Agricultural producers under pressure from prices and complex EU regulations
Several Estonian agricultural producers have announced production cuts. Small producers especially are plagued by price pressure, European requirements and uncertainty.
There is no fancy machinery at the Saidafarm Dairy to mix cheeses, curds and yoghurts. Fresh products are made by hand in the morning to head out to stores in the afternoon. The milk comes from the local cowshed across the courtyard the inhabitants of which are not counted in their hundreds and milk production is half of the national average.
Small producers like Saidafarm have been experiencing great difficulties in recent years. While all buying-in prices have gone up, the consumer cannot afford the final product's price advance. This makes it difficult to stay competitive when producing relatively small quantities.
"A sensible man avoids bankruptcy as you'll spend the rest of your life running from creditors. Rather, it makes sense to go with layoffs and dial back in a way that still leaves you with something. We have dialed back 25 percent compared to last year, a third even. We used to employ 30 people, while we're down to 20 now. We're just waiting to see what comes next," said Juhan Särgava, head of Saidafarm.
Fifty kilometers from Saidafarm, in Kehtna, there are more cows and twice the milk production of the small farm and dairy. But despite profitable milk production, the local meat processing industry had to be shut down and eggs will be the next to go.
The Kehtna Manor (Kehtna Mõis) hen house is half-empty and will produce its last egg on April 12. The last few thousand birds will be sold in two weeks' time.
"Producers who failed to invest in their main business in time are struggling. We have invested in our main activity, our milk and plant cultivation are profitable, while our chicken and meat processing businesses are too small to survive in the currently complicated competition situation. We cannot compete with large and efficient egg producers and meat processing industries," said Siim Riisenberg, CEO of Kehtna Mõisa OÜ.
Kerli Ats, executive manager of the Estonian Farmers Federation, raises beef cattle and is not shy to admit that her Luigeveski Farm is also struggling.
"We need to disperse risks, meaning that we need to diversify our activities. It's basically a choice between diversification or multiplying the size of your business, while the latter requires more investments. I don't think I'm ready to take that risk today," Ats said.
The multiplication strategy seems to be characteristic of the dairy sector where larger companies are buying up smaller ones to survive.
"It is painful to watch when a liter of milk in a plastic bag can be had for 57 cents in shops. I believe milk should not be cheaper than water. From the point of view of producers, a liter of milk should cost the same as a liter of gasoline, or €1.70. Unfortunately, traders use the cheap price of milk to attract customers to their stores," Riisenberg noted.
Next to the effects of the economy, farmers are also at the mercy of EU regulations and confusing agricultural support schemes, which a farmer finds almost impossible to navigate on their own.
"All this red tape, which has been rendered so complicated that half of it should be thrown our right away, followed immediately by half of the remaining half. Things should become a lot simpler, so that a person who has to milk a cow or drive a tractor wouldn't have to remember a Bible's worth of rules based on which to plow and sow, how close they can get to a river or how far they need to stay from a bush," Juhan Särgava said.
The Estonian Farmers Federation was present when the new Common Agricultural Policy was finalized and agricultural support was on the agenda. Why not stand up to insensible bureaucracy?
"We could not foresee the effect it would have on agricultural producers when applying for support. I can given a simple example in that if an organic grain farmer had to apply for support form three different measures during the last program period, this had grown to eight in the current one last year," Kerli Ats said.
Estonia is no exception here as evidenced by months of farmers' protests all over Europe. The latter have proved effective insofar as a proposal to reduce the administrative burden on farmers was supported by member states this week.
"All of the previous agreements have been reopened. I find it a unique moment in the EU when it has been said, also on the highest level, that we need to do something right now to help farmers who have taken to the streets all over Europe, as well as those in Estonia," Estonia's Minister of Regional Affairs Madis Kallas (SDE) said.
The plan is to first reduce red tape. Secondly, critical sectors will be mapped and more support earmarked for them.
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Editor: Marko Tooming, Marcus Turovski