Lithuanias agriculture stumbles into competitive market

25 November 1998

Lithuania’s agriculture stumbles into competitive market

THE Financial Times reports on Lithuanias difficult transition from state- to privately-owned agriculture.

The papers report that farmers are still dealing with a mass of problems almost 10 years after “de-collectivisation”.

These include blurred land ownership, making it difficult for farmers to obtain credit, and tiny plots of land – the average farm size is 11.9ha (29.4 acres).

The Government has made significant tax concessions for farmers with agriculture-related firms facing a tax rate of just 10%.

Farmers who make more than half of their income from farming do not pay any income tax. But the country is still a net importer of agricultural products.

The Governments application to join the World Trade Organisation could provide the economy with a welcome boost.

The World Bank says Lithuanias Government must stop running credit programmes if it is to develop an internationally competitive sector.

It also advises the Government to create mechanisms for introducing financial services into the rural economy.

The Financial Times also reports on Rokisko cheese factory, which has used the usual credit facilities available in a Western economy to develop its business.

• Financial Times 25/11/98 page IV (Lithuania supplement)