5          INSTRUMENTS FOR IMPLEMENTATION OF THE STRATEGY 

The research into the appropriate use of various instruments to implement the Nitrates Directive is ongoing, and will be developed during the elaboration of the first and second Action Programmes, the timetable of which is detailed above and in Chapter 6. Below is included a preliminary analysis of the instruments to be used in implementing the Strategy proposed.

Three types of instruments (separately or in combination) could be used for implementation of the Strategy. These include:

·        Regulatory instruments. These measures are based on legislation. Most popular regulatory instruments are sanctions or penalties for breaching the norms.

·        Financial instruments. These measures should be applied to support specific requirements that are not affordable by farmers or considered economically unattractive. Among most popular financial instruments one should mention foreign trade policy, Excise taxation, Direct product subsidisation and soft credits.

·        Advisory instruments. These measures are aimed to disseminate information among farmers and promote environmental measures by explaining the farmers economic, environmental and social consequences of implementation. Most popular measures comprise Training programmes, Information campaigns and advisory packages.

Application of the above mentioned instruments (applied separately or in combination) should be considered for practical implementation of the Action Programmes.

5.1         Institutional set up for implementation of the Strategy for Implementation of Nitrates Directive

The Ministry of Environment and the Ministry of Agriculture will be the main institutions responsible for transposition, implementation and enforcement of the requirements of the Nitrates Directive in Lithuania. The main areas of activity for  implementation of the requirements of the Nitrates Directive and the institutions involved are presented below.

Transposition. The Ministry of Environment and Ministry of Agriculture are in the process of, and will continue to adopt the regulatory instruments needed for transposition of the Nitrates Directive into national law. 

Monitoring. Institutions subordinate to the Ministry of Environment, namely the Joint Research Center, Geological Survey and Marine Research Center will be the main institutions responsible for monitoring of nitrate concentration and eutrophiocation status in waters. This type of monitoring is required by the Nitrates Directive for the purposes of designating and revising nitrate vulnerable zones. A programme for monitoring nitrates in water, according to the requirements of the Directive has already been proposed, and full development of a monitoring programme is envisaged by 2003. The experience of the Water Management Institute in monitoring of effectiveness of action programmes might also be very helpful.

Development of Action Programmes. The Ministry of Environment and Ministry of Agriculture will lead the development of Action Programmes. Large number of stakeholders should be involved in the process, included but not limited to; Ministry fo Finance, Agricultural Chamber, Farmers Union, Association of Agricultural Enterprises (Bendroves), Agricultural Advisory Service, Water Management Institute etc. Development of the first action programme is foreseen to be implemented during 2002-2003.

Promotion of application of the Code of Good Agricultural Practice. Agricultural Advisory Service, Agricultural University, and Water Management Institute will be the leading institutions for promotion of the Code and dissemination of information. The Code has already been approved by Government and is anticipated to be implemented on an ongoing basis.

Enforcement of mandatory measures. The Environmental Inspectorate in the Ministry of Environment and Plant Protection Service under the Ministry of Agriculture should be responsible for control of implementation of the measures.

Reporting to the Commission. Requirements of the Nitrates Directive on reporting are clearly environmental in nature thus Reports to the Commission  should be compiled by the Ministry of Environment.

5.2         Financing of implementation of mandatory measures

The main costs of the implementation of the Nitrates Directive are considered to be installation of manure storage and purchase of manure spreaders. A detailed programme to finance the implementation of Action Programmes that includes these measures will be developed during 2002-2003. This section briefly presents some possible sources of financing.

Main national sources of financial aid to farmers to implement requirements of the Nitrate Directive are Rural Support Fund and Environmental Protection Fund.

Rural Support Fund (RSF)[1] 

RSF was established in 1997. It aims to provide financial support to farmers, to stimulate rural development and to promote foodstuff exports. Financial aid has been provided within the following programmes:

1. Agro-food market regulation measures;

2. Priority investment measures;

3. Establishment of an agricultural information system, technical assistance and training projects for farmers, scientific projects in agriculture;

4. Social infrastructure development in rural areas;

5. A soft loan guarantee fund.

Financial aid from RSF separates for the following priority investment programmes: setting up of new farms, modernisation of farms; co-operation; establishment of agroservice enterprises; purchase of new technologies; animal breeding; registration and identification of livestock; organic farming; change of farming practices in less favoured areas; development of agricultural resources; and production quality research system, support in case of disasters.

The biggest part of RSF aid is channelled intor agro-food market regulation and financing of priority investment programmes. The total budget of the RSF in 2000 was 421 million Litas.

Lithuanian Environmental Investment Fund (LEIF)

LEIF was established in 1996 to provide soft loans and limited grant financing to the private and public sector. However, it started to function only in May 1999 as it had to wait for the adoption of relevant related legislation in Lithuania. According to the newly adopted Law on Pollution Charges, which is in force from the year 2000, 20% of the collected pollution charges will be transferred to the LEIF. Based on the sums collected from pollution charges in 1998, this amounts to approximately 12 million Lt per year. In addition, Fund already received first portion from the PHARE (1 million EURO). The main objective of the fund is to support public and private sector to implement environmental projects in line with priorities of environmental protection. The fund provides loans and subsidies for environmental projects and activities, develops proposals for investments and assesses investment proposals.

EU structural funds: 

 ISPA

The National strategy does not foresee use of ISPA funds for financing of investments related to agricultural activities. 

SAPARD

SAPARD (Special Accession Programme for Agriculture and Rural Development) is an instrument to assist the pre-accession countries in the modernisation of agriculture and rural development in line with EU practice. 

The Ministry of Agriculture was responsible for the development of the Plan for Rural and Agriculture Development in Lithuania. The Plan covering the period to 2007 sets key priorities for rural development. The Plan for Rural and Agriculture Development emphasises the following rural development objectives:

-        Improvements in farm efficiency and productivity;

-        Provision of additional income for farmers and rural dwellers;

-        Improvements in processing and marketing of agricultural produce;

-        Preservation of existing employment and creation of  new employment in rural areas;-        Maintenance of high environmental standards; and

-        Implementation of hygiene, food safety and quality standards.

Measures eligible for financing from the SAPARD programme include:

·        up to 50% support to investments in agricultural holdings, processing and marketing of agricultural and fishery products, farm diversification, development of forest infrastructure;

·        up to 82% support to investments in village renovation and development of rural infrastructure;

·        up to 100% support to technical assistance, training, and implementation of agri-environmental measures.

The Ministry of Agriculture has already started enforcement of environmental measures at farm level by setting requirements for farms applying for support from SAPARD programme. In order to receive the support the farms must demonstrate that they comply with the environmental requirements.

Global Environmental Facility (GEF)

The Global Environmental Facility (GEF) is a mechanism for international co-operation for the purpose of providing new, and additional, grant and confessional funding to meet the agreed incremental costs of measures to achieve agreed global environmental benefits in the following areas: 

·        biological diversity

·        climate change

·        international waters

·        ozone layer depletion

Degradation of the quality of transboundary water resources caused mainly by pollution from land-based activities (including nutrients) is defined by the GEF as one of the key global environmental concerns relating to international waters. Abatement of common contaminants such as nutrients, and other biological influences is considered by GEF as a high priority action[2]. 

Application for financing (at least partial financing) to improve the environmental performance of the agricultural sector could be filed to GEF (under the international waters Operational Programme), if implementation of measures under the Nitrates Directive is regarded as priority by the Government of Lithuania. 

Other sources of financing

The National Strategy for the Development of Agriculture and Rural Areas compiled by the Ministry of Agriculture foresees several additional sources to finance measures for implementation of the strategy. Some of these might be used to finance implementation of the requirements of Nitrates Directive:

·        Privatisation Fund;

·        Small- and Medium-size Business Development Fund;

·        Special allocations from the state budget and municipal budgets;

·        Loans granted by banks and other credit institutions;

·        Farmers’, farming enterprises’ and other rural entrepreneurs’ own capital;

·        EU PHARE and bilateral programme/project funds; and other sources.

A detailed cost assessment and a programme to finance implementation of action programmes will be developed during 2002-2003.

[1] At the end of 2000 Rural Support Fund was reorganised and since 1/1/2001 it is called Special Rural Support Programme

[2] Global Environmental Facility, Operational Strategy, 1996.