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While there has been a decline in the added value of the
agricultural sector, it is still important in the economy of
Latvia. About 15% of labour force are employed in agriculture
(17-18% including forestry, hunting and fishing. Its contribution
to the GDP has been gradually decreasing, from 10.8% in 1995 to
4.5 in 2000. The total production during this period has decreased
yearly on average by 7%, but in the year 2000 for the first time
an increase (by 3.3%) was observed.
A rather low contribution to the GDP and the relatively high
employment in agriculture indicate low efficiency of the sector.
In the European Union, the added value per person employed in
agriculture is 10 times higher than in Latvia. The causes of low
efficiency are mainly small farm size, old equipment, ancient
technologies, and the low level of specialization.
The low efficiency in the agricultural sector is also coupled
with eco-efficiency: while the amounts of applied pesticides and
mineral fertilizers have increased during the past 5 years, the
added value of the sector has changed only slightly, with a
declining tendency.
Between the mid 1990's and 1999, cultivation of plants
has dominated in agriculture. In 2000, production in plant
cultivation increased by 1% (compared to that in 1999). During the
same period, and livestock breeding increased by 10%, bringing it
into a leader position with 51.5% of the total.
No stable trends have been observed in growth of cereal crop
production, even over a 10-year period. Both the productivity
and production of cereal crops show synchronous fluctuations
between years.
Numbers of livestock and poultry have declined in unison,
much more rapidly than the decrease in the population of Latvia.
Latvia has not been able to regain external markets since the time
of the centrally planned economy, when the agricultural system of
Latvia had an important role in supplying products to the
industrial-administrative centres of Russia.
- Agricultural land-use coverage was 38.5% in the
country: arable land - 28.7%, meadows and pastures - 9.4%, and
permanent crops - 0.5%.
Export of food products has been steadily decreasing. In
1995, food production contributed 16.4% of the export, compared to
5.4% in 2000 (decline by about 2/3) after the Russian crisis. The
total export/import balance for agricultural goods is negative,
and is continuing to fall (-10.3% in 1995 and -11.8% in 2000).
Price liberalization led to a rapid decline in application of mineral
fertilizers in Latvia between 1992 and 1995. Compared to the
initial levels in 1992, which exceeded the levels in the European
Union by about two times, the amounts applied per hectare
decreased to 1/3 of that in the European Union. Since 1995,
application of mineral fertilizers and pesticides has increased.
Mineral fertilizer application increased particularly between 1995
and 1996 (by 17%) and in the subsequent year (by 26%). Growth of pesticide
consumption was 150% between 1996 and 1995, and 100% between 2000
and 1999. This increase in agrochemical use much surpassed the
increase in productivity. During the same period of time, the use
of organic fertilizers declined.
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