VZCZCXRO5754
RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHVL #0618/01 2430852
ZNR UUUUU ZZH
R 310852Z AUG 07
FM AMEMBASSY VILNIUS
TO RUEHC/SECSTATE WASHDC 1538
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHWR/AMEMBASSY WARSAW 3661
RUEHBS/USEU BRUSSELS BE
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC

UNCLAS SECTION 01 OF 02 VILNIUS 000618 
 
SIPDIS 
 
SIPDIS 
 
WARSAW FOR FAS:KSNIPES 
 
E.O. 12958: N/A 
TAGS: EAGR ECON PGOV LH
SUBJECT: CAP IMPROVES LIVES OF LITHUANIAN FARMERS BUT NOT 
WITHOUT CHALLENGES 
 
 
¶1. Begin summary:  Statistics about the Common Agricultural 
Policy (CAP) are readily available; however it is difficult 
to determine its direct impact on Lithuanian farmers with 
numbers alone.  We recently visited several farms to get an 
understanding of the CAP,s effects in Lithuania.  CAP funds 
are positively changing the look and operation of Lithuanian 
farms.  At the same time, there are several downsides to 
applying for and receiving the funds available.  End summary. 
 
Background 
---------- 
 
¶2. Little is known about the direct impact CAP payments have 
on the average Lithuanian farmer.  In a June 22nd meeting 
with Laimonas Ciakas, Director of the EU Affairs and 
International Relations Department of the Ministry of 
Agriculture, Ciakas noted that Lithuanian farmers receive aid 
in one of three ways:  through direct payments, market 
regulation, and rural development funds.  From 2004 to 2006 
Lithuanian farmers received over 1.6 billion Euros from the 
EU and other aid programs.  According to Ciakas, this funding 
will increase dramatically.  At the time of Lithuania,s 
accession to the EU, Lithuanian farmers started receiving 
only twenty-five percent the amount of direct payments that 
farmers from the EU-15 received.  The payments Lithuanian 
farmers currently receive are up to forty percent of the 
EU-15 amount.  The amount of direct payments will 
theoretically equal the level of the older EU members by 2013. 
 
Benefits of the CAP 
------------------- 
 
¶3. The CAP has improved the quality of life for Lithuanian 
farmers.  With rural development funds, old Soviet-era 
structures are being renovated or replaced in favor of newer, 
more modern buildings.  Farms are expanding their operations 
and modernizing the equipment they use including irrigation 
and anti-frost systems for crops, more efficient milking 
methods at dairy farms, and new tractors.  One farmer we 
observed who receives CAP funding had enough disposable 
income to expand and renovate his residence.  Another farmer 
commented that the recent direct payments were enough to 
purchase a new and much-needed automobile.  A third farmer 
can now afford to put the direct payments aside, with the 
intent of using them to help his children pursue higher 
education. 
 
¶4. Expansion of markets and elimination of certain tariffs 
associated with EU entry have also benefited Lithuanian 
farmers.  They are now able to import more efficient 
equipment and cheaper seeds for agriculture for much lower 
costs.  Lithuanian farmers now have access to more markets 
for their berries, fruits, vegetables and poultry than before 
accession.  This availability of new markets provides 
justification for the farmers to expand and improve the 
efficiency of their farms, using CAP funds. 
 
¶5. Lithuanians have found that there are a variety of ways to 
receive additional direct payments under the CAP.  Because of 
the EU's emphasis on environmental conservation, organic 
farming is becoming especially popular.  One organic farmer 
receives an annual payment of approximately 2600 Euros for 
keeping his nineteen hectare farm annually certified as 
organic.  Another receives sixty percent more money in direct 
payments than the average Lithuanian farmer because he is 
under the age of forty.  Training funded by the EU is another 
financial benefit. 
 
Challenges associated with cap use in Lithuania 
--------------------------------------------- -- 
 
¶6. Farm modernization thanks to EU funding is not taking 
place without some challenges.  One of our interlocutors, 
whose company recently received CAP funds, noted that 
restrictions are placed on the use of the money.  Farmers are 
required to purchase new equipment, rather than used.  They 
must also buy the equipment from fellow EU members.  This 
blueberry farmer stated that it would have been cheaper for 
his company to buy used equipment or imported equipment from 
outside the EU rather than accepting the CAP aid, which 
equaled only fifteen percent of the total cost. 
Unfortunately, his company was committed to the aid before he 
realized this fact.  We heard similar complaints by other 
farmers who had to purchase the latest technology in order to 
receive CAP funds. 
 
¶7. One of the largest problems faced by small farmers seeking 
 
VILNIUS 00000618  002 OF 002 
 
 
CAP subsidies is the paperwork process.  One told us, "I 
don,t know how a person without a college education could do 
the paperwork."  This same individual helped her neighbors 
fill out their direct payment paperwork for the last couple 
of years.  However she had to discontinue this help because 
of the excessive amount of time required to complete the CAP 
benefit application forms.  After the forms are complete, it 
is not uncommon to receive numerous rejections before final 
approval.  Accounting discrepancies tended to be the most 
common problem with the rejected paperwork, according to the 
farmers we interviewed. 
 
¶8. One Lithuanian farmer informed us that it is no longer 
worth trying to raise cows for meat because it can now be 
imported so much cheaper from other places, specifically 
Poland, as a result of the open market policies of CAP.  The 
same farmer mentioned that he has noticed more competition 
for dairy products from farms in Latvia.  Another farmer said 
that his company, known for offering a variety of flowering 
plants, has been completely forced out of the rose business 
by competitors from other EU countries who send their 
products into Lithuania. 
 
¶9. Multiple farmers noted that it was hard to find aid and 
advice from government sources.  One poultry farmer we spoke 
to claimed that the favoritism and politics within the GOL 
affected the ability to use CAP allocated funds within the 
designated time.  Inspections are also a challenge.  Several 
farmers noted that inspectors showed up at inopportune times 
without prior notice for inspections and interviews, and then 
required the farmers to be available at that specific time. 
One farmer commented that even though farmers can now get 
more aid than previously available, it was negated by the 
fact that manufacturing companies have taken advantage of the 
increase in foreign dollars by raising their prices on 
farming equipment and services. 
 
Improving upon deficiencies 
--------------------------- 
 
¶10. The application of the CAP in Lithuania,s agricultural 
process is progressing.  Not all farmers feel the paperwork 
is impossible.  One farmer stated that the paperwork is now 
something one person can take care of given enough time. 
Ciakas concurs with this opinion.  He said the paperwork 
issue is only a temporary inconvenience.  He added that the 
paperwork was initially hard for farmers because it was 
something new to them, but that the farmers, experience with 
the paperwork and improvements within the bureaucratic 
process are turning the application process into a non-issue. 
 Ciakas also said that there are now farm advisories being 
set up across the country that are easily accessible to 
farmers. 
 
Comment 
------- 
 
¶11. The CAP is not the salvation of all Lithuanian farmers. 
However, it has made a significant difference for some. 
Despite all of the complaints we heard about the negative 
aspects of the CAP process, the vast majority of those we 
interviewed said they would go through the process again to 
receive the aid.  This is a testament of the success of CAP 
in the farmers' eyes.  The CAP is improving their livelihood 
and standard of living.  Farming in Lithuania is a more 
attractive occupation now than at any time since independence 
from the Soviet Union.  As modifications and adjustments are 
made to the CAP over the coming years and farmers become more 
accustomed to the process, agriculture and rural life in 
Lithuania will continue to improve. 
LEADER