should be likewise permitted to observe all the EU requirements only by 42 percent,” complained Balode.
Agricultural Organizations’ Cooperation Council expert Ginta Jakobsone said that the offer to channel 47 million lats (67 million euros) from rural development funds to direct payments could be considered an achievement, and that these funds should be efficiently used for agricultural and rural development goals.
Council board member Guntis Vilnitis said that the prime minister had prepared a good speech; nevertheless, direct payments to Latvia still remained the smallest in the EU. “The government has failed to convince Brussels that farmers should be offered fairer conditions,” said Vilnitis. If so, the government should compensate farmers with state budget money, so the money farmers receive in the end is on par with the average EU payments. The money for this may be taken from “the billions loaned to the Latvian banking sector,” added Vilnitis.
The EU budget talks resulted in the ceiling on cohesion funding for Latvia to be 2.59 percent of gross domestic product, or 4.2 billion euros, and direct area payments to Latvian farmers will increase to 196 euros per hectare, or approximately 80 percent of the EU average, by 2020. Latvia will also receive an extra 67 million euros for rural development needs that may be channeled to direct payments.
Farmers want extra 460 million euros
The board of the Union of Greens and Farmers (ZZS) reiterated that farmer organization representatives will demand Dombrovskis to compensate for the funds that Latvia will not receive from the European Union budget with money from the national budget.
ZZS believes that the government must provide farmers with such co-financing until 2019 that would consolidate farmers’ competitiveness in Europe, preserve farms and create new jobs in rural areas.
According to ZZS, the total amount of co-financing for farmers’ direct payments and rural development until 2019 is 327 million lats, and this is the amount that the government must compensate.
The Greens and Farmers also insist that the government must do more to support farmers: funding should be allotted to bring order to the irrigation system, farmers should be permitted to buy fuel exempt from excise tax, lending programs for agricultural land purchases and farm modernization must be improved. Latvia must also prolong the term during which foreign nationals cannot buy agricultural land in Latvia. ZZS also believes that farmers’ aid provided by the European Union should be exempt from income tax.
The group asks the government to immediately introduce a reduced value added tax rate on all local agricultural produce, taking into consideration the insufficient funding to farmers.
ZZS also says that after the European Council talks, Latvia is once again in last place, hoping that direct payments will reach 75 percent of the EU average or 196 euros per hectare in 2019. In 2014, Latvian farmers will receive 109 euros per hectare - compared to 130 euros in Estonia and 148 euros per hectare in Lithuania, notes ZZS.