Efficiency analysis of agricultural sector in Latvia compared to other EU countries, based on FADN data
2007
Veveris, A. | Leimane, I. | Krievina, A.
Under conditions of the EU single market of commodities, services and labour, the matter of production competitiveness on the European scale is very important also for Latvian agriculture. It is essential that Latvian farmers could ensure efficient production at a sufficiently low cost level. The objective of the research performed was to reveal the strengths and weaknesses of Latvian agriculture in terms of their cost structure, by analysing the economic information of agricultural holdings, using FADN standard results. The research was mainly performed by using methods of statistical analysis and logically constructive analysis. The analysis enables assessment of the efficiency of agricultural production in Latvia at present, as well as the awareness of the opportunities for increasing the efficiency of production. When comparing the cost level in Latvia and in 14 selected Member States of the EU, Latvia has one of the highest levels of intermediate consumption, while most crucial is the low level of general production efficiency, measured as the value added per work unit (AWU). This indicates that there is a lack of modern technologies, which presume also higher labour productivity. In the light of comparatively lower labour remuneration and land use costs, which ensured the production with smaller necessary capital intensity, agricultural production in Latvia has been competitive in the first years after joining the EU. However, due to the expected increase of these costs, the competitiveness could be lost in the next 2-3 years. In order to avoid this, efficient use of the resources becomes crucial.
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