Are Baltic people really close to the land anymore? They like to think that they are, but the reality is that most people live in cities now. The attachment to the countryside may be sentimental for most but for some, farming is a livelihood. Without EU subsidies the whole industry may have collapsed. Still farmers soldier on with varying levels of success. Some are discovering there is money to be made when you stick the label 'organic' on your produce. Others are struggling to enter the modern era and some just want to quit. This week's Industry Insider is all about farming.
TALLINN - In the 1930s, two thirds of Estonians lived on the land, most of them farming for a living, a profession that was considered an essential part of country life and the soul of the nation. With the decline of the small Estonian farm, it seems all that has changed.
In the 1990s, agriculture supported 55 percent of the countryside's working-age population. In 1992, the number of people occupied in hunting or agriculture was 114,600; in 2007, it was only 20,900.
"The agriculture and food industry gives job only to five percent of the population," Minister of Agriculture Helir-Valdor Seeder told The Baltic Times.
The decreasing number of people hasn't affected production, but it is destroying the vitality of rural areas.
"Small production, with less than ten people per company make up 47 percent of companies and only produce 14 percent of the gross agricultural product," said Ants Laaneots of the Ministry of Agriculture.
This spring, Eesti Maaulikool (Estonian University of Life Sciences) released results of a survey that showed that one fifth of farmers may quit. The ministry has said that this number is realistic and that small farms make up the majority.
The small producers largely depend on support money. While the subsidies provide 12 to 15 percent of the budget for big producers, they account for 50 to 60 percent of the budget at small farms. The support money isn't paid for the product, but for taking care of the animals, culture and land.
"There is a problem that the milk truck doesn't pick up your milk anymore 's they say you don't give enough milk. And the price of milk is lower for small producers for the same quality," said Kaul Nurm, president of Estonian Farmers' Federation.
Laaneots said the main problems for a farmer are competition in the labor market and creating the same working conditions as so-called "old member countries." Despite the economic growth after joining EU, the productivity of a worker is lower than the EU median.
"But still Estonian agriculture establishments assumingly may raise the productivity and competitiveness in EU economic space," said Laaneots.
But the problems are not only in the field of productivity, but also in the vitality of village life.
"We know that 60 percent of farmers will be of pension age in the next five years," Nurm said. He added that while some young people move into agriculture, there are fewer and fewer people in the villages 's young families are mainly concerned with their proximity to workplaces, schools and shops. And if schools, shops and bus lines are closed, that leaves villages emptier.
"The main problem is that there are only a few persons in the countryside and people are leaving still," Nurm said.
A country life development plan for 2007 through 2013 offers over 30 measures to subsidize country life, including village development funds and support for microeconomic establishments (fewer than 10 workers). Whether farmers knew to ask for support money was a real question in 2001 and 2002, but after the intensive counseling and information sessions of 2003 and 2004, farmers began to use all options to get support money.
According to Laaneots, there are two main reasons that the number of people employed in agriculture has decreased. Until Estonia joined the EU, farmers got a 40 percent lower salary compared to the national median. In addition, the productivity of workers has increased, reducing the need for a large labor pool.
"Today's agriculture now needs more highly qualified skilled labor, which could handle complicated machines and devices," said Laaneots.
Although a member country does not have the right to reduce the money given to the farmer by the EU, the country may reduce additional support which comes from its own budget. This year, the 780 million kroons (50 million euros) in additional support may be cut by 230 million kroons (14.7 million euros), according to the Ministry of Finance. The final amount is not yet clear.
"We have heard it might go [down] and it's not making us glad," said Nurm of the additional support. He added that the farmers' income this year will be low due to bad weather, and therefore national support is necessary.
Still, in 2006 Estonian, cows gave 10 percent more milk than EU-27 average. And last year the cereal crop was the largest after re-independence, exceeded national consumption by one-quarter.
"I hope that according to all rules of logic, agriculture should be the economic branch of the future," Nurm said.