Chapter 2

2. Implementation Strategy

2.1. Context of the Strategy: Socio-Economic Issues and Institutional Factors

2.1.1. Socio-Economical Situation in the Rural Areas of Latvia

During the land reform and privatization, the former collective farms were divided into smaller private farms or transformed into shareholder owned companies. Now the private farms are the comer stone of the Latvian agriculture (see Table 1).

Table 1. Development of farms during 1996 2000.

Nr	Type of farms	Number of enterprises					Proportion of enterprises by area ofland, as percentage of the total area
		1996	1997	1998	1999	2000	1996	1997	1998	1999	2000
1	Private farms	94, 905	95, 167	97. 210	101, 167	101, 158	58.6	56.5	57.0	58.8	59,0
2	Houshold plots	156, 600	155,691	153,699	147,366	147, 048	32.5	29.6	29.1	28.6	29,0
3	Private subsidiary farms	98, 582	51,610	28, 831	17, 186	16, 455	3.9	2.4	2.5	1.5	1,0
4	Specialized state companies	81	84	161	644	643	0,7	0,3	0,4	0,3	0,0
5	Other agricultural use incl. shareholder companies	1, 105	1, 763	11, 984	24,777	24, 370	4,2	11,2	11.1	10,7	11,0

	Total	351.273	314.315	290.700	391.140	289.674	100	100	100	100	100

Data source: SAPARD, 2000

The privatization was based on the former historic ownership rights. However, the newly established farms have a relatively small acreage and fields are often non-consolidated that decreases fanning efficiency. In the year 2000 the average area of a farm was 24.3 ha with an area of agricultural land of 14,2 ha. About 77% of the farms have an acreage smaller than 50 ha. A large number of farms (38%) have an acreage of 2 20 ha, which is not enough to ensure ability to compete in the market production of grain, milk, meat, and other agricultural products. These farms have a low income level and produce only for self-consumption.

Table 2. Number of farms by total land area and number of parcels

Farm area, ha	Average farm area, ha	Number of farms	Per cent of total area, %	Number of farms by number of parcels
Farm area, ha	Average farm area, ha	Number of farms	Per cent of total area, %	1	2	>3
Less than 2,0	0.9	36, 697	1	31, 679	4, 173	845
2,1- 5,0	3.6	37, 052	4	25, 414	8, 020	3,618
5,1- 10,0	7.4	41, 632	10	24, 082	11, 236	6,314
10,1- 20,0	14.6	48, 113	23	24, 146	14, 371	9.596
20,1- 50,0	30.2	38, 814	39	15, 882	12, 190	10,742
More than 50,0	71.9	9, 533	23	2, 953	2, 796	3,784
Total	14.3	21,1841	100	124.156	52.786	34.899

Source SAPARD, 2000

Generally, the share of agricultural production of the total economy and the total agricultural production has decreased since 1990 (Table 3). The number of livestock as well as production of meat, milk and grain has decreased drastically by more than 50%. However, still about 17 % of population is employed in agriculture. Thus, the level of employed in the agriculture in Latvia is considerably higher compared with the EU countries (in average -5.3%), except for Greece. The labour productivity in agriculture is very low. It is less than 10% of the EU level measured by the added value per person employed in agriculture. The main reasons are outdated machinery, old technologies, insufficient knowledge, and small-scale farming.

Table 3. Main agricultural indicators in Latvia

Indicator	1990	1991	1992	1993	1994	1995	1996	1997	1998
Share of agriculture in	21.1	21.9	17.2	10.3	8.4	8.9	7.6	6.9	5.7
Share of labour force	15.5	15.7	19.5	18.9	18.6	18.0	17.8	16.6	16.8
Agricultural production, as % of the	-10.2	-3.9	-15.6	-22.2	-20.6	-6.0	-7.4	-2.4	-4.0
Grains, thous. t	1622	1336	1152	1235	901	694	969	1043	970
Meat, thous. t	309	296	246	192	136	123	76	71	71
Milk, thous. t	1.86	1.74	1.48	1.16	1.00	0.95	0.92	0.99	0.95
Sown area, thous. ha	1627	1621	1572	1426	1195	930	986	1003	996
Cattle, thous.	1472	1439	1383	1144	678	551	537	509	478

Source: OCDE, 1999

Therefore, considering the social and economic conditions in the rural areas and the priorities of the development of production, the farmers could find it hard to finance measures necessary for the implementation of the Nitrate Directive.

2.1.2. Basis of the Implementation Strategy of the Nitrate Directive

The implementation strategy of the Nitrate Directive should be based on the following political-economic instruments:

1. Laws and action plans:

	Law on Pollution;
	Regulations of the CofM on the Protection of Water and Soil from Pollution Caused by Nitrates from Agricultural Sources;
	Action Programme of the Nitrate Directive;
	SAPARD plan on rural development.

2. Economic instruments:

	Subsidies;
	Taxes;
	Grants;
	Soft credits.

3. Raising of the public awareness of environmental problems in agriculture:

	Mass media campaign;
	Information;
	Education and training of agricultural consultants and farmers;
	Agreements with farmers' organizations on the implementation of measures on voluntary basis.

2.2. Proposed Scenario(s) and Assumptions for Full Implementation

The implementation of the Nitrate Directive was started in 1994 and still continues in Latvia at the moment:

	Law on Pollution adopted in 2001;
	Regulations of CofM on the Protection of Water and Soil from Pollution Caused by Nitrates from Agricultural Sources could be accepted in 2001/2002;
	Monitoring of agricultural run-off started in 1994;
	GAP Code for Latvia prepared and accepted in 1999.

The implementation model for the period 2001-2008 has been shown in Table 4.

Table 4.Implementation model of the Nitrate Directive

	2001	2002	2003	2004	2005	2006	2007	2008	Assumptions, strengths and weakness
Legislation
Regulations of CofM on the Protection of Water and Soil from Pollution Caused by Nitrates from Agricultural Sources		X							A further development of agriculture will create large farms producing for market. Therefore, farms will be able to invest in environmental protection and comply with the regulations of CofM. The poor financial situation in many farms and lack of subsidies could be an obstacle for the implementation of regulations.
Law on Waters, and relevant regulations (Adoption of WFD)			X						Law on Waters should strengthen the monitoring and establishes water quality limit values; water management and protection based on the basin principles.
GAP Code for Latvia (the revised version)				X				X	Farmers' knowledge and awareness about environmental protection will increase. Due to the lack of financial support the GAP Code implementation could be slow.
Action programme vulnerable zones
Designation of vulnerable zones and implementation of the Action Programme.		X	X	X	X	X	X		The Action Programme shall be implemented in the vulnerable zones. Full implementation of the Action Progamme endangered due to the lack of financing.
Revision of vulnerable zones and Action programme.								X	The allocation of the vulnerable zones could be revised, extended, or the whole country designated as a vulnerable zone. Due to the lack of financing for the Action Programme the extension of the vulnerable zones might be impossible.
Monitoring
Preparation and implementation of the monitoring programme	X	X	X	X	X	X	X		Coordinated and complex monitoring programme for coastal, ground, and inland water to assess agricultural pollution should be implemented. Difficulties to implement the monitoring programme due to the lack of financing.
Evaluation and revision of the monitoring programme.				X				X

2.3. Roles and Investment Responsibilities of Various Actors (State Institutions, Municipalities, and Private companies)

Table 5 depicts the shares of financial participation in the implementation of the main measures of the Nitrate Directive.

Table 5. The financial participation in the implementation of the main measures of the Directive.

	State financing *	Municipal financing	Farmers financing	Other sources
Investments in improvement of manure holding systems in farms	50%		50%
Investments in water protection measures	50%	10%	40%
Investments in monitoring	25%			75 % (WE un GEF project, EU PHARE project, etc.)

* Including SAP ARD financial assistance

2.4. Institutional development plan

The establishment of the Nitrate Board is the major priority in institutional development. The main task of the Board is the coordination of actions and control of the measures implemented by institutions that belong to different ministries (Figure 3). The Ministry of Environment Protection and Regional Development is responsible for the Nitrate Board activities

Figure 3. The functions and the mechanisms of cooperation of institutions involved in the implementation of the Nitrate Directive

The agricultural consultants in the district and municipal level are the weakest point of the institutional capacity .In most rural municipalities there are no consultants on agricultural problems. Agricultural consultants will most likely be available in most localities after the regional reform that will create 102 municipalities. It will facilitate the implementation of the Nitrate Directive concerning the project evaluation, design, implementation, and control.

The regional environmental boards and district inspections are in a similar situation. The employees of boards and inspections don't have sufficient knowledge in agro-environmental issues

It is necessary to establish educational programmes with courses and seminars to prepare experts with relevant knowledge in both of the aforementioned cases.

Several institutions have so far performed water (costal water, ground water, surface water, and agricultural run-off) quality monitoring:

	Institute ofHydro Ecology of the University of Latvia (LU HEI) -the Baltic Sea and the Gulf of Riga;
	The State Geological Survey (VGD) ground water;
	The Latvian Hydro Meteorological Agency (LHMA) -surface water;
	Latvia University of Agriculture (LLU) -agricultural run-off.

It is necessary to establish cooperation and coordination between the different institutions (coordination of all monitoring programmes), e.g. between the ground water and agricultural run-off monitoring. The Latvian Environment Agency has started the necessary preparations for the complex Monitoring Programme to comply with the Water Framework Directive's requirements. All data of the hydrological and hydro-chemical monitoring should be compiled in the Environment Agency and accessible to all institutions involved in water monitoring.

2.5. Methods of Project Prioritization and Implementation

The improvement of livestock manure handling in the whole territory of Latvia and in vulnerable zones especially should be one of the general priorities starting the implementation of the Nitrate Directive, and also for the SAP ARD programme. The manure handling systems are in a critical situation in Latvia according to the EU standards. The measures for their improvement shall take most of the financial and time resources. They include project preparation, approval, financial management, and implementation.

The full adoption of the Nitrate Directive in the Latvian legal system should be finished and the Nitrate Board established in 2001 -2002.

The Action Programme should be prepared and its implementation started in 2002. -2004 (till the accession of Latvia to the EU).

The relevant parts on water monitoring programme relevant to the provisions of the Nitrate Directive and WFD should be included and implemented in the process of the preparation of the complex State Monitoring Programme (2001).

The public awareness (farmers) regarding a voluntary implementation of GAP Code for Latvia should be raised, especially in the territories of vulnerable zones.

BAAP regional network. webmin@baap.lt Page updated 2003.02.06