Agriculture is not just a hobby or a way of life. It not only provides food but is also a matter of national security, because in the event of disruptions to supply chains, we can rely primarily on our own farmers and food producers. How supportive are we of our own farms, to what extent do we entrust them with public procurement by central and local government institutions, and how can Latvia reach Finland’s level? LA.LV spoke to Agnese Radžele-Šulce, Director of Strategy and Business Development at the Latvian Rural Advisory and Training Centre (LLKC), and Jānis Šnakšis, Director of the Strategy, Knowledge and Climate Department at the Ministry of Agriculture (MoA).
Support for farmers is provided all over the world. Without it, urban residents, who make up the majority of the population, would clearly feel the true cost of food, says Jānis Šnakšis. As an example, he points out that without such support, a loaf of bread could cost EUR 10, while vegetables would also be much more expensive. “Support from the European Union and the state is necessary, but at the same time we need to ensure that, by improving their knowledge and making data-driven decisions, farmers can create as much economic value as possible from every hectare, both for themselves and for society.”
Public procurement as a tool for creating demand
Agriculture also plays an important role in maintaining rural populations, which in turn is important in the context of national security. For example, in border areas, local residents may be quicker to notice illegal migrants or other suspicious activities. But even more importantly, in times of crisis, when international supply chains may be disrupted, we have farmers here who are able to ensure local food production.
If a farmer knows that there is a guaranteed market for their products, they will be willing to grow them, and those products will also be available in an “X-hour” situation, says Agnese Radžele-Šulce. Therefore, food procurement by municipalities, state institutions and the armed forces plays a very important role. “This is a tool the state can use to create specific demand – how many potatoes, carrots or other products are needed – and ensure that locally produced food is given priority in procurement. The state is spending its own money, and every responsible manager should think about where that money goes. If we buy imported food through public procurement, we are exporting our money.”
However, there are municipal leaders who would rather buy imported food products if they are even slightly cheaper. They say that the money has been spent anyway. But if it is paid to a local farmer, that farmer pays the local hairdresser, activity leader and other service providers in their municipality. The money continues to circulate in the region rather than going to Poland or Lithuania.
Agnese Radžele-Šulce says that LLKC is working in this direction through the development of the “Novada Garša” platform, where a new “Procurement” module has recently been introduced to reduce the administrative burden involved in procurement. The module will allow farmers to see requests from municipalities and other buyers and offer their products more easily. As the module is still very new, its full functionality is not yet available, and users are still getting acquainted with it.
“We are also working with municipal procurement specialists. When you explain to them in a straightforward way what impact they can have by supporting local producers and what it means for money to stay in the region, many admit that they had not thought about it. Moreover, procurement also affects the quality of food received by their own children and grandchildren, and food produced in Latvia meets high quality standards!” Current public procurement legislation allows preference to be given to locally produced goods. Very often, the issue is not the legislation itself, but the willingness and understanding to make use of the opportunities it provides.
“A farmer cannot suddenly turn a field of grain into a field of potatoes if the procurement tender is announced in August or September. First, the signal has to be given in good time; second, the documentation has to be prepared properly; and third, a personal relationship with local producers needs to be maintained,” says Agnese Radžele-Šulce.
This is not an issue with many unknowns. For example, in Sweden, regions seriously assess how to feed their populations in the event of a threat. They calculate whether there are enough hectares in the region to grow the required amount of food. This can even influence decisions on whether particular agricultural land may be used for a factory.
When LA.LV suggested that such an approach would also be highly relevant for Latvia – assessing the resources and needs of each municipality – Agnese Radžele-Šulce replied that this is already being done in some places. “Several Local Action Groups have had projects aimed at identifying local resources of this kind – in several municipalities in Vidzeme and also in Bauska Municipality. The research was carried out by Agnese Hauka, a researcher at the Institute of Agricultural Resources and Economics.”
The challenge – reaching Finland’s level
“We emerged from the Soviet Union, then joined the European Union and began investing European funding in development. Today, the sector is well capitalised, machinery and technologies are at a high level, and almost two million hectares of agricultural land are being cultivated. The next step is to use everything we already have more intelligently – to develop entrepreneurial capacity and make use of data,” says Agnese Radžele-Šulce. The goal set out in the action plan is to increase productivity per hectare to the level achieved in Finland.
Asked whether this is realistically possible in the foreseeable future, Jānis Šnakšis says that every plan needs to set ambitious targets. “This does not mean that we will necessarily achieve them, but in the analytical section we compared how much value farmers generate from one hectare. Unfortunately, Latvia is at the bottom of the chart. This is not something that should be taken for granted, given our agricultural traditions, farming experience and available resources. Moreover, we are also lagging behind our neighbouring countries. Agricultural output in Latvia is below EUR 1,000 per hectare, while in Finland it is above EUR 2,000 per hectare. Finland is much further north, and its soils are no better than ours. So the question is about the choices we make – how we use the soil, what crops we grow and what added value we are able to create. One task is to improve the quality of the resource or, at the very least, maintain it at its current level. The second is production specialisation. It is important to monitor the economic performance of a farm and assess whether the available resources and their quality are best suited to the chosen specialisation, while looking for opportunities to create greater value from the resources available.”
Currently, around 60% of agricultural land is used for cereals. At the same time, the area devoted to high-value-added crops such as potatoes, vegetables and berry crops is declining. Cereals are a very important area of production, but reaching Finland’s level of agricultural output cannot be achieved through cereals alone.
Where do we stand among the Baltic States?
At times, it seems that food products from Lithuania and Estonia are increasingly outcompeting Latvian agricultural products. What is the objective reality? Jānis Šnakšis says that in primary production, measured per hectare, Lithuania has not moved dramatically ahead of Latvia. “There, agricultural output is around EUR 1,300 per hectare, compared with just under EUR 1,000 in Latvia. However, processing is much more developed and efficient in Lithuania. Estonia, meanwhile, carried out reforms in the early 2000s and focused on larger farms. The average farm size there is around 90 hectares, yet output per hectare is not significantly higher than in Latvia. So farm size in itself is not a sufficient prerequisite for higher productivity. The more important question is how we use the land and what economic value we are able to create from it.”
Agnese Radžele-Šulce points out: “In several sectors, we see major problems with cooperation and with links between producers and processors. One farm cannot solve this on its own. Competitiveness means being able to operate in the common European market – we are part of the EU single market, and that also determines certain ‘rules of the game’. Therefore, it is more important to think about how to strengthen the position of our producers in this market rather than looking for ways to isolate ourselves from it.”
“That is why cereal production is the most stable choice for many farmers,” adds Jānis Šnakšis. “Cereals are largely not a product for domestic consumption, but an export product. They can be delivered to many collection points, prices are determined by the global market, and cereals can be stored.”
It is no secret that the vegetable and berry sectors lack sufficient storage and processing capacity, and there is a need for opportunities to market non-standard or more perishable products as well. This means that cooperation and collaboration are needed throughout the value chain to make the sector competitive, as well as more efficient use of resources. Without this, there will be no progress.
“We are working in three directions in the action plan specifically with regard to land resources,” says Jānis Šnakšis. “First, farmers need to understand the importance of resources – a wrong decision or insufficient action can reduce productivity and result in lost income. Second, if decisions are to be based on data, a comprehensive soil monitoring system needs to be established that would also be useful to farmers themselves. Third, knowledge needs to be improved. Latvia University of Life Sciences and Technologies, our research institutes and LLKC also carry out trials and demonstrations, the data from which clearly show that taking care of soil health can provide significant economic benefits. This is particularly important given the current high prices of fertilisers and energy.”
CONTEXT
The objective of the Agricultural Growth Plan 2026–2036:
To increase agricultural output and productivity by increasing agriculture’s contribution to gross domestic product (GDP) by 2 percentage points and increasing agricultural output over 10 years from EUR 971/ha in 2026 to EUR 2,256/ha in 2036, reaching Finland’s current level.
This is to be achieved by:
increasing productivity;
improving competitiveness;
strengthening cooperation throughout the value chain;
improving risk management.
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