Photo: Akim Aginsky / Pulitzer Center

Kristina Rizga of the Pulitzer Center on Crisis Reporting writes about how farmers are coping with the difficult economic times in Latvia, where the economy is expected to contract by 16.5 percent this year.

Watch the Worldfocus signature story “Empty stores, offices tell tale of Latvia’s economic fall.”

Small Farmers Weather the Economic Storm, Large Farmers Hit Hard

Sixty-year-old farmer Marite Martuzane wakes up every morning at 4:30 and rarely goes to sleep before midnight. Unlike most sectors of the Latvian economy that have slowed dramatically, many small farms that sell directly to their clients have more work than they can handle.

“We are somehow doing better in the economic crisis,” Martuzane explains with a broad, warm smile, as she gives us a tour of her small farm in Adazi, a rural town about 30 minutes away from the capital city of Riga. “People buy more at farmer’s markets now to save money.”

The daughter of a small apple grower at the Riga Central Farmer’s Market, Kristine Brinka, confirms Martuzane’s sentiment. The apples grown on their land in Ikskile always sold well, she says, but they are now selling even more than last year. Vallija, who sells fish caught by a local fisherman, has similarly noticed a spike in her sales this year.

Martuzane works on the farm with her two kids, Liga and Janis, as well as Liga’s partner, Alvis Kigelis. Together, they take care of 12 cows, 40 pigs, dozens of chickens, ducks, and geese, as well as tend to three large greenhouses and an expansive open garden where they grow vegetables and flowers. They own about 34 acres and lease 70.

The countryside with small farms like Martuzane’s always held a special place in the Latvian culture and is still strongly associated with the idea of being Latvian. When Latvia proclaimed its independence in 1918, agriculture was the largest and strongest sector of the economy, and it employed about two-thirds of the work force. When the Soviet Union occupied Latvia in 1945, aggressive industrialization and forced relocation of labor, particularly in the ’60s reduced agriculture’s share of the labor force to about 16 percent by 1990. When the Soviet system fell apart, feed shortages and rising cost of farm equipment created a decline in agricultural production in Latvia.

Today, about nine percent of the 2.3 million total population of Latvia are still engaged in agriculture, compared to the average of about 2.5 percent in the E.U. Close to two thirds of all farms in Latvia are similar size to Martuzane’s — using less than 50 acres, or owning up to 5 cows.

Just like 20 years ago, when Martuzane first started working on this farm, everything they produce is organic and free range. They smoke their own sausages and bacon, and make their own cheese. According to the Latvian Ministry of Agriculture, the number of certified organic farms like Martuzane’s have grown from 38 in 1998 to 4,105 in 2006.

Martuzane thinks the fact that they are small and sell a diverse range of products has enabled them to weather this economic crisis better than bigger, more specialized farms in Latvia. “If we can’t sell meat, we can usually sell cheese,” she explains. “If cheese is not selling, I can sell vegetables.”

The other reason they are doing well, according to Martuzane, is low debt. They took out a small loan to buy two used cars, but resisted taking out larger loans to buy new equipment or expand their facilities.
Unfortunately, profitable farmers like Martuzane, are rare exceptions in the difficult economic times. Even before the economic recession in Latvia, small farmers who lived further away from the wealthier Riga region were among the poorest in Latvia.

But it is the middle and large farmers that are among the hardest hit by the economic crisis right now. After Latvia’s entry into the E.U. in 2004, many small farmers decided to expand. Encouraged by increasing export opportunities, growing GPD and attractive investment loans, large farms increased by 25 percent from 2005 to 2007. About half of their investments were made into facilities and modern equipment.

As Kigelis watched many fellow farmers taking out loans and expanding their operations, he felt that some of the growth was excessive. “I feel like Latvians tried to attain in 10 years what Europeans were building for 40,” Alvis reflects. He also recalls “Aizkraukles Banka” becoming especially aggressive in the countryside with their offers to seemingly attractive loans.

As the global financial crisis spread, the prices of milk and grain — two of the primary agricultural products in Latvia — dropped dramatically. “It’s very hard for large farmers right now, who focused on producing one thing like milk or grain, and took out large loans to expand their facilities,” Liga explains. She mentions the tragic suicide of a large farmer and grain grower, Gatis Karlovs, last year, as an example.

In February of this year, Karlov’s son — along with over 1,000 other primarily large farmers — blocked the streets of Riga with their tractors to protest government policies toward farmers. The protest was one of the largest visible displays of outrage since the economic recession and forced the resignation of Martins Roze, Latvia’s then-agriculture minister.

Martuzane thinks that Latvian farmers, big and small, are being undercut by subsidized, low-cost imports from other E.U. nations. In 2006, the Latvian Ministry of Agriculture shared Martuzane’s sentiment in their yearly report, “Notable differences in the amount of support of the EU market distorting the competition and depriving Latvia of the possibility to use its competitive advantages.” When a New York Times reporter recently expressed this concern to E.U. representatives, they countered that the country’s agricultural program was proposed by the Latvian government itself when Latvia joined the bloc.

Despite the difficulties with E.U. imports, Liga and Marite Martuzane think that joining the E.U. was a positive development overall, at least for small farmers. Liga feels that the E.U. regulations benefited small farmers by overwriting previous Latvian government policies that generated burdensome red tape and corruption. “Before the E.U., I had to fill out six different documents, buy all this extra equipment, and build expensive storage spaces just to milk two cows,” Liga notes.

Marite Martuzane agrees with Liga. Even though she enjoyed the most income from her work back in the Soviet era, there was a significant caveat she explains: “I couldn’t buy anything with my money.” Now, she says, “I have less money, but I can buy anything I want and can get on the airplane to Portugal tomorrow!”

Martuzane proudly explains and rattles off the names of 12 different countries she has visited in Europe since Latvia regained independence. “I also feel more free,” she adds. “It’s difficult to articulate how, but I do.”

Liga and her partner Alvis are concerned that the economic crisis could get even worse this winter, as a growing number of Latvians lose their jobs. Liga can already tell people are preparing for a hard winter. Pigs and potato seeds are sold out in her parish. But Liga says that the majority of farmers like them, who are small and relatively debt-free in Latvia, will survive. “At the very least we know that we will always have enough to feed ourselves.”

- Kristina Rizga

Worldfocus special correspondent Daljit Dhaliwal and producers Sally Garner and Ara Ayer report on the scope of Latvia’s fall.

“Freedom of the moment:” An Estonian boy cries out at the apex of a climbing tower in Tallinn. Photo: Ara Ayer

Symbols of ethnic pride abound in the Baltics. Whether it’s Riga’s Freedom Statue, Vilnius’ Gediminas Castle or a little boy exalting on a climbing tower in Tallinn, no definitive monument stands to represent the ongoing struggle for independence in Latvia, Lithuania and Estonia.

The Baltic states may have traded membership in the former Soviet Union for entry into the European Union and NATO, but they struggle to maintain their separate identities. That they exist at all is a testament to the fortitude of their people. Before the Soviet onslaught, empires of Poland, Prussia, Russia and Scandinavia all tried to incorporate one or more of the Baltic states.

Possessing a prized coastline — an approximate collective land mass of two West Virginias, Vermont and New Hampshire, with a population less than New York City — the Baltic states remain vulnerable. Producing stories with Worldfocus colleague Sally Garner, I found each country has different approaches to self-preservation.

Up until the global economic downturn, Latvia had the fastest growing economy in Europe. It quickly shed its communist past and looked for security and success in the credit and economic structures of the West. Yet rather than providing safety and sustainable growth, Western banking policies and an awakened Latvian consumerism exposed the country to excessive risk.

Now, Latvia teeters toward bankruptcy. Street protests, government instability and rising unemployment are the hallmarks of a once-proud nation. In our reporting, we spoke with a Latvian on the brink of losing his job. He said Latvia is failing because it forgot itself, its strengths and limitations, in the headlong rush to become part of Europe. Disenchanted with a dream deferred, he says he’ll join thousands of his countrymen leaving Latvia for a better life. With over 40 percent of Latvians being of Russian, Ukrainian, Belorussian and Polish descent, the loss of every ethnic Latvian puts the country in a quandary.

Lithuania and Estonia are in better shape economically, but not by much. The Lithuanian government is investing in language, specifically Lithuanian, to help preserve its national identity. Lithuanian is the official and sole language in matters of law, commerce, government and public life. If you are Lithuanian and speak Russian, Polish or German, check your ancestry at the door.

The Lithuanian government has empowered a language police corps to yank down foreign language street signs, correct publications and catch the nation’s newscasters in Lithuanian pronunciation and grammar mistakes. One wonders if such forced obedience will play out in a multilingual world. But then again, they aren’t trying to save the world — just Lithuania.

Estonia by and large is the most technologically-evolved of the trio. The country has placed its future in the digital age by building a “state of the art” civic Internet service. Via computer and phone, one can view everything, from a child’s report card to a live press briefing from the Estonian prime minister. A specially-encrypted Estonian identification card with an embedded digital signature allows Estonians to securely authenticate legal documents, vote, even pay for parking — all online. Estonians believe such Internet access makes for transparent government, responsible citizenry and better business — touchstones of resiliency in uncertain times.

No one can fault these small countries in their ongoing attempts to ensure their existence. Possibly the most important thing each is doing to protect themselves is participate in NATO, United Nations and U.S. coalition military missions. All sent combat troops to Iraq and all are continuing to send troops to Afghanistan. Though their collective deployment has never exceeded 2,000 troops per mission, their commitment to building modern armies and strengthening their ties with NATO cannot be questioned.

The reemergence of Russia as a world power has the Baltics — people, politicians and military men — on edge. Speaking softly but carrying a NATO membership may be the best defense and innovation in preserving Baltic identity and integrity yet.

- Ara Ayer

During the 50 years of Soviet occupation, Lithuanians clung to their language as a not-so-quiet form of rebellion. Today, as Worldfocus correspondent Daljit Dhaliwal and producers Sally Garner and Ara Ayer report, they want to protect it — not from an occupying force, but from other languages.

Estonian Internet guru Linnar Viik explains Estonia’s quick technological development and shares lessons learned from 2007’s massive cyber-attack.

As Worldfocus correspondent Daljit Dhaliwal and producers Sally Garner and Ara Ayer report, Estonia is quickly becoming E-stonia.

Watch an extended interview: Estonia’s Internet guru Linnar Viik shares cyber strategy.

The small eastern European nation of Estonia, population 1.3 million, has sent troops to Afghanistan, just as it did in Iraq.

Worldfocus correspondent Daljit Dhaliwal and producers Sally Garner and Ara Ayer report on Estonia’s military after Soviet occupation and its alliance with the U.S. in Afghanistan.

Read producer Sally Garner’s blog from the field: Newly-minted Estonian soldiers head to Afghanistan.

Riga’s central market. Photo: Sally Garner

Rooftops in Riga’s old town section. Photo: Sally Garner

Worldfocus producer Sally Garner is in Riga, Latvia, reporting on the country’s floundering economy. She writes about how the financial crisis has impacted daily life in Latvia.

The headlines read: “Europe’s Sickest Country,” “Latvia’s Government Collapses,” “Europe’s Most Extreme, Dramatic Economy” — but walk around Riga, Latvia’s capital city, and you’ll see people heading to work, stores full of shoppers and banks open for business. It’s a recession. It’s Eastern Europe. And Latvians are holding their breath.

Unemployment is growing. The economy is now shrinking faster than in any other European country, but in the central market we found people choosing from the mountains of fruit and vegetables, checking out tables full of cookies and candy, buying bunches of flowers and even picking out sweaters and coats. They’re worried, but they say they remember harder times under Soviet rule.

This is a country proud of its 18 years of independence from the Soviet Union and willing to fight to save itself in the current economic crisis.

As we walked around Riga’s old town with its cobblestone streets and “pedestrian only” signs, we saw “for rent” signs — and while many people didn’t want to talk about the economy, most say they know someone who’s lost a job in just the last few months.

We’ve only been here two days, but we’ve heard bankers, small business owners, students and engineers all tell us that Latvia is in trouble. They just want us to know it’s trouble they share with the rest of the world, not theirs alone.

We’ll be back in Latvia next week. Tomorrow we head to neighboring Estonia, and later to Lithuania where we’ll see for ourselves what the headline “Once leaders, Baltic countries in deep slump” means in the countries that were dubbed the “Baltic Tigers” when money was flowing and times were good.

- Sally Garner

Watch for Worldfocus’ upcoming series exploring the Baltics in the coming weeks.