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Agro-Industry Development
Agriculture
was one of the most important economic
activities during the Soviet era. At the end of
the 80s, agriculture employed over 200 000 or
16% (IMF) of the work force and accounted for
21.1% of the GDP. Over the 1990s, the relative
importance of agricultural production in the
Latvian economy has declined sharply.
Agriculture's share of GDP reached only 4.5% in
2002, output being less than one-third of what
it was in 1990. (International Monetary Fund;
Central Statistical Bureau of Latvia; EBRD's
Investment Profile) Nevertheless, the sector
seems to have overcome the worst years since
agricultural output rose by 5.9% in 2001 and
continued to rise also in 2002.
Today, the agricultural sector is fully
privatised, and composes of a large number of
small farms, although restitution of private land
to the original owners has been delayed. One of
the biggest problems is that the sector remains
highly inefficient - although agriculture
accounts for only 4.5% of GDP, it employs about
15% of the total work force. Latvian agriculture
survives through the protection of high tariff
barriers. In the second half of the 90s, several
agricultural and rural development programmes
have been introduced, some of them in
association with the EU (SAPARD) or the World
Bank. (EBRD's Investment Profile 2001)
Nevertheless, the agricultural sector is facing
deep troubles and in the future
many farms will have to close their operations.
Farm size is small (24 ha on average) and there
are only five cows in two thirds of the farms.
Equipment is outdated and quality has not been
up to the EU-standards. Thus, exports to Russia
are of significant importance to Latvia. Despite
protection, the agricultural sector is able to
supply only two thirds of the domestic demand
for meat and as a result, the rest have to be
imported. (Finpro)
The main products of Latvian agriculture have
traditionally been milk, meat, grain, crop,
sugar-beet and vegetables. However, over the 90s
only the production of sugar-beet has stayed at
the level of 1990 or increased. At the same time
milk, egg and total crop production has
contracted by a half and livestock and meat
production is only one-fourth of the 1990 level.
Situated in north-eastern Europe with a coastline along the Baltic Sea, Latvia is geographically the middle of the three former Soviet Baltic republics.
It has language links with Lithuania to the south and historical and
ecumenical ties with Estonia to the north.
Not much more than a decade after it declared independence following the collapse of the USSR, Latvia was welcomed as an EU member in May 2004. The move came just weeks after it joined Nato. These developments would have been extremely hard to imagine in not-so-distant Soviet times.
Riga: Eclectic capital is on Unesco's heritage list
For centuries Latvia was primarily an agricultural country, with seafaring, fishing and forestry as other important factors in its economy.
Latvia was under foreign dominion from the 13th until the 20th century. After the first world war it declared independence which Russia recognised in 1920.
Two decades later, following a pact between Stalin and Hitler, Soviet troops invaded in 1940 and Latvia was absorbed into the Soviet Union. Nazi forces pushed the Soviets back in 1941 but the Red Army returned in 1944 and
remained for half a century.
During the Soviet period, which ended in 1991, Latvia underwent heavy industrialisation, and experienced a big influx of immigrants from other
parts of the USSR, mainly Russia.
About a quarter of the population is Russian-speaking and the rights of this section of society have been a thorny issue since independence. Government reforms introduced in 2004 to restrict the use of the Russian language in schools remain controversial.
Legislation on citizenship was toughened up in 2006. Candidates who fail a Latvian language test three times will be denied citizenship. People without citizenship are entitled neither to vote nor to obtain an EU passport.
Like its Baltic neighbours, in the 10 years since independence Latvia made a rapid transformation to embrace the free market.
Latvia's economy grew by 50% between 2004 and 2007 but the global financial crisis of 2008 hit the country hard. An economic contraction of 12% and a 50% increase in unemployment was predicted for 2009, and the government was prompted to seek aid from the International Monetary Fund (IMF).
The social turmoil triggered by the financial crisis led to the fall of the government in February 2009.
An orthopedic surgeon who took part in clearing up the consequences of the Chernobyl nuclear accident in 1986, Valdis Zatlers was born in 1955 and became active in the pro-independence Popular Front under Soviet rule in 1988.
He later scaled down his political activity to concentrate on medical work. Parliament elected him president on the nomination of the centre-right governing coalition in 2007.
Prime minister: Valdis Dombrovskis
Valdis Dombrovskis leads a six-party coalition that was approved by parliament in March 2009. Mr Dombrovskis succeeded Ivars Godmanis, who resigned in February after protests at his handling of the economic crisis.
A member of the European Parliament from the main centre-right New Era opposition party, Mr Dombrovskis has assembled a coalition including some parties from the Godmanis government plus a smaller centre-right party, the Civic Union.
With the economy expected to contract by more than 18% in 2009, his government pledged to introduce economic recovery measures.
In July, his government agreed a series of deep public spending cuts with unions and employers to rescue the state from bankruptcy, including a 20% reduction in public sector pay.
Born in 1971 and a physicist by training, he was an MP and finance minister in 2002-2004.
Latvia's TV market is dominated by the commercial LNT, two networks operated by the national public broadcaster, commercial TV3 Latvia and the Baltic variants of the main Russian networks. Public radio and TV are financed by state subsidies and advertising.
The media operate freely, with few legal restrictions. A law provides prison terms for libel and incitement of racial hatred. Around 140 newspaper titles reflect a variety of political views.
By March 2008, around 1.3 million Latvians were online (Internetworldstats).
Country profile: Latvia
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