OREANDA-NEWS. April 30, 2013. In terms of production efficiency, Estonia’s agricultural sector is clearly ahead in the Baltic region, and as a result of mergers large enterprises are dominant here, whilst there are still many small producers in Latvia and Lithuania.

“In Estonia, the average size of a farm is 48 hectares, while in Latvia and Lithuania it is 20 and 10 hectares respectively. Considering the size of agricultural land and the number of producers in the country, it may be said that the consolidation of Estonia’s agriculture is four times higher than that of our southern neighbours. When in Latvia and Lithuania 8 to 9 per cent of everyone employed works in agriculture, then the number in Estonia is twice as low at 4.4 per cent,” said Eerika Vaikmae-Koit, Head of Retail Banking and Technology at SEB Pank.

Vaikmae-Koit added that successful agricultural enterprises have followed the motto of increasing production efficiency for many years now and thanks to that the finances of these enterprises are stronger than ever before. “Acquisition of new equipment is at the top of the agenda – last year, leasing at SEB for acquiring agricultural equipment increased 59 per cent. Last year, the number of long-term investment loans given was 38 per cent higher and the loans were mostly used for building new modern cattle sheds,” Vaikmae-Koit noted.

“It is most likely that the consolidation of production will continue in Estonia, as well as in Latvia and Lithuania, because the sales growth rate, profitability, liquidity and funding of large producers are clearly in a better state than that of smaller producers. In the current year and in the following years, investments will primarily be aimed at buying producers and agricultural land as well as at upgrading machinery and equipment,” said Vaikmae-Koit.

This year, Estonian farms that are also SEB’s clients are planning more investments than other types of companies – a conclusion suggested by a survey conducted among entrepreneurs last autumn.

This year, 65 per cent of the farms that responded to the survey are planning investments exceeding EUR 30,000, whereas the average number of such enterprises in Estonian was significantly lower with 48 per cent. Innovation is being planned this year by 67 per cent of farms, topping the Estonian average (62 per cent).