Zin.publikācijas

Efficiency analysis of agricultural sector in Latvia compared to other EU countries, based on FADN data

 Armands Vēveris, Latvia State Institute of Agrarian Economics, Researcher

Ieva Leimane, Mgr. soc.sci., Latvia State Institute of Agrarian Economics, Researcher, Project Leader

Agnese Krieviņa, Mgr. soc.sci ., Latvia State Institute of Agrarian Economics, Economist

Summary

In the conditions of the EU single market of commodities, services and labour the matter of production competitiveness in the European scale is very important also for Latvian agriculture. It is essential that Latvian farmers could ensure efficient production at sufficiently law cost level. The objective of the research performed was to reveal the strengths and weaknesses of Latvian agriculture in terms of their cost structure, by analysing the economic information of agricultural holdings, using FADN standard results. 

The research was performed mainly using the methods of statistical analysis and logically constructive analysis.

The analysis enables the assessment of the efficiency of agricultural production in Latvia currently, as well as ensures the awareness about the opportunities for the increasing of production efficiency.

When comparing the cost level in Latvia and in 14 selected EU countries, Latvia has one of the highest level of intermediate consumption, while the most crucial is low level of general production efficiency, measured as value added per work unit (AWU). This indicates that there is a lack of modern technologies, which presumes also higher labour productivity.

In the light of comparatively lower labour remuneration and land use costs which ensured the production with smaller necessary capital intensity, agricultural production in Latvia has been competitive in the first years after joining the EU. But due to the envisaged increase in these costs the competitiveness could be lost in next 2-3 years. In order to avoid this, the efficient use of the resources becomes crucial.

Key words: efficiency of agricultural production, revenues, costs, the value added, economic size, subsidies.