Agriculture, Baltic, Good for Business, Investments, Markets and Companies

“In Estonia, the average size of a farm is 48 hectares, while in Latvia and Lithuania it is 20 and 10 hectares respectively. Considering the size of agricultural land and the number of producers in the country, it may be said that the consolidation of Estonia’s agriculture is four times higher than that of our southern neighbours. When in Latvia and Lithuania 8 to 9% of everyone employed works in agriculture, then the number in Estonia is twice as low at 4.4%,” said Eerika Vaikmäe-Koit, Head of Retail Banking and Technology at SEB Pank.

Vaikmäe-Koit added that successful agricultural enterprises have followed the motto of increasing production efficiency for many years now and thanks to that the finances of these enterprises are stronger than ever before. “Acquisition of new equipment is at the top of the agenda – last year, leasing at SEB for acquiring agricultural equipment increased 59%. Last year, the number of long-term investment loans given was 38% higher and the loans were mostly used for building new modern cattle sheds,” Vaikmäe-Koit noted.

“It is most likely that the consolidation of production will continue in Estonia, as well as in Latvia and Lithuania, because the sales growth rate, profitability, liquidity and funding of large producers are clearly in a better state than that of smaller producers. In the current year and in the following years, investments will primarily be aimed at buying producers and agricultural land as well as at upgrading machinery and equipment,” said Vaikmäe-Koit.

This year, Estonian farms that are also SEB’s clients are planning more investments than other types of companies – a conclusion suggested by a survey conducted among entrepreneurs last autumn.

This year, 65% of the farms that responded to the survey are planning investments exceeding EUR 30,000, whereas the average number of such enterprises in Estonia was significantly lower with 48%. Innovation is being planned this year by 67% of farms, topping the Estonian average (62%).