“Lithuania’s agriculture and manufacturing industry is the propeller of the country’s economy creating almost 8 per cent of our Gross Domestic Product, providing every eighth Lithuanian with employment and accounting for 16 per cent of total export of the country”, underlined Minister of Agriculture Kazys Starkevičius speaking at the international conference “Funding of Agriculture and Rural Business Today; Problems, Solutions, Prospects” held by the Rural Credit Guarantee Fund on 12 February.

The governing body of the Ministry is always on the farmer’s side
Minister Kazys Starkevičius drew attention of the participants in the conference to the fact that the present Government regards rural areas as the whole rather than as a unit of farming, therefore it seeks to ensure a intensive rural development, which would enable the middle stratum to be formed and strengthened. The first important work of the new governing body of the Ministry – simplification of the use of the European Union assistance – will be of great service to that purpose. “When assistance has reached at least 20-30 thousand farms, the middle stratum of the rural community will have been strengthened. It is small rather than large business that forms the economic basis not only of the European Union but also that of the whole world, hence, everything begins with a farm of a strong and energetic farmer”, spoke the Minister. Kazys Starkevičius discussed especially painful problems of the dairy sector recalling that farmers, having easily refused shares and received relatively small money for them, at the same time lost influence and the possibility to control milk processing enterprises. At the present time the state is constantly being made to mend the situation, however, this is not so easy to do.

The Minister noted that the repayable export subsidies that have been won should help production accumulated in warehouses to be realised, however, we should not expect that they will solve acute problems of purchase prices, as well as other problems of the sector. There are 55 thousand dairy farms in Lithuania on which 380 thousand cows are kept. The possibility to process milk on the farm itself, to sell it straight from the farm is of great significance to small farms therefore simplification of the provision of assistance to them is especially useful. Having made use of assistance the farmers can acquire milk-processing equipment, and once the veterinary requirements have been simplified it will become easier to sell products they produce and process. Small workshops could process up to 10 per cent of milk raw material.

Speaking about the balance of income and expenses of the farmers, on which a rapid increase in prices of the resources used in agriculture had a very negative impact, the Minister drew attention of the participants in the conference to the fact that farmers should also think about the development of alternative activities, as well as about the benefit of growing energy plants because this is an additional and guaranteed source of income.

In its turn the Ministry makes great efforts to achieve that additional maximum EU allowable national direct payments for milk should be paid, that direct payments should be made equal in all member states of the European Union. The Minister underlined that Lithuania’s efforts to find the like-minded in the European Union had given positive results therefore it has been achieved that a transitional period should be applied to a complex linking of assistance, which would have cost the farmers a lot. It has also been achieved that the EU states by the provisions of their national legal acts can reduce assistance given to the farmers who do not engage in production and other important things.

The Rural Credit Guarantee Fund is flexible to adapt itself
The Director of the Rural Credit Guarantee Fund Danguolė Čukauskienė spoke that she was especially glad that despite economic difficulties, a great number of country people never said die and took part in different projects and that they took loans from banks. “In 2008 the Rural Credit Guarantee Fund gave 464 guarantees of LTL 145,2 million to credit institutions for LTL 246,7 million credits granted to farmers, rural business people and processors of agricultural products. As compared with the year 2007 the amount of guarantees increased by as much as LTL 2,7 million”, the Director informed the participants in the conference. Lithuania’s farmers, agricultural companies further remain the Fund’s main clients who make use of the guarantees – they account for about 70 per cent of all the clients.

Danguolė Čukauskienė drew attention of the participants in the conference that taking into consideration the needs of the period the circle of the guarantee recipients had been extended. Guarantees are also given to rural communities, local activity groups, research and higher education institutions, which have industrial farms. The procedure for receiving guarantees has been simplified and the amount of the guarantee has been increased from LTL 300 thousand to LTL 4 million. Furthermore, the guarantee payment has been reduced by as much as 30 per cent. Guarantees are granted not only to investment credits and circulating capital but also to the credit line, not only to banks but also to credit unions. The Fund co-operates with all the banks and credit unions operating in Lithuania.

Optimistic forecasts
The President of the Association of Lithuanian Banks Stasys Kropas is very optimistic about the future of the food sector. According to him, on the basis of the data presented by the Bank of Lithuania, the financial standing of about 70 per cent of agricultural enterprises is good and that of 30 per cent is satisfactory. At the present time there are no especially successful branches of economy, however, the situation of almost 80 per cent of agrarian enterprises is quite stable, and the number of enterprises, which are on the brink of bankruptcy, is very small as compared to those in other sectors of economy.

“Following the crisis Lithuania’s agriculture should be among the winners. I think that the crisis will change the viewpoint that prevails in Europe and Lithuania that agriculture “creates a low added value”, spoke Stasys Kropas. Modern technologies provide the possibility to use agricultural and forest production for technical purposes. Attempts are being made to seek for a substitute to traditional energy sources – rapidly rising fuel prices made us do that before we had been faced with the crisis. Though petroleum went down in price the world countries, having learned from the mistakes made in the past, should not forget alternative energy. Land and water are likely to become a great value in the future; they will be used for various technical needs, transport.

In the opinion of the President of the Association of Lithuanian Banks Stasys Kropas, it is the crisis that can become a stimulus to invest more in these branches. “The crisis will encourage the states to provide their own market with the agricultural production grown and manufactured in their states, therefore much more attention will inevitably be devoted to that”, concluded Stasys Kropas his speech with optimistic forecasts.