Agriculture

Lithuanian farmers are uniting. They are creating more and more co-operatives and are breaking into the market independently. The latest initiative is a new milk processing plant. The Government of the country approves of this step, and as much as 50,8 million litas of EU support from the Lithuanian Rural Development Programme for 2007-20013 will be allocated to the building of the plant. The co-operative Pienas LT, which evolved from one of the first recognized co-operatives Lietuviškas pienas, will receive this money.

Farmers are dissatisfied with the purchasing prices
What for does Lithuania need another milk processing plant when there is not enough milk for the remaining ones? It is for a long time that farmers have been dissatisfied with the operating milk processors and their purchasing prices. The Competition Council announced more than once that dairymen had created forbidden cartels. Therefore milk manufacturers feeling that the Government supports them, decided to take an independent step. It took more than seven years to develop the idea of such a co-operative. Farmers hope that this project will bring them benefit. First of all, economic one.

Milk manufacturers hope that raw milk purchasing prices and income of milk manufacturers will increase, the dairy sector will stabilize, and the possibility to increase milk production will be created. The price of milk should increase due to competition, at the same time the number of cows bred would increase and more corn would be used in the domestic market. As the Chairman of the Board of the co-operative Pienas LT Naglis Narauskas noted, farmers have good reasons to complain about low purchasing prices. “Perhaps a new plant in Lithuania will help us rise from the bottom of the comparative table of milk purchasing prices in the EU countries”, he said. We also hope that the attitude of our milk processors towards milk manufacturers will change and on the whole difference between town and the country should decrease.

The co-operative is already functioning
Today the co-operative that was established on 19 December 2008 is already functioning. At the present time Pienas LT accounts for 14 per cent of the milk market in Lithuania and unites over 200 milk processors. The number of the co-operative members is increasing with every quarter.
Last year the co-operative received 16,7 million litas income and earned 175 thousand litas profit. Now farmers supply milk to different processors. When the plant Pienas LT has been built, they will supply milk to the plant.

Dairymen have ambitious plans. They seek to occupy a larger share of the milk market, and to make the entire milk sector competitive. Pienas LT has already chosen a supplier of new equipment for the milk processing plant from Germany. After the negotiations an agreement with the German company is expected to be concluded. The latter will supply equipment necessary to the whole of the plant – from milk accepting line to drying and packaging. In the immediate future the co-operative expects to have a designer for the plant. Then a tender for construction will be announced.

The location of the plant is strategically convenient
The first processing plant, which is managed by the milk manufacturers themselves, will be located in a strategically convenient place. It is near the second largest city, which is crossed by the most important highways, and there is a free economic zone functioning there. At the present time four plants make use of the tax reliefs there. It is planned to build Pienas LT on an area covering 3 hectares, later it is planned to increase the area. In 2010, a 95-year land lease agreement was signed and the preliminary value of the milk processing plant Pienas LT is 90 million litas. Members of the co-operative themselves intend to contribute another 8,5 million litas, and banks promise to lend 25,5 million. As the Chairman of the Board of Pienas LT Naglis Narauskas explained, construction work of the dairy should start soon, and they are not going to look for a strategic investor. “We planned and we shall adhere to the main principle – the enterprise is co-operative therefore 100 per cent of its shares must belong to milk manufacturers only. Nobody has any doubts about this choice”, said the Head of Pienas LT Naglis Narauskas. The co-operative milk processing plant will be automated, and only about 40 people will work in it.” Milk and whey proteins, casein are planned to be produced at the co-operative plant. It is planned that at the beginning 650 tons of milk will be processed at the co-operative plant per day, later these capacities will be doubled up to 1.200 - 1.500 tons.

The Government supports the farmers
The Minister of Agriculture of the Republic of Lithuania Kazys Starkevičius supports farmers’ ambitions. According to the Minister, the newly established co-operative Pienas LT has already started to dictate its conditions. “Milk purchasing prices rose. The farmers had reached the limit, they wondered whether they should slaughter their cows or keep them”, said the Minister. According to him, at the present time four people manage Lithuania’s milk. The new processing plant built partly with the EU funds will decrease monopolies. “According to him, the main objective is that our milk industry should remain strong, which would manage to operate under competitive conditions. Then everybody will profit – both the farmers and users”. According to the Ministry the present monopoly of four milk processors failed to help either farmers or users. “In many cases the price of milk was highest in the European Union. Last year we even exceeded the prices of Swedish milk where traditionally milk and dairy products are most expensive”, he mentioned. And milk purchasing prices were lower all the time.

There were many co-operatives during the interwar period
During the interwar period and the entire period of independence co-operation was one of the most important means to implement different economic programmes. The Government supported the co-operative movement. Through co-operative organisations the agricultural profile of the country changed – the industry of processing agricultural products was created, export was expanded, all kinds of confusion and disorders during the world economic crisis and at the beginning of the Second World War were avoided. At the end of the third decade the co-operative process carried out contributed to the fact that during the most difficult years of economic depression export of agricultural product was not terminated.
Around 3 000 tons of milk is milked in Lithuania per day.

Farmers are happy about the co-operative
Lithuanian farmers who supply the co-operative Pienas LT with milk are happy with the new possibilities. Though at first there were different doubts. A farmer from Griškabūdis Ward Šakiai district Arvydas Dubickas says that his participation in the activity of the co-operative Pienas Lt is the success of his farm today. Arvydas Dubickas agrees that the market of dairy husbandry is unstable, prices change. However, the farmer decided to join Pienas Lt and is looking forward to the construction of his own milk processing plant, which will be managed by farmers. He does not regret having become member of Pienas Lt. It is not important that he has to pay a contribution, to pay for different other services. The farmer from Šakiai district receives more for milk than farmers from other districts who supply other buyers with milk. The most important thing is management of the co-operative. All members of Pienas LT manage the enterprise by equal rights. "After the plant has been built, the milk purchasing price will rise. Another thing is that buyers – processors of milk will no longer dictate their conditions. We ourselves, while participating in the activity of the co-operative, shall decide how much what must cost”, says Arvydas Dubickas.
Of course, we shall have to observe general conditions. Pienas Lt milk collectors will collect milk from those points only, which will provide at least 400 litas. Cows will have to be examined.

During the interwar period co-operatives spread
Agricultural co-operatives in Lithuania spread and were especially popular in the interwar period. They were created, like today, for economic purposes. The Government also supported the co-operative movement. Through co-operative organisations the agricultural profile of the country changed – the industry of processing agricultural products was created, export was expanded, all kinds of confusion and disorders during the world economic crisis and at the beginning of the Second World War were avoided. At the end of the third decade the co-operative process carried out contributed to the fact that during the most difficult years of economic depression export of agricultural product was not terminated.

The number of farmers’ co-operatives is on the increase
Last year the number of recognised agricultural co-operative partnerships in Lithuania started to grow. In 2007, as many as 12, in 2008 – 35, in 2009 – 30 and in 2010 – 39 co-operative partnerships were recognised. Every year several dozens (most often 2 or 3) of new co-operatives are established in the country. At the present time a total of about 200 agricultural co-operatives operate in Lithuania.
The average number of members in the recognised co-operative partnerships has reached about 200 people, and the annual average number of workers is about 20. Income earned from selling co-operative goods and providing services reached the average of around 5 million litas.
At the present time co-operatives occupy about one fifth of the raw milk market and account for about 5-10 per cent of the corn market.
State assistance and the European Union funds are allocated to establish co-operatives and develop their activities.


Asked for half a billion litas
Lithuania’s farmers and processors are actively seeking to obtain support. According to the measure “Processing of Agricultural Products and Increasing the Value Added” of the Lithuanian Rural Development Programme for 2007-2013, last year 162 applications were received asking for the amount of 498 litas.
Priority to agricultural co-operatives and their members is given according to other measures of the Programme: “Processing and Marketing of Agricultural Products”, “Semi-natural Farming” and “Increasing the Economic Value of Forests”.
A total of 7,89 billion of EU funds has been allocated to the implementation of the Lithuanian Rural Development Programme for 2007-2013.


Support to apple chambers
It is not only co-operatives that receive support allocated to processing agricultural products and increasing the value added, but also individual farmers, and agricultural partnerships. The Naradava (Pasvalys district) agricultural partnership asked for support to buy apple storage chambers. The partnership has 250 hectares of orchards. In a fertile year it picks up to 5 thousand tons of apples. It sells the largest part for desert, and processes the remaining apples into puree. The partnership produces apple puree for children from fresh apples – without any conservatives. The partnership stores the apples in chambers in which necessary temperature, the composition and pressure of atmosphere are maintained.

The partnership has prepared the project according to the first sphere of activity “Processing and Marketing of Agricultural Products” of the measure “Processing of Agricultural Products and Increasing the Value Added” of the Lithuanian Rural Development Programme for 2007-2013. The value of the project totals 3 million litas, more than one third of this amount is covered from the European Union funds – 1 million 150 thousand litas. The funds were enough to renovate 8 out of 13 production storage chambers, which contain 9 thousand tons of apples. To store apples the partnership decided to purchase additionally two more storage chambers, which cost about 300 thousand litas.