A pact with the government says the state will support, as called for in law, a 3 percent subsidy from the state budget and in September change budget law to allot 2.4 million lats. The protocol prescribes a task force to work out the structure of a per-hectare subsidy for 1999 winter and 2000 summer crops. The per-hectare payment will start after changes in the state budget.
The state must start grain intervention on Aug.1 at 64 lats per ton but raise the price in November to 70 lats per ton. Farmers also want defense of sugar and dairy markets with sugar to start on Sept. 15 while conditions for milk intervention will be worked out according to the July 11 agreement.
A Ministry of Agriculture report shows incomes from agriculture in the last five years have diminished by more than one half since 1995 when a farmer earned 722 lats but last year only 344 lats. The farmers have suffered uncompensated losses, with the main reason being that the state has too small a budget for supporting subsidies.
The drop in income affects basic branches like sugar beet cultivation and grain, meat and dairy production.
Compared with 1998, last year's net value of production has fallen by 15 percent to 179.2 million lats. The Central Statistics Department figures show that last year the export of Latvian farm products continued to decrease. In 1998 the value of farm goods exported was 115.5 million lats, but only 64.5 million lats for 1999. The amount of imported goods almost stayed the same at 222.9 million lats. Also, in the first three months this year, overall food production totally diminished by about 4.5 percent.
Last week in Brussels, an agricultural seminar for European Union candidate countries occurred during which EU suggested liberalized trade and open borders. Until now, EU has agreed on a contract with nine from 10 Central and Eastern European countries. The contract calls for candidate countries to open their borders and to limit the export subsidies from EU side, a plan profitable to both sides.
In Latvia about 75 percent of farmers work with credits. EU structural foundation SAPARD supports agricultural programs. The Agricultural development plan of Latvia's government envisages that Latvia will get the funds from SAPARD. Still many farmers in Latvia haven't resolved payment of old credits. For now it is difficult to participate in the program.
"None of Latvia's banks believe in national agriculture and Latvian farmers. If banks don't believe in agriculture, nothing can work out," said Peteris Kalnins, chair of the Farmer Federation who participated in the Brussels seminar.
According to EU proposals, Latvia will be able to have access to financial help for agricultural reform effective this year. SAPARD funding is expected to be operational from 2000 to 2006. If Latvia joins EU before 2006, Latvia may continue to receive support from the structural funds.
Asked how soon Latvia could open trade with EU, Kalnins could not say.
"It's a strange question, because the agreement with EU is from July 1, theoretically, and Latvia has already started to keep its promises by opening the borders, but EU said it will keep its agreement beginning in September," Kalnins said.