Overviews And Reports / Annual report on agriculture for the year 1999
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Overviews And Reports / Annual report on agriculture for the year 1999 |
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Introduction The Ministry of Agriculture has periodically presented quarterly reports and annual reports describing the situation in the agricultural sector. This annual report will give an overview of the main trends in the agricultural sector in 1999. During the last two years the Ministry of Agriculture has implemented the Economic Accounts for Agriculture (EAA) and the following analysis is based on the EAA methodology. The results for 1999 based on the EAA methodology indicated that the situation in the agricultural sector has become very difficult during the last few years. The output from agricultural enterprises has declined compared with the year 1998 mainly due to low prices and unfavourable weather conditions. In 1999, the average prices of agricultural products were significantly lower than during the previous years (20-30%) and as a result the agricultural enterprises did not receive sufficient income. In addition, a long and cold spring and a dry summer were not favourable for livestock farming. At the same time the total production in crop farming increased, mainly due to expanded oil flax and rape area and increased yield; the potato yield was also better compared with 1998. The value of livestock production decreased mainly as a result of a significant reduction in milk prices in 1999. This decrease had already started in the fourth quarter of 1998 and continued declining in the second and third quarter of 1999. The milk production decrease was largely due to a fall in productivity as well as a reduction in the number of cows. The number of cows has decreased 22% since 1995, and in 1999 it decreased almost 9%. Resulting from the worsened financial situation in this sector only 260 million kroons of investments were made in 1999, whereas the investment needed was about 800 million kroons. Thus, the actual investments made covered only one fifth of the total investment need. The investments made in the agricultural sector have been four times lower than the investment need since 1995. The investment need for the year 2000 will be over one billion kroons. The share of state support declined by 33% in 1999 compared with 1998. The following table of Economic Accounts for Agriculture (Table 1) shows the situation in the agricultural sector. Table 1. Economic Accounts for Agriculture 1998-2000 (thousand kroons) |
(Source: Ministry of Agriculture (MoA))
|
1998 |
1999 forecast |
2000 forecast |
|
|
Output from agricultural enterprises |
5,663,359 |
5,159,817 |
5,839,073 |
|
Crop output |
2,234,887 |
2,350,839 |
2,580,363 |
|
Livestock output |
3,091,252 |
2,471,758 |
2,715,717 |
|
Intermediate consumption |
3,678,626 |
3,377,629 |
3,660,036 |
|
Gross value added at production prices |
1,984,733 |
1,782,188 |
2,179,037 |
|
Depreciation |
2,071,591 |
1,906,896 |
1,872,392 |
|
Net value added at basic prices |
- 86,858 |
-124,707 |
306,645 |
|
Compensation to employees |
950,777 |
855,699 |
960,760 |
|
Taxes |
30,100 |
30,100 |
29,000 |
|
Subsidies |
565,000 |
380,600 |
303,000 |
|
Operating surplus |
-502,735 |
-629,906 |
-380,115 |
|
Rent |
161 |
121 |
142 |
|
Interest |
70,000 |
68,000 |
71,000 |
|
Entrepreneurial income |
-572,896 |
-698,027 |
-451,257 |
|
Number of owners |
23,500 |
22,500 |
21,500 |
|
Monthly income per employer |
-2,032 |
-2,585 |
-1,749 |
|
The above table shows that the value of output from agricultural enterprises decreased 9% compared with the year 1998. There was a decline in livestock production both in terms of volume (26%) as well as monetary terms (20%). In addition to low milk prices (considerably lower than world prices), also pork prices were 30% lower in 1999 compared with the prices in 1998. There was a 50% increase in pork imports, which caused a decrease in the purchase of domestic pork by 10% and considerably lowered domestic pork prices. The agricultural sector continued producing at a loss, which even increased by 21.8% compared with 1998. The calculated loss was covered by the sums that were intended for investments, but in reality were used as operating instrument, and also with the income from outside the sector. Livestock farming Livestock production decreased by 20% in 1999 compared with 1998. The main reason for the decline was the low purchase prices of pork and milk, but also dry summer and unfavourable and unstable market conditions. The live weight of slaughtered livestock was 96,800 tons, which was 2,900 tons less than in 1998. The dead weight of slaughtered livestock was 57,600 tons, of which 54% was pork, 32% was beef, 13% was poultry meat and 1% other meat (mutton and goat meat). Figure 1. Dead weight of slaughtered livestock 1999 |
(Source: The Estonian Institute of Economic Research (EIER))
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31,516 tons of meat (in dead weight) was sold to the meat industries in 1999. That was 8.4% more than in 1998. The purchase of cattle increased by 7.4% (mainly due to a decrease in the number of productive animals), whereas the purchase of pigs decreased almost 10%, which was mainly caused by an increase in pork imports. In 1998, the import of pork was 6,800 tons, but in 1999 it was 12,800 tons. There was a huge drawback in the purchase of poultry meat where the purchased amount decreased by 23% compared with 1998. The number of cattle decreased by 21,900 animals, whereas the number of cows decreased by 14,200 animals in 1999. Figure 2. Average purchase price of beef 1998-1999 |
(Source: EIER)
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The average purchase price of beef declined 11.5% in 1999 compared with 1998. Figure 3. Average purchase price of pork 1998-1999 |
(Source: EIER)
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The average purchase price of pork declined 28.7% in 1999 compared to 1998. During the first three quarters in 1999, the average purchase price was 36.9% lower compared with the same period in 1998. As a result of the price increase in the world market, the pork price rose 19.4% during the fourth quarter in 1999, which was 14.3% higher than in the fourth quarter in 1998. Figure 4. Average purchase price of poultry meat 1998-1999 |
(Source: EIER)
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The purchase price of poultry meat was 0.4% higher in 1999 compared with the previous year. During 1999, the prices decreased by 17.8% due to the decline in world prices. In 1999, the amount of milk production was 643,600 tons, which was 85,900 tons less compared with 1998. The percentage of milk fat was 3.8%. The quality of milk realised to the dairy industries increased in 1999. In 1998, the share of higher quality milk was 70.9%, but in 1999 it was 79.3%. The total production of milk decreased as a result of cutting the number of cows, but also due to a productivity decrease. When in 1998 the average production per cow was 4,456 kg of milk per year, then in 1999 it was 4,187 kg, that is 269 kg less. The decline in milk production started in the second quarter in 1999 and was caused by various factors including low producer prices. In addition, the long and cold spring was not favourable for the rapid growth of grazing land grass nor the hot and dry summer for grass growing. On average the weather conditions in 1999 were relatively favourable for foraging and about 100,000 tons more feed were set aside compared with 1998. According to the Institute of Animal Sciences of the Estonian Agricultural University the feeds were of better quality. But still some farms had insufficient fodder supply at the end of 1999 and the beginning of 2000, because foraged feeds were already given to animals at the end of August, in September and in October. Another obstacle in setting aside fodder was the absence of producer income, since the money for milk was received several months later. Figure 5. Average purchase price of milk 1998-1999 |
(Source: EIER)
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The purchase price of milk was extraordinarily low in 1999. In 1999, the average purchase price of milk was 20% lower than in 1998, whereas during the main milk producing months (the second and third quarters) the average price was even lower at 34%. The milk price started to recover in the fourth quarter when it rose 33.3% over the price during the same period in 1998. Total production of eggs was 270.7 million in 1999, which was 34.5 million eggs fewer than in 1998. The reduction in egg production was caused by increased imports from Latvia, Finland and Russia. At the same time, the egg production per hen has significantly increased and was 300 eggs per hen in 1999. Table 2. Production of livestock in 1999 |
(Source: Statistical Office of Estonia (SOE))
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1998 |
1999 |
1999 compared with 1998 |
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|
tons |
tons |
tons |
% change |
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Live weight of slaughtered livestock |
99,700 |
96,800 |
-2,900 |
-2.9 |
|
|
Milk production |
729,500 |
643,600 |
-85,900 |
-11.8 |
|
|
Egg production (thousand pieces) |
305,200 |
270,700 |
-34,500 |
-11.3 |
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Table 3. Number of livestock (in thousands) on 31.12.1999
(Source: SOE)
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1998 |
1999 |
1999 compared with 1998 |
|||
|
+/- |
% change |
||||
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Cattle |
307.5 |
285.6 |
-21.9 |
-7.1 |
|
|
Cows |
158.6 |
144.4 |
-14.2 |
-8.9 |
|
|
Pigs |
326.4 |
281.2 |
-45.2 |
-13.8 |
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Sheep and goats |
30.8 |
29.4 |
-1.4 |
-4.5 |
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Poultry |
2,635.7 |
2,433.1 |
-202.6 |
-7.7 |
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| Crop farming
1998 was a year of a lean harvest, and the production value of crop farming decreased by 12% compared with 1997. 1999 was a year for recovery from crop failure. The production value of crop farming rose 5.2% in 1999 compared with 1998. This was mainly due to an increase in fodder quality and a better potato harvest. According to the Estonian Statistical Office, the growing area of field crops was 809 thousand hectares in 1999, which was 50.7 thousand hectares less than in 1998. Thus, the growing area of field crops has decreased 5.9%. There were 267.5 thousand hectares of unused lands in 1999, which was 34.1 thousand hectares more than in 1998. Thus, the area of unused land has expanded by 11.5%. Compared with 1995 figures, the growing area of field crops has decreased by 4.9% and the area of unused land has increased 5.3%. During 1995-1997, the growing area expanded 19% and the area of unused land decreased 5%. Beginning with 1998, the growing area has decreased 6.4% and the area of unused land increased by 15.8%. Figure 6. Use of land according to field crops |
(Source: SOE)
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The growing area of cereals and legumes has decreased by 9.2% compared with 1998 and was 327.2 thousand hectares in 1999, constituting 40.4% of the total growing area. Of the total crop farming, wheat was sown on 66 thousand hectares and rye on 21.9 thousand hectares. Due to the long drought period in the summer, the average yield of cereals and legumes was about 1,345 kg per hectare, which was 23% less than in 1998. About 90% of the rye production and 75-80% of the wheat production met the quality of food cereals, which was at a relatively good level compared with previous years. Figure 7. Average purchase price of wheat 1998-1999 |
(Source: EIER)
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The average price of cereals was 21.6% lower in 1999 than in 1998. The potato growing area was reduced by 4.6% compared with 1998 and was 31 thousand hectares in 1999, comprising 9.5% of the total growing area. The total production of potatoes was 440 thousand tons, which was 39.8% more than in 1998. The potato harvest covers food potatoes, potatoes for industrial use and seed potatoes. The average yield of potatoes was 144 quintals per hectares in 1999, which was 48.0% more than in 1998. There are three oil-bearing crop unions in Estonia that have been successfully helping producers with supplying seeds, fertilisers and herbicides, as well as with solutions to problem related to drying, storing, processing and marketing of oil-bearing crop production. The growing area of rape and turnip rape increased due to better marketing and the work of oil-bearing crop unions (there are over 400 producers in these unions). In 1993, the growing area was 1.2 thousand hectares and by 1999 it had risen to 24.2 thousand hectares. The total yield of rape and turnip rape was 30 thousand tons in 1999, of which 23.5 thousand tons were sold for exports. The growing of the oil-bearing crop will be enhanced by a new cooking oil plant, which uses mainly rape and turnip rape seeds grown in Estonia as its raw material to a total of 60,000 tons per year. Flax was grown on 218 hectares, of which 100 hectares were under staple flax and 118 hectares under oil flax. The total growing area of flax was 159% more than in 1998, but at the same time it was less than in 1997, when the growth area was 32.5% larger. The production of oil and staple flax’ seeds amounted to 138 tons and stalks 200 tons. Only 21 tons of seed were harvested in 1998. In 1999, the yield was better than in 1997, even though the growing area was smaller. In addition, oil and staple flax seed production in 1999 exceeded the 1997 figures by 40%, and 212.5% more stalks were received. Such instability in flax production is mainly due to the low purchase prices of flax and insufficient export possibilities. Further development in flax production will concentrate on growing and producing mainly oil flax and the main market will be the oil processing plant in Estonia. In addition, direct costs in oil flax production are about 30% lower than in staple flax growing and oil flax does not require the existence of the special technology that is needed for staple flax production. The dry summer was relatively favourable for foddering, although the growth of hay was slow. Practically, there was no second hay, so it was not possible to harvest the necessary quantity of feeds. At the same time the quality of the foddered feeds was better than in previous years. In 1999, during the fodder period, about 1.5 times more hay was harvested, whereas 1.3 times less silage was made compared with 1998. In addition, fewer fodder roots and grain were stocked. Although the situation in foddering is not critical since the quality feeds was high and the number of animals has decreased, there will be a shortage particularly of straw. The open field vegetable growing area was 4.3 thousand hectares in 1999, staying at the same level as in 1998. Cabbages were grown on 1.7 thousand hectares, carrots on 0.8 thousand, red beets on 0.5 thousand, turnips on 0.3 thousand and other vegetables on 1.0 thousand hectares. In real terms, the total yield of main vegetables (carrot, red beet, turnip) was significantly lower (30%) than in 1998. The cabbage harvest was 10% lower than in 1998. The annual yield from greenhouses was about 8 thousand tons, of which the main vegetables were cucumber and tomato. Cucumbers were grown on 52.9 hectares with a total harvest of 5,000 tons, which was 11.7% more than in 1998. Tomatoes were grown on 57.0 hectares with a total yield of 2,500 tons, which was 13.8% more than in 1998. The berry harvest decreased by 25-30% compared to an average year; the strawberry and raspberry harvest decreased by 20-25%. The apple and pear harvest decreased about 50% due to night frost in spring as well as to pest damage. The share of marketable apples was only 60%. The morello harvest was relatively good, although the harvest from sour cherry was very poor mainly due to cold at the time of blossoming in spring as well as to weakening of the trees. The crop of plums was also damaged by fruit rot. The harvest of stone fruits was only 60% of what was expected. The year 1999 was favourable for apiculture (honey and beeswax production). The honey yield was unusually big amounting to 780-800 tons of honey from 30 thousand swarms of bees.
Intermediate consumption Intermediate consumption includes direct production costs, i.e. expenses of seed, fodder, fertilisers, chemicals, fuel, energy etc. Input prices were 7.0% lower in the fourth quarter in 1999 compared with 1998. Compared with the fourth quarter of 1998, the cost of maintenance and repairs of buildings and equipment were reduced the most at 20.9%, fertilisers and bedding costs came down 15.4% and feedingstuffs 8.3%. At the same time communication costs increased by 48.7%. Compared with 1998, intermediate consumption has decreased due to the decreased quantity of inputs and decreased prices of inputs. During the last decade 1999 was the first year when agricultural input prices decreased. At the same time producer prices decreased more. The ratio between direct costs and production has not improved. This is also evident from gross value added at production prices that have decreased 10.2% compared to 1998. Compared with 1995, input prices have increased more than the producer prices of agricultural production. Compared with 1995, in 1999 the communication prices increased the most (147.1% increase since 1995), followed by the prices of animals (97.7% increase) and prices of seeds (80.0% increase). The prices of pesticides increased the least (1.5%). Table 4. Price indexes of intermediate consumption |
(Source: SOE)
|
I quarter |
II quarter |
III quarter |
IV quarter |
Year |
|
|
1998/ 1999 |
1998/ 1999 |
1998/ 1999 |
1998/ 1999 |
1998/ 1999 |
|
|
Total |
-6.9 |
-10.1 |
-8.4 |
-7.0 |
-8.1 |
|
Seeds |
8.8 |
-3.8 |
-2.2 |
0.1 |
0.9 |
|
Livestock |
-12.9 |
-9.8 |
-6.1 |
-3.0 |
-7.9 |
|
Energy, fuel, lubricants |
1.3 |
-7.6 |
-5.6 |
-3.6 |
7.9 |
|
Fertilisers and bedding |
5.7 |
-6.6 |
-14.2 |
-15.4 |
-8.5 |
|
Pesticides |
-3.4 |
-4.5 |
-1.3 |
-0.9 |
-2.6 |
|
Feedingstuffs |
-12.3 |
-15.1 |
-10.3 |
-8.3 |
-9.7 |
|
Materials and small tools |
0.4 |
-0.6 |
-2.2 |
3.5 |
0.2 |
|
Maintenance and repairs of buildings and equipment |
-14.3 |
-2.0 |
-15.5 |
-20.9 |
-21.6 |
|
Communications |
-0.9 |
48.7 |
48.7 |
48.7 |
36.3 |
|
Gross value added at production prices Gross value added at production prices show the extent of state policy influencing the sector. Taxes on the agricultural sector have remained at the same level, VAT and income tax are not included. In 1999, the number of subsidies was increased and also some support measures were increased. At the same time the total amount of agricultural subsidies did not exceed the amount of subsidies in 1998. Compared with 1998, state intervention decreased by 33%. Depreciation The depreciation of agricultural fixed assets is calculated based on real prices and it illustrates the amount of investment needed during a given period to maintain the same production levels. In the calculation of depreciation, the current prices of fixed assets and real depreciation rates of fixed assets, are considered. The amount of depreciation has decreased by the amount of investments, which is one reason for decreasing the depreciation value. The depreciation amount in 1999 was 1,906,896 thousand kroons, which decreased 8.0% compared with 1998. One reason for this decline is the reduction in production and thus the reduction in the number of fixed assets, the decrease in prices of fixed assets and the increase in capital grants compared with the previous year. Investments Figure 8. Investments in acquiring agricultural machines and dairy production farms |
(Source: MoA)
|
As it is indicated in Figure 8, the amount of investments during 1995-1999 was significantly lower than the real need for investments. This situation is possible only when production has decreased steadily and old resources are used without regeneration. As a result, increasing investment is needed into the sector in the short term. The state direct investment support (incl. SAPARD) must ensure that investments are made in effective enterprises. Beginning in 2000, the investment needs include additional investment arising from the requirements of the European Union (incl. veterinary and phytosanitary requirements, animal welfare, environment, plant protection and pest and disease control requirements). Since 1995, real investment has been 3.2 times lower on average than the investment needed. In 1999, it was 4.3 times lower. Compared with 1998, the investment needs increased 2.9% and the actual investment amount decreased 39,0% in 1999. This will create a situation where the existing equipment will reach a level of depreciation when all the inventory has to be replaced in the short time period. In order to improve the situation in dairy farms and to reach the required level by 2003, it is necessary to invest ca 3 billion kroons in Estonian animal production. In monetary terms most investments are needed in dung management i.e. 1,012 million kroons, because many of the dung pits are in poor condition and need renovation. As the next item, 669 million kroons investment in production buildings is needed. The investment needs of production facilities are 669 million kroons. Completing and reconstructing drainage system needs investments of 391 million kroons, or 13% of the total investment. The cost of the drainage system is high because the removal of waste water and waste products has to comply with at least minimum environmental protection requirements. Most of the cleaning utensils have to be imported because at the present time similar equipment is not produced in Estonia.
Figure 9. Investment needs of dairy farms |
(Source: Agricultural Registers and Information Centre)
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The share of expenses related to the usage of agricultural equipment is significant: for example, these expenses in producing cereals comprise 40-60% of the cost of production. In order to be competitive in international markets in terms of quality and price, about 800-1000 million kroons have to be invested in agricultural equipment each year for the next seven years in order to replace the present machinery with modern technology. Figure 10. Investment needs to agricultural equipment |
(Source: The Estonian Institute of Mechanisation of Agriculture)
| Interest
rate reduction and loan guarantees to agricultural sector
The foundation ‘Agriculture and Rural Life Credit Fund ‘ (ARLCF) gives special credit to small and medium size agricultural enterprises for the development of economic activities, providing them with low interest-rate credit through financial institutions. During 1999, the foundation “Agriculture and Rural Life Credit Fund” provided loans of 125 million kroons, of which 50.2 million was for short term loans and 74.8 million kroons for long term loans. In 1999, ARLCF provided short term loans to the agricultural sector for cattle breeding (26.1% of the total amount of loans to agricultural sector), followed by mixed agriculture (16.1%) and cereal and plant growing (11.32%). Figure 11. Distribution of loans according to branches of economy in 1999 |
(Source: ARLCF)
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Rural Credit Guarantee Fund (RCGF) or Guarantee Fund supports agriculture and enterprises outside Tallinn with loan guarantees. The guarantee is necessary when:
The Guarantee Fund guarantees long term loans and financial leasing by credit and financial institutions to finance new investments in the private sector in rural areas:
The Guarantee Fund can make guarantee obligations to the amount of 4 kroons per capital, i.e. about 240 million kroons. In 1999, the Guarantee Fund received 252 applications to guarantee loans to the amount of 298,9 million kroons. 57 applications were refused in the amount of 95.4 million kroons. In total 157 guarantee contracts were concluded, which secured loans in the amount of 117.2 million kroons. The average size of loans was 746.5 thousand kroons.
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| According to loan types, the largest share guaranteed was investment loans, which comprised 65% among total loans guaranteed, followed by loans for spring sowing (14%), circulation (19%) and factoring (10%). The warranties given to credit accounts comprise 1% of the total guarantees. |
| Agricultural
support measures
In 1999, state support to agriculture was smaller than in 1998. The support measures that have a direct effect on the agricultural sector include direct supports, capital grants, interest subsidies, subsidies on excise duty, financing amelioration maintenance, financing liming works, insurance support, breeding support and measures for the control of epidemics. In 1999, the total amount of subsidies was 637.3 million kroons. Subsidies in the amount of 380.6 million kroons were directly influencing the sector by increasing the income of the sector (direct support) or decreasing intermediate consumption expenses (interest subsidy, insurance support etc). In addition, the agricultural sector was directly affected by capital grants, which decreased the costs of investment by 73 million kroons. The support measures that did not directly influence the income of the sector were estimated to be 256.7 million kroons. These support measures include, for example, amelioration maintenance, research, training and extension services support, support for breeding and epidemic control, infrastructure supports, market research and co-operative farming support and other state support measures.
Figure 13. Supports to agricultural sector in 1999 |
(Source: MoA)
|
Dairy cow support was paid to producers in the amount of 88.6 million kroons in 1999, or 872.18 kroons per cow. 2,450 producers in total received the support, comprising 99.5% of the total number of applicants, with a total number of cows of 101,641. The amount of dairy cow support increased by 26.7% compared with 1998. Arable crop support was paid to the producers in the amount of 139.3 million kroons in 1999. In addition to support for cereals, arable crop support includes legumes, rape, turnip rape and seed support. The arable crop support was 495.17 kroons per hectare, which was 21.9% more than in 1998. 7,281 cereal producers applied for arable crop support with a total crop area of 277,005 hectares. The support was given to 7,250 producers with a total crop area of 275,277 hectares. 99.6% of the applicants received the support with 99.4% of the crop area. In order to increase the quality of cereals, the support for certified seed support was increased by 25% in 1999. The certified seed was sown on 33,111 hectares in total, or on 12% of the cereal growing area that received arable crop support. Sow support was paid to the producers in the amount of 3 million kroons in 1999. The support was 152.99 kroons per sow. On May 1, 1999 20,760 sows were registered by 199 producers in Agricultural Registers and Information Centre (ARIC). 175 owners with 19,315 sows in total received the support. Thus, support was given to 65% of the total number of sows and 93% of the sows in the register. Ewe support was paid to the producers in the amount of 1.97 million kroons in 1999. The size of the support was 289.54 kroons per ewe. On July 1, 1999 there were 7,015 ewes and 254 goats registered in ARIC. 693 animal owners with 6,564 ewes and 240 goats in total were given the support. Thus, support was given to 93.6% of the ewes and 94.5% of the goats in the register. Young and meat cattle support was paid to the producers in the amount of 6.3 million kroons in 1999. The amount of support was 500 kroons per animal. There were 2,943 applications accepted with a total number of young and cattle animals of 12,666. Fuel excise was compensated in the amount of 52.59 million kroons in 1999 and 4,074 applicants or 66% of the applicants received compensation. In 1999, fuel excise support was 33.3% less than in 1998. Interest subsidy is given as state support measure for interest rate payments on the bank loans taken out by agricultural producers. 28 million kroons were given for interest subsidy payments in 1999. Interest subsidy is meant to compensate for the interest rates of long term loans by agricultural producers. The total amount of interest subsidy increased by 83% compared with 1998. Most support went to producers who had made considerable investments in 1998. Capital grants or investment support was 72.7 million kroons in 1999. This amount was distributed between counties according to the statistical data based on sown area. In addition, several payments that were not made in 1998 in Järva, Pärnu, Saare, Tartu and Viljandi counties, were paid in 1999. Thus, capital grants were given in the amount of 73.3 million kroons in 1999. In 1999, the amount of investment support was 43% larger compared with 1998. 837 applications were received for capital grants in 1999, of which 702 applications or 84% were accepted. In 1999, support was given to investments in the amount of 616 million, of which 265 million were actually made in 1999, and 351 million in 1997-1998. The average rate of support was 13.1% in 1999, which is more than in 1998 (10.8%) and in 1997 (10.5%). Compared to the maximum rate allowed (25.0% of the of investment) is still small. The biggest share of accepted applications was in the agricultural sector, which comprised 87% of the total number of applications for support. Still, the share of agricultural sector decreased compared with 1998 (95%). Most of the investments given support were mixed investment in plant production and animal breeding (45%), followed by plant production (26%) and animal breeding (12%). Fewer investments were made in industries (11%) and the rural economy (6%).
Income Entrepreneurial income (Table 1) includes salaries with social tax given to paid workers. The decline in the figure is mainly due to low wages. About half of the workforce in the sector is considered as foreign. The average Estonian monthly gross wage was 4,283 kroons per month, whereas in the agricultural and hunting sectors it was 2,379 kroons per month. Thus, the average monthly gross wage in the agricultural and hunting sectors was 44.5% smaller than the average Estonian wage. Since 1995, average gross wages have increased in the agricultural sector. In 1995 it was 1,405 kroons per month, but by 1998 it had risen by 61.9% to 2,535 kroons. In 1999, average monthly gross wages decreased by 6.2% compared with 1998. The entrepreneurial income has decreased by 35.9%, thus every entrepreneur/owner has 2,416 kroons of loss each month, presumed that he/she makes the investments necessary for production.
Export and import of agricultural products In 1999, export (excl.
re-export) of agricultural products (EKN 1-24) totalled 2.6 billion kroons
and import 5.4 billion kroons. Table 5. Export and import of agricultural products in Estonia (million kroons) |
(Source: SOA)
|
Export |
Import |
Balance +/- |
|
|
Year 1998 (with re-export) |
45,236.7 |
66,975.5 |
-21,738.8 |
|
Of which: agricultural products (EKN 1-24) |
7,210.2 |
11,333.8 |
-4,123.6 |
|
share (%) |
15.9 |
16.9 |
|
|
incl. European Union |
1,132.0 (15.7%) |
4,442.8 (39.2%) |
|
|
Year 1998 (without re-export) |
34,915.7 |
54,849.3 |
-19,933.6 |
|
Of which: agricultural products (EKN 1-24) |
3,476.9 |
6,189.8 |
-2,712.9 |
|
share (%) |
10.0 |
11.3 |
|
|
incl. European Union |
904.0 (26.0%) |
3,577.7 (57.8%) |
|
|
Year 1999 (with re-export) |
43,128.3 |
60,392.0 |
-17,263.7 |
|
Of which: agricultural products (EKN 1-24) |
4,758.0 |
7,932.0 |
-3,174.0 |
|
share (%) |
11.0 |
13.1 |
|
|
incl. European Union |
956.4 (20.1%) |
3,672.5 (46.3%) |
|
|
Year 1999 (without re-export) |
34,430.1 |
50,359.7 |
-15,929.6 |
|
Of which: agricultural products (EKN 1-24) |
2,589.9 |
5,433.5 |
-2,843.6 |
|
share (%) |
7.5 |
10.8 |
|
|
incl. European Union |
792.0 (30.6%) |
3,205.8 (59.0%) |
|
In 1999, the main export items of agricultural products were fish and fish products (38.3%), following dairy products (23.3%), soft drinks and alcohol beverages (9.1%), meat and meat products (6.8%) and cereals, flour, pearl barley and pastry (4.7%). About 33.5% of dairy product exports were directed to European Union countries. This figure increased 25.7% compared with 1998. Meat products were mainly exported to Latvia and Lithuania, 50.7% and 36.8% respectively of the total export amount. Compared with 1998, the export amount decreased 25.5%. Most of the decline occurred in dairy products exports i.e. 32.7%, incl. export to Russia decreased 67.9% and to the European Union 6.9%. The export of soft drinks and alcohol beverages decreased 23.1% and export of fish and fish products decreased 19.8%. Compared with 1998, the export of meat products decreased 14.8% and cereals export 11.7%. The amount of imports decreased 12.2% compared with 1998. The import of dairy products decreased by 60.5%. The import of meat and meat products from European Union has increased 6.8% compared with the same period in 1998.
Table 6. Comparison of export and import amounts of several agricultural products |
(Source: SOE)
|
Export |
Import |
Export |
Import |
Balance |
|||||
|
Item |
Unit |
1998 |
1999 |
1998 |
1999 |
1999/1998 |
1999/1998 |
+/- |
|
|
% |
% |
||||||||
|
Milk and dairy products |
895.1 |
602.2 |
561.0 |
221.7 |
67.3 |
39.5 |
380.5 |
||
|
(million kroons) |
|||||||||
|
incl. butter (0405) |
t |
13,049.4 |
8,289.6 |
11,355.7 |
2,411.8 |
63.5 |
21.2 |
5,877.8 |
|
|
cheese (0406) |
t |
6,502.0 |
3,820.0 |
1,209.0 |
890.2 |
58.8 |
73.6 |
2,929.8 |
|
|
skimmed milk powder |
t |
11,868.0 |
12,692.2 |
1,082.6 |
1,446.5 |
106.9 |
133.6 |
11,245.7 |
|
|
sour milk products |
t |
34,028.3 |
3,154.0 |
1,925.8 |
1,550.3 |
9.3 |
80.5 |
1,603.7 |
|
|
(0403) |
|||||||||
|
yogurt |
t |
1,473.9 |
530.4 |
1,072.8 |
951.2 |
36.0 |
88.7 |
-420.8 |
|
|
Meat and meat products |
mil kroons |
206.1 |
175.7 |
463.3 |
494.6 |
85.2 |
106.8 |
-318.9 |
|
|
Fish and fish products |
mil kroons |
1,235.4 |
990.7 |
401.9 |
277.9 |
80.2 |
69.1 |
712.8 |
|
|
Cereals, flour and flour products |
mil kroons |
138.2 |
122.1 |
674.2 |
593.2 |
88.4 |
88.0 |
-471.1 |
|
|
(10,11,19) |
|||||||||
|
According to customs statistics, the trade balance of all agricultural products is negative. This includes positive trade balance for dairy and milk products and fish and fish products, and negative trade balance for meat and meat products and cereals, flour and flour products.
Figure 14. Export of agricultural products in 1999 |
(Source: SOE)
|
The main export partners of main agricultural products were European Union member states, and Latvia and Ukraine. Figure 15. Import of agricultural products in 1999 |
(Source: SOE)
|
The main import partners of agricultural products were European Union member states, and Poland and Lithuania. The share of imports with the free trade agreement partners was 82.0% of the total imports. The share of exports with the free trade agreement partners was 82.3% of the total exports. Figure 16. Import of agricultural products according to countries 1994-1999 |
(Source: SOE)
| Conclusion.
Forecast for 2000
According to the preliminary forecast production value of total output in the agricultural sector will increase in 2000. The production increase in this forecast takes into account unpredictable factors (weather) that have an effect on production and the increase in resources of agricultural producers. The increase in production reduces the unit cost that allows increasing direct costs to fertilisers, herbicides etc, which will increase production. In addition a 1-3% increase in the prices of agricultural products has been considered. According to the forecast, production expenses will increase by 8%. The increase in costs is due both to increase in prices (2-3%) as well as to an increase in expenditure. Expenditures in the plant production sector will increase due to an increase in the cost of chemicals and fuels. Depreciation will decrease by 2%. This is due to an increase in capital grants as well as fixed assets used outside the sector, which not renewed. Entrepreneurial income will increase by 12%. Average monthly gross wages will increase from 2,379 kroons to 2,800 kroons. The number of paid workers will decrease by 1,000 employees, mainly due to low wages in the agricultural sector, which is the reason why the labour force is leaving the sector, and also due to bankruptcies of enterprises, which is the reason for increased unemployment in the sector. The share of taxes decreases, because of the difficult situation in the sector. In addition, 7-10% of agricultural land will not be used. Thus, over a million kroons from the land tax will not be collected. In total, agricultural support measures will be reduced by 25.3%. Direct support measures will decrease by 17.9%, mainly due to decreasing the amount of ar
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| Last modification 14. May 2001 |