Agriculture, Analytics, EU – Baltic States, Modern EU

International Internet Magazine. Baltic States news & analytics Thursday, 20.06.2019, 10:27

European agriculture: policy’s effect for the Baltic States and Latvia

Eugene Eteris, European Studies Faculty, RSU, BC International Editor, Copenhagen, 20.11.2018.Print version
The role of agro-sector in the Baltic States is still quite significant: about 25-30 percent of the workforce in the Baltic States is engaged full-time or partially in agro-sector, including processing of agricultural products, forestry and fishing. A general agro-sector analysis in the EU and the Baltic States, as well as in Latvia, can help in streamlining national political and economic decision-making.

Agriculture, forestry and fishery play increasingly vital role in the most countries’ environmental conditions, sustainability and competitiveness. Still more important is the fact that agriculture occupies a decisive role in the nations’ political economy stimulating citizens’ healthy and quality food production, preserving clean environment and helping to develop rural areas for the “general” and organic farming.


The European latest agricultural reform (Common Agricultural Policy, CAP) was adopted by the EU institutions in December 2013. It was designed for far-reaching changes in the member states towards, i.e. fairer and greener direct payments, strengthening the position of farmers within the food production chain, making agro-policies more efficient and transparent, as well as providing a response to the challenges of food safety, climate change, growth and jobs in rural areas. The main idea was to assist the member states in achieving the EU-2020 objectives of promoting smart, sustainable and inclusive growth.

 


Agro-sector’s workforce: EU and the Baltics

There are about 10 million people working in the European region’s agro-sector, which accounts for 4.4% of total employment. Almost three quarters (72.8%) of the agricultural workforce in the EU is concentrated in seven countries: Romania, Poland, Italy, France, Spain, Bulgaria and Germany. For example in Poland, the share of agro-workers reaches 12%, in Lithuania 8%, in Latvia about 5% and in Estonia around 3% of the total national workforce.


More in: Agriculture, forestry and fishery statistics, 2017, Commission report, p. 27

Source: EU agro-statistics in: https://ec.europa.eu/eurostat/web/agriculture/overview

 

Total agricultural output in the EU-28 is about €432.6 billion, with about 5-6% growth per year. In 2017, about 56% of the agricultural output, or €244.1 bn was spent on the internal consumption (input goods and services), while gross value added was 44% of the total output, or €188.5 bn. The combination of the sharp increase in the value of agricultural output and a limited increase in internal consumption (+1.8%) resulted in a steep rise in the gross value added generated by the EU agricultural industry in 2017.


http://europa.eu/rapid/press-release_STAT-18-6448_en.htm?locale=en

 

With €72.6 bn (or 17% of the EU total) in 2017, France had the highest total agricultural output among EU states, followed by Germany (€56.2bn, or 13%), Italy (€55.1 bn, or 13%), Spain (€50.6 bn, or 12%), the United Kingdom (€31.8 bn, or 7%), the Netherlands (€28.9 bn, or 7%), Poland (€24.9 bn, or 6%) and Romania (€17.5 bn, or 4%).


https://ec.europa.eu/eurostat/documents/2995521/9380923/5-16112018-BP


Value of agricultural output increased in 2017 In almost all EU states: the highest increase was recorded in Estonia (+18.2%), ahead of Ireland (+13.6%), Romania (+13.2%), the UK (+12.6%) and Poland (+11.1%). However, the value of agricultural output decreased in Slovenia (-4.7%) and Malta (-3.1%), while remained stable in Croatia and Slovakia. Among the EU states with the largest agricultural industry, the value of total agricultural output increased by 8.6% in Germany, 4.5 % in Spain, 3.2% in France and 2.2% in Italy.


Increase in the value of animal output by over 10% in 2017 was due mainly to rises of 20.2% for milk, 17.9% for eggs and 11.6% for pigs, mostly as a result of increases in prices.


The value of crop output increased in the EU by 3.6%, with volume up by 1.7%, and prices up by 1.9%; the rise was mainly due to increases of 10% for wheat and spelt and of 8% for industrial crops.


Table: Output of agricultural industry and its components in the Baltic States

 

 Total agro-output, € bn                              Percentage change 2017 vs. 2016, in %

                                                     In output        in crop   in animal    Agro-service   Second/activity

Estonia         0.9                     18.2               16.1        25.6               -7.1                -3.0

Latvia          1.4                       8.1                 4.5         18.3            -34.0                 5.9

Lithuania      3.1                     10.8                 7.3         17.9              -2.5               12.0

Source: Eurostat Newsletter, 179/2018, 16 November 2018

 

In the EU, about 32% of the agricultural labour force is below 40 years old compared to 42.4% in the total working population. About 60% of those working in agriculture are 40-64 years old, against 55.2% of the overall working population: about 9% are older than 64, compared with only 2.4% in the total working population. The proportion of people aged below 40 is higher in the total working population than among people working in agriculture in all EU countries except for Luxembourg and Denmark.


By contrast, in all countries the proportion of people aged 65 and over was higher among people working in agriculture than in the total working population. The highest proportions of young people (below 40 years old) in the agricultural labour force are in Luxembourg (50%) and Denmark (44.7%), while the lowest is in Portugal –about 14%.


People aged 65 and above accounted for over 15% of farm workers in six EU states, with the highest levels reported in Portugal (about 42%) and Ireland (21.7%). More than half of farmers were aged between 40 and 64 in all countries except in Luxembourg, Portugal and Denmark.


In all three Baltic States the 64-68 age-group is dominating in agricultural sector. Women accounted for fewer than half of farm managers in all EU states; the highest proportion is in Lithuania (47.1%) and Latvia (45.2%). In Finland, Malta, Germany, Denmark and the Netherlands the proportion of female farm managers do not exceed 10%.


 Among people working in agriculture more than 50% had a low level of education in seven EU states; the highest shares, exceeding 85%, is in Malta (90.2%) and Portugal (87.6%). The lowest proportion is in the Czech Republic (4.1%). The proportion of tertiary graduates among people working in agriculture ranged from 1.6% in Romania up to 25.5% in the UK.


In Latvia about 60% of farmers are having only “practical experience”; about 10% have only “basic training” and less than 25% are having “full agricultural training”.

Around 22 million people are working regularly in agriculture in the EU-28, but only 16.4% of them worked on a farm full time. The proportion varied from slightly over 50% in the Czech Republic, France, Luxembourg and Belgium to less than 10% in Malta, Austria and Cyprus. Romania has the lowest proportion, with only 1.5% of people engaged in agricultural work full-time. In the Baltic States, there are 30% of “regularly-working farmers” in Estonia, while 18% in Latvia and 10% in Lithuania.



Rural development

As a rule, national rural development policy aims to improving: a) competitiveness in agriculture and forestry; b) quality of the environment and the countryside; c) life in rural areas and d) diversification of rural economies.


With modernisation trends in agriculture, importance is attached to industrial and manufacturing agro-sectors, while their various services’ role in the economy is increasing. Hence, agriculture is getting less important as a source of jobs while there is an increasing emphasis on the role farmers in rural development, including forestry, biodiversity, the diversification of the rural economy to create alternative jobs and environmental protection in rural areas.


Only in four EU states, employment in agriculture is more than 10% of total employment: in Romania about 26%, in Bulgaria about 18%, in Greece and in Poland -11% in each.


Very low shares - below 2% - are in Germany (1.4%), Sweden (1.3%), Belgium (1.2%), Malta (1.2%), the UK (1.1%) and Luxembourg (0.8%).


Employment in the EU’s forestry is exceeding: 20% of the employment in the primary sector in Sweden (40.2%), Slovakia (34.7%), Estonia (29.2%), Latvia (24.5%) and Finland (20.8%). Employment in fishing activities did not reach 5% of primary sector employment in any country but Malta (23.9%) and Spain (5.2%).


Agro-income

In 2015 the median net income in agro-sector in modern EU has been € 16 127 per person. Most disadvantaged in terms of income were rural areas, with a reported average income 12.5% lower than in the EU-28 average. By contrast, median income in cities and towns and suburbs exceeded the EU-28 average (by 4.9% and 5.4%, respectively). In 15 out of 17 EU states that had a median income below the EU-28 average, the lowest income levels were reported for those living in rural areas. This group of countries also reported the biggest variations in income levels between rural areas and cities.


Bulgaria and Romania are two EU countries with the lowest income levels. In the countries with an income level above the EU-28 average, people living in rural areas of Austria and the UK recorded the highest level of income. In Ireland, France, Luxembourg, Finland and Sweden the highest income was reported for those living in the cities.


In Latvia an average income is about €5 039 in rural areas, €5 960 in towns and € 6 637 in cities; a little bit less in Lithuania and much higher income is registered in Estonia, correspondingly €7 369, €7 545 and €8 903. 


Final agro-output: In 2016 France was the largest agricultural producer in the EU-28 with € 70.3 bn or 17.4% of the EU-28 total, followed by Italy (13.2%), Germany (13.1%) and Spain (11.6%); relative to its size, the Netherlands accounted for quite a high share of the EU-28’s agricultural output with 6.7%.


The highest increases in output value (in absolute terms) were recorded for the EU’s largest producers, with about € 6.4 bn in Spain, 5.2 bn in Italy, € 4.2 bn in the United Kingdom, € 2.7 bn in Poland and € 2.2 bn in France. Total agro-output in the EU-28 is about €405 bln.



Main components of the EU-28’s agricultural output

 In 2016 crop output was 51.9% of the total output value of the agricultural industry and animal output was 39.2%. The agricultural services and inseparable secondary activities, generally the processing of agricultural products, provided the residual shares of 5.0 % and 3.9% respectively. The agricultural products accounting for the highest share of output value in the EU-28’s agricultural industry in 2016 were: vegetables and horticultural plants - 13.2%; milk - 12.2%, cereals - 10.7%, while pig - 8.5% and cattle. 


In Latvia the agro-output value was €942 mln in 2010, € 1 299 in 2013, € 1 315 in 2014, €1 435 in 2015, € 1 316 in 2016 and about € 1.4 bn in 2017; whereas with €2-3 bln in Lithuania during 2010-16, and about €20-22,5 bln in Poland during the same period.


Agro-land: prices and rents

On average, the most expensive purchase price of one hectare of arable land in the EU is in the Netherlands of about € 63 000. However, among the EU regions, the most expensive price for arable land was in the Italian’s Liguria region with an average of € 108 000 per hectare.


Cheapest arable land is in Romania, with a hectare costing an average € 1 958; the price is “competing” with a hectare of arable land in the Yugozapaden region in Bulgaria with €1 165.


The level of land prices depends on national regulations, regional proximity to networks and other local factors including soil quality, slopes, drainage etc. as well as the market forces of supply and demand, including influence of foreign ownership rules.


Strongest growth in land prices of arable land during five years 2011-16- has been in the Czech Republic (a three-fold increase), Lithuania, Estonia, Latvia and Hungary (a two-fold increase).


In almost all regions, buying arable land is being more expensive than buying permanent grassland, e.g. as much as 20 times more expensive in some of the Greek islands. Likewise, buying irrigable arable land was more expensive than non-irrigable arable land: for example, as much as six times more expensive in some of Spanish regions.


Not all land is owned by the farmer working the land: many farmers rent their land, as either a short- or long-term business decision. The cost of renting arable land prices, as well as grassland, differs greatly among the EU states and regions.  

Renting one hectare of agricultural land was most expensive in the Netherlands: on average about € 800 per year; with the highest regional average in Flevoland being almost twice the national average, i.e. €1 536 for the year.


Renting agricultural land was cheapest on average in Latvia - € 46 per hectare per year; although the cheapest regions in the EU for renting were in Swedish northern regions with about € 28 per hectare per year. As with land prices, renting permanent grassland was cheaper than renting arable land.


Note: Full EUROSTAT’s text is available in:

https://ec.europa.eu/eurostat/documents/2995521/8756523/5-21032018-AP-EN.pdf/b1d0ffd3-f75b-40cc-b53f-f22f68d541df

On EU’s agro-statistics in: https://ec.europa.eu/eurostat/web/agriculture/overview


Forestry

Forestry, along with farming, remains crucial for land use and the management of natural resources in the EU’s rural areas, and as a basis for economic diversification in rural communities. Rural development policy is part of the EU’s Common Agricultural Policy (CAP), which is the main instrument for implementing forestry measures. It is estimated that spending on forest-related measures (through the European Agricultural Fund for Rural Development) amounted to € 9-10 billion during 2007–13. In the same period, an additional € 2.7 billion in state aid for forestry was spent by the EU states; besides, combined spending during just during 2014-15 amounted to € 1.4 bn.  


The EU states are holding about 5% of the world’s forests and, contrary to what is happening in many other parts of the world, its forest area is slowly increasing. In socio-economic sense, forests vary from small family holdings to state forests or to large forest-estates owned by companies. Most important in economic sense are volumes of round-wood and sawn-wood forest products with additional sources of employment.


Apart from the traditional production of wood and other products, forests are increasingly valued for their environmental functions, such as protecting the water quality of headwaters and rivers, preventing soil erosion, protecting human settlements from avalanches, filtering air-borne pollutants, protecting biodiversity and providing space for recreation. More recently, the absorption of carbon and its storage in trees and forest soils has been recognised as essential for mitigating climate change, while at the same time, timber is still the most used source of renewable energy in the EU. Both facts have led to a number of the EU states’ forest-policies initiatives.


The EU states are having about 182 mln hectares of forests and other wooded land, corresponding to 43% of its land area, excluding lakes and large rivers. Wooded land covers a slightly greater proportion of the land than is used for agriculture (in some states about 41%).


In seven EU states, more than half of the land area was forest-covered in 2015: just over three quarters of the land area was wooded in Finland and Sweden, while about 63% in Slovenia; the remaining four EU states, each with shares in the range of 54–56%, were Estonia, Latvia, Spain and Portugal. In Greece the share of wooded area is about 50%.


Sweden presently is the largest wooded area with 30.5 million hectares, followed by Spain with 27.6 mln, Finland with 23 million hectares, France with 17.6 mln, Germany with 11.4 mln and Italy with 11.1 mln hectares. Of the total EU area covered by wooded land, only three EU states are recorded double-digit figures: Sweden accounted for 16.8%, Spain for 15.2% and Finland for 12.7%. The amount of re-forestation is good as well: the growing stock of timber in forests and other wooded areas is about 26.0 bn m3.  


About 60 % of the EU states’ forests are privately owned: e.g. in Portugal about 97% of forests are privately owned, while in Poland the share is below 20% and in Bulgaria at 12%, the lowest share.


Out of about 6,2 thousand hectares land area, about 3,4 thousand is covered by forests in Latvia with 3,1 thousand available for wood supply. Forest ownership in Latvia is divided between private and public sectors: correspondingly about 51% for public and 37% for private; the rest belongs to legal entities (10%) and local authorities (3%). In Lithuania the corresponding figures are 61,4 and 38,6%, while in Estonia 41,3% in the public and 58,7% in the private sector (source: EU forestry report, p. 14 and www.balticexport.com).


Among the EU states, Sweden produced the most round-wood (74 mln m3), followed by Finland, Germany and France (each producing between 51 and 59 mln m3). Slightly more than one fifth (21.9%) of the EU states’ round-wood production is used as fuel-wood, while the remainder was industrial round-wood used for sawn-wood and veneers, or for pulp and paper production. In Latvia, out of 12,2 thousand m3 round-wood production 1,2 thousand is used as fuel-wood and 11 thousand m3 for industrial production. In Estonia, the corresponding figures are 10,4 thousand and 45 thousand m3, while in Lithuania – 2,1 and 4,3 thousand m3. Round-wood production in Latvia is almost double of the corresponding figures in the two neighboring states –Estonia and Lithuania, given the recent increases in the production of wood-pellets and other products used as fuel-wood energy resource in gross inland energy consumption.


Among 3 Baltic States, Latvia has the biggest share of sawn-wood production: about 3,5 thousand m3, compared to 1.2 in Lithuania and 1.6 thousand m3 in Estonia. Germany and Sweden are still the EU’s leading sawn-wood producers, regularly accounting for about 21% and 17% of the EU’s total output over recent years with 21.5 thousand m3 in Germany and 18 thousand m3 in Sweden.

However, the value added figures for forestry and logging in Latvia are quite low compared to other EU states: 120 euros in Estonia and 125 euros per hectare in Latvia with 362 euro in Lithuania. The gross “forest output is about €1 bn in Latvia, €1,6 bn in Lithuania and € 0.6 bn in Estonia.   


Labor productivity in Latvian forestry is about €21,2 thousand per person/per year employed in forestry, while in Estonia – €32.4 and €50,4 in Lithuania; best in Sweden - €172 and Finland - €161, followed by Austria – €144,6  and France – €103.  Whereas in Bulgaria, Cyprus, Hungary and Romania the productivity levels are € 10 000 per person employed.   


Wood-based industries

European wood-based industries include a number of activities, e.g. in large parts of the furniture industry, pulp and paper manufacturing and converting industries, as well as printing industry. Together, some 415 000 enterprises are active in wood-based industries in European member states: they represented about one in five (19.7%) of total manufacturing enterprises in the EU. With the exception of pulp and paper manufacturing, many wood-based industries had a relatively high number of SMEs.

In the economic sense, wood-based industries in the EU produce gross added value of about € 107 bn or 6.2 % of the total manufacturing sector in Europe. The highest share belongs to pulp, paper and paper-based products with 40.7 % or € 43 billion; while the other three sectors had nearly equal shares: printing and service activities related to printing and the manufacture of furniture each amounted to 27 % of the gross value added of wood based industries, while the manufacturing of wood and wood products made up to 29%.


During last decade, the overall added value generated in the EU states’ by manufacturing industries increased by 11%, while the wood-based industries experienced a strong decrease in activity as gross value added fell by 30%. Reductions in activity are recorded in three wood-based industries: largest decline in output recorded for printing and service activities related to printing (– 27.70%). The added value recently generated in the EU’s wood and wood products manufacturing enterprises fell by 13.7% and for manufacture of furniture by 19.0%; only the added value of pulp and paper production increased by 8.6%.

 


Fishery

Total fishery production in the EU covers total catches in the seven sea-surrounding regions, as well as aquaculture production. The total production of fishery products is about 6.4 mln tones of live weight equivalent (the mass or weight when removed from water).


There is a visible decline in fisheries activity: a decrease in the last 15 years reached about 20%; a moderate upward trend was observed only recently with 3.6% rise of the EU total fishery production. However, variations were uneven at national level: total production expanded in Spain (+8.1%), the United Kingdom (+19.0%), Denmark (+24.3%) and Poland (+44.8%). The decline was registered in Portugal (– 15.8%), Greece (– 14.3%), Italy (– 12.9%) and France (– 9.2%). Total fishery production in Norway and Island equivalent to three quarters of the total EU production.


During last years, over 80% of total EU production originated from marine catches, while the remaining 20% came from aquaculture.   


Total EU’s catches in 2016 amounted to 5 mln tones live weight, which is 2.6% less than in 2015. Contrasting with the overall decline observed since 2000 (1.5 mln tones live weight less, or – 22.7%) a slight 2% rise was registered between 2008 and 2016. Variations have been diverse with significant increases in Poland (70.5%), Croatia (46.6%) and Finland (36.2%) as opposed to drops in Lithuania (– 32.7%), Latvia (– 27.2%) and Estonia (– 26.3%).


Catches by the fishing fleets of Spain, the UK, Denmark and France accounted for a bit more than half (55.0 %) of the total EU catches.


Although the European fishing fleet operates worldwide, EU catches were taken primarily from the Eastern Atlantic and the Mediterranean and Black Sea. In 2016, 74.3% of EU states’ catches were made in the North East Atlantic, with another 9% from the Mediterranean and Black Sea; only 8% is coming from the Eastern Central Atlantic. Spain was the only EU state catching significant quantities in all seven fishing areas, whereas the fishing fleets of the United Kingdom, Denmark and France were active mostly in the North East Atlantic and made almost half (47.7 %) of the EU catches in this region. In all 3 Baltic States, North East and Eastern Central Atlantic areas, including the Baltic Sea, are the main catching zones.

Fishing fleet in Estonia consists presently of 1557 units (compared with 965 in 2008), in Lithuania, correspondingly 218 and 142; while in Latvia a small reduction from – 841 in 2008 to 678 presently.


General reference: http://europa.eu/rapid/press-release_STAT-18-2261_en.htm?locale=en;


The EU agriculture, forestry and fishery statistics for 2017 is available on the Eurostat website at: http://ec.europa.eu/eurostat and in:    

https://ec.europa.eu/eurostat/documents/3217494/8538823/KS-FK-17-001   






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