On the Threshold of Coming-True Dreams

Algirdas Mykolas Brazauskas, Prime Minister of the Republic of Lithuania

Today we view Lithuania’s membership in the European Union and the ongoing European integration processes in the wider context of international politics. Lithuania’s EU and NATO membership firstly means saying good-bye to political cataclysms and shocks and return to traditional values of Western democracy.
The Euro-Atlantic integration of Lithuania and other Eastern and Central European countries symbolizes unification
of the European Continent that ideologically and politically was divided by the Cold War.

Our country that for the largest part of the 20th century was not allowed to be an equal player on the European political stage today must learn a lot and catch up with the EU colleagues and partners in many spheres. However this does not mean that we come to the EU only to gain benefit. Lithuania is also ready to “give”, than means to bring its own contribution into the development and implementation of the common EU policy. I would particularly stress the foreign policy. Lithuania boasting great experience in political and economic cooperation with Eastern neighbours already today actively participates in formation and realization of the common EU policy with regard to future Eastern neighbours Russia, Belarus and the Ukraine.
We come to Europe as a reliable partner cherishing the same democratic values of the Western cultural tradition that were observed in the creation and development of the European Union.
The EU membership brings not only guarantees for political stability in our country. The intensifying international economic-commercial cooperation and growing foreign investment will induce further economic progress. The Lithuanian economy is experiencing the fastest growth in the Baltic Sea Region. In 2002, Lithuania’s GDP grew by 6,7%; in 2003 - by 9%.
The present-day economic development level in Lithuania lags behind the EU average. Thus our vision and goal after joining the EU is to maximum benefit from the membership-brought possibilities including the assimilation of EU structural funds. This should help to secure more rapid economic growth and improvement of standard of living. By all means, reaching the EU average is not an easy task. This aspiration cannot be attained in a year or two, however the present-day economic growth rates and the EU membership benefits give us a hope that in the nearest 10 or 15 years Lithuania will make huge progress in all economic sectors.

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THE LITHUANIAN VILLAGE -
AN IMPORTANT PART
OF NATIONAL ECONOMY

Jeronimas KRAUJELIS,
Minister of Agriculture of the Republic of Lithuania

It happened so that having undergone numerous changes the Lithuanian village still remains the cradle of our national economy, traditions and culture. Although the number of people living and working in villages is constantly decreasing, the economic importance of agriculture to the country is more significant than in other countries of the European Union.
The first years of the new century were the years of dynamic changes for the Lithuanian agriculture. In 1999 we were invited for official negotiations on the EU membership, on 13 December 2002 we have completed them, and from 1 May 2004 we are already the Member States of the European Union. If compared with other countries, our negotiations have been favourable: in 2004-2006 for each Lithuanian agriculture worker will fall in average LTL 14.6 thousand, accordingly to Latvian - LTL 13.4 thousand, to Polish - LTL 8.5 thousand.
In comparison with our neighbours we have negotiated the biggest quota of milk, of which for one inhabitant falls 489 kg (in Latvia - 311 kg, in Poland - 246 kg).
It is inspiring that the efficiency of agriculture is growing during the recent years thanks to the European Union and national support, the tenacity of agriculture workers, modernisation of activities. The growth is as follows:
* Average annual productivity of cows during the years 2000-2003 increased from 3.7 tons from a cow to 4.0 tons;
* Grain fertility - from 2.7 t/ha to 3.07 t/ha;
* The share of the extra type milk in the engrossed quantity increased from 34% to 90% in the beginning of 2004;
* Fivefold increased the certified agricultural landed property for ecological farming; currently there are 700 of such;
* Particularly rapid development of rural tourism, growth of activity of rural societies. Our village becomes more attractive.

At the time when the negotiations started we had only 3 agricultural produce processing enterprises meeting the EU requirements. At present there are already 80 of them.
Modernisation of produce processing has partly determined the fact that during the last seven years, in the year 2003 for the first time the balance of foreign trade of agricultural and food products was positive: national export exceeded the net import by LTL 71 million.
These are the first signs showing that we proceed in the right direction. The results of coming years will be determined by the results of today’s work. And for this is required mutual understanding between the producer-processor-consumer-agriculturalists’ autonomy-government.
This year the financing of agriculture, forestry, melioration, fishery and veterinary has increased almost by twice in comparison with 2003 (2003-LTL 0.8 billion, 2004-LTL 1.4 billion). The level of direct payouts, according to the absorption of means, will grow five or six times if compared with the year 2003.
Legal basis for the work in the European Union is in principle ready, financial opportunities are favourable and it is important to make use of them. For this reason we have to improve the administrative capacities of the agriculture, to inform and induce agriculturalists to follow new opportunities. All this will be reached by united efforts and work.
The totally new trend of support - compensation payouts according to the measures of Rural Development Programme (early withdrawal from the agricultural commodity production, locations less favourable for agriculture and locations with environmental restrictions, agrarian environment protection, foresting of agricultural purpose land, supporting semi-natural farms under reconstruction, supporting the implementation of the EU requirements and technical support) - for these purposes in 2004 the amount of LTL 632.5 million is foreseen.

The investment support will increase: in 2004, according to the priority measures for rural development and fishery provided by the General Programming Document (investments into agricultural possessions, settlement of young farmers, processing of agricultural produce and improvement of marketing, stimulation of rural locations’ adjustment and development, forestry, leader+, training) the amount of LTL 169.6 million is allocated.

In the course of our integration to the European Union our main task has been a sustainable and continuous development of Lithuanian agriculture and village with modern industrial and social infrastructure and friendly environment enabling production of quality products and provision of services, and for the inhabitants of rural areas - favourable work, business, domestic and social conditions.
The results that have been achieved by Western European countries during several years or several decades have to be overcome by us during a few years.

* From 2000 the subsidizing of production was rejected by shifting to support provided in direct payouts (in 2000, LTL 36 million of direct payouts and compensations were paid, in 2003 - LTL 197.6 million).
* Excise duty refunded for the diesel fuel (in 2000 - no refunding, in 2001 -LTL 45.8 million refunded, in 2003 - LTL 80.8 million refunded). From 2004 the diesel fuel is sold for agriculturalists without excise duty.
* The Agriculture Loan Guarantee Fund provides more guarantees for the loans taken from banks by agriculturalists, by agricultural produce processors, by rural businessmen (in 2000 such credits received the guarantee of LTL 0.4 million, in 2003 - LTL 64 million).
* Compensation is given for a part of credit interest, costs of purchasing new agricultural mechanisms, investment costs for modernisation of dairy farms.
* Young settling farmers receive compensation of 40% for the purchase costs of building materials and articles.
* Compensation is given for a part of investment costs of Agricultural Cooperatives for purchasing of long-lasting property. Favourable to the development of cooperation Amendments of the Law on taxes were adopted.
* On 27 February 2004 ended the last stage of submitting applications for the EU Special Pre-Accession Programme for Agriculture and Rural Development (SAPARD), which was under implementation for more than two years’ period. In total there were received 1159 applications, signed 667 agreements for support, the amount of LTL 537 million allocated for their implementation, still a certain part of projects is under evaluation. 210 projects supported by the SAPARD have been already implemented. Lithuania is among the leaders in regard of employing the SAPARD funds. These means make a significant support for the growth of competitiveness of our farms.

During a very short time the agricultural sector has fulfilled not only the tasks and objectives of EU accession period, but it also has fulfilled certain membership requirements, such as: the system of administration of the SAPARD Programme has been established, the support of the Programme is being successfully absorbed, harmonisation of national legal acts is completed. Almost 60% of legal acts allocated to Lithuania for reviewing and harmonisation have fallen to the agricultural sector.

This year is the first year of our work in line with the EU regulations. It will be not easy, however I believe that in future, with increasing experience, it will become more clear and easy for us to work.

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THE LITHUANIAN COUNTRYSIDE -
THE CRADLE OF THE NATIONAL HISTORY, CULTURE AND TRADITIONS

Gintautas KNIUKŠTA, Chairman of the Committee on
Rural Affairs of the Seimas of the Republic of Lithuania

33,1% of the Lithuanian population live in the countryside, 17% of the employed in Lithuania are engaged in agricultural activities. The agricultural land covers even 53%, forests - 31% of the country territory.

... When I told the members of the French Parliament that the Lithuanian farmers produce 7 thousand kg of milk per cow and the wheat harvest is 70 cwt per hectare they smiled, however when I told them that the Lithuanian farmers export their production to over 80 countries and last year the positive foreign trade balance in agricultural and food products was registered smiles from their faces disappeared and they, as if having agreed in advance, started repeating, “Now we see that we have underestimated diligence and aggressiveness of the Eastern European farmers”...
Lithuania has joined the community of free, democratic and solidary nations on 1 May 204. During the accession preparations we have made great progress in agricultural, processing and other activities. The achievements are obvious on the country scale, also in the agricultural sector, especially bearing in mind limited budgetary financing and the necessity to modernize Lithuanian farms and diversify economic activities in rural areas.
Upon the EU accession, Lithuania will have to observe the Common Agricultural Policy principals. Nevertheless, the main task of the Lithuanian State will remain the same as laid out in the strategic planning documents - sustainable agricultural and rural development with modern production and social infrastructure and healthy environment providing rural residents with favorable business, work and social conditions.
One the major tasks of the EU Member States is supporting the income of producers of agricultural products. In recent years, aid instruments used in the Lithuanian agricultural sector have been gradually harmonized with the EU Common Agricultural Policy principals (introduction of direct payments, investment support, etc.).
The EU accession negotiations have been successfully completed; the national legislation has been harmonized with the EU law.
In 2002, the “umbrella” Law on Agricultural and Rural Development was adopted. Lithuania has negotiated 55% of the EU level for direct payments to reach the Lithuanian farmers in 2004, also has approved agricultural and rural development strategies until 2006 and until 2015.
Greater support has been envisaged for the strategic diary sector. In 2001, the diary sector did not receive any state financial aid, while in 2003 the support already mounted to LTL 100 million. Farmers engaged in agricultural activities in less-favored areas will also receive larger support. Great changes have occurred in developing organic farming, the number of certified farms grew by three times last year and amount to 100 as of the present day.
The SAPARD programme was launched at the end of 2001. 606 agreements for the support of LTL 520 million were signed in 2002-2003.
The Cooperation Congress, the first after the restoration of Lithuania’s Independence, was held in 2003 that encouraged the establishment of cooperatives. The Law on Bio Fuel has been enacted; a part of agricultural production is already used for production of bio-fuel. The Law on Excise Taxes provides for excise-free sale of diesel fuel to producers of agricultural products from 2004.
The land reform has taken speed. As of the beginning of 2004, ownership rights were restored to 88% of land area indicated in citizens’ applications. Lithuanian legal entities have been given a right to buy agricultural land by amendments to the Constitution. The transitional 7-year period has been set for sale of agricultural and forest land to foreign nationals.
The Agricultural Census, the second in Lithuania’s history (the first was arranged in 1930) was conducted in 2003.
Lithuania has significantly improved the quality and safety of agricultural products, has introduced veterinary, phytosanitary, environmental and other standards. 131 enterprise operates in conformity with the EU requirements, of which are 22 milk, 37 meat and 9 poultry processing companies. The year 2003 witnessed the positive foreign trade balance in agricultural and food products after the period of several years.
Rural communities get established in Lithuania, their present number totaling 400.
The integration process has already demonstrated that we must continually search for and have partners in the European Union. Thus, the Committee on Rural Affairs has actively collaborated and collaborates with its counterparts in other EU Member States and aspirant countries. For three years we exchange delegations with Estonia, maintain business-like relations with the neighboring Poland. These days, as already a full and equal EU member, Lithuania receives the delegation of the Committee on Rural Affairs in the Finnish Parliament. Being a EU member, Lithuania will assume more rights, will participate in the EU law-making and together with like-minded bodies and partners will protect its national interests.
The EU will exercise common, clear and stable agricultural policy in all Member States. Lithuania will not only implement the EU Common Agricultural Policy but also will directly participate in reforming it.
Although land and capital are important to agriculture, the key factor remains a man. In this relation farming results will be decided by knowledge, information and initiatives. For instance, almost half of the US farmers handle the documents for the state aid at their homes. In Lithuania, computers still are a great rarity in rural areas.
The Lithuanian countryside needs young and educated people who in their turn demand better than present business conditions. I also think that we all comprehend that the EU membership puts importance to other issues, like keeping to veterinary, phytosanitary and environmental requirements; the technological knowledge should be accompanied by specialization, cooperation, development of organic farming and guiding activities to the potential markets and a clients.

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What are we and what are our expectations while joining the European Union?

Jonas RAMONAS, Chairman of Lithuanian Chamber of Agriculture

Lack of interest integration
We should dwell upon one area extremely sensitive to euro-integration. This area is agro industrial sector which has always been of big importance to Lithuania. It is sufficient to mention that up until now one third of the whole population of the country lives in the countryside. Therefore the interests of people belonging to this social group should be protected first of all.
The EU Member States played the major role during the EU accession negotiation process. This could be explained as the candidate countries were in worse situation as if asking for something. On the other hand, new member states were not able to come up with the uniform position throughout the whole negotiation process except for few minor matters. Therefore the outcome of the negotiations regarding direct payments to farmers was indeed pathetic as amounted only up to 25% of the level assigned to the old member states. Later on because of the “tough” position of Poland the European Commission has cushioned the conditions by agreeing to increase a little the percentage of direct payments at the expense of structural funds and national budget assignations. Transitional preferential periods regarding financial input into the EU budget have not been proposed neither to Lithuania nor other states. This reproach is targeted at ourselves, not Brussels. Most probably candidate countries were too focused on their own internal political matters and proved to lack the will to prepare integrated negotiation position at least for agriculture that proves to be one of the most sensitive sectors to all countries.

I would think that it is not yet too late to do something. We must take into account the present reality and substantiate it by arguments. Specific historical circumstances played their role when many years ago Spain and Portugal joined the EU. Agricultural production output in these countries accounted for big comparative weight in their economies and the number of population living in rural areas nearly coincides with the one of Lithuania.
Current circumstances are completely different when the majority of new members are breaking free from the soviet heritage and are in the process of reforming their economies. On the other hand, we are merging into the EU after the first steps of reforming Common Agricultural Policy (CAP) have been taken following long years of discussions in this regard. Judging from general positions it is unreasonable to promote and increase the production volume of many agricultural products when there is a surplus of them in Europe. The objective of the CAP reform is to gradually separate support to the countryside from stimulation of the growth of production volumes. However, general interest requires assessment of different level of intensity of agrarian sectors’ production in the old member states and the future ones. Therefore it would be useful to look for different models of CAP reform. The harmonization of interests and positions will never be a finite process as it is political and economic phenomenon. On the other hand, the EU member states first of all think of their own interests by changing already agreed upon positions and by setting transition periods for free movement of labor force.

We expect economic order
What do we indeed expect? First of all - order. Although Brussels’ bureaucracy is often cursed, farmers will not face harder life in the EU. Primarily due to the fact that production costs will be balanced against product sale prices.
Lithuanian farmers would have been better prepared for the integration if the government had avoided making several mistakes. One of them is the method of management of agricultural product processing companies, especially in milk sector. Is it normal that the average loss making of dairy farms during the last fours years amounted to 14-16%, and in 2003, the crucial year, has reached its record level: farms sold basic fat milk at 24% lower prices than actual milk cost. Where from farmers are supposed to get resources for modernisation of farms if their work is loss-making? However, this situation can turn to the milk processing companies in a different way. Farmers are actively searching for potential markets elsewhere - in Poland, Estonia where purchase prices are 1,5 and more times higher. Obviously processors will not stand such competition; however, such situation is disadvantageous both to the consumers and the state.
What is worse is that situation is likely to remain the same this year. Having started CAP reform the EC has retracted target milk purchase price which acted as an important economic lever of farmers’ income. The so called interventional purchases of milk and meat products and export promotion were supposed to become as certain shock-absorbers starting with May 1. These measures would have improved financial status of some processing companies and farmers could have expected the increase of purchase prices of raw milk. Unfortunately, government institutions failed to prepare to apply these measures.
Despite these difficultly solved problems farmers look into the future with hope. We expect to receive direct payments for crops, suckling cows and slaughtering. More and more farmers are interested in compensational support forms. The objective of such support is to cover farmers’ income which is lost due to the restrictions of certain activities or other circumstances. Farmers will have the possibilities to receive compensations according to 6 rural measures. These are payments for early withdrawal from commercial agricultural production, farming in less favored areas and areas with environmental restrictions, for afforestation of agricultural land as well as others.

However, farmers will have to realize one important thing. Only conditions for receiving support will be created. Therefore farmers, aiming at receiving direct payments and compensational support will be obliged to adhere to strict EU requirements and obligations the violation of which might result in receiving heavy fines. In this way a psychological breakthrough will have to happen in farmers’ minds meaning the obvious but often neglected thing, that in order to receive something one has to take care of that oneself. Lithuanian Chamber of Agriculture as farmers’ self-governance organization actively disseminates this information to farmers, organizes seminars and visits local self government administrations.
It can be observed even now that the situation regarding future payments and support use is not particularly good. Seems that the government has made one more mistake by resolving to support all land users irrespectively of their place of residence and nature of their main activity. It is sufficient to mention that approximately 300 000 land users have registered in Agricultural Business and Rural Register which would be the basis for receiving the payments. Meanwhile there are only 70 thousand farmers who have registered their farms and who are indeed involved in agricultural business. What does that mean? First of all, the establishment of intensive farms will be impeded; secondly, big part of resources allocated for direct payments will in fact remain unused as potential recipients will fail to meet the requirements. The worst thing is the obvious lack of discussions while solving this important economic dilemma. Somebody’s narrow point of view was simply imposed.

The countryside must undergo the rebirth
If countryside does not revive, we will not be able to use possibilities provided by the EU for a long time. First of all cooperation of small and medium size farms must intensify which has not been the case until now. Already Lithuanian farmers of interwar period prompted by the academician P. ?al?ius realized that cooperation is nearly the only way of surviving competition. Currently there are many undergoing discussions regarding the benefit of cooperation. Of course after the privatization of processing companies in which farmers failed to interfere, horizontal cooperation will prevail. However, these cooperatives would be able to enter negotiations with processing companies regarding purchase prices as equal partners. This is especially important in milk sector as the activities of mobile milk collection points are being terminated and production of milk can accordingly decrease.
Various business companies and communities must bravely step into the rural areas. Faceless settlements and villages have to be reborn for the new European life, manors and ethnographic villages must be taken care off and rural infrastructure has to be developed. Structural investment support provided for investments in rural development and improving farm structures can be used to achieve these objectives. These are investments into agricultural holdings, establishment of young farmers, improvement of processing and marketing of agricultural products, and adjustment and development of rural areas.
By meeting integration challenges we must conquer political and economic, rural and urban opposition. It is important to discuss and defend our positions by presenting adequate arguments, and most importantly to remember that we are disputing over Lithuania and its countryside and not over our political parties’, or even worse, personal, ambitions.

Lithuanian Institute of Agrarian Economics is Becoming an International Research Centre

Docent, Dr Gediminas RADZEVIČIUS,
Director of the Lithuanian Institute of Agrarian Economics

In recent years, Lithuania has faced a need to restructure its economy in conformity with the laws of the market economy. Great efforts have been concentrated on the approximation of the Lithuanian legislation to the EU law. No less attention has been directed to applied economic research in different spheres, rural development and agriculture not being an exception.

the examination of the market development tendencies
The Lithuanian Institute of Agrarian Economics has carried out major researches in evaluation of the agricultural peculiarities in Lithuania and the status of separate regions on a country scale. The Institute has three main divisions Agricultural Policy Division, Information Management and Analysis Division and Rural Development Division and is engaged in diverse research activities. Specialists in agricultural policy analyse and forecast instant and long-term impact of Lithuania’s EU integration on agriculture, develop instruments for the implementation of agricultural and rural development strategy, prepare the monitoring system.
Last year, the Institute won four European Commission tenders: “Evaluation of the outcome in implementing Council Regulation No 3950/92/EEC establishing an additional levy on milk and milk products, Commission Regulation No1392/2001/EC laying down detailed rules for applying Council Regulation No 3950/92/EEC establishing an additional levy on milk and milk products”, “Impact of Lithuania’s EU integration on farm restructuring”, “Impact of Lithuania’s EU integration on the development of non-food crops and their cultivation in set-aside areas”, “Changes in customs policy related to the EU integration and their impact on foreign trade in agricultural and food products.”
The issue of searching for new markets is very important. We are actively engaged in the examination of the market development tendencies, drafting proposals how to enhance international competitiveness of agricultural and food products, analysing changes in the product price starting from the producer to the consumer. Increasing competitiveness stimulates investigation of the present situation, creating plans for the future and developing instruments to best assimilate market changes. One of the major goals in scientific research of the Institute is competitiveness enhancement of agricultural and food sector. We draft proposals for improvement of crop and animal production efficiency. The Institute staff accumulates and analyses the performance results of companies engaged in animal, fruits and vegetables processing. Each year, the Institute renews and supplements with new facts the analysis of the impact of the EU integration on the Lithuanian agricultural sector. The Lithuanian Institute of Agrarian Economics directs no less attention to rural and regional development. We analyse the experience of the EU countries in assimilation of the structural funds, discuss the amount of compensations to be paid to farmers engaged in agricultural production in less-favoured areas. We are also very much concerned about the issue of employment in rural areas, farmers’ income, etc.
the agricultural sector integration into the EU market is carried out under unequal competitive conditions
The old EU Member States and acceding countries direct great attention to the rural development policy. Researchers are also actively engaged in this process. The collaboration of politicians and scientists help in restructuring the EU common agricultural policy in conformity with the rural development needs. Integration of the Lithuanian agricultural sector into the EU market, compared to other EU Member States, is carried out under unequal competitive conditions (small manufacturers, underdeveloped cooperation, lower level of modernization of production technologies, etc.). Therefore, we find it very important to regularly analyse the agricultural and food products sector, economic and structural changes in activities of separate agricultural entities, integration impact upon the development of agricultural and food sector, timely identify problems. Last year, the Lithuanian Institute of Agrarian Economics carried out the analysis of the CAP mid-term interim review, examined the impact of the ongoing reforms on the development of the main agricultural sectors. The integrated information system is used for the monitoring and analysis of import and export in food products, drawing financial statements of agricultural partnerships and enterprises, and investigation of performance results of producers of agricultural products. The Institute has developed and administers the Farm Accountancy Data Network (FADN) according to the EU requirements.
priority to scientific research
Taking into consideration the present situation in Europe, the Lithuanian Institute of Agrarian Economics guides its activities to scientific research pertaining to rural development, agricultural economics, i.e. preparation and valuation of various state instruments. We also analyse EU measures and funds used in rural development, efficiency of SAPARD aid and structural funds.
Researchers of the Institute have worked out the project on the EU integration of the fishery sector. Lithuania’s’ economic and statistical data about fish stock, activities of fish processing companies and the fishing fleet are necessary for the development of the EU common fishery policy.
The Lithuanian Institute of Agrarian Economics carries out short-term assignments of the Republic of Lithuania Seimas, Government and the Ministry of Agriculture, closely collaborates, exchanges experience and information with the Lithuanian Chamber of Agriculture, Farmers’ Union, Association of Agricultural Partnerships, Lithuanian Agricultural Advisory Service, different societies and associations, companies and farmers. The Institute drafts business plans upon farmers’ request that comply with the requirements of structural funds, prepares studies on the business development potential.
The researchers of the Institute are well familiar with results of similar scientific research carried out in Lithuania and other countries, learn from colleagues, also share their own experience and knowledge with Lithuanian and foreign partners. The Institute specialists consult students and lecturers of the Lithuanian University of Agriculture, Vilnius University and other higher schools, Danish, Dutch, Latvian, Romanian, German, other colleagues. The researchers participate in programmes financed by the EU Fifth and Sixth Framework Programmes, World Bank, FAO and other funds. Three projects of the Fifth Framework Programme and one project of the Sixth Framework Programme are being carried out in 2004. The project Economic Analysis of the European Fishery Sector conducted in 2003 has been recognized the best in Lithuania and is described in the publication Lithuania in the 5th common programme. The researchers of the Institute are invited as experts to evaluate international projects on an individual basis. We hope that the improving scientists’ qualification and expanding relations with foreign colleagues will result in the larger number of international projects and increasing work volumes.
The Institute staff members have joined the European Economists Society, Nordic Science Council, world club of heads of institutes engaged in agricultural economics and rural research, other international organizations. The Lithuanian Institute of Agrarian Economics is becoming an international research centre for solving problems in the development of agricultural policy.

One of the activities of the Lithuanian Institute of Agrarian Economics is publishing scientific works and research papers, analytical editions, methodical guidebooks and recommendations. The Institute prepares and issues the following publications: “Marketing. Agricultural and Food Products” (published every quarter since 1998), “Lithuanian Agriculture” (published once a year since 1999), “Lithuanian Agricultural Science” (prepared together with the Academy of Science), “Data of Agricultural Respondent Enterprises” (published once a year since 1997), “Analysis of Economic Indicators of Farms in Lithuania and some EU Member States”, etc.

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EUROPEAN CARE FOR LITHUANIA’S ENVIRONMENT

Arūnas KUNDROTAS, Minister of Environment

CHANGES IN THE LITHUANIAN TRANSPORT SECTOR AFTER THE EU ACCESSION

Alminas MAČIULIS, State Secretary of the Ministry of Transport and Communications of the Republic of Lithuania

ON THE EUROPEAN HEALTH CARE ROAD

Juozas OLEKAS, Minister of Health

During twelve years after restoration of independence, many positive changes have occurred in the Lithuanian health care system. Some of the major are establishment of the institution of a general practise physician, changing the training system of physicians and paramedical personnel, promotion and development of private medical practise, restructuring of the system of health care institutions, introduction of advanced treatment technologies and new pharmaceuticals, safer and higher quality health care services and improvement of the pharmaceutical reimbursement system.
Our major goal is a healthy man, healthy society and healthy Lithuania. In this relation we direct huge attention to children’s health. Children are the Lithuania’s future and their health care shall become one of the national priorities. A prenatal care system has been developed in Lithuania. As a result, morbidity and mortality of pregnant women, women at childbearing and infants have decreased. Infant mortality dropped down almost twice.
The Lithuanian Ministry of Health strives to rationalize the health care system so that health is treasured, medical services are well-arranged and available to everybody, the work of physicians is respected and valued.
Lithuanian cardio-surgeons and their achievements are well-known and valued throughout Europe and the world. The first artificial heart implantation operations were successfully performed in 2003 giving hope to people seriously ill with heart diseases. Lithuania is deservedly proud of world-famous achievements of cardio-specialists, orthopaedists, odontologists, face and jaw surgeons, other specialists.
Lithuania anticipates significant changes in the health system after the EU accession. Already in 2004, we expect to receive around LTL 20 million from EU structural funds. This aid will be used for modernization and development of the system of general practitioners and reduction of mortality from heart and blood-vessel diseases. Restructuring of the Lithuanian health system is a continuous process needing application of progressing treatment methods. We will strive to make Lithuania’s health care system equal to the health system in the most progressive European Union Member States.

Lithuanian health system and policy

The Lithuanian Law on Health Insurance was passed in 1996. It provides for compulsory health insurance for all permanent residents in Lithuania, independently from their citizenship. The compulsory health insurance is exercised by the state institution - State Patients’ Fund (SPF).
Income of the budget of the Compulsory Health Insurance Fund in 2003 consisted of:
- compulsory health insurance contributions amounting to 3% of wages paid by enterprises, institutions and organizations for the employed persons - 20,6%;
- deductions of enterprises, institutions and organizations from the personal income tax (enterprises, institutions and organizations pay compulsory health insurance contributions amounting to no less than 30% from the personal income tax amount calculated for persons receiving income related with labour relations) - 51%;
- Republic of Lithuania state budgetary contributions for the insured by the state (pensioners, children, the unemployed, etc.) - 23,3%
- other income - 5,1%.
SPF spent EUR 158,8 per one insured person in 2003. The Compulsory Health Insurance Fund fully covers visits to the doctor, treatment at the hospital (including medicine), rehabilitation. 100%, 90%, 80% and 50% of the referent price is reimbursed for the out-patient treatment. Medicine included into the list prepared and approved by the Ministry of Health are subject for compensation (about 1400 medicine of different producers and of 400 different chemical compositions). 90% of the base price for the sanatorium treatment is being reimbursed for children under 7 years and the disabled up to 18 years.
Persons who are not covered by the compulsory health insurance may get only first-aid and have to pay for any other medical treatment at prices set by the Ministry of Health.
Funds used by the health sector in Lithuania make about 6,5% of the Gross Domestic Product.
The Law on Health Insurance also provides for additional private health insurance.

Public health

Lithuania implements targeted and gradual public health system reform using knowledge and experience of foreign countries. During twelve years of independent Lithuania, the conception of public heath has greatly changed. A modern public health concept is being developed. It aims at ensuring the efficient functioning of disease prevention and control system, development of health training and information systems by fostering professional education, implementation of the public health system reform complying with the EU legal requirements.
The public health care in Lithuania is exercised by the State Public Health Care Service with 7 subordinate national institutions and 10 territorial public health centres with 38 branches in districts, Radiation Protection Centre, Extreme Health Risk Situation Centre, Hygiene Institute encompassing Ecological Medicine Centre and Labour Medicine Centre.
The public health care is concentrated to public health monitoring, data analysis and expertise; preventive activities are conducted on a programme basis. The major tasks in public health care are spreading of information and knowledge about health, rapid reaction to public health threat, ascertainment and management of factors effecting health. Attaining these goals will enable to create a public and universal health potential by developing healthy life style and behaviour attitudes in the community, by protecting personal health from negative environmental factors and by preventing diseases.
The Lithuanian public heath care system is further harmonized with the EU legal requirements and integrated into the EU public health care system.

Personal health:
first aid, outpatient and specialized health care services

Specialized health care services and first-aid are rendered by state and private personal health care establishments. Persons who have chosen a specific primary health care institution that has signed an agreement with the patients’ fund receive all personal health care services foreseen in the capacity of the general practise physician for free. A physician employed in a private primary health care institution that has signed an agreement with the patients’ fund has a right to prescribe compensated medicine and direct an ill person to specialists for specific consultations.
The Ministry of Health carries out the restructuring of the system of personal health care institutions. It aims at securing residents needs for health care services, higher quality, better safety and availability of health care services and more rational use of resources.
The total number of hospital beds per 10 000 residents is 89,6; 40 physicians and 77,7 nurses fall per 10 000 residents. As of 2003 data, there were 181 hospital, 445 out-patient institutions and polyclinics in the system of the Ministry of Health (excluding private health institutions and those belonging to other ministries).

Personnel

13856 physicians, 2309 dentists and 26 918 nurses were employed in the Lithuanian health care system as of the beginning 2003.
The average wages of physicians made LTL 1234, nurses - LTL 770. The average salaries and wages in Lithuania amount to LTL 1174,9.

Training

About 300-350 students graduate in medicine every year.
The final study programme of physicians (post-graduate studies) has been approved by the Lithuanian Government Resolution No 1359 of 31 October 2003. Physicians of 44 professional qualifications are qualified following this resolution. About 20% of doctors choose the professional qualification of a family doctor.
A physician must improve the professional qualification for 200 hours every five years, of which 120 hours shall constitute courses organized by Lithuanian universities

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Changes in Activities of the State Medicines Control Agency of Lithuania

Prof., Dr Habil. Vytautas BASYS, Head of the State Medicines Control Agency of Lithuania

Professor, Doctor Habilis Vytautas Basys is the correspondent member of the Lithuanian Academy of Sciences. In 1991-1998 he held the position of the Chairman of the Board of the Lithuanian Pediatric Society. From 1991 to 2003 Vytautas Basys headed the Neonatology Clinics of Vilnius University, from 1998 to 1999 held the post of the Vice-minister of Health. Vytautas Basys was elected the corresponded member of the German Pediatric Society in 2002. Vytautas Basys is the co-author (together with K. Mancelis, A. Sinkus and K. Venckauskas) of the books “Paveldimos ligos”, “Vaisiaus ir naujagimių ligos”, “Pediatro žinynas”, textbooks “Vaikų ligos”, “Naujagimių sveikatos registro duomenys” (5 editions, together with co-authors). Vytautas Basys is the author of 170 scientific articles and over 200 publications.

In 2003, structural changes were carried out in the State Medicines Control Agency of Lithuania. The structure of the Agency was approximated to the European Agency for the Evaluation of Medicinal Products established in London. The medicines registration division was reorganized; the number of medicines control laboratories was reduced. Getting ready to exercise qualified medicines quality analysis we have plans to merge the remaining laboratories. As it is impossible to catch up with the technological progress and have all modern equipment, medicines manufacturers and wholesalers in medicines will have to use the services of other Lithuanian and EU laboratories.
The activity of the State Medicines Control Agency is best reflected in the medicines quality and efficacy. During the last three years, no cases of drug intoxication or unusual complications have been recorded. This demonstrates that our Agency duly protects the Lithuanian territory from unsafe medicines.
Over 6000 types of medicines have been registered in Lithuania. The Agency secures the sufficient amount of high-quality medicines used in treatment of all kinds of illnesses, strictly controls activities of all medicines manufacturers, wholesalers and drugstores.
In May 2004 the first EU directives on medicines registration, distribution and manufacture become operational in Lithuania. The medicines registration system was fully harmonized with the EU requirements in March 2003. One of the Agency’s tasks is to ensure that all medicines registered in Lithuania would meet requirements raised to qualitative production. Medicines coming from the EU countries actually conform to these requirements, however we will have to guide our activities to control and inspection of medicines imported from the so-called “third countries”, like Russia, Belarus, the Ukraine, Bulgaria, Romania and India.
The specialists of the Inspectorate of Pharmaceutical Companies closely collaborate with medicines wholesalers. Over 60 companies registered in Lithuania are licensed to trade in pharmaceuticals. The major problems are related with the Lithuanian manufacturers of medicines. This is a very sore issue as stopping activities of companies engaged in manufacturing medicines would mean the increase of the number of the unemployed and the lack for some cheaper medicines. Thus activities of those companies the production methods of which do not comply with the requirements of the Good Manufacturing Practise (GMP) will be suspended and they will be given some time to improve their production methods.
5000 of 6000 medicines registered in Lithuania are imported. This witnesses good Lithuania’s international collaboration in the sphere of pharmacy. In May 2004 the State Medicines Control Agency will become a some kind of international institution, as all medicines registered in the European Agency for the Evaluation of Medicinal Products in London will be automatically registered in Lithuania on the same day. Second, the mutual recognition proceedings become effective on the basis of which a medicine may be registered in some or all EU Member States. An application to register the medicine may be submitted in several states at the same moment. One of these states acts as the main evaluator, drafts notifications to other states, while the latter should recognize the registration in the course of 90 days.
Upon the EU accession, 30-50% of medicine will be subject for national registration. The international pharmacological alertness system will become effective that will control the undesired reactions to medicines. All countries will be immediately informed about the medicine that has caused the unknown reaction in one of the EU Member States. In case of a need, the specialists of the Inspectorate of Pharmaceutical Companies will carry out the on-the-spot production checks in those countries that will supply the medicine for registration in Lithuania.
The international cooperation has given our specialists opportunities to study, improve qualification and gain experience. Last year, we entered into cooperation with the Swedish Medical Products Agency and plan to sign the cooperation agreement with the Polish colleagues.

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WHAT DOES A TAXPAYER NEED?

Birutė JURGELEVIČIENĖ,
Head of the State Tax Inspectorate of Vilnius County

Enterprises, persons engaged in individual activities pay voluntary tax contributions into the state, municipal budgets, compulsory state funds under the procedure established by the Lithuanian legislation. Only a small percentage of contributions is exacted using forced tax exaction measures.
Those paying taxes timely do not wish to be inspected and distrusted. They would like to see a tax administrator as an equal partner who explains and gives advise how to avoid mistakes in execution of tax obligations.
The new Law on Tax Administration, amendments and supplements to other legislation made during the pre-accession period stress that a tax inspectorate is not a controlling institution but an adviser rendering all kinds of services that taxpayers need. The equal partnership is safeguarded by the Republic of Lithuania Constitution and other legal acts that are biding on both taxpayers and tax administrators. Only intentional tax evasion gives more powers to a tax administrator.
It is not easy to be well familiar with all tax laws, resolutions and normative documents, so what usually taxpayers need is professional consultations and explanations on different tax computation, declaration and payment issues.
Highly skilled specialists of the Education and Consulting Division of the State Tax Inspectorate of Vilnius County consult taxpayers in the inspectorate, also by phone, answer written and e-mailed inquiries.
Taxpayers may find the necessary information on the website of the State Tax Inspectorate (www.vmi.lt) that contains all tax legislation, amendments and supplements to tax laws, comments, orders, procedures, etc. Frequently asked questions and answers to them, information material and other publications, also tax declaration and payment calendar are available on the same website.
The homepage of the inspectorate offers articles from the national, specialized and regional newspapers and magazines.
Companies intending to conclude agreements with new partners may find all tax-related information about that company, if it pays taxes, uses necessary accounting documents, etc. on the website of the State Tax Inspectorate.
The information on the Internet about the most usual taxpayers’ mistakes, decisions of the courts passed in tax cases is interesting to many of us. In many countries, taxpayers’ find the relevant information in their letterboxes. We have also analyzed the possibility of introduction of such a service. However so far have decided against it, as residents usually do not inform the State Tax Inspectorate about changing their living place thus also the address. Also, letterboxes in majority of multi-storey houses are damaged or broken and residents may not receive the information intended for them. Instead, we publish many information leaflets and booklets about the major taxpayers’ duties, their obligations and any other relevant information that are disseminated in companies, institutions and residents’ societies for free.
The State Tax Inspectorate organizes free of charge seminars to taxpayers.
There are cases when a company that has rightly calculated and filed out a tax return does not have money to pay taxes by the set date. In such a case, the company may ask the tax administrator to defer a tax payment deadline. We have a right for such deferral, may also grant a tax loan, exempt a taxpayer from fines and penalties. Even several companies located in the Vilnius county have asked for such tax relieves and, having received them, have overcome the difficult financial situation and successfully operate until the present day. Such companies have preserved jobs and continue paying taxes into the national budget.
A taxpayer, being an equal partner to a tax administrator, must have a right to dispute tax administrator’s decisions that, to his opinion, are wrong. Tax disputes are practised since long however the new Law on Tax Administration includes even stricter regulations as regards to a tax administrator. Having proved the wrong computation of taxes, a taxpayer has a right to refuse exercising the wrong decision of a tax administrator, seek for mutual agreement, etc.
Residents wishing to get engaged in individual activities often come to the tax inspectorate for advice and information. They may also choose a tax payment method they find the best - to buy a business certificate or file tax returns.
The advanced information technologies help to improve quality of services and better handle the growing number of people coming to the tax inspectorate. Companies and residents may e-mail declarations, reports, ask for a necessary documents, etc. Already this year, we received the first e-mailed income declarations of residents and plan to offer the same service for companies at the end of the year. All taxpayers addressing a tax inspectorate wish to receive comprehensive information, professional services and qualitative advice. We at a tax inspectorate seeking to best meet taxpayers’ needs currently conduct a taxpayers’ survey aiming to ascertain their wishes and proposals, also in cooperation with psychologists analyse the attitude of the staff of a tax inspectorate towards taxpayers. Attentiveness to taxpayers will be a binding requirement to be taken into consideration during certification of tax officials.
We will make the partnership taxpayers and tax administrators to be rational and civilized.

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KAUNAS INVITES TO THE INTERNATIONAL EXHIBITION KAUNAS 2004

On 13 - 15 May 2004 Kaunas, the second biggest city and the industrial and technological center of Lithuania, has the honor to host the event bearing great importance to the city, the whole region and the Lithuanian State - the exhibition Kaunas 2004. The exhibition carries the motto “Contacts. Business. Science. Investments”. This event is organized with the prospect to draw attention of business communities of our partner cities and other regions, which are interested in business development and investment in the Baltic Sea Region. The major goal of the exhibition Kaunas 2004 is introducing the intellectual and economic potential of the Kaunas city and region to the Lithuanian and foreign business, science and culture community, emphasizing the rapidly developing potential for investing, creation of new technologies and modern means of communication, promoting universal cooperation of companies, business, culture, science and regional self-government bodies. Special attention will be attached to the innovative manufacturing methods, unique products and small business development. It is expected that these types of activities will determine the competitiveness of the Kaunas region on the single European market.
The exhibition Kaunas 2004 will welcome the business companies both from the city of Kaunas and Kaunas County. Their participation expands the geography of the exhibition and gives more comprehensive information about the potential of the region and its importance on the country scale. The traditional exhibition participants are Lithuanian and foreign businessmen, representatives of business associations, embassies, ministries, municipalities and counties, etc. Participants of the exhibition are invited to get registered into the Contacts Database (www.kaunas2004.lt) for a wider dissemination of activities and partner search.
Kaunas 2004 will present the leading companies in the following sectors: industry; IT sector (electronics, computers, communications, security); food and beverages; chemistry and pharmacology; glass ceramics; wood processing; metal industry; packaging; machinery and instruments; transport, transportation services and road freightage; constructions; bank and insurance sector; largest trade companies; tourism sector (tourism agencies, restaurants, hotels, sport and tourism inventor); publishing sector; municipal enterprises; Kaunas Universities, design and innovations in technologies, consultations. The exhibition will offer the visitors the possibilities to have individual meetings with our businessmen according to individual requests and wishes, meetings with representatives of Kaunas higher education establishments, technology companies and technology research centers with the aim to get acquainted with the newest innovative services and products and the potential of the human resources in our city. The participants also will be provided with the possibility to receive urgent information in special stands and during organised seminars about investment possibilities in our city, including detailed information related to the laws of the Republic of Lithuania on land lease, taxes, permissions, etc., and other legal acts.

Please accept our heartily invitation and request to disseminate this information to all companies or institutions of Your country that have already entered into co-operation with Lithuanian companies, have joint ventures with Lithuanian partners or have incorporated their representation offices in Lithuania and, moreover, have close relationship with the Kaunas business environment. We would also like to address you with a request to disseminate the information on the forthcoming event in Your country to companies, various investment funds and associations showing interest in investment possibilities in Kaunas, and create the precedent for co-operation with our country and Kaunas City.
Kaunas City will be honored to welcome you at this event of paramount importance for our developing city and discover the possibilities that our city is offering.
Looking forward to meeting you in Kaunas, meanwhile I remain,
Sincerely Yours,
Arvydas Garbaravi?ius,
Head of organization commission
Mayor of Kaunas City

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THE EUROPEAN FUTURE OF KAUNAS

Ramūnas Garbaravičius, Chairman of Strategic Planning
and Investment projects
Coordination Commission in
Kaunas City Municipality

After festive celebrations dedicated to Lithuania’s integration into the European Union there comes one simple question “What is next?”. In the context of universal euphoria the professional attitude towards the future of the second largest town of Lithuania - Kaunas - and its new potential in the context of single Europe becomes extremely important. The formerly known as the town of Hanza trading alliance, the provisional capital of inter-war Lithuania and the cradle of Lithuania’s seek for independence during the soviet period, Kaunas is becoming an open European city noted for peculiar cultural atmosphere and unique potential of economic and human resources that should be properly exhausted. The member of the Kaunas City Council, Chairman of the Kaunas City Municipality Commission for Coordination of Strategic Planning and Investment Projects Ram?nas Garbaravi?ius tells the journal B&E about the future of the second largest city of Lithuania, the vision of Kaunas as a European city and strategic guidelines in its development.

“Kaunas is noted for its rich history, strategic geopolitical position, the huge potential of economic and human resources. The city is open for innovations and attractive for investment. Kaunas is the city convenient and safe to live in. Due to its geographic location, Kaunas has been destined to become the largest logistics centre not only in Lithuania but also the Baltic Sea Region. Kaunas District is crossed by the European transport corridor in the East-West direction, highway Via Baltica, highway Klaip?da-Vilnius-Minsk-Moscow. Two international railway lines 9B and 9D being the segments of the European corridor meet in Kaunas District also. Highway Via Baltica stretches via the three Baltic States and links the Nordic countries with Central and Western Europe. The road going from Tallinn via Riga to Warsaw links the Lithuanian roads with the European road network at Kaunas. The total length of Via Baltica in Estonia, Latvia and Lithuania makes 649 km. It is intended to build the European gauge railway line. The state importance airport has been established in Karm?lava. It is located 12 km from the centre of Kaunas city. The annual turnover of cargoes handled at Karm?lava airport is the largest among the Baltic countries. The free economic zone is being established nearby, in an area of approximately 100 ha. This zone is intended to become the largest in the Baltic Sea region.
Since old, Kaunas is famous as Lithuania’s business centre and industrial city. Having experienced upswings and downturns, these economic sectors has survived as those dominant and determining the economic image of Kaunas. In recent years, an evident growth of economic indicators of Kaunas region is observed. Investment into the manufacturing sector of Kaunas totaled 1,1 billion Litas and are expected to further increase. On the national scale, Kaunas ranks second by the employment of population in economic activities. Kaunas County leads by the commodity turnover and surpasses Klaip?da and Kaunas Counties. Kaunas County also maintains the leading position according to the GDP growth. Kaunas city is unique and interesting to a European investor by its industrial potential. The traditional industrial sectors like manufacture of furniture, chemical industry, radio-electronics, textile experience qualitative changes, are modernized and in the near future are expected to become competitive economic sectors on the EU scale. Great attention is attached to promotion of production based on innovation and creation of high technologies. These are some of the most promising economic activities to be developed in Kaunas and will have huge impact upon the competitiveness of the city and its place in Europe.
Kaunas might be deservedly called the camp city of science and high technologies. Around 50 thousand students study and 10 thousand lecturers and researchers work in the city with the population of 400 thousand this being a great source of qualified human resources. Kaunas has always been the donor of intellect to Lithuania, its capital city Vilnius and today already to EU Member States. The main problem to be solved by the city authorities is the brain drain and preserving the potential of human resources for the city needs. Proper conditions should be created inducing young people to work and live in Kaunas. For this purpose, the social project on provision of young families with dwellings has been prepared on the basis of the popular Private Public Partnership Programme. The programme is aimed at helping young families to rent a dwelling at lower than market prices for an unrestricted period. In the prospect of 5 years, around 1000 of such flats should be built in Kaunas. We think this to be a great support to young families inducing young qualified specialists stay and work in the city of Kaunas. Creation of work places and the need for qualified and cheaper than in Europe labour force grows together with investment into the city. In recent years, investment in Kaunas have doubled. The year 2000 was especially successful - investment grew by even 46%. Kaunas boasts one of the lowest in Lithuania unemployment rates - around 6%. The demand for skilled labour force is very great.
The free areas - free economic zones - are offered for green field investment, the city infrastructure is successfully developed. The implemented investment projects already generate the first benefits. For instance, when the heat energy appreciates throughout Lithuania, after sucesfull privatization of Kaunas energija, heat energy in Kaunas not only does not rise in price but also is planned to become cheaper. The support of EU funds will be used for solving wastewater treatment problems. It is intended to launch the construction of biological water treatment facilities, renovate water-supply and sewage systems. Kaunas also solves the problems of transports flows, car parkings, public transport development. The latter problem is quite successfully worked out with the help of Vivaldi project. In this project, Kaunas collaborates with Bristol (Great Britain), Bremen (Germany), Nantes (France) and Aalborg (Denmark). The principal goal of the project is modernization of the public transport of the city seeking for balanced transport mobility, rational use of energy, ecologically clean environment and improvement of services. The Vivaldi project is financed by the project participants and the European Commission. Kaunas is also famous as the world-level medical center. Unique transplantation and other complex operations are being performed and the progressive research-experimental activities are carried out at Kaunas University Clinics. Kaunas cultural is also in full swing. There are 9 professional and amateur theatres in the city, some of them like Kaunas Musical and Drama Theatres are of national importance. Such projects of culture as Pa?aislis Classical Music Festival and Kaunas Jazz Festival are famous international events attracting crowds of music experts and prominent performers from all around the world. The sports of Kaunas represented Lithuania and its seek for independence during the long years of soviet occupation. The legendary basketball team ?algiris and the star of Lithuanian basketball Arvydas Sabonis are well known in Europe and throughout the world.
Kaunas is the city attractive for investment offering highly skilled labour force and well-developed high technologies. Kaunas will never be Paris and cannot be equaled to European megalopolises. However in our visions and plans see Kaunas as an important European city not by its size but by strategic geographic location, unique potential of economic, cultural, scientific and human resources. Kaunas is becoming an open, European and modern city, an important bridge between the East and the West. Kaunas is the city where the rapidly growing economy and high technologies harmoniously match the historic heritage, where the past meets the future and live in full harmony.”

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