No. 3




Estonian Agricultural Policy and WTO Agreement Do Not Serve the National Interests

18 June 2001


RiTo No. 3, 2001

Due to a low population density and centuries-long European-style agricultural and forestry practices, Estonia possesses good agricultural and forestry resources. In contrast to forestry resources, Estonian agricultural potential has not found adequate economic use.

Ignoring the need for an agricultural policy that would consider the realities of the world economy, has led to a situation where this branch of the Estonian economy has been left unprotected, and at the mercy of unfair world trade. Agricultural producers, left without support from the State, cannot simultaneously cope with three serious problems:

  • transition from large-scale to small-scale production, requiring the application of appropriate modern equipment and technology;
  • deterioration of traditional foreign markets (Russia);
  • unfair competition with nationally subsidised goods from the EU, not only on foreign markets but also on the Estonian internal market.

Together, these factors are responsible for the constant decrease in agricultural production since 1991. Due to significant economic policy disadvantages in the competition environment, internal producers lack the capital needed to develop this branch of the economy, whereas foreign capital shows no serious interest in it. The importing of main agricultural produce – meat, milk and grain products – by using an unfair trade advantage – forces Estonian producers out of competition on the internal market. At the same time, principal foreign markets are closed to Estonian agricultural producers, due to import barriers.

The great natural potential of Estonia could be harnessed to fuel economic development only if the competition terms were equalised for Estonian and EU agriculture. Solving this problem will prove to be the most difficult task for Estonian (foreign) economic policy right up to the time of joining the EU. Yet, any further degeneration of agriculture would mean that Estonia would not be able to make use of her natural resources, even after joining the EU, since production quotas for agriculture will be fixed on the basis of pre-accession production levels.

The EU’s sanitary and environmental requirements for agricultural production are extremely strict. In order to comply with these, Estonian agricultural producers should make investments reaching in the billions. Accumulating such means in the conditions of unfair competition proves impossible for the producers. Financial assistance provided by the EU for the preparation of Estonian rural life for integration does not cover even 5% of the needs of the agricultural sector. Unfortunately, the Estonian parliament and government are dominated by political forces who are hostile to the rural sphere, and attempt to cut even the modest support that agriculture is receiving today. If the current economic policy is continued, it will not be possible for Estonian agriculture to respond adequately to the needs of Estonia and survive as a sustainable branch of the economy by the time of its joining with the EU.

Full article in Estonian