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“Having experienced a period of intense financial
fluctuations, the Lithuanian agricultural sector is entering a phase of change.
Looking at the results of this year and the coming 2026, the structure of
farms, the scale of investments and the main risks of the sector are changing,
says Paulius Liubancas, Head of the Agricultural Business Financing Group at
Swedbank.
In early November, the Seimas adopted amendments to the Law
on the Fundamentals of National Security, which agreed to recognize the
agricultural and food sector policy as strategically important for national
security.
“We can already assume that the strategic status of the
agricultural and food sector will give high priority to the availability of
energy and other key resources, and it will be possible to expect greater state
support through subsidies, payments, etc. This can significantly reduce risks
in extreme conditions and ensure the continuity of operations,” says P.
Liubancas.
Reviewing recent changes in the agricultural sector, he
emphasizes that during the 2024–2025 period, agriculture did not experience
major changes, but several long-term trends emerged.
“For ten years now, Lithuania has been consistently adapting
to the EU Green Deal, gradually expanding the scope of organic farming. Another
important direction is changes in the structure of farms. Small crop farms are
increasingly ceasing operations and selling or leasing land to larger market
participants, which is why the consolidation of the sector is becoming
obvious,” says P. Liubancas.
Will have to look for solutions
He reminds that the majority of grain grown in Lithuania is
exported. Therefore, their financial results directly depend on global
purchasing price trends.
“The current situation was mainly influenced by the high cost
of fertilizers and plant protection products, rising wages and low incomes,
which were determined by falling purchase prices and the failure to reach
higher grain classes,” P. Liubancas describes the state of the sector.
Different dynamics of costs, incomes and risks are becoming
apparent in individual agricultural segments. This year brought natural
challenges to the crop growing segment, but in terms of harvest indicators,
they cannot be called poor.
“The warm winter was favorable for crops, but due to spring
frosts and damp, cooler weather, the plants developed more slowly. The harvest
began 2-3 weeks later than usual, and the August rains prevented machinery from
entering the fields. Nevertheless, the harvest – both in terms of quantity and
quality – was good,” the interviewee reviews.
However, the economic environment was not so generous for
farms. He reminds that the majority of farms operating in the country did not
fix grain purchase prices because they expected purchase prices to increase.
However, in 2024-2025. grain harvests were good worldwide, so purchase prices
for the main crops did not increase or decreased.
“In 2025, the average purchase price of the new grain
harvest was 15% lower than in 2024. The purchase price of rapeseed remained at
a similar level,” calculates P. Liubancas. “When assessing farms operating in
the field of crop production in general, it can be concluded that the majority
of them experienced a gap between costs and market prices and profitability,
compared to previous results, will be lower. Farms will have to look for
solutions to reduce costs and improve efficiency.”
This year's vegetable harvest was record-breaking, but their
growers were saddened by the sharp drop in purchase prices.
“However, the financial condition of horticultural farms has
been excellent for the past two years and the accumulated reserves allow us to
survive quite easily with this year’s more modest results,” says P. Liubancas.
Wide range of success
A much wider range of results is recorded in individual
livestock segments this year – some farms are strengthening their positions,
while others are facing a decline. For example, the dairy production sector is
showing positive trends. Compared to last year, the purchase price of natural
milk is about 16% higher this year, and the total milk yield in Lithuania,
despite a 2.5% decrease in the number of dairy cows, increased by 2.6%. P.
Liubancas says that dairy farms maintain high profitability and are preparing
investment plans to modernize existing or build new farms.
The Lithuanian broiler poultry segment also managed to
achieve good results in 2025 – its growth volumes have been consistently
increasing since 2021. The interviewee comments that one of the main reasons
for the growth is the intensive investments financed by EU support funds in
2020.
“Due to high meat purchase prices, farms continue to expand
their activities, increasing the number of poultry they raise. In 2025,
purchase prices will remain high, therefore the financial situation of farms in
this sector is assessed as good,” he emphasizes.
However, beef cattle, pig and sheep farmers are doing worse:
over the past five years, fewer and fewer of these animals have been raised in
the country.
“The main reason is the historically low meat purchase
prices that have prevailed for a long time. Only this year have they recovered in
the cattle and sheep sectors. This improves the financial condition of these
farms, but they still avoid investing heavily and increasing their herds,
because they are not sure how long the higher purchase prices will last,” says
the Head of the Agricultural Business Financing Group at Swedbank.
The most vulnerable segment, according to Mr. Liubancas,
remains pig farming.
“Compared to 2024, purchase prices in the pig farming sector
have fallen by approximately 10% this year. It is likely that price pressure
and the risk of swine fever will remain the main reasons why this segment is
shrinking in Lithuania,” he states.
The need for financing is growing
As the costs and investment activity of the agricultural
sector increase, the need for financing has also increased in recent years.
According to Mr. Liubancas, this is influenced by several directions operating
simultaneously. First of all, the accelerating modernization of farms.
“Farms are actively implementing sustainable technologies
and robotic systems, especially due to the shortage of labor. These investments
are expensive and are usually financed through credit institutions,” he
explains.
Another direction is infrastructure renewal. Reclamation,
drainage, systematic soil use, maintenance and improvement are becoming
increasingly important in the context of climate change.
“Farms that invest in these areas achieve better results and
adapt more easily to changing weather conditions,” emphasizes P. Liubancas.
The need for financing is also increased by the desire to
maintain competitiveness and resilience. P. Liubancas notes that today credit
institutions are long-term partners for farms, able to cushion market
fluctuations.
An additional layer of risk is formed by the proposed
smaller EU support budget for the period 2028-2034.
“With the decrease in appropriations, the sector may face a
significant shortage of investment funds,” says the manager.
Although the sector's financing needs are increasing,
according to the bank's assessment, most farms remain financially mature and
able to manage risks, and the sector itself is one of the most stable in
Lithuania - especially considering the fact that most farms have many years of
experience, often passed down from generation to generation.
Mr. Liubancas says that when assessing the possibility of
investing in a farm, bank experts focus mainly on three indicators: the farm's
historical and forecasted earnings, the size of equity capital and historical
performance results. At the same time, according to the manager, more and more
importance is given to the farm's business strategy: whether it is looking for
ways to increase the value received and reduce dependence on raw material
purchase prices.
The interviewee says that in order to create higher added
value in the long term, the country's farms should start processing:
"By selling raw materials - grains, milk, meat,
vegetables - farmers receive the smallest part of the value. Even minimal
processing would allow profitability to increase several times."
For example, specialization and processing are particularly
suitable for smaller farms (up to 200 ha). The most productive way would be to
sell the resulting products in specialized stores, by starting to provide
e-commerce with delivery services or by becoming a HoReCa supplier.
“Direct sales models shorten the supply chain and increase
the value received by farmers,” says P. Liubancas.
For larger farms, in his opinion, the best way is
cooperation:
“Cooperation increases bargaining power, allows for the
joint implementation of significant processing investments and creates greater
value and profitability in the long term,” the interviewee notes.
Prepare for the biggest risks
Assessing the prospects of the sector, P. Liubancas
distinguishes three main risks, which, in his opinion, will remain important in
the coming years.
“The agricultural sector faces financial risks, which are
determined by increased costs and decreased purchase prices. Such price
scissors, when the cost price is close to the income received, become a major
test for farms,” he states. “The sector also cannot avoid disease outbreaks:
outbreaks of African swine fever continue to occur in Lithuania, cases of bird
flu are being registered, and outbreaks of Bluetongue disease are being
recorded in Europe. Droughts, heavy rains, hail and frost brought by climate
change are also becoming an increasingly frequent phenomenon, therefore it is
necessary for farms to increase their resilience.”
According to the interviewee, the risk structure will not
change substantially in the near future, therefore it is important for farms to
move from reacting to external factors to strategically planned changes in a
timely manner.
“The country’s agricultural sector needs to create greater
added value and reduce dependence on purchase prices. Farms must also invest in
technologies and precision agriculture, which can reduce costs by up to 30% and
increase crop stability. In order to achieve sustainable growth, it is
necessary to improve the condition of the soil and invest in the modernization
of farms – use renewable energy, introduce robotics, improve herd genetics, –
says P. Liubancas. – Those farms that are already creating greater value and
investing in efficiency will be the most competitive in 5-10 years.””
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