The Latvian Peat Association welcomes the State Audit Office initiative to focus on the management and accounting of mineral resources in the country.

The Latvian Peat Association has long pointed out that insufficient attention is paid to the field of mineral extraction and utilisation in the country. Our local resources and their place in the national economy are undervalued, and consequently, so is their potential contribution to increasing prosperity in Latvia.

The Latvian Peat Association is puzzled by the comparison of data and their interpretation expressed in the State Audit Office's audit report.

For example, the report compares peat extraction, import, and export data. It sums the volume of extraction and imports, and points out a discrepancy with the volume of exports. This discrepancy is only logical, as the industry extracts raw material – peat (reporting the volume of peat extracted to the state at 40% moisture). To ensure high-quality professional substrates, different crops require moisture levels ranging from 50% to 80% (which more than doubles the weight compared to the conventional peat moisture declared in peat extraction reports), with various additional products and substances added to the peat. As a result, a peat product is obtained, which is exported and can be seen in Central Statistical Bureau data alongside other peat products and pure raw materials.

It is regrettable that the State Audit Office did not consult with industry experts before publishing the audit report to understand the specifics of the sector!

Thanks to investments made by Latvian entrepreneurs and foreign investors over several decades, Latvia produces peat products with added value, which are then used in professional horticulture. Investments have been made and substrate factories worth many millions of euros have been built in Latvia, as a result of which we are the largest substrate producers in the Baltics.

The unsubstantiated conclusions of the State Audit Office disparage the contribution of Latvian peat producers to the national economy and undervalue investments in the sector.

The sector must be competitive among the Baltic and other countries. In Latvia, 58% of leased areas for peat extraction are under the management of Latvijas valsts meži (LVM). Land lease fees for existing peat extraction sites in Latvia are the highest in the Baltics. In Lithuania, the average lease fee per hectare is 8 EUR, in Estonia 10 EUR, while the average lease fee paid by the industry to LVM is 178 EUR per hectare.

The lack of objectivity in the State Audit Office report undermines the reputation of an export-capable industry. The peat sector provides well-paid jobs in the regions and promotes regional development in Latvia; the data can be viewed on the LKA website and in the statistics on national economic sectors published by the State Revenue Service (VID).

The indications expressed in the State Audit Office's audit report regarding the accounting of peat resources should be consistent with the directions set out in the Government's action plan and should be incorporated into the Latvian peat utilisation guidelines currently being developed under the leadership of the Ministry of Environmental Protection and Regional Development (VARAM).

Ingrīda Krīgere, Board Member