European Commission has approved Latvian scheme to support companies active in the primary agricultural production sector affected by the coronavirus outbreak in a volume of €1.5 million. Now it is the competence of Latvian authorities to evenly distribute the allowed support for most needed. In this way the EU assists the states in national support measures to mitigate the economic impact of the present crisis in a coordinated way, in line with EU rules.
The Commission has adopted a “temporary framework” to enable the member states to use in full the flexibility provisions under the state-aid rules already in mid-March 2020. The idea was to support those sectors of national economies that have been hit hardest by the coronavirus outbreak. The EU “temporary framework was adopted initially by the Commission on 19 March 2020 and amended already twice, on 3 April and 8 May 2020.
This €1.5 million support will enable Latvian government to provide zero-interest rate loans of up to €100,000 to companies active in the agricultural sector. It is supposed to assist the farmers to cover their immediate liquidity needs so that they would continue their essential activities during these coronavirus outbreak.
The support will be accessible to all Latvian companies of all sizes active in the primary agricultural sector; the applicants shall be aware of the goods and services included in the “primary sector”.
Structural aspects in Latvian agro-sector
In Latvian agro-sector, there is about 50-50% division between farmers in “crop and animal production” (including food and beverage) and those involved in “forestry and logging”; somehow about a third of the latter is in “wood processing”. Only about 10 per cent of Latvian GDP is produced in agro-sector.
Over 16% of Latvian population is employed in agro-sector, compared to 4,5% on the EU’s average. In some neighboring states the percentage is even higher: e.g. about 22% in Lithuania and 18% in Poland.
Two decades ago, there were about 273thousand persons working in this sector; about 70% of farmers “consumes rather than sell their produce”.
In 2010, according to the latest official statistics there have been about 83 thousand “holdings” with about 180 thousand people “working on farms”.