“ Situation in Latvian agricultural cooperation today ”

1. Indulis Jansons Chairmanoftheboard, Latvian Agricultural Cooperatives Association (LACA) “Situation in Latvian agricultural cooperation today”

2. LACA – one of the most influential farmers’ organizations in Latvia, also a member of the advisory board to L. Straujuma, the Minister of Agriculture, founded in 2002 LACA – association that performs compliance assessments of agricultural services co-operative societies (ASCSs). LACA – improved the compliance assessment system of ASCSs, also enabling compliant co-operatives to receive various types of support and other advantages. Latvian Agricultural Co-operatives Association (LACA)

3. co-operation in agriculture sectors in Latvia starts from year 2000, with changes in legislation of co-operativesand establishing a new term: agricultural services co – operative societies (ASCSs) From year 2003 ASCSs had State support for establishing for new co-operatives (support was for promotion of co-operation has been defined as a priority in agriculture on a national level. National policy is oriented towards the promotion of co-operation. developmentofAgriculturalco-opertivesinLatvia (1)

4. developmentofAgriculturalco-opertivesinLatvia(2) Number of farmers in co-operatives Neto turnover of co-operatives milj.LVL

5. co-operation has developed best in the dairy and cereal sectors; these sectors have the highest number of co-operatives. • co-operation has seen little success in the meat sector due to the grey market and the poor experience by other co-operatives. • co-operationhasseen little success inthe organic farming; there's not lot of farmers who want’s or who has necessity to co-operate. • agriculture technique co-operatives; they aren't very marketable, every farmer wants to buy his technique. Development of co-operation in Latvia in various fields (1) Registred co-operatives in Latvia Compliant co-operatives

6. most agricultural services co-operative societies only sell their produced outputs and do not process the outputs produced by their members. successful examples in dairy farming – 4 dairy-producing co-operatives have their own processing enterprises; 3 dairy-producing co-operatives construct of a joint dairy-processing enterprise «Latvijas piens». Development of co-operation in Latvia in various fields (2)

7. Support under the measure “Modernisation of Agricultural Holdings” of the Rural Development Programme. Support under the measure „Adding Value to Agricultural Products” of the Rural Development Programme. Support under the measure „Setting up of Producer Groups” of the Rural Development Programme (only to commitments undertaken). Aid in the form of state subsidies to compliant ASCSs for long-term investments (construction projects) and for the partial settling of interests of short-term credits, leasing and factoring deals. Compliant ASCSs are exempt from corporate income tax. Compliant ASCSs pay only 50% tax on their trucks. Support to/advantages of compliant ASCSs (1)

8. ASCSs are exempt from tax on service cars. Compliant ASCSs are eligible for credit guarantees from the Rural Development Fund. Compliant ASCSs are eligible for credit guarantees from the Latvian Guarantee Agency. Compliant ASCSs are eligible for export credit guarantees from the Latvian Guarantee Agency. Compliant ASCSs can obtain loans from the Mortgage Bank pursuant to Regulations on loans to foster the development of micro-, small and medium merchants and agricultural services co-operative societies. Pursuant to Section 3 Commercial mortgage law, an ASCS may be registered as an aggregation of property subject to the mortgage. Support to/advantages of compliant ASCSs (2)

9. Compliant ASCSs can obtain loans from the Mortgage Bank for the purchase of current assets. Pursuant to the Law “On Value Added Tax”, a farmer handing over unprocessed self-produced agricultural products to an eligible ASCS, shall receive a compensation amounting to 14% of the value of these products. The compensation may also be received by the compliant ASCSs if it is not the taxable person and of it pays the full amount of the compensation received to the farmer. Support to/advantages of compliant ASCSs (3)

10. Latvijas Lauksaimniecības kooperatīvu asociācija Republikas laukums 2 – 519, Rīga Tel.+371 67027546, e-mail: birojs@llka.lv www.llka.lv Thank you for your attention!