The drive to achieve climate neutrality, cut emissions and preserve biodiversity has created a risk that economic activity will be scaled back in the land-use sectors, which are the most important employer in rural areas; at the same time, pursuing a “politics of shrinking” risks losing both people and the tax revenue needed to fund the services society requires.
These were the conclusions voiced in a discussion entitled “How can the land-use sectors work and develop under ever-increasing requirements and restrictions?”, organised by the magazine “Dienas Bizness” and the Latvian forestry and related sectors portal zemeunvalsts.lv. The land-use sectors are significant generators of export earnings and tax revenue, and significant employers, particularly in the regions.
A shift in understanding
Uldis Ameriks, Vice-President of the Employers' Confederation of Latvia and Chairman of the Board of SIA “Laflora”, notes that the past year has been marked by all manner of change. Specifically, peat products — the growing media needed for raising seedlings — have been in very high demand on the world market, which has allowed export volumes to be increased.
“It is no accident that the statistics show Latvia to be something of a peat-products superpower,” says U. Ameriks. He points out that around the world, security is often understood not only in the sense currently prevailing in Latvia, but also as human health and food security. “The sector is developing, but over the past year uncertainty has grown, because non-governmental organisations are pushing the line that peat extraction in Latvia should cease entirely by 2050, and on top of that we now have the National Energy and Climate Plan, which includes measures on cutting emissions,” U. Ameriks explains. He takes a positive view of the fact that Latvia's politicians have a good understanding of the sector — all the more so given that the Minister for Agriculture, Armands Krauze, has voiced unwavering support for it.
The inertia factor
Guntis Gūtmanis, Chairman of the Council for Cooperation of Agricultural Organisations (LOSP), likewise notes that both understanding and attitudes have changed over the past year.
“But there is also a BUT, because the European Union's shared position that we must do battle with nature and return to the past unfortunately still persists, even if there is a sense that the pace of movement in that direction has slowed,” says G. Gūtmanis, backing up his point by noting that decisions taken earlier in Europe's corridors have by no means been repealed and continue to burden farmers' work with new requirements and conditions.
“A year ago we were talking about the Nature Restoration Regulation as a possibility, and a good many compromises have been reached on it. It has now been adopted, all EU member states will have to implement its requirements, and within two years they must draw up a strategy setting out how they will do so,” G. Gūtmanis explains. He notes that there are provisions that ease Latvia's situation, since it is possible to opt out of certain measures, but even so the Nature Restoration Regulation will have a negative impact on land managers in Latvia.
“The regulation's requirements will make food production more expensive and more difficult; we are already seeing European countries where the view is being aired that livestock farming should be scaled back, whereas in Latvia it has been a traditional occupation for centuries,” G. Gūtmanis replies when asked about the regulation's impact on agriculture. He points to the new European Parliament and European Commission, whose composition differs from their predecessors.
“This parliamentary term was elected under the sign of the farmers' protests, whereas the previous term came in on the mood of the Greta Thunberg protests,” G. Gūtmanis says of the difference. He is convinced that the upshot has been a recognition that farmers must not only be heard but also met halfway; there has been a seven-month conversation on strategic dialogue, containing both positive things and things on which farmers have many questions and few answers. “In overall terms the direction has shifted somewhat, but there is still considerable inertia behind the measures that dismay farmers,” G. Gūtmanis sums up.
Situations that cannot be compared
“As time goes on, we are seeing changes in directions that are attractive to the land-use sectors and in others that are less pleasant,” concludes Māris Liopa, Chairman of the Forest Certification Council of Latvia. The most significant of these, in his view, is precisely the growing understanding at European level of various land-use issues, particularly as regards the specific conditions of the northern region.
“The Baltic states are in a different situation from the countries of the Mediterranean basin, so an identical approach is not possible, even though all of them are in the European Union. For example, the approach to forestry, to its sustainability and to the methods for achieving it will be radically different in Spain or Greece from what it is in Latvia,” M. Liopa explains, stressing that the European Union must not be weakened by excessive requirements, because the result is a loss of competitiveness, which in turn reduces the income needed to guarantee security.
“Weakening the land-use sectors in Latvia has a direct impact on national security,” M. Liopa stresses.
Differences and common ground
“In the development statistics,” U. Ameriks replies when asked whether Latvia's course differs from that of its neighbours. In his view, Latvia's comparatively rapid slide behind its neighbours is stark confirmation that something is not right in Latvia specifically. “In the peat sector, Latvia is the most significant player among the Baltic states, because in the segment of growing media needed for raising seedlings and vegetables, companies operating in Latvia have won a very substantial market share,” says U. Ameriks. He draws attention to the fact that no EU document says a categorical NO! to the peat sector, with the exception of Latvia's Just Transition Fund, under which the use of peat in energy is to be discontinued from 2030. No commitment of a similar nature has been made by Finland, which is rich in peat resources, or by Latvia's northern neighbour Estonia.
“Finland's strategic energy reserve resource is still peat, particularly given the absence of energy supplies from the east,” says U. Ameriks. In his view, Latvia is taking on (imposing) greater obligations, which run counter to the sector's development. “The peat sector wants only one thing: let us work and plan long-term development. We do not need any support; that way the sector will make a contribution to rural employment, to the taxes paid and to growth in export earnings!” Uldis Ameriks is convinced, stressing that first and foremost the unwarranted “curse of fossility” must be lifted from the sector.
“Peat is a natural resource that renews itself slowly, and horticultural peat is, moreover, a renewable resource that can be used to achieve sustainability,” U. Ameriks explains. In his view, all the land-use sectors must work together, not only to hold their current positions but to achieve successful development. G. Gūtmanis, however, does not agree with what U. Ameriks says, as he believes that in holding back the peat sector the state is acting wrongly.
“Latvia's peat sector is undervalued, all the more so given that it is one of the world's leading suppliers of high-quality growing media, used to grow not only vegetables but all kinds of seedlings (trees included). All the more so if the tree seedlings that are planted go on to absorb CO₂ for many decades and produce oxygen — absorbing emissions, which is a very great benefit in mitigating climate change. The thinking has to change by 180 degrees: the peat sector must be developed and helped to carry out further (deeper) processing of the peat extracted — manufacturing products — thereby bringing Latvia's economy far greater income from abroad, from export markets,” G. Gūtmanis stresses. He does, however, conclude that on a large scale Latvia is similar to Lithuania, Estonia and Poland, the latter being a far larger and more influential player: “Allies are needed to get any decision taken in the EU, so it would be logical for Latvia to stick together not only with Lithuania and Estonia but also with the Visegrád countries — the Czech Republic, Slovakia, Poland and Hungary,” he says, agreeing that there are very substantial differences in agriculture between the bloc's southern and northern countries.
“The decisions that may work well in the southern countries do not work in our region. For example, within common European policy it is very hard to prove that we need to maintain drainage systems, because in southern Europe water has to be brought in rather than — as in Latvia — drained away,” G. Gūtmanis says by way of illustrating the differences, stressing that this is precisely why there cannot be identical solutions across such a highly diverse EU.
“We have to understand that situations differ and that approaches therefore differ too, but the one shared imperative — producing and securing food — is a matter of national security, particularly in a situation where borders ‘close' or something cannot be imported, yet the population still has to be fed,” says G. Gūtmanis.
M. Liopa is quick to add that Latvia's 700,000 ha of forest are so valuable precisely because they have been drained. “One of the most important factors in forest certification is sustainability, but in previous European Parliament terms disproportionate weight was given to nature protection requirements that had been exaggerated and misunderstood, rather than to real need assessed in the light of the situation in the particular country,” M. Liopa explains, backing up his point with an example in which “forest” means something entirely different — namely that in one of the EU's southern countries a forest is essentially pasture that has become overgrown with trees, which bears no comparison with forest in Latvia.
“When it comes to biodiversity, one of the factors cited is the amount of deadwood; in Latvia it is 23 m³/ha, one of the highest figures in Europe, and so in our climatic conditions it is logical that biodiversity will be considerably more impressive than in the southern countries,” says M. Liopa. He notes that climatic differences are stark confirmation that you cannot lump everything together.
“In southern Europe the sowing is finished, while in Finland it has not even started,” M. Liopa replies when asked for an example. In his view, the task of the MEPs elected from Latvia should not be to show off with proposals, initiatives or posts, but to stand up for specific decisions that benefit Latvia, whose people sent them to that institution.
“The fact that new ideas keep emerging about taking ever more land out of economic use, ignoring local conditions, is not normal. Precisely because we are so different within the European Union, policy on the use of land resources should also be left in the hands of the nation states, because forests in Latvia or Finland cannot be managed the way they are in Europe's southern countries, and it is exactly the same with agriculture and peat,” M. Liopa is convinced. In his view, the soundness of this idea is borne out by regrettable precedents in which common European decisions are not really applicable either in the north or in the south.
G. Gūtmanis points to another paradoxical picture: in places where natural assets have been found that need protecting, it is established some time later that they have been partly lost, and… the conclusion drawn is that more protection is needed. “At the same time, in areas that were not previously protected and where economic activity has taken place, the state of natural assets is actually better than in the protected areas,” says G. Gūtmanis. In his view, it is in a way paradoxical that natural assets arise and develop naturally in places that are not specially protected, rather than where strict restrictions or bans on economic activity have been imposed. “Nature acts as it sees fit; people must act logically and sensibly, and those who ruin nature must be held to account,” G. Gūtmanis is convinced.
A shift of paradigm
“A shift in the paradigm of thinking within Europe's institutions is needed, because for the most part the requirements come from the rules created in EU institutions; if here in Latvia everyone — officials and politicians alike — does not change their thinking, we will not be able to influence the big decisions being made in Brussels and Strasbourg,” G. Gūtmanis concludes.
In U. Ameriks's view, nature protection and national security are very significant factors: “Latgale is a region rich in peat resources where there are problems with employment; “Laflora” too was unable this year to take on everyone who wanted to work, because there are only as many jobs as there are, while construction of the peat growing-media plant has been postponed owing to uncertainty about the volumes of peat that will be available in future.” Uldis Ameriks points out that Latvia (and not only Latvia) is failing to meet its emissions reduction plan and will simply have to buy CO₂ allowances, which is why thought needs to be given now to the funding required for that purpose.
“One option is to fund the purchase of allowances out of payments from everyone living here; the other is out of payments from those who generate the emissions in question — but reducing production means fewer jobs and lower tax payments, which will have consequences for national security, because people are loyal when they have work and a future,” U. Ameriks reasons. He explains that the peat sector, a significant employer in Latgale, presents the opposite picture, since no new peat extraction areas are being allocated while the existing ones will at some point be exhausted; at the same time there are a great many such resources that do not lie within protected areas, yet no extraction is planned there. “National security requires defence systems, but with what money will we be able to buy them? That money can only be generated in the state coffers by economic development, not by contraction,” says U. Ameriks.
Without investment, competitiveness is lost
“Farmers are in a way more reckless, and so they invest regardless of today's risks or potential future ones, but the uncertainty comes not only from possible restrictions and new conditions affecting their operations, and from the war in Ukraine, but also from the approach towards the EU of that country (Ukraine), which is an enormous food producer,” G. Gūtmanis notes. He recalls that on questions of marketing food from third countries there is a debate in the EU about how it is produced — whether it meets the same requirements as producers within the EU.
“Unfortunately, the moment we stop investing in agriculture we lose competitiveness — the ability to sell our produce at economically justified prices — which is why farmers cannot afford not to invest,” G. Gūtmanis stresses. In his view, there should be special conditions in Latvia's border areas, which are at the same time the EU's external border.
“For example, for any production in the border area we could abolish the environmental impact assessment procedure and replace it with a decision by the local authority, which is essentially a simplified assessment of the potential plant's likely impact on the surrounding environment, thereby allowing the planned project to go ahead instead of sending the potential investor from one office to another for several years,” G. Gūtmanis proposes. In his view, a further additional solution would be to abolish real estate tax for potential investors once the project has been carried out, thereby creating new jobs for people and additional tax payments for the state coffers.
M. Liopa notes that forests, and Latvia's forests in particular, are of very great value, as the investments of many foreign companies demonstrate. At the same time, precedents abroad give cause for concern, where enormous corporations buy up forests and land so that they can serve as carbon stores — a mechanism for offsetting polluting activities — but no traditional economic activity (forestry, agriculture) takes place there.
Video of the discussion is available here: https://www.youtube.com/watch?v=M4NZOIwVlTg