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