Research, development and advice

Agricultural science is an important instrument for carrying out the country’s agricultural policy. It is also a measure for ensuring the competitiveness of the agricultural sector. The results of agricultural research find implementation in practical agriculture through agricultural education and advisory systems. As a result, the competitiveness of Estonian agricultural products will increase both on the domestic, as well as external market. In order to increase the competitiveness of agriculture, it is vital to integrate Estonian agricultural science to the international scientific system and implement research results quickly in practice.

In Estonia, agricultural research is carried out by the Estonian University of Life Sciences, Jõgeva Plant Breeding Institute, Estonian Research Institute of Agriculture and the Agricultural Research Centre.

The Estonian Agricultural Research Development Plan 2007 – 2013 foresees the preservation of the following fields of research in the institutions belonging to the governance of the Ministry of Agriculture: plant breeding; developing environmentally friendly and effective plant breeding technologies; rural economy and its sustainable development; research on the protection and monitoring of the agricultural environment; food safety and biological diversity.

One important output of research and education is consultation. The advisory system joins scientific research and organization of education with active agriculture – the results of teaching and research reach active farmers through agricultural advisers. Also, problems of practical agriculture reach the organizers of education and science through agricultural advisors.

The Minister of Agriculture of the Republic of Estonia recognized with directive from 5 June, 2007, the Estonian Chamber of Agriculture and Commerce as a coordinating advisory centre, which main tasks are: giving out necessary information and clarifying it to rural entrepreneurs and rural population; offering specialist advice; organizing study and information days.
About the goals of agriculture and rural development support


Grounds for giving support

Support for agriculture, fisheries, rural life and food industry can be applied according to the order and conditions set for several different fields:

•  European Union’s Common Agricultural Policy Implementation Act (CAP Act) (RDP 2004–2006 and RDP 2007–2013 support);
•  Rural Development and Agricultural Market Regulation Act (national support);
•  Estonian Rural Development Plan 2007–2013 (RDP 2007–2013);
•  Estonian Rural Development Plan 2004–2006 (RDP 2004–2006);
•  Estonian National Development Plan 2004–2006 (NDP) 3. priority.

During the programming period 2007 – 2013, the European Union co-finances the support for agriculture and rural development in the framework of RDP 2007 – 2013 from the European Agricultural Fund for Rural Development (EAFRD), which is separate from structural funds.

The following agriculture and rural development support schemes have been provided by the CAP implementation act:
 

•  Single area payment scheme and supplementary direct payments for crops and livestock farming;
•  Support given on the grounds and conditions of the RDP, which in official terms is called a measure accompanying the agricultural policy. The main goal of this support is to prevent negative influence of intensive production and paying compensatory allowances for worse production conditions and for the decrease of income due to expenses and limitations of environmental requirements. During the period 2007 – 2013, the agriculture and rural development investment support of the NDP 3. priority will be added;
•  Market organization, which will achieve a similar level and stability of administratively established prices.
• Single area payment scheme, supplementary direct payments, market organizational support and support for processing, usage and export for agricultural products are financed from the new European Agriculture Guarantee Fund (EAGF).

NDP is enforced with Structural Aid Act and its measures are targeted to support the development of the four priority areas of life of the country:

1. Developing human resources, increasing labour force potential and better usage of it;
2. Increasing the competitiveness of entrepreneurship and employment;
3. Ensuring a sustainable economic and social development of rural life, agriculture, fisheries and the food industry;
4. Developing the infrastructure to ensure economic development.

 
NDP measures were financed from the four structural funds of the European Union (EU):
 

•  The European Agricultural Guidance and Guarantee Fund (EAGGF), which supports both the reorganization of agriculture, as well as rural life;
•  The Financial Instrument for Fisheries Guidance (FIFG), which is targeted to solve structural problems of the fisheries domain;
•  The European Regional Development Fund (ERDF), which supports economic development and creating new jobs;
•  The European Social Fund (ESF), which helps to increase employment through the development of human resources.

 
Division of support based on goals and meanings:

1. Investment support (financed from RDP 2007–2013 and NDP):
 

•  for the modernization and compliance of agriculture and forestry, food industry and fisheries with the requirements of the environment and food safety. The goal of the support is to increase the competitiveness of Estonian enterprises and compensate expenses, which are connected to the fulfillment of environmental and food safety requirements;
•  for the diversification of economic activities in rural areas;
•  for the development of infrastructures in rural areas.

2. Support for the environment and less favoured areas and compliance with EU requirements –– in essence, these are compensations for agricultural producers for “green services” (financed from RDP 2007 – 2013 and RDP 2004 – 2006) – the support is used to encourage the agricultural producers to increase the usage of mineral fertilizers and plant protection products – to preserve nature. The support barely covers the decrease of income brought out by restrictions. The whole society will benefit from the support. Many countries, which call themselves liberal, do not use production methods, which would preserve the environment and increase “benefits” on the account of using or polluting natural resources – soil humus and clean water.

 
3. Income support:
 

•  income support for small income holdings engaged in agricultural production, which have no possibilities to expand economic activities (financed by RDP 2004 – 2006);
•  Area-related aid, support for crops and livestock farming (financed on the basis of the CAP implementation act). In all the developed countries, supplementary expenses of agricultural enterprises related to the peculiarity of agricultural production are compensated through different support measures. In agriculture, a large share of main assets is used periodically due to natural reasons, averagely, 2 – 3 months per year, which significantly hinders competitiveness and economic possibilities. Also, there is compensation for land maintenance costs. Considering the needs of the future and increase in the demand for food products, the fertility of fields has to be preserved. Thanks to the area related aid implemented in 2004, more than 120 000 hectares of field land covered in weed or overgrown with bushes was taken into usage again.

4. Support for processing, usage and export of agricultural products (financed based on the CAP implementation act);

5. National support: support for the breeding of farm animals, market development support, practical training support, support for farm relief services. National support is financed by the state budget of Estonia.
 
Goals of supports

The goals of supports derive from the goals of the European Union Common Agricultural Policy (CAP), which were worded by the Treaty of Rome and became effective on January 1, 1958. The goals of the CAP are unchangeably worded by the Treaty of Amsterdam in 1997 and they are valid until today:
 

•  increase the productivity of agriculture through promoting technical progress and ensuring the rational development of agricultural production and the optimal usage of production factors, mostly labour force;
   
•  through that, ensure a satisfactory standard of living for the population engaged in agriculture, mostly through increasing the personal profits of people engaged in agriculture;
•  stabilize markets;
•  ensure food security;
•  ensure reasonable consumer prices.
   

In developing the CAP and its implementation special methods, the following will be taken into consideration:
 

•  the peculiarity of agricultural production, which derives from the social structure of agriculture and the structural and natural differences of agricultural areas;
•  the need to carry out relevant adjustments step by step;
•  the fact that in the Member States, agriculture is a sector, which is tightly connected to the entire national economy.

Situation has changed, the goals have remained the same
Due to the lack of food products in Western-Europe after World War II, the main goal of countries´ governments was to expand agricultural production by all means. Self-sufficiency in food was established within ten years. Despite the state’s intervention measures, mostly by price support, one of the main goals was not achieved: increasing the personal profits of people engaged in agriculture. The income per one employee in big and small farms was five times different (for the benefit of big farms). The average increase of income of farmers was 1, 5 times smaller than the income of industry workers in the 1960s. A way out of the situation was seen in structural changes – creating large production farms. The restructuration plan of the European Commission prepared in 1968 – known as Mansholt Plan – foresaw the development of modern, viable production units with the help of directed investment support. The goal of the plan was to increase the income per person by decreasing the number of people engaged in agriculture. For the released people, an early retirement or retraining was planned. The plan saw fierce resistance and had to be given up.
Negative influence of price support
The negative influence of price support of agricultural products became eminent in the 1980s: increasing environmental damages in areas of intensive production; increase in food quality risks (mad cow disease etc), surplus production and trade problems.
Decrease in market intervention


Influence of the WTO

Since 1980s, the formation of EU agricultural policy was directly and strongly influenced by the binding agreements achieved between Member States in the World Trade Organization (WTO).
In 1994, an agreement was achieved in the WTO to harmonize the measures of the agricultural policy and the agricultural contract was signed. The agreement provided the principles of competition in agriculture, obligation to decrease trade restrictions and limits of agricultural support.

The provisions of WTO agricultural agreement were a compromise between countries, which support free trade, and countries, which valued rural development, the environment and food quality. By the 1980s, the economic scientists of developed countries were convinced in the following: “Since completely free trade cannot be achieved, a balanced protection between economic branches and goods is better than enforcing a very high protective measure on some of them and leaving the others with less protection, or no protection at all” (M. Tracy, 1993). Also the justifications on balanced protection principle offered by L. Mahé in 1984 have remained valid until today.
In the formation of the agricultural policy of the re-independent Estonia, EU agricultural policy goals, WTO agreement principles and criteria, and the opinions of noted economic scientists on the questions of agricultural trade, were not accepted due to the pressure by the interest group of free trade supporters. The policy, which targeted the resources (free trade), in principle, could not fulfill the consumers´ expectations. The main and advertised result of liberal economy – the alleged consumer benefits – was not achieved in Estonia. On the contrary, in the most economically free Estonia, food prices were the highest, when compared to the EU joined countries in absolute, as well as purchasing power relative terms, according to the data of the magazine Agra-Europe from 15 September, 2002. Compared to the seven joined countries, food prices in Estonia were averagely 15 – 33 percent higher and compared to food prices in Cyprus, Slovenia or Malta, the prices in Estonia were somewhat lower, but the living standard and purchasing power of the people in those countries is 2,2; 1,9, and 1,4 times higher than in Estonia, respectively. Accession did not bring about a sudden increase in food prices – food prices increased 3, 7 %.

 Agenda 2000

The reform plan Agenda 2000 gave a new meaning to agricultural policy – multifunctionality. It means that the functions of agriculture were used in wider terms than just producing food. Agriculture was granted a key role in preserving the viability of rural areas, biological diversity of the environment and habitual cultural landscape. The means for the expansion of the union, development of competitive entrepreneurship and diversification of rural activities held a significant place in the reform plan. The multifunctional role of agriculture was accompanied by the differentiation of support measures and changing the meaning of support. The support for food production using environmentally friendly and natural methods, in essence, is compensation for the supplementary expenses and decrease in income due to certain restrictions accompanying these methods.
Reform plan of the agricultural policy

According to the reform plan of the agricultural policy of 2003, agricultural support was decoupled from production, which gave the entrepreneur a possibility to plan production according to market demands. Support was differentiated based on the CAP goals, the economic situation and development possibilities of different target groups. Paying agricultural support was associated with fulfilling compulsory environmental requirements. By differentiating support, a more expedient usage of resources was achieved, but it was also accompanied by the complexity of the system.


Public opinion on the expediency of support

 According to the public opinion poll “The image of the Ministry of Agriculture and rural life among Estonian city people” (M. Taru, R. Toomla, April – May 2004), 85% of the people questioned thought that agriculture should be supported by the state budget, and 80 % of the people questioned believed that the whole society will benefit from supporting agriculture. The research centre Faktum carried out a research “The reputation of rural life” (February 2005) and it revealed that three fourths of all answered people found the situation of rural life bad. 86% of the people questioned imagined rural life as developing, growing, and our own and thought that the state should help more in fighting against the weakness of rural life and designing its reputation. The positive opinion of the public about supporting rural development is extraordinary, since the opinions of economic scientists and representatives of interest groups, who stand very far from the agricultural science, have dominated the Estonian media scene and according to them, the state should not interfere with agriculture, nor implement market organization measures or support. Some measures are being criticized, others praised, but the goals of EU agricultural policy or the essence of modern agriculture or food production in the market oriented economy are not known. Targeting measures (free trade, tax system etc) characterizes deficit in management knowledge. Interchanging the goal and the measure in the decision-making process usually causes random and undesired consequences. The expectations of successful farmers were fulfilled with the accession to the European Union. The expectations saw greatest advantages and possibilities for economic stability. Compared to 2003, the production of the economic branch of agriculture increased (current prices) with support 8, 1% and without support 6, 4%. The added value of agriculture increased 17%, compared to the preceding year.