Commission Report (2002): Latvia

• Progress since the last Regular Report
• Overall assessment
• Conclusions

Chapter 7: Agriculture

Progress since the last Regular Report

Latvia has made further progress in the area of agriculture, both with aligning legislation and with strengthening administrative capacity. Progress has been more limited on border controls, animal waste and processing establishments. Agriculture in Latvia accounted for 4.7 % of gross value added in 2001 compared with 4.9 % in 2000. Employment in agriculture has declined considerably over recent years, and now accounts for 15.1 % of total employment.

In 2001, overall agricultural trade between Latvia and the EC increased significantly, largely due to the ``double- zero-agreements'' to liberalise trade in agriculture. EC imports of agricultural products originating in Latvia increased by 43 % to EUR 53 million. EC exports to Latvia increased by 16 % to EUR 268 million. The trade balance in favour of the Community amounted to EUR 215 million compared to EUR 194 million in 2000. EC imports were dominated by dairy products. Miscellaneous edible preparations, tobacco, fruit and nuts, sugars and sugar confectionery were the main export goods from the EC.

In 2001, a total sum equivalent to LVL 24.14 million (EUR 43.07 million) was allocated to agriculture (including rural development) from the central government budget. The share of support for agriculture and rural development in the budget is about 3%.

In the area of land reform, Latvia has continued to make some progress. Whereas registration in the Cadastre has been virtually complete for several years, registration in the Legal Register (Land Book) has continued, albeit at a slow pace. Latvia has started preparations for land reparcelling.

Horizontal issues

Latvia has made progress in its preparations for the future implementation of the European Agricultural Guidance and Guarantee Fund (EAGGF). The Rural Support Service (RSS) of the Ministry of Agriculture was accredited as the SAPARD agency in December 2001 and has a good basis for building up the necessary functions to meet the EAGGF Guarantee and Guidance requirements (see A.b -- Relations between the European Union and Latvia). In order to set up the paying agency in Latvia, a working group for merging of the Rural Support Service (RSS) and the Agricultural Market Intervention Agency (AMIA) has been established and the necessary legislative amendments were adopted in May 2002. In addition, 3 new structural units of the RSS became operational in January 2002: the EU direct support department, the EAGGF division within the finance department and the IACS division within the information department.

Regarding the Integrated Administration and Control System (IACS), in December 2001 Latvia adopted an implementation regulation defining the main elements of IACS implementation in Latvia, such as the computerised database, land register, animal register and integrated control system. An amendment to this Regulation adopted in September 2002 defined the responsibilities of the Rural Support Service and the State Land Service for setting up the land register. Latvia intends to opt for the methodology of physical blocks to build its land parcel identification system, i.e. blocks of parcels delimited by permanent boundaries such as roads, rivers, forests, etc. Latvia already has aerial photographs covering its territory, with the exception of some border areas, which are covered by satellite images. In order to implement the system, preparatory work has started to set up the land parcel identification system and a pilot project has been prepared.

As regards trade mechanisms, a detailed action plan for the implementation of the Common Market Organisations has been prepared and presented to an inter-ministerial working group of the Ministry of Finance, the National Board of Customs and the Rural Support Service, responsible for the administration of trade mechanisms.

Regarding quality policy, preparatory work has been carried out regarding new legislation to establish a system similar to the EC system for protection of designations of origin, geographical indications and certificates of specific character.

No major developments can be reported on organic farming. A regulation concerning procedures for the setting up, maintenance and operation of the Farm Accountancy Data Network (FADN) was approved in July 2002 and designated the Latvian State Institute of Agrarian Economics as the Liaison Agency of the FADN. The regulation also sets up the National Committee for the Data Network responsible for the co-ordination and supervision of the FADN and communication with the EC.

Common Market Organisations (CMO) Since last year`s Regular Report, Latvia has made some progress on introducing a legal framework and administrative structures for the establishment of Common Market Organisations.

As regards the administrative capacity in this field, Latvia has continued to implement its action plan for the implementation of Common Market Organisations. Sector-by-sector competent authorities have been identified, measures, procedures and functions have been planned and estimations of necessary human resources have been prepared with a view to the implementation of the CAP in Latvia. In order to establish the administration system for CAP management mechanisms in Latvia, three new structural units of the Rural Support Service became operational in January 2002. In 2002, the number of staff in the Rural Support Service and respective budget appropriations have been increased to satisfy the growing need for administrative capacity required for the management and implementation of the different support schemes, including SAPARD. Latvia has taken some preparatory steps to develop its agricultural policy. A concept on necessary changes in the national legislation for the implementation of the EC Common Agricultural Policy has been elaborated and a ministerial working group is preparing the relevant legislation.

Preparations for implementing the CAP with regard to the systems of area payments have continued for cereals, vegetables and oilseeds and the introduction of an area payments system for grain was started in 2000--2001. In the field of arable crops, Latvia continued to apply a public storage scheme for cereals which has been further aligned to EC practices in the ``Regulation on Grain Market Intervention for the period 2002--2003.

As regards the sugar sector, amendments to the Sugar Law were adopted in February 2002 as well as legislation regarding sugar production quotas and the state balance of sugar production and consumption. These are aimed at bringing Latvia`s national quota system further in line with the EC quota system.

For fruit and vegetables, the functions of the responsible institutions have been determined during the reporting period (all administration of the system of producer organisations will be done by the Rural Support Service, which will be the single EAGGF-Guarantee Section paying agency). Further elaboration of the regulations on fruit and vegetable producer organisations is needed.

Regarding animal products, in November 2001 Latvia adopted legislation on the handling of milk and dairy products, which provides for setting up a Milk Producers' Register, containing a system of detailed accounting of milk deliveries to dairies, which will serve as a basis for establishing and implementing the EC milk quota system. Legislative steps have been taken on labelling of beef and financial support to beef producers: a slaughter premium for adult male bovine animals and a suckler cow premium were assigned. No new developments have been reported in the wine sector.

Rural development and forestry The most significant development in this area has been the accreditation of the Rural Support Service as the SAPARD agency in December 2001 (see Section A.b. -- Relations between the European Union and Latvia). Measures supported include modernisation of agricultural machinery, equipment and construction of buildings, afforestation, development and diversification of economic activities. Latvia has a national scheme to promote organic farming, and has proposed additional pilot agri-environment measures, which will assist in the preparation of full-scale post-accession measures. Intensive consultations and social discussions are taking place regarding rural development measures in view of the elaboration of the Rural Development Plan.

Veterinary and phytosanitary issues, including food safety

During last year, Latvia continued to adopt legislation in the veterinary and phytosanitary sectors as well as in food safety. The Food and Veterinary Service continued restructuring and strengthened its capacity further.

Latvia has continued to align its legislation with the acquis in animal welfare, notably by adopting regulations on the welfare of pigs and calves and requirements for use, keeping, trade and killing of animals used for experimental and scientific purposes. Since January 2002 the Food and Veterinary Service is carrying out inspections on farm animal sheds and assessing their compliance with animal welfare requirements.

Regarding animal health, Latvia has adopted legislation concerning eradication and elimination procedures, prevention and combat of diseases and working conditions for veterinary examinations. Furthermore, instructions of the Food and Veterinary Service have been issued covering occurrence or suspicion of bovine spongiform encephalopathy (BSE), eradication of foot-and-mouth disease and the elimination of these and some other diseases. Latvia has joined the Animal Disease Notification System (ADNS).

The capacity of the administrative structures was reinforced over the last year. The number of inspectors was significantly increased compared with 2001. Since 2002, the Food and Veterinary Service has been carrying out control of the whole food chain. Particular progress has also been made in terms of training, including the establishment of a human resource and training programme and the installation of equipment.

As regards border inspection posts on external borders, the Sanitary Border Inspection of the Food and Veterinary Service has continued work to upgrade the Border Inspection Posts which Latvia wishes to maintain after accession, in order to bring them up to the standard required by the acquis. Construction work has started on 3 out of the 7 longterm posts planned. The technical equipment of the Sanitary Border Inspection has been upgraded. A pre-audit has been carried out in the phytosanitary and management area of the Sanitary Border Inspection in order to prepare for its accreditation.

Latvia continues to prepare for participation in the computerised network linking veterinary authorities ANIMO, including provision of compatible technical equipment, and established a list of postal codes and files in December 2001 containing ANIMO contact points to be used for information exchange.

Regarding public health protection, Latvia has further aligned its legislation as regards requirements for production and placing on the market of milk, meat and fresh poultry and rabbit meat. In November 2001 Latvia adopted legislation on the handling of milk and dairy products relating to production, treatment, transport and processing which aim at bringing its legislation further in line with compulsory requirements on hygiene, quality and veterinary standards as well as requirements for packaging, accounting and the registration system. The upgrading of food-processing establishments has been progressing particularly in the dairy and fish sectors. Latvia has established annual state supervision and control programmes, which are being implemented by the Food and Veterinary Service. In addition to these activities, the Food and Veterinary Service has carried out assessments of all establishments involved in the food chain and has prepared modernisation plans together with each establishment.

As regards animal waste treatment, the policy document on Collection, Rendering and Disposal of Animal Waste adopted by the Latvian government in April 2002 provides for the establishment of high risk waste collection and treatment system under private ownership.

In the phytosanitary sector, progress was made in further aligning Latvia's legislation to the acquis as well as institutional strengthening. A phytosanitary survey plan has been elaborated for the year 2002 and an internal control plan for phytosanitary inspectors has been set up. co-operation between the Plant Protection Service and the Sanitary Border Inspection of the Food and Veterinary Service was improved.

As regards plant health (harmful organisms) and plant hygiene, several instructions have been adopted laying down guidelines for control and eradication of harmful organisms and testing methods. Moreover, a plan for further implementation of the acquis granting authorisation of plant protection products has been finalised.

In March 2002, legislation was adopted to further align the implementing measures for plant passports to the acquis. The issuing of plant passports for all plants will start in January 2003. Until EU accession, they will be for use within Latvia only. The plant-health registration of producers and importers of particular plants and plant products has continued. So far, only a limited number of producers and importers have been registered.

Administrative structures for phytosanitary issues have been strengthened. The new structure of the State Plant Protection Service (SPPS) entered into force in March 2002. Its aim is to further rationalise the institution and to increase its effectiveness by separating control and surveillance of the implementation of legislation from co-ordination and planning. In addition, 7 regional offices have been created. As regards staffing, 210 persons work in the state plant protection service, 50 in the central administration, 106 inspectors and 25 specialists in the regional offices and 26 staff in the laboratory.

In order to improve phytosanitary border controls, the Sanitary Border Inspection has started working on accreditation in the phytosanitary field according to the European Standard. Control procedures have been elaborated. Another positive development concerns the signature of an agreement on co-operation and exchange of information signed between the State Plant Protection Service and the State Plant Protection Service Division for Diagnostics of Plant Quarantine Organisms.

As regards food safety (see also Chapter 1 -- Free movement of goods), there have been some developments regarding the institutions responsible for food safety inspections. In January 2001 the Food and Veterinary Service started operating as the sole institution responsible for control of the entire food chain. co-operation between the Sanitary Border Inspection of the Food and Veterinary Service of the Ministry of Agriculture and the State Plant Protection Service has been improved with an inter-institutional agreement on co-operation and exchange of information. Work to improve co-operation among institutions involved in border inspections is ongoing.

The upgrading of food processing establishments, as referred to above, has been progressing particularly in the dairy and fish sectors. The Food and Veterinary Service carries out the assessment, supervision and control of establishments involved in the entire food chain in order to tackle this problem and upgrading plans for all establishments have been produced in order to be in compliance by the date of accession. However, no fully reliable classification of the establishments according to the severity of the deficiencies has been carried out.

BSe-related measures have been adopted and have been implemented and routine testing is being extended. However, further significant efforts are requested to meet EC standards.

Overall assessment

In the area of horizontal measures, preparatory work for the creation of the paying agency in Latvia is in place. Continued attention should be paid to the merger between the Rural Support Service (RSS) and the Agricultural Market Intervention Agency (AMIA) and its transformation from a SAPARD agency into the single paying agency which will be responsible for the management of the Agriculture Guidance and Guarantee Funds (EAGGF) upon accession. Latvia needs to address more swiftly and energetically the preparation for the Integrated Administration and Control System (IACS), as its timetable appears very tight, and in particular completion of the strategy, completion of the land parcel system as well as digitisation. Very serious efforts are urgently needed in order for Latvia to be able to build up an operational IACS by accession. The necessary decisions must be taken immediately and the related funding put in place without delay if Latvia is to be in a position as of accession to administer and control efficiently the CAP aid-schemes. Further legislative work and preparation of administrative structures and procedures are necessary in the fields of organic farming and quality policy, where a clear definition of the role of the different institutions is needed, and the Farm Accountancy Data Network (FADN).

As regards Common Market Organisations, Latvia now needs to take more decisive steps in terms of implementation of developed action plans for each market sector in order to prepare the necessary national legislation. Latvia already has some parallel mechanisms for some areas for which market organisations exist in the EU, including cereals and sugar. However, they need to be further aligned with EC requirements,

As regards administrative capacity, the newly established structure of the Rural Support Service needs to become operational and the remaining adjustments to the requirements of the acquis should be carried out. Special attention needs to be paid to the timely preparation of administrative structures and detailed descriptions of procedures for all measures. Training of staff in the competent institutions should continue.

Latvia is well advanced in building up administrative capacity for implementing rural development policies, as a result of the accreditation of the Rural Support Service as the SAPARD agency. Latvia should continue the development of its Rural Development Plan and of its Structural Funds` rural development priority.

Slow progress with land reform is still a strain on the development of the agricultural sector in Latvia, and on adequate identification of land for CAP purposes. While the Cadastre is virtually complete, registration in the Legal Register (Land Book) is progressing only slowly. Generally, with the exception of the part around and south of Riga, the land market in Latvia is not very active.

Concerning the veterinary field, while legislation adopted so far constitutes a good basis, Latvia needs to significantly speed up the process of transposing and implementing the acquis in this area.

Regarding animal welfare, Latvian legislation has been largely aligned to the acquis requirements concerning general welfare. This process needs to be completed. Further alignment work is necessary in the field of animal health, where Latvia should also make further efforts to ensure effective implementation.

The situation regarding controls at border inspection posts requires special attention as to the general hygiene situation and the quality of controls carried out. Latvia needs to increase its efforts in order to comply with agreed timetables for completion of the construction of its 7 long-term border inspection posts. Preparation for participation in ANIMO should continue.

With regard to public health protection, the upgrading of processing establishments in the dairy and fish sectors is rather advanced, with 16 establishments approved in total, but further efforts are required, particularly in respect of meat-processing establishments.

As regards animal waste treatment, Latvia needs to ensure implementation of its newly adopted legislation on collection, rendering and disposal of animal waste. Preparation for the establishment of a waste collection system for the treatment of high-risk animal waste upon accession must continue. Very serious efforts are needed to ensure that the system can be operational as scheduled.

In the field of animal nutrition, framework legislation, which aims at transposing the bulk of the relevant Community legislation remains to be adopted.

In the phytosanitary sector, transposition and implementation of legislation is relatively advanced, in particular legislation on plant passports. This process remains to be completed. Further harmonisation is needed, particularly with regard to seed and propagating material. Registration of producers and importers should be speeded up and completed well before accession, being one of the cornerstones of the EC plant health system.

The changes made to the administrative structures constitute a very good step towards guaranteeing the smooth functioning of the State Plant Protection Service (SPPS). Latvia should now ensure the effective enforcement of this service, including the recently established regional structures. Work of the State Border Inspectorate on accreditation as well as on effective implementation of established control procedures should continue. In particular, further staff training is needed and laboratory capacity should be further improved.

As regards food safety (see also Chapter 1 -- Free movement of goods), as is mentioned above, considerable progress has been made, particularly regarding coverage of controls in the food sector, the preparation for the upgrading and control of food establishments and the increase in measures to deal with BSE.

The reorganisation of some of the bodies dealing with food safety i.e. the Food and Veterinary Service, increased administrative capacity for supervision of modernisation plans and laboratory equipment, and improved co-operation among the authorities involved should further improve effectiveness in this area.

Conclusions

In its 1997 Opinion, the Commission concluded that substantial efforts to align with the acquis were still necessary, although progress had been made in adopting the measures mentioned in the Commission`s White Paper of 1995 on the Internal Market. The Commission added that particular efforts were needed on: the implementation and enforcement of veterinary and phytosanitary requirements and upgrading establishments to meet EC standards (an aspect of particular importance with regard to the inspection and control arrangements that protect the EU's external borders); strengthening administrative structures to ensure the necessary capacity to implement and enforce CAP policy instruments, including the import arrangements; and further restructuring of the agri-food sector to improve its competitive capacity. The Commission further pointed out that since only a limited number of the mechanisms of the Common Agricultural Policy existed at that point in time, fundamental reform of policy would be needed, and a substantial effort would be necessary to prepare for accession in the medium term.

Since the Opinion, Latvia has made considerable progress towards alignment with the EC agricultural acquis, in particular over the past two years and, more recently, has progressed with developing the necessary administrative capacity to implement the acquis in this area. As regards preparations to apply the Common Agricultural Policy, some preparatory steps have been taken in terms of administrative structures for the necessary legislative alignment, but considerable legislative work lies ahead and only limited progress has been made with the actual implementation of the CAP. Transposition of legislation is proceeding well. Administrative structures are partly in place and further efforts are needed to strengthen administrative capacity.

Negotiations on this chapter continue although all negotiation issues in the veterinary and phytosanitary fields have been clarified. Latvia has been granted a transitional arrangement for public health in 11 milk processing establishments, 29 fish processing establishments and 77 meat establishments (until three years after the date of accession). Latvia is generally meeting the commitments it has made in the accession negotiations in this field.

In order to complete preparations for membership, Latvia's efforts now need to focus on finalising alignment; further reinforcing the administrative capacity to implement and enforce the acquis of the Common Agricultural Policy in particular for the paying agency, the Integrated Administration and Control System and the Common Market Organisation mechanisms, and especially in the veterinary field and that of food safety; ensuring that establishments are duly upgraded to meet Community Standards; and concluding the process of agricultural land reform.

---

Next: Chapter 8: Fisheries
Up: 3.1. The chapters of the
Previous: Chapter 6: Competition policy