Farmers' incomes are rising. Who can we thank?

Last year, farmers in Latvia had the second largest increase in cash income, assessing all 28 member states (see graph), according to a rapid assessment by Eurostat. Experts also explain this growth with the legalization of wages, the exit of small farms from the market, which in calculations raises the average income of employees in the sector. However, those employed in agriculture still receive lower wages than employees employed in many other sectors of the national economy. It will take many more years to reach, for example, the level of Germany, where last year the decrease in cash income compared to the previous year amounted to more than 37%. There is also a more optimistic conclusion – we are still approaching the EU average cash income level in agriculture, because last year it fell by 4.3%.

Researchers' explanation

Researchers at the Institute of Agricultural Resources and Economics believe that the increase in cash income in Latvian agriculture last year was caused by an increase in agricultural product production by 8.7% (an average decrease of 2.5% in EU member states). Farmers and other employees in the sector would have deserved even more if not for the large drop in base prices of 4.5%. The increase in total agricultural income was also contributed to by a slight drop in the prices of individual production resources, the institute says. Researchers draw attention to the fact that last year the largest increase in cash income was provided by the rapid increase in crop production (we told about the record grain harvest in Latvijas Avīze), which compensated for the decrease in prices for animal products and especially milk. The increase in the quantity of crop products in Latvia last year was estimated at an average of 15%, while the prices of crop products were stable, their increase was estimated at 0.2%. The fastest growth in crop production was in wheat production, rapeseed cultivation, potato cultivation, and fruit growing.

The growth in animal product production was approximately 2%, but producer prices fell by approximately 15.5%. The steepest price drop was for milk – 25.5%. Researchers point out that state and EU support compensated farmers for part of this price drop.

Previous surveys conducted by Latvijas Avīze show that last year the most complex problems had to be solved by dairy producers and pig farmers. Those working in these sectors cannot hope for a rapid recovery from the crisis this year either, forecasts show.

Other results

Last year, the largest drop in cash income in agriculture, calculated per employee, was in Germany and Poland – 23.8%. In turn, in the period from 2010 to 2025, the largest drop in cash income was experienced by Finnish farmers, who last year received 42% less money than in 2010. In Germany, farmers' cash income during this period fell by 25%. In Latvia, cash income from agricultural activities increased by 12.7% in these six years, in Estonia – by 30.7%, and in Lithuania – by 27.3%. In Poland, the cash income of people employed in agriculture during this period fell by 15%.

In EU member states, the largest decline last year was in sugar beet production – 26%, corn production – 24.5%, fodder crop production – 7.6%, olive plant production – 5.3% and barley production – 1.8%. Among crop products, production increased in the olive oil, fresh vegetables, fruit and wine sectors.

The decline in livestock production by 5.9% was influenced by a decline in the value of milk produced by 14.9% and a decline in pig farming by 8.9%, which could not be compensated for by growth in cattle breeding, sheep and goat breeding, egg production and poultry farming. Production costs fell by 2.4% last year - due to lower energy costs and a drop in feed prices, estimates show.

Opinions

Still plenty of room to grow

Maira Dzelzkalēja-Burmistre, Vice President of the EU farmers' umbrella organization "COPA": “Compared to other EU member states, where the industry faced unfavorable conditions, the opposite was observed in Latvia – we harvested a record-breaking grain harvest. Over the past ten years, cash income per farm in Latvia has increased by 45%. The reason is the larger managed areas, the increase in productivity. In old Europe, cities and infrastructure are developing at the expense of agriculture, and productivity indicators are stable. Latvian farmers have the opportunity to grow at the expense of agricultural areas. Cash income per person employed in the industry is only 30% below the EU average. Work efficiency must be improved.”

Miervaldis Mazkrists, owner of the Dobele municipality farm “Meldrāji M”, grows cereals, rapeseed and potatoes: "The year was really better, we grew larger crops, we didn't have to sow wheat and rapeseed in the spring like we did a year earlier. Although the quality of the grain was lower than a year earlier, the good harvests compensated for this price drop. The favorable market situation in potato growing was most likely due to the poor natural conditions in Poland."

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Information prepared by:
Uldis Graudiņš
Editor of the economics department of the newspaper "Latvijas Avīze"