ZSA discusses with the Latvian Agricultural Society and DNB Bank about current events in agriculture

On Friday, January 15, the Farmers' Assembly held an open council meeting, where, together with the director of the Rural Support Service (RSS) and experts from DNB Bank, we discussed the past year in agriculture and the goals to be achieved in 2016. In the talks, the RSS Director Anna Vītola-Helviga outlined two main issues – the planned changes for submitting payment applications for the 2016 season, as well as current events related to submitting project applications for investment support. In turn, representatives of DNB Bank listened to farmers' opinions on the provided lending services, as well as provided insight into the development prospects of the sector.
The Director of the Latvian State Agency, Anna Vītola-Helviga, praised the work of the service and entrepreneurs in the previous planning period, when the funding allocated to Latvia was used in full.
The LAD has set an ambitious goal for 2016 to work much faster and more efficiently – to pay out area payments to a larger number of clients faster than before. To implement the above, the LAD intends to promote the use of the electronic application system (EPS). The current two-system application (paper and electronic applications) requires both considerable resources and a significant amount of time. A lively discussion turned to the clarification of the upcoming rural blocks and landscape elements. As before, problems are expected in connection with the overlapping of marked areas. However, the LAD offers a solution to this problem – the overlapped territories will be visible in the system, they will be changeable and negotiable between the owners.
DNB Bank economics expert Pēteris Strautiņš told the meeting participants that the prospects for the near-term development of the Latvian economy are quite good, growth will likely accelerate this year and next. However, agriculture will be more affected by the situation in global product markets. A rapid increase in product consumption is not expected in Latvia, at least in terms of volume. As incomes grow, people will be willing to pay more for quality and product image. According to statistical data, over the past 20 years, food purchasing power — the amount of products that can be purchased with an average salary — has grown rapidly, for some products even several times. However, the amount of food consumption per person has not changed much during this time, with sales of meat and dairy products increasing, but bread and potatoes decreasing. Therefore, farmers' incomes can be increased by an increase in exports, as well as local processing.
P. Strautiņš also emphasized that in the near future farmers will face a rapid increase in labor costs. Internal migration is expected to increase. As housing availability in the Riga region improves, the labor surplus currently observed in some regions will disappear, leading to an increase in wages in these places.
Those present were introduced to DNB's offer specifically for farmers – a leasing loan, which enables farmers to purchase fixed assets in a simple and convenient way, even now, when the new European Agricultural Fund for Rural Development (EAFRD) investment project repayment procedure has come into force in cases where a financial leasing product is used. By concluding a leasing loan agreement with DNB Lēzings and receiving co-financing from the Latvian State Agricultural Society, the client will, as before, be transferred the entire co-financing amount in one go after the purchase of the object and submission of the necessary documents.
At the meeting of the Farmers' Council, Green Public Procurement was mentioned as a good example of entrepreneurship, which creates good competition conditions for Latvian producers. At the same time, producers must be careful when cooperating with wholesalers so that the offers obtained from local producers are not used only formally - for the competition, but also for the actual sale of products.
When discussing lending options, the Farmers' Council expressed the need to review loan repayment terms, interest and principal payments for dairy farms.