Agriculture is doomed in the energy war

Agriculture is doomed in the energy war
Agriculture is doomed in the energy war

Support would help

The first wave of food price hikes followed the start of Russia’s war in Ukraine. Both these countries together account for more than 30 percent. of world trade in wheat and barley, 17 percent. – corn and more than 50% – sunflower oil, seeds and pomace for animal feed. With the cessation of exports, the population of not only Lithuania, but also a large part of the world felt the price jump. Economists hoped that the Russian-led food price war would end after all in the spring and summer. It’s over. But the same Russia started an energy war in the summer. It didn’t take long for energy producers to take advantage of this.

When the newspaper asked economists how it would be possible to soften the impact of product prices, one answer was given: state support.

“The state could contribute by improving people’s financial situation – basically by reducing the personal income tax or increasing the amount of tax-free income,” said the well-known economist Aleksandras Izgorodin. – Another option is direct compensation to the business so that it does not raise prices. The second path means moving towards a more regulated market. If the state found funds and allocated subsidies to farmers due to losses, due to the increase in the price of fuel and fertilizers, it would certainly help to stabilize prices and reduce inflation. Of course, then the country would have to borrow more and this would mean a bigger budget deficit. In conclusion, I can say that reimbursement is possible, but it would cost the state.”

ŽűM does not have a plan

What aid package can be expected for the agricultural sector? The Rural Affairs Committee of the Seimas recently, on September 14, started the parliamentary control of the support planned by the Ministries of Agriculture (ŽŪM) and Energy (ENM). It turned out that there is none yet. It is recommended to use preferential loans or loan guarantees, to look at investment projects.

Agriculture is completely discriminated against industry. The Ministry of Economy and Innovation (EIM) has prepared 1 billion euro investment program until 2023. end, ENM will also allocate 1 bln. preferential loans to companies that will build power plants using renewable energy resources. For some reason, nothing will happen to farmers under these programs.

Farmers complain that until now they cannot build solar power plants as natural or legal persons using the same support measures, they are given the right to use green energy only for the object where the solar power plant is installed. Chairman of the Chamber of Agriculture (ŽŪR) dr. Arūnas Svitojus said that he misses the steps of ENM, they are very late: he himself talked to the minister about this problem and heard the assurance that farmers will be able to connect to the networks already this year.

According to A.Svitojaus, we will find solutions by working together, sharing ideas for solutions in the same way as the ball is passed in basketball. He reminded that we have the resources, but the ministries should cooperate closely with each other, with the Seimas, and with social partners.

The Chairman of ŽŪR drew attention to the fact that farmers’ strikes are starting in European capitals, but Lithuania together with Latvia and Estonia agreed not to contribute, not to aggravate the situation and not to feed the Kremlin’s propaganda mill. However, the situation in all sectors is very complicated.

The most difficult for birders

Representatives of poultry and egg farming companies are sounding the alarm that without state intervention and urgent support, this Lithuanian agricultural sector of national importance will completely collapse.

“We are hostages of a complicated geopolitical situation, we can no longer predict future gas or electricity prices. The worst thing in this situation is the inefficiency of the Government – poultry farming as a branch of Lithuanian agriculture does not exist and is not included in any form even in the ŽŪM 2023-2027. strategic plan. This is a scandalous, systematic destruction of the Lithuanian poultry sector,” said Gytis Kauzonas, director of the Lithuanian Poultry Association.

He claimed that this winter will be critical – poultry farmers will not be able to pay millions of electricity bills, and it is impossible to stop production because of millions of live chickens. Poultry farmers drew attention to the fact that in Lithuania there is support money for snail, sheep and goat breeders, and their sector is on the fringes of agricultural policy.

Half a year ago, the members of the association met with Minister Kęstučius Navickas and asked to mediate together with ENM and the Ministry of the Environment (MoE) so that the energy-intensive branch of the economy would be allocated measures to maintain the continuity of live poultry farming, despite the expected increase in energy prices. Until now, neither the Ministry of Agriculture nor other ministries have prepared a single viable support scheme, nor do they have any plan to help the farm.

“The poultry sector does not exist in the plans of the Ministry of Agriculture – in the approved strategic plan of Lithuanian agriculture and rural development from 2023-2027. allocated 4.2701 billion no funds have been allocated to the poultry sector”, disappointed representatives of the poultry sector.

Shows the example of Germany

Algis Baravykas, the director of the Lithuanian Pig Breeders’ Association, who was interviewed by the newspaper in March, said that the situation of pig farming in the country is very bad, although the state had provided support for this sector. True, not because of Russia’s war in Ukraine and not because of rising energy prices. Already a year ago, pork purchase prices were so low that costs far exceeded income. In other words, pig farming had become completely unprofitable.

Farmers’ strikes begin in European capitals, but Lithuania together with Latvia and Estonia agreed not to contribute, not to aggravate the situation and not to feed the Kremlin’s propaganda mill.

According to A. Baravykas’ calculations, the losses of the sector, accumulating since 2020, already reached about 23 million in March. euros, although ŽűM recognized only 14.7 million. euros: “If the costs are higher than the prices, which is the case, farms in Lithuania will no longer keep pigs (they are not charity funds that would buy grain at a very high price and sell pork at a very low price). Then we will eat imported meat, by the way, it has been like this for a long time. However, regardless of whether it is Lithuanian or non-Lithuanian pork, I think it will definitely be three times more expensive. It cannot be otherwise if grain and other things have doubled in price.”

From the beginning of spring to the autumn, the pig farming sector, like others, was also depressed by the consequences of the energy war, with significantly increased costs. The Association of Lithuanian Pig Breeders on August 18. appealed to the Government, EIM, ŽŪM, Seimas Economic and Rural Affairs Committees for support. The European Commission’s communication on state aid measures intended to support the economy in crisis conditions in response to Russia’s aggression against Ukraine gives them hope.

Some countries have already taken decisions on aid to pig farmers. Here is Germany on September 14th. “released” 180 million euro aid scheme. Almost half of the support is earmarked for pig farmers, followed by poultry and vegetable farmers, etc. The head of the association, who examined the German temporary state aid scheme, says that they have provided a maximum of 15 thousand for one company. the amount of support in euros – in order to spread the support more widely. However, the structure of the farms there is different, the farms are smaller, and the energy crisis is less acute.

According to A. Baravykos, first of all, one should not waste time talking about what has not been done before, but clearly assess which sector suffers losses due to the higher price of electricity, and prepare a plan as soon as possible (a resident at home may be able to watch less TV or turn on lights less, but animals, birds, mills, bakeries need a constant energy supply). Second, we need a clear forecast – what will happen if we do nothing.


The article is in Lithuanian

Tags: Agriculture doomed energy war

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