Chapter 1.3

1.3. Strengths and weaknesses of the region

1.3.1. Strengths and weaknesses

Economic development

Strengths	Relevant indicators
Overall national economy is improving and macro-economic indicators are stable	GDP per capita at PPP - 6,200 EUR (1998) Real GDP growth - 5.1% (1998)
The agricultural sector is important for national economy in terms of both production and employment	Share of GDP - 10.1% (1998) Utilised agricultural area/total area – 54% Agricultural employment/total employment 21.4%
Competitive advantage for livestock production due to natural and climate conditions	N.a.
The quality of agricultural products has improved	N.a.
Farm structure has changed leading to an increase in the contribution to GAO from private initiative	GAO from private farms – 75.8% (1997)
Land reform is in progress	Will be completed before the end of 2000.
Harmonisation with EU legislation (the agricultural acquis) is under way	N.a.
Forestry is important for its natural resources and farm diversification opportunities	Wooded area – 30% Employment in forestry – more than 15,000
Fishery sector is significant source of income in coastal areas, and is another farm diversification option	N.a.
Lithuania has an attractive countryside, landscape, wildlife and cultural heritage. The attractiveness of the rural areas is a strength in order to diversify of agricultural activities	N.a.

Weaknesses
The agricultural sector is characterised by a low level of productivity (could indeed be a threat to competitiveness of agriculture and rural areas on a whole)	Yield: grain - 2.5 tonnes per ha milk – 3.2 tonnes per cow
Lack of capital (investments)	N.a.
Fragmented agricultural holdings	N.a.
Poor quality breeds and inadequate hygiene standards	N.a.
Poor educational skills with farmers	Farmers with a professional/technical education – 38% of farmers
Lack of specialisation in farming	Mixed farms – 82% of farms
Land market is not functioning optimally	N.a
Inefficient food processing industry due to lack of machinery, over capacity	Food processing industry production/total industrial production – 28%
EU harmonisation not yet complete	N.a.
Poor infrastructure (transport and communication)	N.a.
Lack of administrative structures and capabilities at de-central level	N.a.
Ageing population is a weakness for economic vitality in rural areas	Rural population above 65 – 23% of total rural population

Social development

Strengths	Relevant indicators
Good balance between rural and urban population and settlements	Number of rural settlements – approximately 22,000
Due to rural-urban migration slowed down, more young people are available in rural areas

Strong rural civil society with strong commitment, social structures and community feeling	N.a.
Weaknesses
Low educational level	N.a.
Over dependence on agriculture in rural areas	Employed in agriculture – 58% of total rural employment
Rural disposable income is low compared to urban disposable income thereby decreasing rural living standards	N.a.
Basic living conditions (e.g. water supply, sewage, telephone) are much poorer in rural areas with consequences for quality of life.	Sewage systems available for inhabitants – 733 systems (1997) Number of telephones per 100 rural inhabitant – 13.4 (1997)
Social and cultural services are weak	N.a.
Ageing population is a problem for rural civil society and overall rural vitality	Rural population above 65 – 23% of total rural population

Environmental development

Strengths	Relevant indicators
Lithuanian rural areas contain landscape and wildlife of great ecological and scientific value (bio-diversity)	Natural parks in ha – 734,000 ha Forests in ha – 1,888,000 ha Number of landscape objects - 688
Lithuanian soils, climate and water resources are great ecological and economic assets	-
A network of protected areas has been developed over the last five years	Natural parks in ha – 734,000 ha Under protection rule – 11.2% of total area
Lithuanian rural areas have many buildings of historic heritage, architectural value and interest.	Number of buildings of registered in Cultural Heritage Register – 59 manors

Weaknesses
Intensive farming using fertilisers, pesticides and chemicals will cause substantial environmental damage, e.g. soil and water pollution through erosion, and contamination with heavy metals	-
Contamination of ground water sources because of poor handling of animal waste	-

1.3.2. Ranking of drawbacks identified

To summarise, the following major drawbacks of Lithuanian agriculture and rural development that need to be addressed were identified:

1. Low level of efficiency in agricultural sector, high energy costs and low level of farm technologies are ranked as high[1]. The issues will be addressed by supporting capital investments in agricultural holdings (proposed Measure 1). It will exploit available human resources in rural areas, as well as natural conditions and traditions in agriculture.

2. Small average farm size and fragmented agricultural production are also ranked as high. Theses will be addressed by supporting on-farm investments and promotion of structural changes in agriculture: providing higher level of support to young farmers and co-operated projects.

3. Low quality of agricultural produce and use of poor quality breeds and seeds is of high importance. Support to investments in agricultural holdings (new technologies and equipment) and promotion of quality breeds and seeds, together with the development of supporting sectors (e.g., animal breeding) will address the drawback.

4. High importance is ranked for processing of agricultural products that is very fragmented, characterised by over capacities and needs to improve in order to meet quality, food safety, environmental requirements. The issue will be addressed by supporting capital investment in the processing of agricultural and fisheries products (proposed Measure 2).

5. Lower average rural household disposable income is marked to be very important issue. It will be indirectly addressed promoting investments in agriculture and diversified activities (proposed Measure 3).

6. Over dependence on agriculture as source of income is classified as highly important. Promoting multiple activities in rural areas will contribute to alternative income. This will exploit existing favourable natural conditions, rural landscape and heritage, as well as experience in other sectors (e.g., SME, forestry, fisheries).

7. The future technology investments in agriculture will decrease employment opportunities and income in rural areas dependent on the sector. This highly important issue will be addressed through supporting diversified activities.

8. Low standard of living in rural in terms of physical and social infrastructure is highly ranked. Renovation of villages and development of rural infrastructure will aim at minimising gaps between rural and urban areas (proposed Measure 4).

9. Low level of education among the farmers is classified as medium drawback. Directly it will be addressed providing technical assistance, developing strategic and technologic knowledge (partly proposed Measure 5)

10. Ageing of farming and rural population (medium rank) will be addressed through supporting young farmers and entrepreneurs, improvement of social infrastructures in rural areas. Improvement of social infrastructures will lower threat of continuing decrease in rural libraries and culture centres.

11. Intensification of agriculture will impact negatively environmental conditions. To address the emerging threat, first, special focus will be paid to organic farming by providing support at a higher rate. Second, project selection criteria will include environmental appraisal.

[1] Ranking was decided after taking into the consideration of the overall importance of the aspects to rural development in Lithuania

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