In Lithuania, it pays to sell food to consumers - the profits of such a business are high

"We don't like numbers because they force us to react and change. When numbers appear, it's hard to repeat the same myths that we've been repeating for twenty years and comfortably solve nothing.

 

This can be said about several figures published in recent weeks, which we avoid connecting with each other.

 

In Lithuania in 2022, extremely high inflation was caused not only by the rapid rise of energy goods, but also by a significant increase in the prices of food and beverages.

 

In Lithuania, the prices of food and beverages increased by as much as 25.9 percent in 2022. – more than twice as fast as the average in the European Union (EU), where the growth reached 11.9 percent. According to Eurostat, the price level of food and beverages in Lithuania had already risen in 2022 to 99% of EU average, and in 2021 the price level reached 88 percent of this average. According to Žygimantas Maurics, Chief Economist of Luminor Bank, currently, based on preliminary calculations, the price level of food and beverages in Lithuania already exceeds the EU average.

 

As if we should rejoice that we have overtaken "old Europe" again, but there is no joy. There is no boasting by the Government about how well we are managing.

 

Another figure that is directly related to this is the jump in the Lithuanian agricultural sector. It surpassed IT last year in terms of value created. Yes, space, satellites, lasers, and even high-paying programming jobs have fallen behind growing crops and potatoes. As much as it hurts the hipsters.

 

"The last few years have been really good for the agricultural sector. As the prices of agricultural products grew faster than the costs of production, the added value created grew rapidly. In addition, due to the favorable climatic conditions, the quantities of produce grown were also high. In 2019, EUR 1.52 billion was created in the agriculture, forestry and fisheries sectors (hereinafter referred to as the agricultural sector). added value of EUR 1.75 billion in 2020, in 2021 – 1.86 billion euros, and in 2022 - as much as 2.68 billion.

 

It is interesting that in the agricultural sector in 2019, 3.5 percent was created. Lithuania's GDP, and in 2022 - as much as 4.4 percent, which is the largest share since 2005. What is even more interesting is that in 2022, the agricultural sector surpassed the IT sector in terms of added value created: the IT sector generated 2.36 billion EUR added value, and the agricultural sector - EUR 2.68 billion", says Žygymantas Mauricas, chief economist of Luminor, explaining, how farmers live.

 

True, the head of one of the agricultural organizations commented on these numbers based on non-accounting terms:

"You have to learn a very, very elementary [thing]: what is profit, then taxes, production costs, obligations to banks and what remains for the development of the economy. Very irresponsible essays."

 

Another piece of good news, which has not been confirmed, but was discussed at the meeting of the Seimas Committee on Rural Affairs, is that Danes are planning to build a dairy farm here, because the purchase prices paid from large farms are higher than the EU average. The key thing here is the price for large farms. For others, it is not so attractive. No one from Scandinavia is planning to go to establish 6 cow farms in Lithuania.

 

Where I bend - the declaration of crops has just ended, one of the most significant events in the sector, showing where the entire sector is heading, what the government is offering and what farmers are choosing. The trend is clear - declaring farms are decreasing. This means that farms are getting bigger. 

 

Animal husbandry is on the decline, people continue to prefer cereals and no longer want cows.

 

If we lived without emotions, we should simply put all these numbers into one and not complain, but start drawing real conclusions and then - real actions.

 

If agriculture occupies an increasing share of GDP in our country, maybe it should be highly valued. Do not complain, as during the last Lithuanian language exam, that agro are no longer understood by young people. Yes, we are a land perfectly suitable for agriculture, and this is shown by farmers who are able to compete with the world's largest concerns. 

 

If someone tries to explain that this is a very "traditional" farm, then show them in which other area there was such a technological leap - the same generation used horses on the same farms 30 years ago (ah, the same ones - alive, tamed, where now in the zoo can still be seen), build with the help of Russian ax and hammer tractors, and now robots are being tested in the fields, and in a few years this will be a completely common technique. These are the same people who have no plans to stop. Drones would also be used much more widely, but the laws have not yet caught up with the technology.

 

Maybe it's finally time to answer the question of what kind of commodity economy we really need, and to back up that answer with money. For others who are too small to compete, no longer have the strength or desire, simply give them a chance to retire from farming with dignity. There is room for improvement, but you don't have to do it at the expense of people who are still really "working for nothing", even though they don't realize it. However, there are many scientific studies and institutes for that, which must provide for all of our money basic answers, how to act and where to go.

 

There are two ways. The first Polish - strictly specialized regions and cooperatives. You don't want to be in a cooperative - you have no future, you go to the city to look for work. This is not philosophy, this is reality. They kept relatively small farms alive. Part of the farms are social, but these are not only voters, but also permanent rebels, blocking the roads and demanding the attention of the authorities.

 

The other Estonian way is to say goodbye to the small ones, support the big ones and continue not to worry, because there is only business without sentiments. They don't block roads. Their lobbyists sit at the same table with the authorities and arrange the numbers as needed.

 

Lithuania has not yet chosen a clear path, and this indecision is breaking people's destinies and burning taxpayers' money. As I have already mentioned, agriculture has proven once again that its role in our economy and in the process of creating wealth is only growing.

 

In any case, you need to go back to the numbers and draw the lines only after putting them together. Emotions and talk that it would be good if there were, and give euros for it, are no longer appropriate here."