No help for farmers before elections

RIGA - For Latvian farmers, two events have proven disastrous - heavy rain and national elections.

As of mid-September, the agriculture sector incurred a 36 million lat ($62 million) loss because of bad weather conditions, but the government still can't decide whether to give farmers compensation.

Instead, politicians have been firm in maintaining the status quo until the Oct. 3 parliamentary elections.

"I will do everything not to allow any changes to the 1998 budget before the elections," proclaimed Finance Minister Roberts Zile recently.

Ostensibly, it's an attempt to keep the farmers out of the election campaign. Zile said, "We can't risk accession to the World Trade Organization and the positive evaluation the EU gave to our progress statement just for some MPs to be re-elected."

The Ministry of Agriculture reported that 12.8 million lats is needed just to cover part of the farmers' losses and allow them to finish harvesting and start winter sowing.

The Latvian Farmers' Union (LZS) submitted the amendment to the 1998 budget according to which 12.8 million lats for compensation should be allocated from the corporate income tax revenues.

Karlis Boldisevics, an LZS faction consultant, said the Parliament directed the amendments to the budget and finance commission, but further development can be expected only at the end of October.

Since the political climate may change completely after Oct. 3, there is no way of telling whether farmers will get the compensations they need to survive the winter.

According to the Ministry of Agriculture, each farmer should be paid 10 lats per hectare of vegetables and grain. Winter sowing should be subsidized with 15 lats per hectare of rye and 20 lats per hectare of wheat.

Zile said there is no money in the budget for compensations.

"How can the Farmers' Union faction suggest allocating money from the corporate income tax revenues, if both its ministers [Economics and Agriculture ministers] said Latvian companies, especially food producers, can't sell their products," Zile said. "If they don't sell their products, they can't pay the tax."

According to Zile, the emergency situation in the Latvian countryside has been caused not only by bad weather, but also by the loss of the Russian market, and lowered prices on agriculture products due to the crisis in Southeast Asia.

Zile said there are other ways of helping farmers rather than amending the budget. Farmers should be repaid 4 million lat excise tax on gas.

The Ministry of Economics should help foodstuff exporters with money from the Latvian Export Credit Fund, for which 10 million lats were allocated this year, but only 2.3 million used.

This year was also the first year when 17.1 million lats were allocated for agricultural subsidies.

"Most money has been used earlier, although the agricultural sector has a seasonal character, and the money could have been used for compensations now," Zile said. "I hope this year's experience will be taken into account next year."