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					    MINISTRY OF AGRICULTURE OF THE REPUBLIC OF
                    LITHUANIA




     Rural Development Plan 2004-2006
                 Lithuania




                             MARCH 5, 2008


Consolidated version as of 5th March, 2008       1
                                               Table of contents

ABBREVIATIONS ........................................................................................................ 7

1. INTRODUCTION ...................................................................................................... 8

2. MEMBER STATE AND ADMINISTRATIVE REGION ........................................ 8

3. GEOGRAPHICAL AREA COVERED BY THE PLAN........................................... 8

4. PLANNING AT THE RELEVANT GEOGRAPHICAL LEVEL ............................. 9

5. QUANTIFIED DESCRIPTION OF THE CURRENT SITUATION ........................ 9
5.1.       Lithuania‟s geographic position ...................................................................... 9
5.2. Administrative structure, rural areas and settlements .................................... 10
5.3. Rural population .................................................................................................. 14
5.4. Employment and income in rural areas ............................................................ 16
5.5. Social and physical infrastructure in rural areas ............................................. 21
5.5.1. EDUCATION AND TRAINING .................................................................................. 21
5.5.2. RURAL INFRASTRUCTURE .................................................................................... 23
5.5.3. RURAL CULTURE ................................................................................................. 24
5.6. Agriculture ........................................................................................................... 24
5.6.1. SIGNIFICANCE OF THE SECTOR IN THE NATIONAL ECONOMY ............................... 24
5.6.2. LAND REFORM AND UTILIZATION OF THE LAND ................................................... 26
5.6.3. LESS FAVOURED AREAS ...................................................................................... 29
5.6.4. FARMING STRUCTURE, NUMBER OF FARMS AND SIZE ........................................... 30
5.6.5. AGE STRUCTURE OF FARMERS .............................................................................. 32
5.6.6. PRIMARY PRODUCTION AND PROCESSING INDUSTRY ............................................ 33
5.7. Forestry ................................................................................................................. 51
5.7.1. FOREST COVER ..................................................................................................... 51
5.7.2. FORESTRY IN THE NATIONAL ECONOMY ............................................................... 53
5.7.3. FOREST OWNERSHIP ............................................................................................. 54
5.7.4. LEGAL BASIS ........................................................................................................ 55
5.7.5. MULTIPLE USE OF FORESTS .................................................................................. 57
5.7.6. AFFORESTATION OF AGRICULTURAL LAND .......................................................... 58
5.8. State of the environment – agriculture and forestry ........................................ 60
5.8.1. SOIL ..................................................................................................................... 61
5.8.2. WATER ................................................................................................................ 73
5.8.3. AIR AND CLIMATE ................................................................................................ 77
5.8.4. BIODIVERSITY ...................................................................................................... 78
5.8.5. LANDSCAPE AND PROTECTED AREAS ................................................................... 84
5.9. SWOT analysis ..................................................................................................... 89
5.9.1. EXTERNAL ANALYSIS ........................................................................................... 90
5.9.2. INTERNAL ANALYSIS ............................................................................................ 91
5.10. Key problems in agriculture and rural development ..................................... 97
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5.11. Impact from the previous programming period (title) .................................. 98
5.11.1. LESS FAVOURABLE AREAS ................................................................................. 99
5.11.2. AGRI-ENVIRONMENT........................................................................................ 101
5.11.3. AFFORESTATION OF AGRICULTURAL LAND ...................................................... 103

6. DESCRIPTION OF THE STRATEGY PROPOSED, ITS QUANTIFIED
OBJECTIVES, THE RURAL DEVELOPMENT PRIORITIES SELECTED AND
THE GEOGRAPHICAL AREA COVERED............................................................. 107

6.1. The objectives hierarchy for Rural development ........................................... 108
6.2. Overall Rural Development Strategy and Priorities ..................................... 112
6.2.1. SINGLE PROGRAMMING DOCUMENT .................................................................. 119
6.2.2. SPECIAL RURAL SUPPORT PROGRAMME ............................................................ 124
6.2.3. RURAL DEVELOPMENT PLAN ............................................................................. 130
6.3. Extent to which the Strategy takes into account the specific features of the
areas concerned and compliance of the strategy with other EU policies ............ 139
6.3.1. INTEGRATION OF WOMEN AND MEN IN THE STRATEGY ..................................... 140
6.3.2. FUTURE ENVIRONMENTAL OBLIGATIONS .......................................................... 141
6.4. Areas covered by Specific Territorial Measures............................................. 148
6.5. Timetable and uptake ........................................................................................ 148

7. INDICATIVE OVERALL FINANCIAL ALLOCATIONS .................................. 149

8. APPRAISAL SHOWING THE EXPECTED ECONOMIC, ENVIRONMENTAL
AND SOCIAL IMPACT ............................................................................................ 150

9. DESCRIPTION OF THE MEASURES ................................................................. 150

10. NEED FOR ANY STUDIES, DEMONSTRATION PROJECTS, TRAINING OR
TECHNICAL ASSISTANCE OPERATIONS .......................................................... 151

11. DESIGNATION OF COMPETENT AUTHORITIES AND BODIES
RESPONSIBLE .......................................................................................................... 151
11.1. Ministry of Agriculture ................................................................................... 152
11.2. National Paying Agency .................................................................................. 153
11.3. Monitoring Committee ................................................................................ 154


12. MONITORING AND CONTROL, EVALUATION AND PUBLICITY ........... 155

12.1. Controls and Sanctions ................................................................................... 155
12.1.1. ADMINISTRATIVE CHECKS ............................................................................... 155
12.1.2. ON-THE-SPOT CHECKS ..................................................................................... 156
12.1.3. CONTROL OF MEASURES .................................................................................. 156
12.1.4. SANCTIONS ...................................................................................................... 157

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12.2. Financial circuits.............................................................................................. 167
12.3. Publicity ............................................................................................................ 168
12.4. Evaluation......................................................................................................... 169
12.4.1. EX-ANTE EVALUATION..................................................................................... 170
13. RESULS OF CONSULTATIONS AND DESIGNATION OF ASSOCIATED
AUTHORITIES AND BODIES AS WELL AS ECONOMIC AND SOCIAL
PARTNERS ................................................................................................................ 172

14. BALANCE BETWEEN THE DIFFERENT SUPPORT MEASURES ............... 176

15. COMPATIBILITY AND CONSISTENCY WITH EU POLICIES..................... 177

16. ADDITIONAL STATE AID ................................................................................ 177
Annexes
Annex 1: Technical sheets per measure .................................................................. 178
Annex 2: Good Farming Practice............................................................................ 236
Annex 3: Details on Less Favoured Areas .............................................................. 240
Annex 4: Details of the Code of Good Agricultural Practice and the Action
   programme for implementation of EU Nitrate Directive ............................. 252
Annex 5: Physical and financial indicators of the measures (cumulative data per
   year) ................................................................................................................... 259
Annex 6: Result and Impact indicators ............................................................... 261
Annex 7: Executive Summary of Ex-ante evaluation ............................................ 270
Annex 8: List of social partners consulted during the preparation of this Rural
   Development Plan ............................................................................................. 274
Annex 9 : Statistical data on municipalities ........................................................... 276
Annex 10: SPA's for meadow birds protection in Lithuania................................ 278
Annex 11. Calculations of payments for the measure Agri-environment ........... 280
Annex 12: Equipment used as basis for calculations of payments for meeting
   requirements of Council Directive 92/46/EEC ............................................... 326
Annex 13: LFA area ................................................................................................. 327


List of tables
Table 1: Rural areas in Lithuania - population and area, February 2002 ........... 13
Table 2: Rural settlements, 2000 ............................................................................... 13
Table 3: Changes in rural population ....................................................................... 14
Table 4: Vital statistics and migration of rural population 1996-2000 ........................... 15
Table 5:Age structure of population, February 2002 .............................................. 16
Table 6:Employment in agriculture, hunting and forestry and fishing, 1990-2001,
    % .......................................................................................................................... 16
Table 7:Employed rural population by economic activity in 1997 – 2001, in % .. 17
Table 8: Activity, employment and unemployment rates in rural areas compared
    to urban, 2000 ..................................................................................................... 18
Table 9:Change in average disposable incomes per capita, 1996-2001 ................. 18
Table 10: Average household disposable income and expenditure in 1996-2000, in
    Litas...................................................................................................................... 19


Consolidated version as of 5th March, 2008
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Table 11: Number of population within the categories of education, per 1000 of
    inhabitants, 2001 ................................................................................................. 21
Table 12: Distribution of LAAS contracted clients according education, % ........ 22
Table 13: LAAS awareness raising activities .......................................................... 23
Table 14:Macroeconomic indicators of the agricultural and food sector in 1995-
    2000 ...................................................................................................................... 25
Table 15: Land use as of January 1, 2001 ................................................................ 27
Table 16: Structure of agricultural holdings, June 2003 ........................................ 31
Table 17: Statistics of Crop Sector, 2002 .................................................................. 33
Table 18: Development of bio-organic farming in 1993-2001 ................................ 37
Table 19: Ranking of problematic areas in the sector (3-high, 2-medium, 1-low) 40
Table 20: Farm sizes according to the number of livestock, 2002 ......................... 41
Table 21:Ranking of problems in the sector (3-high, 2-medium, and 1-low)........ 47
Table 22:Ranking of problems in the sector (3-high, 2-medium, and 1-low)........ 48
Table 23: Lithuanian manufactures of food and beverages: number of enterprises
    and employees, in 19993...................................................................................... 49
Table 24:. Capital investment volume, 1995 -2000, mill. Litas ............................... 51
Table 25: Earnings in public forestry, 1996-2000 ................................................... 53
Table 26: Market supply with forest berries, mushrooms and medical plants,
    1996-2000 ............................................................................................................. 57
Table 27:. Exports of mushrooms and wild berries, 1995-2000 ............................. 57
Table 28:Average annual afforestation area during the period of 1941-2000
    (thousand hectares)............................................................................................. 59
Table 29: Afforestation of private agricultural land in 1998-2001, ha .................. 60
Table 30: Use of mineral fertilisers (in active substance) ....................................... 62
Table 31: Structure of water consumption, % ......................................................... 74
Table 32: Amounts of pollutants discharged into surface water bodies (tons per
    year) ..................................................................................................................... 74
Table 33: Protected areas, in 2002 ............................................................................ 86
Table 34: SWOT analysis........................................................................................... 91
Table 35: Distribution of buckwheat quota in 1999 .............................................. 100
Table 36: List of measures in 2004-2006 and allocated financial resources ........ 113
Table 37: Compatibility and coherence between measures in relation to the key
    problems in agriculture and rural development ............................................ 116
Table 38: Quantified objective hierarchy for Early Retirement measure ......... 133
Table 39: Expected impacts and results in Agri-environment ............................ 135
Table 40:Expected impacts and results for Support for semi-subsistence farms
    undergoing restructuring measure ................................................................. 137
Table 41: Expected impacts and results for Meeting standards measure ........... 138
Table 42: Estimated number of applicants and allocated financial resource for
    measures, 2004-2006 ......................................................................................... 139
Table 43: Indicative overall financial table, including EU contribution (EUR
    million) ............................................................................................................... 149
Table 44 Annual programming (EU contribution in EUR million) ........................ 149
Table 45: List of sanctions in case of Transferor ................................................... 159
Table 46: List of sanctions in case of Transferor of Small Diary Farm .............. 159
Table 47: List of sanctions in case of Farm Worker ............................................. 159
Table 48: List of sanctions in case of Transferee ................................................... 159
Table 49: List of sanctions to be applied for Less favoured areas and areas with
    environmental restictions measure ................................................................. 160

Consolidated version as of 5th March, 2008
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Table 50: Sanctions – Agri-environment ................................................................ 162
Table 51: List of sanctions to be applied in Afforestation measure ..................... 164
Table 52: List of sanctions to be applied to a beneficiary in measure Support for
    semi-subsistence farms undergoing restructuring......................................... 166
Table 53: List of sanctions to be applied in Meeting standards measure ............ 166
Table 54: Ex-ante evaluation findings and the Actions taken by the Ministry of
    Agriculture ........................................................................................................ 171
Table 55. Distribution of funds among measures, 2004-2006 ............................... 176


List of Figures:
Figure 1: Change in structure of the incomes of the self-employers in agriculture
     .............................................................................................................................. 20
Figure 2: LAAS clients according farm size ............................................................ 22
Figure 3: Structure of gross agricultural production in 2000 ............................... 26
Figure 4: Land used for agricultural activities by users ......................................... 28
Figure 5: Structure of dairy farmers by age ............................................................ 32
Figure 6: Number of dairy farms by the age of farmers ......................................... 33
Figure 7: The structure of bio-organic crop area in 2002....................................... 38
Figure 8: Structure of sales of the food industry in 2001 ........................................ 49
Figure 9 :Labour Costs .............................................................................................. 50
Figure 10: Forest cover change in Lithuania from 1938 to present ....................... 52
Figure 11: Forest stands area by dominant tree species ........................................ 52
Figure 12: Changes in the use of agricultural pesticides ........................................ 61
Figure 13: Change in the amount of mobile phosphorus in Lithuanian soils ....... 63
Figure 14: Changes in the amount of mobile potassium in Lithuanian soils ........ 63
Figure 15: Hierarchy of objectives .......................................................................... 110
Figure 16: Chain of Command in Implementing the Rural Development Plan . 152




Consolidated version as of 5th March, 2008
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Abbreviations
AEP                 Agri-environment Programme
AIRBC               Agricultural Information and Rural Business Centre
CAP                 Common Agricultural Policy
CGAP                Code of Good Agricultural Practice
EAGGF               European Agriculture Guidance and Guarantee Fund
ERS                 Early Retirement Scheme
EU                  European Union
FAO                 Food and Agriculture Organization
FOAL                Forest Owners Association of Lithuania
GDP                 Gross Domestic Product
GFP                 Good Farming Practice
GoL                 Government of Lithuania
LAAS –              Lithuanian Agricultural Advisory Service
HN                  Hugiene Norm
LFA                 Less Favoured Areas
MC                  Monitoring Committee
MLS                 Minimum Living Standard
MoA                 Ministry of Agriculture
NGO                 Non Governmental Organization
NVZ                 Nitrate Vulnerable Zones
RDP                 Rural Development Plan
RSF                 Rural Support Fund
SAC                 Special Areas of Conservation
SAPARD              Special Accession Programme for Agriculture and Rural
                    Development
SASP                Special Agricultural Support Programme
SDF                 Small Diary Farm
SPAs                Special Protection Areas
SPD                 Single programming Document
SWOT                Strengths, Weaknesses, Opportunities, Threats
UAA                 Utilised Agricultural Area




Consolidated version as of 5th March, 2008
                                                                            7
          Rural Development Plan 2004-2006, Lithuania
1. Introduction
The Rural Development Plan for the period 2004-2006 has been prepared by the
Ministry of Agriculture of the Republic of Lithuania in fulfilment of the obligations
under Article 41- 44 of the Council Regulation 1257/1999 and in accordance with the
detailed requirements laid down in the Commission Regulation 817/2004. The
structure and the content of this Rural Development Plan in general follows the Annex
II of the mentioned Regulation and only a one change in the present document
structure and content have been introduced. This change was introduced aiming at
improving the readability, coherence and consistency of the Rural Development Plan
and is as follows:

    The detailed descriptions of the measures have been placed not inside the Plan
     but instead in the Annex 1. It is believed that in such a manner the chapter 6
     related to the Rural Development Objectives, Strategy and Priorities is much
     more all-in-one and helps the reader to get a full picture of the Rural
     Development Policy in Lithuania. Instead a role of the Rural Development Plan
     in implementing the strategy and its role among other financial instruments
     available is described.

This document was developed following the 'Guidelines for the switch from SAPARD
to postaccession Rural Development Instruments (2004-2006)' dated 17.12.2003 in
order to ensure that continuity of the experiences gained under SAPARD as well as
smooth switch to the new rural development measures would be ensured.


2. Member state and administrative region
This Rural Development Plan is prepared for the Republic of Lithuania and covers the
entire territory of the country.

The Rural Development Plan 2004-2006 has been prepared following the overall
country‟s development strategy stated in the Single Programming Document and the
measures proposed in the Rural Development Plan complement the Single
Programming Document measures related to agriculture, rural development and
forestry in order to ensure that proposed actions interplay with one another to obtain
synergy and sustainable results for rural development. Compatibility and coherence
between the documents and therein-embodied actions are dealt in chapter 6.

3. Geographical area covered by the plan

All the measures (except Measure 2 "Less favoured areas and areas with
environmental restrictions") included in this Rural Development Plan are to be applied
all over Lithuania. Measure 2 will only be implemented in the designated less-
favoured areas, which are to be approved alongside the adoption of this Plan and in the
designated Natura 2000 territories.


Consolidated version as of 5th March, 2008
                                                                                     8
Since all territory of Lithuania is classified as an Objective 1 country in transition, the
Plan contains the following four EAGGF Guarantee section funded accompanying
measures:
         Early Retirement
         Less Favoured Areas and Areas with Environmental Restrictions
         Agri-Environment (the only mandatory measure)
         Afforestation of Agricultural Land

In addition, Lithuania also has chosen to implement four optional measures to be
funded from EAGGF Guarantee envelope and therefore those are included in this plan
and are as follows:
             Support for semi-subsistence farms undergoing restructuring
             Meeting standards
             Technical assistance
             Top –ups for direct payments

4. Planning at the relevant geographical level
As already mentioned above in Chapter 2 this Rural Development Plan is prepared for
the entire territory of the Republic of Lithuania. There are no any other plans of such
nature to be applied on the exceptional basis in the country.

5. Quantified description of the current situation

This chapter provides an overview of the situation in rural areas in terms of the area,
population, employment and income of rural population as well as social and physical
infrastructure. Also, the role of agriculture and forestry in the national economy as
well as the impacts of the sector to the rural development is presented. A specific
emphasis is put on the development of activities in less favoured areas and at the
present state of environment in the rural areas. The fishery sector even though playing
an important role in terms or rural employment and additional income generation is not
covered within this plan as it is a part of the Single Programming Document in which
the throughout description of the sector and the measures to remedy the problems
existing within this sector, are presented.

5.1.   Lithuania‟s geographic position

Lithuania is located in the eastern part of Europe, bordering Latvia in the north (610
km long border), Belarus to the east and south (724 km) and Poland to the south (110
km), as well as Kaliningrad region of Russia (303 km) to the southwest. The total
surface area of Lithuania is 65.3 thousand sq. km (roughly the size of Ireland).
Lithuanian population is 3,462 million of which 2,317 million live in urban areas and
about 1,145 million in rural areas.




Consolidated version as of 5th March, 2008
                                                                                         9
Map 1. Lithuania’s geographic position




The country forms part of the great North European Plain, and landscape alternates
between hilly areas and flat plains. There are two elevated regions with a maximum of
290 m above sea level, and three plains and lowlands. Lithuania has 758 rivers longer
than 10 km, and there are 2834 lakes larger than 0.5 ha. Forests cover 31 per cent of
the territory.

5.2. Administrative structure, rural areas and settlements

Pursuant to the Law on the Territorial Administrative Units of the Republic of
Lithuania and their Boundaries (adopted on 19 July 1994, No. I-558) Lithuania is
divided into administrative units: municipalities and counties.

Municipality is a territorial administrative unit administered by the bodies self-
government elected by the community pursuant to the Law of Self-government of the
Republic of Lithuania and other respective laws. Municipality consists of populated
areas. The main criteria for the establishment of municipality are related to the ability
of the municipality to manage and maintain the environment, municipal economy,
provide services to the inhabitants of this municipality as well as how the municipality
is capable of implementing other functions prescribed by the Law of Self-government.

County is a higher administrative unit of the territory whose administration is
organised by the Government of the Republic of Lithuania pursuant to the Law on
Administration of the County and other respective laws. County consists of the
territories of municipalities that are characterised by the common social, economic and
etnocultural interests. Based on the Law of the Republic of Lithuania on Territorial and
Administrative Units and their Boundaries at the first stage of the reform of territorial

Consolidated version as of 5th March, 2008
                                                                                       10
administrative units 56 Municipalities and 10 Counties were established. The Counties
are as follows: Alytus, Kaunas, Klaipeda, Marijampole, Panevezys, Siauliai, Taurage,
Telsiai, Utena and Vilnius. Further, there was the second stage of the reform (in the
beginning of 2000) during which few more municipalities were established, also
change of the borders of the existing municipalities were introduced. As the result, in
the meantime the territory of the Republic of Lithuanian comprises 10 Counties and 60
Municipalities (Map 2, Map 3).

Map 2. Counties in Lithuania




Consolidated version as of 5th March, 2008
                                                                                     11
Map 3. Municipalities in Lithuania




Further Article 3 of the above-mentioned law provides the definitions of populated
areas. The definitions are presented below:

The towns are compactly built up residential areas with a population exceeding 3000.
More than 2/3 of the working population is employed in industry, business and
production and social infrastructure.

The towns of the Republic of Lithuania with a population of less than 3000, regional
towns and urban-type settlements and residential areas shall be considered as towns
even after the coming into effect of the Law on the Territorial Administrative Units of
the Republic of Lithuania and their Boundaries.

Small towns are compactly built up residential areas with a population from 500 up to
3000. More than half of the working population is employed in industry, business and
production and social infrastructures, as well as traditional small towns.

Villages are other residential areas having no characteristic features of a town and a
small town.

Exact boundaries of towns are defined by the Decision of the Government of the
Republic of Lithuania.

The rural areas are of substantial importance in terms of both surface area and
population. At the beginning of 2002, the rural areas covered 63.6 thousand sq. km.
This equalled 97.4 % of the total Lithuanian surface area.

Consolidated version as of 5th March, 2008                                         12
Table 1: Rural areas in Lithuania - population and area, February 2002
                                                                                            Population
                          Area               Per-         Population         Per-
                                                                                            Density in
                          (sq. km'000)       centage      ('000)             centage
                                                                                            sq. km
 Total Lithuania          65.3               100.0        3.475              100.0          53.3
 Rural Areas              63.6               97.4         1.143              32.9           18.0
Sources: Department of Statistics under the Government of the republic of Lithuania, 2002

30,8 per cent of the total Lithuanian population lives in approximately 22,000 rural
settlements of various sizes. Most of them are small villages with a population of less
than 50 inhabitants. The density of population is 18,0 inhabitants per km2. The density
of rural population is usually higher in the municipalities with higher agricultural
potential or in the municipalities near larger cities (the highest density is in Kaunas
district, making up to 40 inhabitants per km2)). Rural areas in the eastern and south-
eastern part of Lithuania have the lowest density of population (the lowest one is in the
district of Švencionys, making up 8.72 inhabitants per km2) ).

Table 2: Rural settlements, 2000
  Number of                    Number of                 rural        Percentage        of         rural
  inhabitants                  settlements                            settlements
  Up to 26                     14767                                  68.5
   26-50                              2635                            12.2
   51-200                             2732                            12.7
   201-1000                           1300                            6.1
   >1000                              115                             0.5
Source: Lithuanian Department of Statistics, 2001

Small rural settlements prevail in Lithuania; most of them are farmstead villages
(about 80 percent of the total rural settlements). Large settlements and small towns
comprise 20 per cent of the total number of settlements. More data about the
population in different municipalities provided in Annex 9.

Below in share of agricultural land in all the municipalities of Lithuania is presented.
The data about share of agricultural land on municipality level is provided in Annex 9.




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                                                                                                       13
Map 4: Share of agricultural land in all the municipalities of Lithuania




There are 15 municipalities in which agricultural land makes more then 60 % of the
total land area. From territorial perspective most of those municipalities are situated in
the central part of Lithuania; however some of them are also situated in the northwest
part (2 municipalities namely Skuodas and Mazeikiai) and one in the western part –
Pagegiai.

5.3. Rural population

The newest Population census data states that in 2003, Lithuania‟s population was
estimated at 3,462,553 inhabitants – about 49 thousand less than in the beginning of
2000. In 2003, the rural population was estimated at 1,145 million inhabitants, i. e.
accounted for 33,06 per cent of the total Lithuanian population. From 1995 the total
population was constantly decreasing. However, in the rural population very slight
fluctuation can be observed and on average the rural population in the period 1995-
2002 was 32.7 percent.

Table 3: Changes in rural population
Beginning   Total population      Rural population         % of rural population
of the year („000)                („000)
1995        3 643                 1 183                    32.4
1996        3 615                 1 183                    32.7
1997        3 588                 1 159                    32.3

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1998            3 562                    1 163                   32.6
1999            3 536                    1 159                   32.8
2000            3 512                    1 155                   32.9
2001            3 478                    1 153                   33.2
2002            3 475                    1 149                   33 06
2003            3 463                    1 145                   33.06

Source: Statistical Yearbooks of Lithuania 2000, 2001 2002, 2003.-Vilnius: Department of Statistics
        under the Government of the republic of Lithuania, 2001, 2002 2003
        Demographic Yearbook 1996, 1997, 1998, 1999.-Vilnius: Department of Statistics under the
        Government of the Republic of Lithuania, 2001

The demographic processes in rural areas have an influence on the quantitative aspects
of the labour force engaged in agriculture.

Table 4: Vital statistics and migration of rural population 1996-2000
Vital statistics and migration         1996         1997         1998          1999         2000
Births                                 14326        14080        13953         13619        13141
Deaths                                 19430        18527        18344         17693        16987
Natural increase                       -5084        -4447        -4391         -4344        -3846
Immigration                            36554        34477        25918         23429        20034
Emigration                             27461        27910        23548         20732        15770
Net migration                          9093         6567         2370          2697         4264

Source: Statistical Yearbook of Lithuania 2000.-Vilnius: Department of Statistics under      the
        Government of the Republic of Lithuania, 2000
        Demographic Yearbook 1996, 1997, 1998, 1999.-Vilnius: Department of Statistics under the
        Government of the Republic of Lithuania, 2000

Natural increase of rural population is negative –number of deaths exceeds number
births. Birth rate in rural areas is by 30% higher than in urban, but the percentage is
annually decreasing. High death rate in rural areas, which is by 75% higher than in
urban areas, makes a negative impact on natural population increase.

Net migration remains positive as more people move to rural areas than leave them.
However, the composition of the rural population deteriorates: more persons of
working age leave, while more persons of retirement age move in.

In 2000, persons of working age accounted for 52,5 percent of the total population in
rural areas, persons of retirement age made up to 24,6 percent and children under 15 –
22,9 percent, The number of children in rural areas decreased by 11,9 thousand since
1996.

The tendency of ageing population is common to the whole European region, however
is it more evident in rural areas than in the towns. According to the data of February
2002 the share of population between 15 and 64 years was lower in rural areas (61.5
%) compared to urban areas (69.4%). At the same time the share of population over 64
years was significantly higher in rural areas (17.9%) compared to urban areas (12.4%).
Demographic structure of rural population has a negative impact on further
implementation of integrated rural development actions.

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                                                                                                 15
Table 5:Age structure of population, February 2002
                 Total            Population        Population      Population
                 population       under 15 years   between 15-64    above 64 years
                                                   years
                 Thous.     %     Thous. %         Thous.      %    Thous. %
Total Lithuania 3475,6      100   659,6    19,0    2321,1      66,8 494,9    14,2
Urban areas      2326,2     66,9 422,5     18,2    1614,2      69,4 289,5    12,4
Rural areas      1149,4     33,1 237,1     20,6    706,9       61,5 205,4    17,9
Source: Data of Research of Employment in February 2002 by the Lithuanian
Department of Statistics

The proportion of the urban-rural population among counties is quite even - there are 3
counties with an above average urban population, as well as 3 counties with an above
rural population and 4 counties with about average. The even distribution of
population is considered by the Government to be an important strength of Lithuania.
It provides a sound basis for sustainability of municipalities and rural communities.

5.4. Employment and income in rural areas

During the process of transition Lithuania's labour market has undergone significant
changes. The labour force experienced a dramatic loss of income and, in turn,
purchasing power during the early transition, although a partial recovery of income
became apparent in 1994 with economic recovery.

The development of economic reforms produced a downward trend in employment.
Lithuania's employment data for 2001 compared to 1997 indicate an accumulated job
loss of around 7% (106 900). During the same period the number of employed
population decreased from 85,9% to 83%.

At the end of 2001, the total rural working population made up to 30 per cent of total
Lithuanian employment, while agriculture, forestry and fishery employment rate was
estimated at 17.8 per cent. In spite of the fact, that in 1995 the share of the sector
employment made up 22.8 % of total employment, it must be considered, that the
share of employment is continuously decreasing.
Table 6:Employment in agriculture, hunting and forestry and fishing, 1990-2001, %
Kind of economic
                 1990        1995    1996    1997     1998    1999     2000    2001
activity

Agriculture,
hunting and forestry
and fishing          19.5    22.8    24.2    21.8     21.5    20.2     19.9    17.8
Agriculture,
hunting and forestry 19.4    22.7    24.1    21.7     21.4    20.1     19.8    17.7
Agriculture         18.5     22.9    23.1    20.8     20.6    19.2     18.9    16.7
Fishing             0.1      0.1     0.1     0.1      0.1     0.1      0.1     0.1

Consolidated version as of 5th March, 2008
                                                                                      16
Sources: Statistical Yearbook of Lithuania 2000.-Vilnius: Department of Statistics under the
         Government of the republic of Lithuania, 2000

Rather large number of people engaged in agriculture is determined by the low
efficiency of labour, partial employment and small farms. Lithuanian agriculture has
large possibilities to increase labour efficiency by consolidating and specializing
farms. Therefore the number of the directly employed in agriculture would go down
and thus will contribute to the growth of unemployment in rural areas. Redundant
people should have possibilities and suitable conditions to develop new traditions in
agricultural production and to engage in new business activities.
In the last years, the changes in the labour force in rural areas have not been very great,
but there are certain adverse tendencies that give reasons for concern: the number of
the employed decreases while unemployment is growing. In 2001, employment rate in
rural areas was 43 percent and it is by 7% lower then in urban areas. The rate
fluctuates in the country from 34,5 to 51,7 % broadly reflecting the actual economic
and social development within different parts of Lithuania.

Table 7:Employed rural population by economic activity in 1997 – 2001, in %
             Economic activity                  1997   1998       1999       2001
Agriculture, hunting, forestry and fisheries  58     56         53         51
Industry and construction                     12     12         14         10
Services                                      16     17         17         20
Education                                     6      8          9          9
Health and social work                        4      4          4          4
Other activities: public, social and personal 4      3          3          6
service
Source: Labour force, employment and unemployment 1997, 1998, 2000, 2001. – V. Department of
Statistics under the Government of Lithuania

Agriculture, hunting, forestry and fisheries remain the key economic sector in rural
areas and employs 51 percent of the total rural population. However, in the period of
1997 – 2001 the amount of employed population in this sector decreased by 23 % in
total. In different counties agriculture, hunting, forestry and fisheries employs from 52
to 82 % of the total rural population. The over dependency of rural population in terms
of income from agricultural activities is a weakness of rural sector having a negative
impact on successful implementation of rural development strategy.

The second largest employer is service sector - it employs 20 % of the total rural
working population. The rest part of rural population is engaged in industry and
construction, other services such as education, health care and social work and other
activities.

The total unemployment rate of about 14% in 1997 increased to 17% in 2001. This rate
exceeds considerably the EU average estimated to be 10.8%. However, according to
register-based unemployment rates, in 2000 the total unemployment rate increased to
11,5 % in comparison to 5,9 % in 1997. The number of unemployed persons in rural
areas in the period 1997-2001 increased from 58 to 70 thousands and it makes up to 21
%. Every third unemployed person applying to the Labour Exchange is from rural
areas. The number of persons previously employed in agriculture and having no jobs
presently is increasing.

Consolidated version as of 5th March, 2008
                                                                                               17
The unemployment rate among the rural population makes up to 14.6 %, while in the
urban areas the same indicator estimates at 16.7 per cent. But the age structure of the
rural unemployed is unfavourable: the large number of rural youth unemployment is
common. At the end of 2000, the unemployment rate among rural youth up to 25 years
of age made up to 33.8 %. It, however, leads to the conclusion that a lot of the young
generation in rural areas lack education and professional skills.

Usually, the rural activity rate is considerably lower than the urban one. At the end of
2001, it was 57.4 per cent, compared to 63.2 per cent in Lithuanian urban areas.
However, the gaps between the rural employment rate and employment rate in the
urban area are rather small (51.3 per cent and 52.6 per cent respectively). Despite of
that rural population is less unemployed than in urban areas.
Table 8: Activity, employment and unemployment rates in rural areas compared to
urban, 2000
                            Urban areas           Rural areas
 Activity rate              63.2                  57.4
 Unemployment rate * 16.7                         14.6
 Employment rate            52.6                  51.3
Source: Lithuanian Department of Statistics –
* Labour Force Survey, 2001

 The incidence of long-term unemployed is also high -59%, 58,5% in urban and 60,8%
in rural areas respectively. The highest long-term unemployment rates were recorded
for people aged over 50, who tend to leave the labour force because of health problems
or unavailability of work. The share of women in long-term unemployment accounts
for 38.6 %.

However, some positive tendencies should be observed in labour market, as more of
the rural population tends to switch to the employment in services and other activities
that is of crucial importance in aiming to minimise the dependency of rural population
from agriculture.

Consequently, lower activity and employment of the rural population leads to lower
average disposable household income, when compared to the urban population.
According the survey of the household income and expenditure in 2001 average
disposable income per capita made up 409,5 Litas per month. Average household
income in rural area was 310,9 Litas per capita, while the average urban household
income was 455,4 Litas per capita. Rise of the total disposable income during 1996-
2001 year period made up 25,3 per cent (29,1 in urban and 15,6 in rural area). The
average rate of increase during this period made up 4,6 per cent, 5,2 per cent in urban
and 2,9 per cent in rural area respectively. According the income survey, the difference
between average urban and rural household income increased from 31 per cent in 1996
to 46,5 per cent in 2001. Therefore, the already existing gap between rural and urban
households in terms of income keeps on widening.
Table 9:Change in average disposable incomes per capita, 1996-2001
                                                                                      Average
                                                                                      rate of
                           1996     1997      1998     1999     2000       2001       growth
Consolidated version as of 5th March, 2008
                                                                                      18
 Total,     Litas  per
 month                      326,7     368,9     422,5      428        415,4      409,5      X
 Annual rate of growth      X         1,129     1,145      1,013      0,971      0,986      1,046
 Annual rate of growth
 of real income             X         1,037     1,090      1,005      0,961      0,973      1,012
 Urban, Litas per
 month                      352,7     403,1     463,5      475,2      464,9      455,4      X
 Annual rate of growth      X         1,143     1,150      1,025      0,978      0,980      1,052
 Annual rate of growth
 of real income             X         1,049     1,094      1,017      0,969      0,967      1,018
 Rural,     Litas  per
 month                      268,9     298,4     336,3      327,1      311        310,9      X
 Annual rate of growth      X         1,110     1,127      0,973      0,951      1,000      1,029
 Annual rate of growth
 of real income             X         1,019     1,072      0,965      0,941      0,987      0,996

Low incomes of rural population determines the structure of expenses. The majority
goes for food, the smallest amount for health and education.




Table 10: Average household disposable income and expenditure in 1996-2000, in
Litas
Indicators                    1996       1997      1998       1999       2000
Average disposable income
per family member monthly
         urban                352.7      403.1     463.5      475.2      464.9
          rural               268.9      298.4     336.3      327.1      311.0
          of which farmers‟   24838      245.7     286.0      252.2      239.3
Share of expenditure on food,
%
         urban                51.7       48.5      44.3       42.0       40.4
         rural                65.3       62.1      59.0       56.8       56.2
        of which farmers‟     66.8       67.5      63.6       62.6       60.6
Health care
         urban                2.7        3.1       3.5        3.7        4.5
           rural              2.4        3.2       3.3        3.4        5.8
          of which farmers‟   2.1        2.1       2.1        2.1        3.3
Education
         urban                1.0        1.0       0.4        0.8        0.8
          rural               0.6        0.7       0.1        0.2        0.3
            of which farmers‟ 0.6        0.6       0.0        0.1        0.0

Source: Household income and expenditure in 1996, 1997, 1998, 1999, 2000.-Vilnius: Department of
Statistics under the Government of the Republic of Lithuania

Rural population‟s in kind income makes up to one third of the total household income
per member, and in the case of farmer – 45 percent in 2000. Although a share of in
Consolidated version as of 5th March, 2008
                                                                                              19
kind income was decreasing during the last years, individual agricultural activities in
households are still the main source of income for rural population. Low monetary
income from business indicates the low profitability of commercial agricultural
production and unfavourable circumstances for alternative income in rural areas.

If to analyse the percentage distribution of disposable income by source and residential
area for 2000, urban dwellers derived 59.4 per cent of their income from employment,
almost twice that of rural people (29.1 per cent). Rural people derived almost a quarter
of their income from self-employment in agriculture (24.2 per cent), compared to 2.3
per cent for urban dwellers. Rural people also received a higher percentage of their
income from retirement pensions (20.7 per cent versus 13.1 per cent).
Figure below shows the changes in income structure of practicing farmers. Trend of
declining portion of income from employment and rising portion of income from
social benefits illustrate ageing process of farmers.
On the other hand, low portion of income from employment shows low off-farm job
possibilities among rural people engaged in farming activities.



                         100%              6,70%
                                  7,50%             8,30%    11,40%     8,40%
                                  16,20%   16,30%   19,10%
                           80%                               19,30%    22,80%


                           60%

                                  65,30%   68,50%   61,30%
                           40%                               59,10%    59,60%
                                                                                    Other
                           20%                                                      income

                                   11%     8,50%    11,30%   10,20%     9,20%       Income from
                            0%                                                      social
                                  1997     1998     1999      2000      2001
                                                                                    benefits
   Other income                    18,4     19,2     21       27,4       21         Income from
                                                                                    self-
   Income from social benefits     39,8     46,5     48,3     46,1      57,1        employment
                                                                                    Income from
   Income from self- employment   160,4    195,8    154,8    141,5      148,9
                                                                                    employment
   Income from employment          27,1     24,5     28,5     24,3      22,9




Figure 1: Change in structure of the incomes of the self-employers in agriculture

Rural tourism is one of the most popular alternatives to traditional rural activities. In
the year 2002 there were about 670 farmsteads involved in rural tourism business; in
the year of 2001 the number of visitors in farmsteads involved in agro tourism made
up to 56,8 thousand. The majority of the farmsteads are located in South-eastern and
Western parts of Lithuania. These are the most favourable geographical regions, and
are known for their rich natural and cultural resources.

Compared to urban entrepreneurs, rural ones are less active to take new businesses as
the business environment in rural areas is in less favourable situation, especially in
terms of investments. The other obstacle for providing alternative activities is the lack
of knowledge and experience in the fields of management and marketing.


Consolidated version as of 5th March, 2008
                                                                                       20
Thus, data on employment and household income reveal major weaknesses in
Lithuanian rural areas: first, high dependence on one source of income - agriculture;
second, high unemployment among rural youth; and third, a widening income gap
between rural and urban households.

5.5. Social and physical infrastructure in rural areas
5.5.1. Education and training

The education level of the rural population is inferior to that of the urban population.
People in the rural areas are less prepared for the development of competitive
agriculture or work in other industries.

Secondary education is dominant amongst both urban and rural population (34.5 and
30.1 per cent respectively). However, rural population with primary and less then
primary education is of the same proportion as the population with secondary
education and makes up to 30 per cent whereas in urban areas it is only 13 percent.
Most of the rural population engaged in agriculture has secondary, secondary
vocational (37.9 percent) and primary or less than primary education – 15.4 percent.

Table 11: Number of population within the categories of education, per 1000 of
inhabitants, 2001
                     Higher     Technical       Secondary       Basic       Primary
                     educa-     intermediate education          education level
                     tion       level                                       education
                                education
Urban population     161        211             286             132         172
Rural population     55         156             242             187         284

Sources: Labour Force, Employment and Unemployment 2000. Results of Labour Research.-Vilnius:
Department of Statistics under the Government of the Republic of Lithuania .

The data of 2001 shows that in the group of 1000 inhabitants 658 urban inhabitants
have higher, technical or secondary education, compared to 453 rural inhabitants. The
level of higher education is three times lower among rural population.

The Ministry of Education and Science of the Republic of Lithuania implements the
general educational and science strategy in Lithuania. The state policy in scientific
research works in agriculture, farmer's continuous learning, consultations, adult
education, qualification improvement, farmer's self government, education and culture
is implemented by the Rural Development and Information Department of the Ministry
of Agriculture, its Science and Training Division that also coordinates activities of the
Council of Agricultural Science and Farmer's Education Council. The department
forms and implements the policy of agricultural science and education, introduction of
new technologies in agriculture, organises and coordinates research orders by the
Ministry of Agriculture, their financing, introduction and propagation of results,
coordinates training and qualification improvement of agricultural specialists.

Agricultural education can be obtained at 2 universities, 8 vocational and 27
agricultural and other professional education establishments. Agricultural universities
and also 2 state scientific research institutes and their branches, 5 university scientific

Consolidated version as of 5th March, 2008
                                                                                           21
research institutes and 2 state science establishment are engaged in agricultural
scientific research.

Lithuanian Agricultural Advisory Service (LAAS) plays an important role in training
of rural population as the main costumers of their services are farmers, agricultural
specialists, members of agricultural cooperatives, representatives of medium and small
businesses in rural areas, teachers of agricultural schools. Each district has an advisory
office (branch) taking into consideration needs and existent conditions of service users.
There are 44 offices in total, each employing 3-6 specialists providing qualified
services and consultations in traditional plant-growing, cattle breeding, accounting of
the farm economics, construction and mechanisation of agricultural buildings, etc.
Moreover, consultants organise courses, seminars and help farmers to realise joint
projects with Lithuanian and foreign partners.



Table 12: Distribution of LAAS contracted clients according education, %
            Education                                    Percent
High                                24 (54  of which have agricultural)
Higher                              35 (59  of which have agricultural)
Secondary                           31
Primary                             10




Figure 2: LAAS clients according farm size

LAAS is expanding its activities on a yearly basis in order to meet the ever-growing
request of its clients both in terms of professional knowledge and awareness.
Awareness is of great importance in making farmers to look for changes and
improvements in their farming activities that lead to the improvements in the methods
and technologies and further in the quality of their produce.




Consolidated version as of 5th March, 2008
                                                                                        22
Table 13: LAAS awareness raising activities
                                                       2001          2002 first half year
Number of seminars                                      777                   653
Number of participants in the seminars                16987                 15438
Number of topics of the technical notes                1511                  1048
Number of article topics                                633                   399
Number of field days                                    214                   138
Number of participants in the field days               3695                  2222
Publications                                             24                    12

Education and training of rural population as well as awareness rising is a must in
aiming at sustainable economical and social rural development which is impossible
without increase in abilities of rural population to operate in the open market
environment. Rural population is lacking initiative, self-confidence and capacity to
take active part in the decision-making or implementation process related to the
development of their own rural territories. The network of agricultural advisory and
educational institutions is established and evenly distributed among rural territories in
Lithuania. However, they lack human resources capable of spreading the most
advanced knowledge and the best experiences and there is a big need to upgrade the
existing base in order to provide all necessary capacity building which is required to
reflect all needs of rural society.

5.5.2. Rural Infrastructure

Compared to urban areas, Lithuanian rural areas have a lower standard of living in
terms of physical infrastructure. The underdeveloped rural infrastructure is a serious
weakness of rural areas. Although there are no villages without electricity, wide
disparities between rural and urban areas existed in water supply, central heating
systems, sewage and telephone networks. A significant number of rural inhabitants are
supplied with poor quality drinking water. Only 43.5% of rural residential units, or one
third of rural settlements, have central piped water supply systems. Approximately
700,000 rural inhabitants use drinking water from 300,000 dug wells. The problem is
that 30% of dug wells used for drinking water in rural areas are contaminated with
nitrates. The artesian bores and central water supply systems installed in most of rural
settlements are out-dated and doesn‟t comply with hygiene and environmental
standards.

The same is true for sewage systems. In total, 733 sewage systems have been installed
in rural areas. They serve around one third of rural inhabitants. Poor development of
water supply and sewage systems raises major environmental issues.

Though Lithuania has a well-developed local road network (at the end of 2001 the total
length of local roads was 48.152 km) and electricity supply, the setting up farmers or
farmers undergoing restructuring are facing problem of establishing road or electricity
connection to new households and farmsteads.

A significant problem in rural areas is related to functioning of earlier established
drainage management systems. Those represent the large-scale drainage systems that
are interconnected by water conducting canals including a large number of hydraulic

Consolidated version as of 5th March, 2008
                                                                                       23
structures. These systems installed during last decades are covering an area of 3.01
million of ha including not only agricultural land, but also territories of rural
settlements, forests, other recreational and public territories. They are not complying
with environmental standards, as the water collected from contaminated territories is
not decontaminated.

To conclude, poor water supply and sewage systems represent a major threat to rural
environment. Besides, existing disparities in infrastructure between rural and urban
areas and poorer quality of life may lead to migration from rural to urban areas. These
trends would have a negative impact on rural development and threaten the
sustainability of rural communities.


5.5.3. Rural Culture

In Lithuania there are 46 villages, which have either historical or cultural heritage.
Additionally, more than 59 manors, buildings, parks and gardens subject to protection
are located in the rural area. Together they cover more than 1,300 hectares. These sites
of cultural value (villages, manors, etc.) play a vital role in development of rural
tourism and recreation services, and preserving rural heritage.

Rural libraries and cultural centres represent an important part of rural life, traditions
and culture. In 1990-1999, the number of rural libraries and cultural centres steeply
diminished. In 1990, there were 1439 rural libraries compared to 1206 in 1999. Also,
the number of rural cultural centres dropped from 1045 in 1990 to 841 in 1999. At the
same time, the number of rural libraries and cultural centres has been decreasing, their
technical conditions worsened.

However, in the last two years the establishment of local communities has started to
take place. In many cases these communities are established and conduct their
activities in the base of cultural centres and therefore the rebirth not only of the
premises as such but also of the activities that used to be performed earlier is on the
way. It should be emphasised, that social life in rural areas used to be very active
through gatherings in those cultural centres and therefore absence of such a life for
about 10 years after the independence has made rural people to renew their activities
through which they enhance the culture, enrich their daily life. As of December 1st
2002, there were 159 local communities officially registered and operating in
Lithuania. Thus, the support and reinforcement of such movement is of great
importance in order to ensure that local initiatives are realised to the benefit of the
local rural community and further of the entire rural population.

5.6. Agriculture

5.6.1. Significance of the sector in the National Economy

Agriculture remains as one of the main sector in the national economy. Agriculture and
food industry contribute substantial part of GDP. However, the share of the sector
input in GDP constantly declines as also declines the agricultural production. In 1998
the share of the sector contribution made up 14.5 % of GDP (agriculture -9.4%), in
1999 -13% (7.9 % of agriculture, comparatively). In 2000 it declined to 12 % (6.9%).

Consolidated version as of 5th March, 2008
                                                                                        24
Table 14:Macroeconomic indicators of the agricultural and food sector in 1995-
2000
                               1995      1996     1997       1998     1999     2000
 GDP at current prices, mln.
                                  24103            31569       38340       42990      42597      44409
 Litas
 Total agricultural production at
                                  5572.1           6338.8      6378.6      6153.0     5065.6    4476.0
 current prices, mln. Litas
 Share of agriculture in gross
                                   10.9             11.3        10.9         9.4        7.9        6.9
 value added, * %
 Export of agricultural and food
                                  1982.7           2296.6      2472.0      2082.7     1509.1    1792.3
 products, mln. Litas
 Share of agricultural and food
                                   18.3             17.1        16.0        14.0       12.6       11.6
 products in total exports, %
 Imports of agricultural and
                                  1950.3           2391.5      2510.4      2538.2     2166.4    2227.5
 food products, mln. Litas
 Share of agricultural and food
                                   13.4             13.1        11.1        11.0       11.2       10.2
 products in total imports
* Including agricultural services, hunting
Sources: Statistical Yearbook of Lithuania 2000.-Vilnius: Department of Statistics under the
         Government of the republic of Lithuania, 2000
         Agriculture in Lithuania 1999.-Vilnius: Department of Statistics under the Government of the
         republic of Lithuania, 2000

In the period 1995-1997 the total agricultural production as well as the share of
agriculture in gross value added was increasing. The increase was even bigger that in
the economy of the country as a whole, but in 1998 and 1999 due to the Russian crisis
and other factors, the added value decreased. The share of value added in agriculture in
respect of the total value added in the country‟s economy shrank as well. In 1995 it
made up 10.9 per cent, and in 2000 it dropped to 6.9 percent.

Trade in agricultural and food products has a significant share in the structure of
Lithuania‟s foreign trade. In 2000, Lithuania‟s agricultural and food product exports
accounted for 11.6 % (LTL 1.8 billion) of the total value of Lithuanian exports, while
imports accounted for 10.2 % (LTL 2.22 billion). Traditionally, the Lithuanian food
industry is a net exporter. In 2000 Lithuania's milk production was 246%, egg
production 117%, meat and grain production 100% of domestic consumption.

The main export markets for agricultural products are the European countries. In 2000
59.0 per cent of exports of Lithuanian agricultural products went to the countries of the
European Free Trade Association (EFTA), the Central Europe Free Trade Association
(CEFTA), and Baltic Free Trade Agreement (BFTA), in comparison to 40 per cent in
1995. In 2000 the foreign trade results were improving to compare with 1999 (the
trade deficit was decreasing, and the export share to the EU countries was increasing).

In 2000 the dairy products accounted for the largest share (about one third) of the total
agricultural and food export. Meat and meat products accounted for 6.0 per cent, grain
– 3.0 per cent, fish and fish products – 7.0 per cent of the total agricultural and food
export.


Consolidated version as of 5th March, 2008
                                                                                                   25
Taking into account these trends, Lithuanian food industry will be able to have the
niche in the EU Common Market. However, to compete successfully in domestic and
external markets, the Lithuanian food industry requires restructuring and
modernisation. There is still a need of investments in capital and human resources to
comply with quality, hygiene, food safety and environmental requirements.

The structure of the agricultural production has changed significantly during the recent
decade. In 1990 livestock production constitute the major part of the agricultural
production (54.5 per cent) while in 2000; crop production took a leading position -
61.9 per cent.


                             Other production
                                   1%
                          Potatoes
                            13%
                 Fruit and                                       Grain
                vegetables                                       28%
                    9%

         Fodder plants
             6%                                                     Eggs
                                                                     3%
            Sugar beets       Meat                        Milk
                                                Rape
               3%             18%                         18%
                                                 1%




Figure 3: Structure of gross agricultural production in 2000
Source: Data provided by the Department of Statistics under the Government of the Republic of
Lithuania

Agricultural production in Lithuania is quite diversified. It is characterised by the
concentration of some of the production to different parts of the country. It must be
taken into account in the development of agriculture and the processing of agricultural
products as well as rural development at the local level. The main part of agricultural
production is produced in family farms and household farms – about 85 percent of
crop production and about 70 percent of livestock productions

5.6.2. Land reform and utilization of the land

The process of land reform and restoration of ownership rights to land started in 1991.
The situation considerably improved in 1997 as the result of the improvement of the
implementation of the land reform procedures. By 1st of October 2000 the land
management projects have been prepared and approved. The share of the land the
ownership rights to which have been restored makes up 79 per cent of land area
indicated in applications. By the beginning of 2002 the total number of private


Consolidated version as of 5th March, 2008
                                                                                           26
landowners reached 555 700. The total area of the land to which the ownership rights
have been restored, makes up 2090 thousand hectares, or 52.8 per cent of UAA.

Restitution process has not been finished yet. However, it is obvious that the existing
private land tenures are too small to run perspective and competitive activities. In spite
of the process of Lithuania integration into the EU, it is necessary to stimulate
competitive farm development and promote formation of the expedient holdings. The
preparation of the principles of the land management and administration are underway.
These principles are aimed to improve the agricultural farm structure, to ensure
implementation of the environmental protection, to stimulate infrastructure
development.
Of the 6.530 thousand hectares of the total Lithuanian area, utilized agriculture area
(UAA) at the beginning of 2001 accounted for 53.4 per cent of total country area.
Arable land accounted for 84.1 per cent of UAA, meadows and natural pastures –14.2
per cent of UAA and permanent crops - 1.7 per cent of UAA.

Forests cover is 30.6 per cent of total country area. Water bodies make up 4.0 per cent,
roads – 2.0 per cent, build-up territories –2.9 per cent, and other land –7.1 per cent of
the total country area. The reclaimed area equalled 3.05 million hectares, 85 per cent of
which has been drained. More than 1 million hectares of soil are acid, so it must be
permanently chalked.

Table 15: Land use as of January 1, 2001
           Land use                      „000 ha                                        %
Total area                      6.530
Utilized    agricultural   area 3.488,7                                  53.4
(UAA)
Arable land                     2.932,6                                  84.1 of UAA
Meadows and natural pastures    497.1                                    14.2 of UAA
Permanent crops                 59                                       1.7 of UAA
Forests                         1998.4                                   30.6
Water bodies                    262.1                                    4.0
Roads                           131                                      2.0
Build-up territories            187.3                                    2.9
Other land                      462.5                                    7.1

Sources: Statistical Yearbook of Lithuania 2001.-Vilnius: Department of Statistics under the
         Government of the republic of Lithuania, 2001

The land reform is changing the structure of agricultural land from the point of view of
its users. The number of farmers‟ farms is increasing, while the number of agricultural
partnerships and other kinds of agricultural enterprises and the area of land at their
disposal is diminishing.




Consolidated version as of 5th March, 2008
                                                                                               27
                                  Land of houshold farms
                                                                                15,3
                                                                                       22,1

    Land of agricultural partnerships leased from the state
                                                                    3,3
                                                                                                      39,1

                   Land used by horticultural associations
                                                                   0,2
                                                                   0,6
   Land of other natural and legal entities leased from the                    12,3
                            state                                                        25,2

                            Land used by state enterprises
                                                                   0,5
                                                                   1,3
       Land non-granted for usage and not leased or state                             19,9
                         owned land                                      6,5

               Private land used for agricultural activities
                                                                                                               48,5
                                                                         5,2

                                                               0          10      20         30      40      50       60

                                                                               1994 01 01         2001 01 01



Figure 4: Land used for agricultural activities by users
Sources: Land fund of the Republic of Lithuania as of 1 January1995, 2001. – Vilnius: Department of
          Land Management and Law under the Ministry of Agriculture, State Enterprise of Land and
          other Real Property Cadastre and Register

The number of the private owners of agricultural land has been changing throughout
the land reform. As of January 1, 2001, there were 522.8 thousand private owners of
land. The area at their disposal amounted to 1915.2 thousand hectares, which
accounted for 29 per cent of the total land area or 48.5 per cent of agricultural land.

Generally, climatic conditions and the natural fertility of soil constitute an important
conditions for the favourable development of milk and meat sector, for growing wheat,
rye, fruits and vegetables, flax, rape, sugar beets. Comparatively low soil; water and air
pollution is of great importance in developing the organic farming.

A very specific problem that Lithuania faces is the huge amount of agricultural land
not being actually used for agricultural purposes. Over the last decade more and more
agricultural lands in Lithuania have become abandoned and have not been cultivated
for some time. This development is mainly a result of the land reform process and the
adaptation by the agricultural sector to the open market.

It is estimated that about 600.000 ha of agricultural land is not being currently farmed.
In many cases, cultivation of such lands is being stopped since the areas are
characterised by poor soils and other adverse growth conditions. However, the ongoing
land reform process has resulted in some of the better soils being left uncultivated as
well.




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                                                                                                                       28
5.6.3. Less Favoured Areas
In Lithuania there is a broad regional variety defined by natural, social, economic,
traditional and other factors. These factors directly or indirectly influence productivity,
efficiency, income and, ultimately, quality of life in a given region. In these regions
where the income from agricultural activity is declining, the agricultural activity must
be continued because of the protection of environment and rural area itself.
In period 2002-2003 in order to identify the less-favoured areas there had been
approved national Procedure for the Selection of Less-Favoured Areas by Order No. 3
of the Minister of Agriculture of the Republic of Lithuania as of January 7, 2002.
To the less-favoured areas there had been attributed the areas in which agricultural
losses are incurred due to the limited productivity of agricultural land and the density
of rural population is below the country‟s average or the viability of rural communities
(ratio between births and deaths) is worsening.
In the period 2002-2003 the total less-favoured area covered 1.597,5 thous. ha or
47.4% of the total utilisable agricultural area in Lithuania.
       Less favoured areas for the period 2004 - 2006 are to be attributed in accordance with
Regulation (EC) 1257/1999 using these indices:
        yield of cereals is lower than 80 per cent. of national average,
        the value of total agricultural production per capita employed in agriculture,
        population density is lower than 50 per cent of national average,
        percentage of active population engaged in agriculture is more than 15 per
       cent,
        the rate of population regression 0.5 per cent per annum or more.
       (See Annex 1. Technical sheet per measure).
With regard to the natural differences, it should be noted that there are 24 types of soil
in Lithuania, which are further classified into 15 agronomic types of soil according to
the locality, topographic and climate specifics. Each type of soil is creating different
agricultural conditions and requiring different farming approach. The quality of soil is
reflected by the soil productivity grading system (lowest – 30 points, highest – 50
points). In accordance with this system it can be seen that soil quality in Lithuania
varies approximately 1.65 times on the level of local governments.
The most consistent region in terms of soil quality is Central Lithuania, with smallest
proportion of low quality soil. The greatest concentration of the poor soil quality areas
is in the Eastern, South – eastern and Western parts of the country.
Differences of soil quality result in different plant productivity, which varies within
Lithuania about 3 times. For example, cereals productivity varied 2.2 times, the lowest
being in Zarasai municipality (1.48 t/ha) and the highest productivity in Šakiai
municipality (3.73 t/ha).
Income from agricultural production differs between the municipalities accordingly.
Whereas in Marijampolė county income from 1ha of agricultural production is 800
Litas, in Telšiai county 1ha of utilizable agricultural area results in 374 Litas. Income
differences between different municipalities reflect not only different soil quality but
utilization of agricultural area and production intensity as well. Low soil productive

Consolidated version as of 5th March, 2008
                                                                                           29
potential and inefficiency lead to abandonment of agricultural land and eventually to the
less total income per region.
Lower income in less-favoured areas is reflected by income from agricultural
production per one farming person. Although country average agricultural income per
farmer (5.8 thous. litas) is low in general, income of farmers in the less-favoured areas
is still considerably lower (i.e. 3.9 thous. litas per year in Alytus county or 4.3 thous.
litas per year in Telšiai county).
Another factor, important for the quality of life in a given region is a demographic
factor. The lowest density of rural population is in the Eastern and South-eastern parts
of Lithuania. In Švenčionys local government population density is the lowest in
Lithuania and it reaches only 8.72 people/sq. km. It is also 2 times below the national
average and almost 5 times below the densest Kaunas municipality, where population
density reaches 40 people/sq. km.
Another important criteria is viability of rural population. Especially low viability
coefficient is in the Eastern part of Lithuania. In Ignalina local government rate of
deaths is almost three times higher than the rate of births.
Unfavourable agricultural conditions lead to higher level of population migration from
those areas, lower volumes of agricultural activities, less investments into the sector
and eventual abandonment of land.

5.6.4. Farming structure, number of farms and size

Improvement of the efficiency of the primary agricultural production depends on three
main reasons – size of the farm, trend of development and financial and economical
capacity. Currently, 4 different types of farms characterise Lithuania‟s farming
structure:
               Agricultural companies, public and private companies, co-operative
                  companies, farms of other categories;
               Registered farmer‟s farms;
               Family farms; and
               Household plots.

Agricultural companies, public and private companies, co-operative companies, farms
of other categories are large-scale, corporate type enterprises created as a result of the
transformation of state and collective farms. In addition to primary agriculture, they
are involved in agro-processing and trading activities. According to provisional results
of the Census of agriculture 2003 in the Republic of Lithuania, the number of
corporate type enterprises reduced sharply. By June of 2003 568 such companies
remained active, while in 1995 there were 2611 ones. It was predetermined by the lack
of competitiveness. The main reasons for low competitiveness can be defined as
follows:
                   o Outdated machinery and equipment
                   o High operating costs
                   o Lack of investments.
Agricultural companies, public and private companies, co-operative companies, farms
of other categories owned 389 thousand ha of land, of which 283,6 thousand ha were
agricultural land. The average size of such farms are rather diverse: an average size
agricultural company (total number - 293) owned, respectively, 714 and 697 ha,

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                                                                                        30
private companies (139) owned 359 and 304 ha and co-operative companies (50)
owned 472 and 460 ha on average.

After independence the process of creation of farmers’ farms started. The number of
farmers‟ farms recorded with the Farm Register was 45 thousand. They owned 1269
thousand ha of land, of which 1159 thousand ha were agricultural land. One farm
owned on the average 28,2 ha of land and 25,7 ha of agricultural land.

The creation of a so-called Family Farms started before Lithuania gained its
independence. The number of family farms registered during the census of June 2003
equalled 233 thousand. They owned 1275 thousand ha of land, of which 1093 thousand
ha were agricultural land. The average size of such farms was, respectively, 5,5 and 4,7
ha.

The fourth type of farms is Household Plots with an average size of less than 1 ha.
Household plots are often operated by shareholders of agricultural companies or by
rural inhabitants, in order to supplement their income from other sources. They still
account for a significant share of income generated by rural inhabitants. According to
census date of June 2003 there were 332 thousand household plots instead of 300,4
thousand ones in 2000. They owned 90,6 thousand ha of land, of which 41,1 thousand
ha were agricultural land.

Table 16: Structure of agricultural holdings, June 20031
                                             Number     of             Area cultivated,     Average
                                             holdings                  thousand ha          size, ha
Family farms                                 233 000                   1275                 5,5
Farmers‟ farms                               45 000                    1269                 28,2
Agricultural companies, public and private       568                   389                  684,9
companies, co-operative companies, farms
of other categories
Total holdings (1 ha and more)               278 568                   2933                 10,5
Household plots                              332 000                   41,1                 0,27
Total holdings                               610 568                   2974,1               4,9


According the Census data, by June 2003 there predominated small in size holdings.
Holdings from 2,0 to 9,99 hectares made up 29,0 per cent, from 10,0 to 19,9 hectares –
17,7 per cent of, from 20,0 to 29,9 hectares – 8,6 per cent and from 30,0 to 49,9
hectares – 8,6 per cent of the total number of the farms. Holdings from 50,0 to 499,9
hectares made up 20,7 per cent. Holding more than 500 ha made up 14,3 per cent. It is
expected, that by 2006 the average size of farm will reach 18,2 hectares and by 2010 –
22,0 hectares.

Thus, the average size of the farm taking into consideration the data about farming
structures and the area of land at their disposition, the average size of the farm by June
2003 was 4,9 ha and it is very small if to compare it to the EU average. The small
average size of an agricultural holding is a major problem for the development of a
1
 Sources: Lithuanian Department of Statistics, 2003; Provisional results of the Census of Agriculture
2003 of the Republic of Lithuania

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                                                                                                   31
competitive agricultural sector. Establishment of co-operatives is considered as the
solution for small producers to strengthen their positions. A large number of co-
operatives have a modest membership rate. Despite the measures taken to promote the
cooperation, establishment of cooperatives/producer groups is still not popular mainly
because of past cooperative experiences.

5.6.5. Age structure of farmers

Labour efficiency in agriculture is closely related to the age structure of farmers.
Farmers up to 35 years old produce twice as much if to compare to the farmers of
retirement age. About 40 percent of people employed in agriculture are of retirement
age. About half (49 percent) of the registered farmers are 60 years old or even older,
21 percent are 50-59 years old. Young farmers up to 40 years old make only 14
percent.

Since a lot of the farmers are engaged in milk production (29 %) their age structure
and its relation to the farm size an efficiency of the farms will be analysed in more
detail. According to the data of Agricultural Information and Rural Business Centre
(AIRBC) by 1 of January 2002 there were 224582 dairy cow owners in the Animal
Register, more than 95 per cent of which owned less than 5 cows. Persons of
retirement age comprise 38 per cent of dairy cow owners and they own 28 per cent of
dairy




                                                      22%

        43%
                                                                             <40
                                                                             40-
                                                                             49
                                                                             50-
                                                                             59
                                                                             >60
                                                              17%

                                        18%




Figure 5: Structure of dairy farmers by age

As dairy farms with more than 5 milking cows are suggested to be economically
viable, the figure below shows, that economically viable milk production is
concentrated in holdings of comparatively younger farmers at the age between 35 and
55 years. Among small (less than 5 cows) dairy farms farmers at the age between 55
and 75 dominate. Moreover, they make more than 50 percent of all milk producers.




Consolidated version as of 5th March, 2008
                                                                                    32
  Number of                                                                                      Number of
  farmers                                                                                        farmers

   30000                                                                                          1560

   25000                                                                                          1300

   20000                                                                                          1040
                                                                                                              >5 cows
   15000                                                                                          780
                                                                                                              <5 cows
   10000                                                                                          520

    5000                                                                                          260

           0                                                                                      0
                31-35   36-40   41-45   46-50   51-55    56-60   61-65   66-70   71-75 over 75
                                           Age of farmers

Figure 6: Number of dairy farms by the age of farmers

As the result, the milk production is in a great demand for structural changes in terms
of farmer‟s age and farms size. Small milk producers eventually will face milk quality
related problems not being able to meet the required standards and requirements. At
the same time it is necessary to ensure that elimination of the small milk producers
does not result into the escalation of the social problems among milk producers which
presently dominate in rural areas and whose main source of income is derived from
this type of activity. The fact, that most of the milk producers are over 60 years old
make the problem even more sophisticated as people of this age are reluctant to
redirect their activities into other economically viable spheres or to restructure their
farms in a way that investments and improvements would results in the economic
benefits.

5.6.6. Primary production and processing industry

Crop production sector
In 2001 the area covered by different crops was 2,15 mln. hectares.
Table 17: Statistics of Crop Sector, 2002
               Total    Grain    Protein    Flax        Rape     Sugar   Pota-    Field      Fodder      Other
               crops             crops                           beat    to       vege-      legumes
                                                                                  tables
Area           2152,0   918,0    36,2       9,5         60,0     29,2    99,2     20,7       36,0        943,2
thous.ha
Yield                   2,77     1,74       0,66        1,84     36,0    15,4     12,6       31,6
t/ha

Grain production
Grain production is the main in crop production. The area used for grain production
out of the total crop area in 2002 was 44,3 percent.


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                                                                                                         33
50 per cent of grain crops are currently used for feedstuffs, about 20 per cent – for food
production, and 12.6 per cent for seeds. Cereal supply exceeds actual demand for
cereal in 5 per cent. Consequently, it is expected, that cereal consumption will slow
down. The average annual consumption will not exceed 100 kilogram per capita in the
nearest future. However, increase in livestock production reasoned by the growing
demand for dairy and meat products will support overall demand for cereal. Despite of
the drop-off of the grain crops area, especially in poor soil municipalities, the growth
of the cereal production must be reasoned by the growth of the productivity. It is
supposed, that crop yields must exceed to 3.7 tones per hectare in 2004 and 5.5 tonnes
per hectare in 2015 in comparison with 2.7 tonnes per hectare in 2000.

Grain production in Lithuania is concentrated in the central part of the country –
namely in Šiauliai, Panevėţys and Kaunas counties as well as in the western part,
which is of medium productivity. About 50 percent of the grain production comes
from the mentioned counties. In the western part characterised by heavy precipitation,
unfavourable conditions for winter crop and leguminous plants, the grain area amounts
to 40 percent of total crop area.

In East Lithuanian conditions for grain cultivation are the most unfavourable. In this
area about 60 percent of the total soil are non-humic, and a hilly land prevails. The
sandy soil of the south-eastern part is non-productive. The aforementioned conditions
are more favourable for cultivation of buckwheat, oats, rye, and lupine. That is why the
grain area of East Lithuania amounts to about 35 percent of the total crop area of the
region. In 2001 land area covered by cereal made up to 950 thousand hectares. If to
compare it to 1997, the area in 2002 has decreased by 22 percent. The main reason of
such a development was the fall in procurement prices. About 84 percent of the total
land area covered by cereals belongs to farmers and about 16 percent – to agricultural
partnerships.

The crop farms, which have invested in modern technologies, have already reached the
yields comparable to those of EU countries. However, the average productivity of crop
farms is rather low. All crop husbandry branches are facing problems related to
outdated technologies and high production costs. Farms are lacking specialised
knowledge and investment capacities to update production equipment, to use high
quality seed and plant protection products.

Rape production
Rape is relatively new crop in Lithuania the area under which is rapidly extending on
the farms. About 70 percent of Lithuanian soils are suitable for rape cultivation. In
2001, the rapeseed was grown on about 40 thousand hectares. Rape is grown in all
municipalities of Lithuania, mainly on farmer‟s farms – about 72 percent. Rape is
mainly cultivated in small, non-specialised farms, no latest technologies are applied
which result in a relatively low yields (about 1,9 t/ha). Rapeseed yield on larger
specialised farms that are engaged in more intensive farming is much higher – about
2,5-3,0 t/ha. In the period 1996-1999 there was a significant increase in rape area from
11,8 thousand ha to about 84 thousand hectares as a result of the increasing rape
demand in foreign markets and state support for rape growers. In 2002, rape area
reduced by more than 45 percent in comparison to 1999. The decline was conditioned
by the size of support and lower price on domestic and foreign markets.


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                                                                                        34
Rapeseed export is one of the most important sales possibilities for Lithuanian farmers,
because on the domestic market demand for rape is limited. During the period of 1997-
2000 about 45 percent of total rapeseed output was exported. Income from rapeseed
export in 2001 made about 51 mln. Litas.

Flax production
Flax cultivation in Lithuania is based on deep-rooted traditions, favourable climatic
and economic conditions, the areas mostly suited for this type of production are
situated in western part and in the north-eastern part of the country. The area under
flax production in 2002 was 9,5 thousand hectares. About 70 percent of flax is grown
on farmers and household farms. One third of these farms specialise in flax growing.
Their flax area amounts to more than 30 hectares. They apply more progressive
technologies; as a result, their yield is higher. However, a major part of flax is grown
in small, non-specialised farms, in areas of 1.0 – 5.0 ha. These flax growers are not
able to apply the advanced technologies, thus, high costs and often a poor quality of
flax fibre is a result.

The situation in the sector is such that Lithuanian farmers can hardly satisfy up to 40 %
of local textile industry demand for fibre flax raw material. The main problems are
insufficient yields and quality. Obstacles for achieving good yields (and especially –
quality) are lack of investments for renewal of fibre flax production technologies, fibre
flax and seed treatment as well as lack of investments for purchasing special
equipment.



Sugar beet production
Sugar beets require good quality soils. As the result, the cultivation of sugar beets is
concentrated in the central part of the country. 90 percent of the total sugar beet area is
located in the following municipalities: Kedainiai, Marijampolė, Panevėţys,
Radviliškis, Šiauliai, Vilkaviškis, Šakiai, Pakruojis where there are suitable soils and
processing enterprises. In the period of 1995 – 2002 the area used for sugar beet
cultivation made up to 24,3 – 29,2 ha. The yield fluctuated from 24,6 up to 36 t/ha .In
2001, 61 percent of the total sugar beet area belonged to the farmers and household
plots and there were about 165 agricultural partnerships involved in this type of
production. However, the number of agricultural partnerships growing sugar beets is
decreasing annually.

A major part of farmers cultivate sugar beets on small areas that do not allow using
expensive machines, to reduce labour costs and cost per unit.

Potato production

Agricultural land under potatoes in the year 2001 was 99,2 thousand ha, i.e. 4,6
percent of the total agricultural land area under crops. 99 percent of the area under
potato belongs to farmers and household farms. More then 85 percent of farmers
involved in potato production grow potatoes on a very small areas of land (average
size - 0,3 ha). Only about 0,3 percent of potato growers grow potatoes on area bigger
then 15 ha. The average area of specialised potatoes growers is 30,5 ha. Lithuania has
favourable potato growing conditions and potato production has further perspectives.

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                                                                                         35
Some potato growers who apply appropriate agro-technical methods and use
appropriate selected varieties can reach 40 t/ha or even higher yields. However,
average potato yield in Lithuanian are 14 – 16 t/ha. Potato growing is much more
expensive in comparison to other crops – costs of 1 ha of potatoes is by 4-5 times
higher then the costs of 1 ha of grain production, 2,5 times higher then the cost of flax
production and 1,5 times higher then the cost of sugar beets. Taking into consideration
present market prices of potatoes and resources required the potato production is
economically viable only if yield is not less then 22 t/ha. Development of the sector is
closely related to the establishment of the specialized farms.

Vegetable production
Vegetable gardening is one of the most important and profitable agricultural sectors in
Lithuania. About 10 thousand people are employed in this activity. In the 2002 the
share of vegetables in the total agricultural production made up to 8 percent. About
99,5 percent of the vegetables grown in the open air belong to farmers and household
plots. And only 0,5 percent of the open air grown vegetables belong to the agricultural
partnerships. The latter vegetable growers are more involved in greenhouse vegetable
growing. Vegetable growing is more concentrated around cities. Locally produced
vegetables make more then half of the local market supply.

A team of commercial vegetable growers has not been formed yet, groups of vegetable
growers have only started to form. A significant share of manual works employed
reduces the productivity of a vegetable growing activity. Progressive technologies are
not applied and as a result yield is two times lower then in the EU countries. Smaller
vegetable growers are not able to deliver vegetables in larger amounts and to satisfy
the needs of supermarkets. The above-mentioned reasons conditioned an increase of
vegetable imports. Lack of appropriate storage facilities, grading and packing
equipment results in a selling of produce straight from the field and it results in lower
prices and further incomes of farmers.

The area covered with glass-covered greenhouses hardly reaches 100 ha. The biggest
portion of vegetables supplied to the local market grown in the glass-covered
greenhouses is provided by 5 enterprises that joined into the Lithuanian greenhouse
association. A major part of polyethylene greenhouses is not large – 4-20 a. As a rule
the heating is seasonal, therefore, vegetable yield is not rich. In 2000, there were 230
ecological farms, including 20 involved in vegetables growing. The products grown in
these farms comprised 12 percent of the total agricultural production. In recent years,
their output has been increasing by 15-20 percent per annum. Demand for ecological
vegetables has been increasing as well. However, the needs for ecological products
have not been satisfied. Because of small and irregular supplies of ecological products,
shops specialised in selling ecological products are not profitable and cannot be
expanded.

The main obstacles for smooth development of the vegetable sector are the following:
lack in storage capacities, outdated vegetable growing technologies, low level of
producer‟s co-operation in sharing special equipment and performing common
marketing activities.

Fruit and berry production


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                                                                                        36
In 2002, orchards and berry plantations in Lithuania covered 41,8 thousand hectares,
with 35,9 thousand of ha of yield areas included. This makes up to only 1,7 percent of
the total agricultural land area. The greater majority of orchards and berry plantation
are small, not commercial varying in size from 0,06 to 0,5 ha. The growers themselves
consume almost all the harvest. Commercial orchards and berry plantations make up
about 14 percent of the total horticultural areas. The average size of stock companies
and agricultural partnerships engaged in industrial horticulture manage the area of 30
to 400 ha. The size of average orchard is about 210 ha and almost all of that size
production has all needed equipment and highly skilled personnel. Lithuanian farmers
are quite active in horticulture. An average size of a farmer horticultural unit varies
from 5 to 20 ha, and in some cases it even reaches 100 ha.

Organic agriculture
Lithuania‟s integration into the EU implies a challenge to produce only competitive
goods, i.e. competitive agricultural products. It is also necessity to apply cost effective
farming methods, environmentally friendly and socially acceptable arrangements. This
gives a task to solve economic, ecological as well as social problems in a complex
way. In this regard one of the best management systems is bio-organic agriculture. It is
based on natural biological processes and materials in order to ensure sustainable
farming and production of high quality agricultural products.

All the necessary preconditions for the production of organic products exist in
Lithuania: a favourable ecological situation, state support, expanding local and foreign
market of organic products, national and international recognition of the certification
enterprise „Ekoagros‟. All that results in possibilities to export organic products.

The number of organic farms is constantly increasing (Table 2.). In 1993, the first
organic farmers were certified. In 2001, 280 organic farms and 19 processing and trade
enterprises were certified.

Table 18: Development of bio-organic farming in 1993-2001
Year               1993    1994    1995    1996    1997     1998    1999    2000    2001       2002
Number of                                                                   230     280        393
                   9       14      36      65      106      144     171
farms
Area, ha           148     267     582     1118    1568     4006    3995    4709    6400       8760
Source: Data provided by ,,Ekoagros” 1993-2001.

Information about organic farms and enterprises is presented in an annual publication
by “Ekoagros” - Certified Organic Farms and Enterprises in Transitional Period.

The area of certified organic farms is 0.8 per cent of the total area of agricultural land
in Lithuania. An average size of the organic farm is 22 ha. In terms of the area of
certified land Klaipėda District ranks first, then come Varėna, Birţai, and Molėtai
Municipalities. Other producers of organic products are located in different
municipalities of Lithuania.


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                                                                                          37
The major part of certified lands is meadows - 50 per cent and cereals - 40 per cent, 10
per cent of the area is used for vegetables, leguminous, potatoes, berry plantations,
orchards, etc. (Figure 7.). The structure of crop area on organic and conventional farms
is very similar, the difference lays in the fact that more vegetables, leguminous and
potatoes are produced on organic farms.

As a rule, organic and conventional farms are mixed, i.e. they produce different
products: grain, potatoes, livestock products, fodder, etc. Only a few farms are
specialised in producing of vegetables, fruit, berries, mushrooms, or herbs.




                                       Orchards, berry
                    Vegetables,         plantations      Other
                leguminous, potatoes        4%           1%
                        5%




                Cereals
                 40%
                                                                          Meadows
                                                                           50%


Figure 7: The structure of bio-organic crop area in 2002
Source: Data provided by ,,Ekoagros” 2002.

In 2002, the certified organic farmland was 8196 hectares, of which 4864 ha –
grasslands, 2152 ha – cereals, 714 ha - leguminous, vegetables, potatoes, 409 ha –
orchards, 57 ha – berry plantations. As for livestock production, the major organic
product is milk (90 per cent). However, milk as well as beef and poultry are sold as
ordinary products, without the mark of organic certification. There is no processing
plant producing livestock organic products.

Organic products are in greater demand in Lithuania now. Where as before only very
few specialised shops were operating in which organic produce was sold, in the year
2003 the biggest supermarkets started placing the organic products on separate shelves
and promoting healthier and better quality products.
There are attempts to export organic products (berries, honey). On the domestic market
21 per cent of organic products are sold directly in the farms, 40 per cent – in fairs and
market-places, 14 per cent - in shops, 25 per cent - in other places. The future will
show what form of trade is the most popular. It is probable that selling organic
products in supermarkets will stimulate the development of the market of these
products.

The number of organic farms increases by 20-30 per cent annually. If the certification
of land follows the same pattern, in 2006 this area will comprise 0.5 per cent of the
total agricultural land.


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                                                                                        38
The development of organic farming described above will not be able to meet an
increased demand. The goal is to have 2 per cent of the total agricultural land area
turned into organic farms before 2006. Therefore, increasing the number of organic
farms annually is of prime importance.

Processing of crop products
Grain processing
Currently there are 47 grain-processing companies and 10 of them are the big ones.
The capacity of Lithuania‟s grain processing industry is over 400 thousand tons of
food flour, about 40-50 thousand tons of groats and more then 2 million tons of mixed
fodder. The scale of grain processing industry is diminishing as a part of the process of
agricultural reform – In the period 1991-2000 mixed fodder output produced dropped
by more then 5 times, food flour production declined by about 50 percent.

In recent years the largest mills have been undergoing modernisation. Technological
lines for cereals preparation and other equipment have been renewed. The upgrade of
production facilitates the increase of the output of the highest quality flour,
improvement of grain quality and competitiveness in domestic and foreign markets.
The mills operate at approx. 50 percent capacity.

Mixed fodder producers are operating at about 15-20 percent capacity. Majority of
enterprises have high energy consuming technologies designed for large-scale
production. As a result, production costs have grown, and output quality has lowered,
which reflects on competitiveness. However, some companies that have gradually
modernised the process of production have managed to significantly increase their
market share. In 2000, about 40 percent of mixed fodder producers covered
approximately 80 percent of the total mixed fodder sales. The remaining actors in the
field operate at minimum capacity, and in many cases they only meet their own
livestock production needs.

In order to make grain quality estimation more precise and operational, financial
resources have been allocated from the Rural Support Fund to buy INFRATEC
equipment, 39 units in total, for determination the quality of cereals, flour, compound
feeds and their supplements. All analysers are combined in a network administrated by
the MoA.

Thus, the support should be given to encourage the consolidation of the grain industry,
laboratory equipment and production quality control. Support to flour milling has to be
focused on investments in modern laboratory equipment aimed at testing the quality of
raw materials. For that purpose support aiming to restructure grain-processing industry
under SAPARD programme priority “Improving processing and marketing of
agricultural and fishery products” is to be provided. During the programme preparation
no project for the investment in grain processing has been approved yet. It is planned
to extend the support measure also in the coming programming period.

Rape processing
Rape processing company "Obeliu aliejus"is the main rape processing company in
Lithuania. The processing capacity of this company is processing of 18 tons of rape
and production of 6 thousand tons of rape oil and 11 thousand tones of oilcake for the


Consolidated version as of 5th March, 2008
                                                                                       39
fodder. Processing of rape produces valuable oilcake that could be replacing a great
part of rather expensive imported soy meals.

It is expected that in 2003 a new rape processing company will be opened in Mazeikiai
district which plans to process around 30 000 tons of rape a year. The final product is
expected to be the bio-diesel.
Flax processing
The existing network of primary processing of flax is based on the territorial
distribution of main flax growers. The processing enterprises have a processing
capacity of 50-60 tons of flax straw. However, only about half of the processing
capacities are being utilised because of insufficient amount of flax straw.

1999 – 2002 was the period when primary flax processing companies have been
improving their technological equipment in order to increase the output of long and
short flax fibre. Currently the ratio between long and short flax fibre is 40: 60 instead
of 60: 40 as it is in Western Europe countries.

Sugar beet processing
There are 4 sugar factories in Lithuania. The processing capacity as well as the
technical level of all the sugar factories in Lithuania is lower then in those of the
Western European Union countries. The sugar factories have been modernised in order
to improve the quality of sugar, to increase the processing capacity and to shorten the
processing time, to increase the sugar output, to reduce the processing costs and to
meet the environmental requirements. Despite this fact the productivity of the factories
is still lower than in the factories of the EU countries.

Processing of vegetables and fruits

There is a big potential for the processing of vegetables in Lithuania. However, due to
organisational-economical reasons this potential is not being utilised fully. Most of the
processed vegetables are consumed locally. Also import of processed vegetables
exceeds exports. The main reasons for the low competitiveness of the vegetable
producers are unproductive technologies, outdated storage capacities, undeveloped
vegetable preparation, packaging and marketing systems. Most of the problems
mentioned also apply to the processing of the fruits and berries.

Having presented the processing of main crop products it could be summarised that
main problems in relation to processing of crop products are related to modernisation
of processing and marketing chain in grain and fodder industry, primary flax
processing and fruit and vegetable industry. The majority of industries are facing
problems of old technologies, inadequate storage and handling capacities, preparation,
packaging and handling of products in the marketing chain. Thus, the problems listed
could be ranked as follows:

Table 19: Ranking of problematic areas in the sector (3-high, 2-medium, 1-low)
                 Primary            Processing          Quality          Marketing
                 production                             standards
Cereals          3                  3                   1                2
Rape             3                  1                   1                2


Consolidated version as of 5th March, 2008
                                                                                       40
Flax2                   3             2                  3                  1
Fruit-vegetables        3             3                  3                  2

Livestock sector
Before presenting in detail livestock production, some information about size of
livestock farms, livestock density is provided below. This information will be further
very helpful when the implementation of the EU Nitrate Directive will be presented in
section 6.3.2.

Agricultural Information and Rural Business Centre (AIRBC) has conducted a
questionnaire survey in 2002. In total 187,645 agricultural entities have filled
questionnaires. Assuming questionnaires reached all agricultural holdings in Lithuania,
which number in the year 2002 was around 270 000, the response rate was
approximately 68%. Nevertheless, the biggest part of not responded farms are small
household farms.

Data on farm sizes according to the number of LU is presented in the table below. There
was no distinction made between farmer‟s farms and agricultural enterprises.

Table 20: Farm sizes according to the number of livestock, 2002
Farm Size (LU) Number of farms        Total number of LU
10 – 29            3.329                    45.434
30 – 59              267                    10.574
60 – 99                85                    6.259
100 – 149              32                    3.969
150 – 199              36                    6.199
200 – 299             26                     8.479
>300                   80                   90.379
Total >10              3.862               171.292
Total Lithuania                            745.676

Data in the above table shows that there are almost 4000 farms with 10 and more
livestock units in Lithuania, majority of them are small farms with 10-30 livestock
units. According to the survey, currently there are 80 farms in Lithuania with 300 and
more livestock units and 26 farms with 200-300 livestock units. The territorial
distribution of livestock farms depending on the size is also presented in
Map 5.

Map 5 Territorial distribution of farms having more then 200 LU




2
    Primary flax processing

Consolidated version as of 5th March, 2008
                                                                                     41
Majority of farms having more then 200 LU are situated in the central part of
Lithuanian which is characterised by fertile soils. The biggest number of farms having
10-29 LU (over 200 in each) exists in three municipalities - Vilkaviškio, Šilalės and
Šilutės. Out of 78 farms with 300 and more LU, 10 are situated in Panevėţys
municipality.

The average livestock density per ha of agricultural land is far below the maximum
allowed according to the Nitrate directive (1,7 LU/ha). The average livestock density in
Lithuania is 0,244 LU/per ha of agricultural land in 2002.




Consolidated version as of 5th March, 2008
                                                                                     42
Map 6: Livestock density in Lithuania, 2002




The highest density at present is in Marijampole, Silute and Silale municipalities,
respectively 0.38, 0.3 and 0.41LU/ha of agricultural land.

Further in Map 7 and Map 8 density of pigs and cattle is presented. Pig density and
also the pig production dominates in central and western part of Lithuania whereas
cattle dominates in the western and south-western part of Lithuania.




Consolidated version as of 5th March, 2008                                      43
Map 7: Density of pigs in Lithuania, 2002




Map 8: Density of cattle in Lithuania, 2002




Consolidated version as of 5th March, 2008    44
It is obvious from the maps provided above that pig production is more concentrated in
the areas where fertile soils dominate – central part of Lithuania. Pig production also
slightly dominates in the Western part of Lithuania where soil is better if to compare to
the soil in the Eastern and Southern part of the Country. Cattle production dominates
also in the Western part and also in the Southern part of the country where more
grassland is available.

Presently most of the livestock farms do not have manure storages meeting set
environmental requirements (more information on the Nitrate Directive
implementation and the requirements can be found in section 6.3.2. and Annex 4).
Manure storages have to be installed in farms having more then 10 LU. All such farms
will have to install new or to reconstruct existing manure pads and slurry tanks, and
this is about 227,5 thousand m2 of manure pads and about 1161 thousand of m3 of
slurry tanks, including pig farms. For this purpose there will be a need for about 410
million Litas. In the big cattle farms having more then 300 livestock units (there 86
farms of this size) manure and slurry storages will have to be installed first of all and
there will be a need for about 85 thousand m2 of manure pads and about 197 thousand
m3 of slurry tanks. This all would cost 58,6 million Litas. In the pig farms having
more then 300 LU, there will be a need to install 606 m3 of liquid manure storages (the
costs will be 121,4 million Litas). Most of manure and slurry storages will have to be
installed in Joniskis, Kedainiai, Marijampole, Pakruojis, Panevezys, Pasvalys,
Radviliskis, Sakiai and Siauliai municipalities.

Milk sector

Primary production

Milk sector is identified as a branch of agriculture with a comparative advantage. In
2001, milk production made up to 20 percent of the total value of agricultural
production, whereas the export of diary products made up to 30 percent of the total
exports of agricultural and food products. In 2001 if to compare with the year of 2000
milk productions and procurement of milk increased accordingly by 4 and 5 percent.
The increase in milk production is due to increase in productivity – in 2001 average
milk yield from cow was 4150 kg and it is by 477 kg more then in 2000. However,
milk yield in Lithuania is 30 percent lower then in the EU countries.

The number of cows in the 1995-2000 period was decreasing but in 2001 it stabilised.
In 2003 there were 445,4 thousand cows Out of this number 409,4 were kept in private
farmers and family farms and about 36 thousand in the agricultural companies and
enterprises. Small size milk farms prevail in Lithuania – on average each farm has 2,3
cows. 84 percent of milk producers have 1-2 cows, 15,4 percent – 3-9 cows and only
0,6 percent of all diary farms have 10 or more cows. More than 70% of milk is supplied
to the dairies by small producers (1 to 5 cows). The average number of cows kept by
agricultural partnerships is 183 cows. In 2001 there were 198 agricultural partnerships involved
in milk production.

Positive structural changes related to the structure of milk farms could be observed in
the 1995-2001 period. Number of farms having less then 10 cows in 2001 if to
compare in 1998 has decreased by 33,7 thousands and the number of farms having

Consolidated version as of 5th March, 2008                                                 45
more then 10 cows has increased by 1,9 times. However, the average number of cows
in farmer‟s and household farms remain quite small – 1,83 cow per farm.

The seasonality of milk production is very big – in summer milk production is by 2,5
times bigger then in winter period. It is worth mentioning that in 2001 if to compare to
2000 the quality of milk procured has increased – there were 52 percent of the highest
quality milk and 25 percent of the first class quality milk procured. However, the
problem of ensuring the quality and hygiene standards as well as the environmental
and animal welfare aspects in diary farms remains a big issue that needs further
restructuring of the milk production sector and no doubt adequate investments.

As the result of State investment support during last years some specialised dairy
farms have been strengthened, the quality of raw milk and the yield have been
increased significantly. However the scale of this improvement is not sufficient. The
major problems in the primary sector are the following: low efficiency of production
and difficulties in complying with quality, hygiene, environment and animal welfare
standards. In order to solve the problems of dairy sector and to use transition period in
the most efficient way, it is necessary to focus on the measures that would encouraged
changes in farm restructuring and modernization, improving the quality and extending
the external market.

Milk processing

The dairy industry has been undergoing restructuring during last years. Currently there
are 38 milk-processing companies, 17 of which have the EU veterinary number, and
are qualified as exporters of dairy products into the EU countries. The main dairy
products being produced are: cheeses (soft and hard), yoghurts and kefir, butter,
skimmed milk powder, whole milk powder, casein, pasteurised milk, chocolate-coated
soft cheese, desserts and canned condensed milk.

In order to keep relatively high export level leading dairies focus on the
implementation of the new technologies and extending their assortment. It makes
Lithuanian dairy enterprises to keep export of dairy products in a relatively high level
(34 per cent of the total export volume). The main trade partners are the EU countries,
CIS and the USA. This allows dairies to keep a high share of export.

Many enterprises have modernised their premises, equipment, and production
technologies in accordance with the hygiene requirements of the EU. Enterprises are
implementing the control system of HACCP. A new hygiene norm “Food hygiene” has
been introduced meeting the requirements of the EU-directive 93/43. Main milk
processing enterprises have currently certificates to export dairy products to the EU
market, in accordance with directive 92/46. However, the remaining problem in many
dairies is quality and environment management systems, as well as improvement of
hygiene, animal welfare.
The milk processing industry has to strengthen the capacity to cope with increased
competitive pressure and market forces in domestic and world markets.




Consolidated version as of 5th March, 2008                                           46
According to Lithuanian HN 15, dairies have to introduce the HACCP system in order
to increase product quality and competitiveness. It requires considerable investments
and know-how, where external means and expertise would be much requested.

Support should be given to dairies in order to restructure the product basket, switching
from balance products to more value-added products. The alternatives of producing
whey and baby-food, which require modern technologies, should be weighed. The
possible markets for national specialities should be evaluated.

The growing demand for ecological dairy products reveals new possibilities for dairies.
Support should be given to acquire new production technologies and equipment for
ecological production.

Table 21:Ranking of problems in the sector (3-high, 2-medium, and 1-low)
                 Primary           Processing          Quality          Marketing
                 production                            standards
Dairy            3                 1                   1                3

Meat production

Favourable climate in Lithuania, skilled employees, sufficient fodder recourses and
long traditions in cattle breeding and meat processing has created a base to foster a
comparative advantage in livestock production.

Meat sector plays an important role in agricultural production. The total worth of the
breeds in 2000 made up to 17.8 per cent of total Lithuania agricultural output. About
17.4 thousand people are involved in the livestock breeding sector, and 3.9 thousand in
the meat processing industry. However, productivity is low in comparison with the EU
countries.

During the last years meat production fell down. In 2002 there was 173,6 thousand
tonnes of meat produced, instead of 202.3 thousand tonnes in 1998 and 192.9 thousand
tonnes in 1999. During the last decade beef and veal production reduced by about 3.3
times, pork and poultry production – about 2.9 and 2.7 times respectively.
Traditionally two species of breeds – cattle and pigs - dominate in the herds. According
statistical data by the beginning of 2002 the total number of the cows amounted to 441.8
thousand ones (according RBDIC data -492.6 thousand). It makes up to 59 per cent of
total herd structure, while, beef cattle and half-breeds makes up to 5 per cent. That
illustrates revaluation of milk production in Lithuania livestock sector. By the beginning
of 2002 the total number of pigs amounted 1010.8 thousand.

Majority of livestock farms are small in size. According RBDIC data by the beginning
of 2002 there were 239.363 herd owners, 209.557 of which have 1-5 heads. The same
figures illustrate the situation in milk sector. Though, in order to keep high quality and
hygiene standards and improve competitiveness of the sector it is necessary to
encourage farm restructuring and investments into the modern equipment and
technologies.

Due to the improvement of the quality of the raw material and promoting the
competitiveness of meat products, development of cattle breeding is expectable. In
Consolidated version as of 5th March, 2008                                            47
order to keep natural landscape and to increase market supplement with dietary meat,
development of sheep breeding assume a high importance. Further development of the
sector is deeply connected with farm specialization, implementation of progressive
technologies.

Meat processing
At the end of 2001, Lithuania had 416 slaughterhouses and processing enterprises –
136 poultry and livestock slaughterhouses, 117 mixed meat plants (slaughtering and
processing), 122 meat processing enterprises, 2 game enterprises, 1 utilisation
enterprise, 38 specialised storehouses-cold storages. However, if to compare to 2000,
the number of slaughterhouses and processing industries decreased by 22 percent.
Such a change first of all is related to the stricter veterinary supervision and control,
applicable in respect of slaughtering, processing, warehousing and supply to the
consumer. All food enterprises have to implement the HACCP. By 2000 Lithuania
meat processing industry still remained a net exporter. Five meat-processing
enterprises have been qualified for the EU veterinary number that encouraged them to
export beef and beef foodstuffs to EU countries. However, the production produced in
the enterprises mentioned above makes rather small proportion of the total output of
the sector. Thus, enlargement of the number of meat processing enterprises, that meet
EU sanitary and hygiene standards must be foreseen as a challenge.

The industry is hampered by the fact that much of technologies and equipment
installed are rather outdated. For example, in the meat-processing sector it is common
that slaughtering is still linked with processing. This results in inadequacy of quality
and efficiency.

Absence of slaughterhouses complying with EU requirements heavily limits
competitiveness of Lithuanian meat processing sector, and overall fulfilment of pre-
accession economic criteria. From the social point of view, weak competitiveness of
the sector will mean loss of employment and decrease in farm income level.

Although the meat industry is undergoing restructuring, the market is predominant by
rather small size industries, some larger industries are under-exploiting their capacities.
The major problems of the sector are: high production costs, low efficiency,
difficulties in meeting EU veterinary, hygiene, environment and animal welfare
standards. A number of small processing industries have already invested in modern
technologies complying with EU requirements using the assistance provided by EU
SAPARD programme.


Table 22:Ranking of problems in the sector (3-high, 2-medium, and 1-low)
                 Primary           Processing          Quality          Marketing
                 production                            standards
Meat             2                 3                   3                3


Food processing industry in general

Similar to the primary agricultural sector, processing of agricultural products – food
industry being the main out of it - plays an important economic and social role in the

Consolidated version as of 5th March, 2008                                             48
national economy. The food industry contributes a considerable share to the total
Lithuanian industrial output: in 1999, it still accounted for 26.8% of the total industrial
output, though its share is continuously decreasing.

Milk and dairy sector, and meat processing are the most important ones. These sectors
account more than a half of the total Lithuanian food industry output. Especially milk
and dairy sector is of high importance for its export opportunities.

                                                                          Milk products

                                                                          Fish processing
                     19%
                                                   26%                    Meat and meat products

                                                                          Prepared fodder

                                                                          Processing of fruits and
                                                                          vegetables
             20%                                         6%               Oils and fats

                                                                          Products of the milling
                                                                          industry
                     4%                          13%
                                                                          Other food products
                        1%           10%
                                                                          Beverages
                          1%


Figure 8: Structure of sales of the food industry in 2001
Source: Industry 2001.-Dpartment of Statistics under the GoL, 2002
Regarding the social role, the food industry is an important source for employment. In 1999, 22% of the
total industrial output was produced by approximately 22,6% of the total industrial employment. The
same year 466 Lithuanian food processors and beverage producers employed almost 43,000 employees. 3


Table 23: Lithuanian manufactures of food and beverages: number of enterprises
and employees, in 19993
                                   Enterprises by number of employees
                                                                             500
               Total                                                200-
                        0-9 10-19        20-49     50-99 100-199             and
                                                                    499
                                                                             over
Number of
                  466     63      90         129      77       52      41       14
enterprises
Number of
               42792 326       1309        4146     5300    7066    13751 10894
employees
Source: Lithuanian Department of Statistics, 2001.

Moreover, manufactures of food and beverages are important for the national economy
for their contribution to exports. In 1999, 81% of foodstuffs and beverages produced
were consumed in domestic market, and 19% were exported. However, the food

3
    Sole proprietorships excluded.

Consolidated version as of 5th March, 2008                                                           49
industry produces and exports relatively low value-added products. Usually, raw
materials are exported, while products of higher value added are imported. Trade
balances indicate low level of Lithuanian agri-food industry.

Most of the raw materials used in processing have local agricultural origin. For that
reason, the processing industry is vital for local producers of raw milk, meat, grain and
other primary agricultural produce. For highly competitive processing industry
guarantees its farm-suppliers a constant source of income, further development of agri-
food industry is one of the principle issues related to rural development.

Transition to the market economy has changed the structures of the food industry:
processing of agricultural products has become fragmented. Currently, the structure of
the food industry is characterised by several large processing units, and a number of
small-medium enterprises (with employee numbers up to 50). The large processing
units were set up to serve local and former Soviet Union markets. The emergence of
small-medium enterprises that mainly work for the local market has reduced the
market share of the large processing units. The collapse of the former Soviet Union
market and loss of the domestic market resulted in huge over capacities in the large
processing units: meat processors use approximately 20% of their capacity, as dairies -
approximately 45%. As a result, huge over capacities impair competitiveness of the
sectors where economies of scales are important.

In order to compete successfully in domestic and external markets, the agri-food
industry needs to improve quality of production by conforming to the standards and
hygiene-sanitary requirements set by EU. Poor qualities of production limits export
opportunities. Furthermore, improvement of the quality is one of prerequisites in
finding a niche market in the Common market.

To outweigh the agri-food industry disadvantages in quality, efficiency and over
capacity, there are competitive advantages to be forged. On one hand, the old traditions
in agriculture have created a sustainable raw material base. On the other hand, the
traditions have formed the product and technological knowledge resources.

Furthermore, Lithuania still remains a country with relatively low labour costs.
Considering food industry is labour intensive, this advantage becomes noteworthy.
Labour costs remain much lower than in western countries, in average they constitute
10%-15% out of western salaries in food industry. Eastern European wages exceed
Baltic ones in average on 20% while productivity levels are quite similar. Finally,
according to Lithuanian Development Agency agriculture and food industry are the
sectors with lowest salary levels among Lithuanian industries.

Figure 9 :Labour Costs




Consolidated version as of 5th March, 2008                                           50
Source: International Yearbook of Industrial Statistics, 1997

In conclusion, to increase its competitiveness Lithuanian food industry can benefit
from public investment support programs. Thus, it can substantially contribute to rural
development by providing sources of income to the farm-suppliers.

Investment volume in agriculture and food industry

During the period of 1995-1998, capital investment volume in both agricultural and
food sectors have been steadily increasing. The investment volume in agriculture
jumped in 1998: it exceeded 166 million Litas (approximately 40 million EUR). The
stimulus for investment activities was due to the started Rural Support Fund
operations, increased market potential for agricultural products, and speeding up of
land reform. However, in 2000 the capital investments in agriculture, hunting and
forestry decrease by 51 percent. Manufacturers of foodstuffs, beverages and tobacco
steadily invest in restructuring of enterprises in order to meet new market requirements
and has the increasing tendency year by year. The huge investment volume (in both
agriculture and food processing industries) is still required to continue the industry
restructuring. Public support to capital investment will speed up the restructuring and
fostering of industry competitiveness.

Table 24:. Capital investment volume, 1995 -2000, mill. Litas
                     1995       1996        1997     1998            1999           2000
Agriculture,
hunting     and        140.0     143.1        149.5    166.3            110.8              85,0
forestry
Manufacturing
of        food,                                                                     453,1
                     204.8      306.2      351.5    435.4
beverages and                                                       440.6
tobacco
Source: Lithuanian Department of Statistics, 2002
5.7. Forestry

5.7.1. Forest cover

Forests in Lithuania cover approximately 2 million hectares, or 31% of the total
Lithuanian surface area. Despite the increasing forest cover during the second half of
the last century, Lithuania from this perspective still remains behind its Baltic
neighbours (47.1% in Latvia and 48.7% - Estonia (FAO 2001). Increase in forest cover
in Lithuania has been announced as one of the main national goals.




Consolidated version as of 5th March, 2008                                          51
                     35

                                                                                     30,3    30,9
                                                                              30,1
   Forest cover, %
                     30                                                27,9
                                                             26,4

                     25                              23,9
                                           22,6
                          21,8
                                   19,7
                     20


                     15
                          1938     1948    1956      1961    1973      1983   1993   1998    2001
                                                             Years


Figure 10: Forest cover change in Lithuania from 1938 to present
Source: Centre of forest economics

Conifer stands make up to 59,9 per cent, soft broadleaves up to 35,3 per cent and hard
broadleaves make 4,8 percent of the total forest area. Forest stands area by dominant
tree species is provided in Figure 11. Intensive natural regeneration of forests is
followed by species substitution in favour of soft broadleaves. More then two thirds of
naturally expanded area are occupied by soft broadleaves (birch, grey alder, black
alder).

                                                      0,8%
                                                  1,8%
                                              2,7%
                                           2,8%
                                    6,0%
                            6,2%                                                            36,6%




                          20,0%


                                                                    23,1%




Figure 11: Forest stands area by dominant tree species
Source: Lithuanian forest assessment 01 01 2001

Commercial forests make up some 73% of Lithuania's forests. Protected areas occupy
11,5 per cent of the whole territory of Lithuania. They consist of 4 strict reserves, 5
national parks, 30 regional parks, 265 state reserves, and 662 protected landscape
objects. According to Lithuanian Forest Assessment, by 1 January 2001 forests in
protected areas account for 50,4 per cent of protected areas and 18,8 per cent of forest

Consolidated version as of 5th March, 2008                                                          52
territory. In addition, 293,000 ha of forests are under restricted forestry activities. Thus,
the area of protected areas and other forests with restricted economic regime makes up
to 33,3 per cent of the whole Lithuania‟s forest cover. In Lithuania only 22 percent of
forests have been artificially established and the remaining 78 percent are natural or
semi-natural forests. It results into much bigger biodiversity in Lithuania if to compare
it to that of other countries.

5.7.2. Forestry in the national economy

Forestry and forest industry play an important role in Lithuanian economy. During
recent years value added in forest sector was increasing steadily, annually contributing
about 3 per cent of gross domestic product in Lithuania. Share of the forestry sector
from the gross national product in the year 2000 was 0.7%, which constituted 269.4
million LTL. In recent years, Lithuania annually produced more than 5.0 million m3 of
wood. Export of round wood and forest industry products in the year 2000 made up 11
% from the total value of the country‟s export.

Fellings in forest available for wood supply in state, private and other forests in 2000
constituted 5.3 mill.m3, of which 3.9 mill.m3 were harvested in the state forest
enterprises and national parks and 1.4 mill.m3 – at private forests. At present, only
61.6 % of the net annual increment of Lithuanian exploited forests are harvested.

Number of employed in forest sector was rather stable and totalled 50-55 thousand
during 1992-1999. This figure represents 3 per cent of total employment in the country
and 8 per cent of total employment in agriculture, forestry and manufacturing industry.
The above-mentioned number of employed does not fully reflect employment in forest
sector, as many people are temporarily involved in forestry activities, particularly
private sector. Besides that, many enterprises of other sectors (construction, agriculture,
forestry, etc.) also are involved in timber processing activities (saw milling, carpentry,
etc.), which is not their main activities and therefore workers of these companies are not
covered by this statistics.

Most of workers work in primary forest industries (sawmilling, wood-based panels) –
56 % percent of total employment in forest industries. Number of employed in
furniture industry is 34 % of total employment of forest industries. Employment in
paper industry reduced by almost 50 percent – from 6.7 in 1989 to 3.6 thousand in
1999.

Data on average labour income in forestry and forest industries as such provides that
earnings in total forest sector are increasing. It can be clearly observed from the ratio
of average labour income in forestry and forest industries of average labour income for
all sectors.

Table 25: Earnings in public forestry, 1996-2000

                  Average monthly earnings, Lt
                          Total Of which:                     Ratio:
                  All     forest
                  sectors sector Forestry Saw milling Workers All sectors/
Year                                                          Forestry
1996               618 720       722      727         652     0.86

Consolidated version as of 5th March, 2008                                              53
1997                778      847       861          795            766          0.92
1998                930      992       1014         847            838          0.94
1999                987      1061      1088         870            878          0.93
2000                1,008    1095      1118         884            899          0.92
Source: Centre of Forest Economics 2001 (department of forests and protected areas); S. Starkevičiūtė
2001.
Most of the primary forest industries are located in rural areas and therefore this
economic activity is perceived as a potential for increase of working places and further
income in rural areas. For that purpose enhancement of forestry sector to promote the
benefits of social, economical and ecological nature is set as one of the priorities in
rural development.

5.7.3. Forest ownership

Forest area under the public ownership in Lithuanian is 1,002 thousand hectares (50%).
There are 458 thousand hectares (23%) in private ownership, and 560 thousand hectares
(27%) in the process of being restituted/privatized. The Lithuanian private forestry is
characterized by large number of small private forest holdings. At the end of the first
half of 2001, there were about 150.000 of legitimated private forest holdings with the
average 3.4 hectares per holding.

As regards the development of the private forestry it should be mentioned that co-
operative relations among forest owners are increasing. In 1993 Lithuanian Forest
Owners Association was uniting 100 whereas in 2002 – 1700 forest owners. The main
services that FOAL is providing for its members are:

    information and consultancies about private forestry;
    education in silviculture and forest management of private forest owners;
    representation of private forest owners.
The awareness campaigns organized by FOAL on a continuous basis aiming at
promoting sustainable forestry result in an expansion of the FOAL and further to a
management of private forests in a sustainable manner.

Being a public organization Association is actively promoting process of private forest
owners cooperation. Now there are eleven forest owners‟ cooperatives, Private Forest
Extension Centre witch are successfully providing commercial and extension services
for private forest owners. The main objectives of forest owners‟ co-operatives are these:

       to benefit the members of private forest cooperatives and FOAL due to
        sustainable way of forest management activities;
       increasing efficiency of private forest holding management;
       defence of private forest owners economical interests;
       representation of forest owners towards business partners.

Through forest owner‟s cooperatives as well as through Lithuanian Forest Owners
Association the relations with economic partners engaged in timber harvesting, wood
processing and wood trading are being maintained and it is of great importance for the
development of a private forestry.


Consolidated version as of 5th March, 2008                                                       54
5.7.4. Legal basis

On the 17th of September, 2002, Minister of Environment approved the Lithuanian
Forest Policy and Implementation Strategy (No. 484). The document spells out clearly
formulated principles of forest policy, which reflects and balances the interests of the
state and the individual citizens or their interest groups related to the forest sector, and
defines a strategy for implementation of such policy.
The Lithuanian Forest Policy has been formulated taking into account the following
principals:
         responsibility for the sustainable use of forest resources,
         compliance with national legal base and international agreements,
         participation of and cooperation with all interested stakeholders,
         diversity and equality of forest ownership forms,
         complexity of forestry,
         promotion of traditions in forestry.
The Forest Policy is implemented through four main directions, namely:
         general forest policy direction which covers protection and improvement of
            forest resources, diversity of forest ownership forms, public awareness
            raising about forestry and it‟s participation in decision making process,
            development of forestry science and education, strengthening and
            development of international relations;
         economic direction which promotes rational and sustainable forest use and
            increase in forest productivity and quality of wood as well as effectiveness
            of forestry,
         ecological direction which emphasise the sustainability of forest
            ecosystems and protection of biodiversity and improvements in forest
            health status
         social direction under which public needs related to forests are met and
            both public and private forestry is developed in the rural development
            context.

The Forest Policy and Implementation Strategy became the most comprehensive
document describing the future development of the forest sector. Moreover, the
document puts forestry in the broader rural development context as it plays a
significant role both in economic and social life of rural community. Adoption of this
document has strengthened the forestry position in social, economical and ecological
life of the nation.

Lithuanian Forest Policy and Strategy is also aiming at implementation of
international initiatives related to sustainable forest management. Below the key
international initiatives are listed.
Implementation of recent resolutions on the protection and management of European
forests (Strasbourg, Helsinki, and Lisbon)

Lithuania has signed Strasbourg (1990), Helsinki (1993) and Lisbon (1998) Ministerial
Conferences on Protection of Forests in Europe Resolutions.



Consolidated version as of 5th March, 2008                                              55
To develop sustainable forest management important changes in the forestry sector
have been made successfully during last decade in Lithuania. Such changes include
legal and regulatory frameworks, the institutional framework, economic policy,
financial instruments and information.

Implementation of H1. Lithuania has prepared general national guidelines for
sustainable forest management, which were included into up-dated National Program
for Development of Forestry and Forest Industry, approved by the Government of
Lithuania in 1996. Forest Law embodies basic principles of sustainable forest
management in a broader sense. The implementation phase of general guidelines on
regional level was started via improving forest management planning methods and
corresponding forest management activities.

Implementation of H2. The enhancement of biodiversity in Lithuania is being
considered as an essential element of sustainable forest management. All activities
aimed at implementation of H2 have very close relations to other Helsinki and
Strasbourg resolutions - particularly H1, S2, S6.

The network of nature protection areas was strengthened within the last few years.
Structural and protection quality improvements were followed by the increase of
protected area. Guidelines for Conservation of Biodiversity in Commercial Forests
were prepared in 1996, Recommendations for Conservation of Rare Forest Habitats
and Proposals for the Improvement of the Protection of Rare Forest Birds‟ Nesting
Sites, in 1996.

Lithuania is a member of EUFORGEN since 1995 and participates in the program
activities. As a result of such co-operation Guidelines for the Conservation of Genetic
Resources were developed in 1996.

Consequent actions towards education and rising of public awareness in relation to the
conservation of biodiversity are being implemented. Educational curricula, programs
of various courses for university and college degree forestry students, state forestry
employees, forest owners and forest workers as an important part also includes
biodiversity conservation issues. These activities are aimed not only at forestry
professionals and forest owners but also cover broader auditorium, e.g.:
schoolchildren, students with environmental background, forestry-related institutions
and NGO‟s.

Work-programme on the conservation and enhancement of biological and landscape
diversity in forests. The commitment of the European governments in the conservation
of biological diversity has been expressed in Resolution H2. Therefore a "Pan-
European Biological and Landscape Diversity Strategy" has been developed which
addresses the conservation of biological diversity at all levels. Lithuanian Biodiversity
Conservation Strategy and corresponding Action Plan was prepared by the Ministry of
Environmental Protection and approved by the Parliament in 1998. This strategy and
Action Plan follow-up a "Pan-European Biological and Landscape Diversity Strategy"
and are based on the Helsinki resolution H2.

Criteria and indicators for sustainable forest management. Lithuania has not
developed any of its own special criteria and indicators for sustainable forest

Consolidated version as of 5th March, 2008                                           56
management. Most criteria and indicators have come directly from the Pan-European
system. These criteria where officially approved for use by the former Ministry of
Forestry in 1995. Only one additional criterion, the percentage of private forests, is
being used. The reason for this is a regularly increasing share of private forests and
significant influence of the private forest sector on sustainable management of the
country's forests.

5.7.5. Multiple use of forests

Forests in Lithuania are one of the most important components of natural environment,
landscape formation and protections, as well as the subject to recreation and hunting.

Recreational forests cover 89,000 ha or 4 % of all Lithuanian forests. Non-wood
products account for more then 10-15 % of income from all forest products including
wood. Main non-wood forest products are mushrooms, berries and fruits, medicinal
plants, game meet, Christmas trees, etc. In some regions like South and South East
Lithuania the value of collected mushrooms and berries is close to and even higher
than that of wood. Consumption of mushrooms and berries increased considerably
during 1990-es, Increasing exports of mushrooms and wild berries was the main
reason for expanding market demand. During last years there was an increase in import
of mushrooms and berries from Russia, Belarus and other countries. Most of imported
mushroom and berries are re-exported to Western countries as it can be observed from
the data provided above.

Table 26: Market supply with forest berries, mushrooms and medical plants, 1996-
2000
 Production                           1996      1997   1998    1999 2000
 Mushrooms                            1933      2648   3386    840.6 2187
 Berries                              1614      3668   2162    202.9 838.5
 Medicinal plants                     53.6      52.9   68.0    56.9     59.3
Source: Centre of Forest Economics 2001.

Table 27:. Exports of mushrooms and wild berries, 1995-2000
                                                                  Total
 Production                                                Year
                                                                  Tons 1000 Lt
 Mushrooms, fresh                                          1995   1964.8 37372.3
 or chilled                                                1997   2159.8 29591.3
 (HS: 070951)*                                             1999   2301.4 32664.0
                                                           2000   5489.9 64882.6
 Fresh cranberries,                                        1995   530.4 3295.4
 bilberries, cowberries                                    1997   1731.0 7667.5
 (HS: 081040)*                                             1999   202.5 724.2
                                                           2000   95.5 485.4
  Source: Centre of Forest Economics 2001 (Statistics Lithuania).
  *Commodity code of Harmonized system.



Consolidated version as of 5th March, 2008                                         57
In the 1999-2000 season, there were 4,5 million ha of land used for hunting in
Lithuania. Fields, shrub land and water areas account for major share in total area used
for hunting – 2,5 million ha. Forests occupying 1,9 million ha are also used for
hunting; private forests here account for 0,4 million ha, the rest is state and reserved
for restitution forestland.

Up to 30 species of medicinal herbs are harvested in Lithuanian forests. Juniper
berries, bearberry leaves and black alder bark are the most popular and of the greatest
demand. Though Lithuanian forests are rich of medicinal herbs, the existing resources
are insufficient to meet the current demand.

Since the most of the forests occupy areas where soil productivity is low, forestry (in
terms of both wood and non-wood products) provides opportunities as an important
source of additional income for farmers and rural dwellers. For that reason, forestry is
considered as one of diversifying activities in the rural areas able to contribute to
provision of additional employment. At the moment, especially non-wood forest
product utilization provides a sound basis for rural development initiatives, which aim
to increase income-earning opportunities while maintaining environmental quality.

5.7.6. Afforestation of agricultural land

Along with changes of economic and social conditions in Lithuania, after land reform
has started, the trends of decreasing land use for agriculture became visible. This
process is particularly significant in the regions where poor soils are abundant and as a
result are not longer being cultivated.
Afforestation process and increase of forest cover in Lithuania, considering
environment protection, landscape ecology criteria, maintenance of cultural heritage as
well as factors of rational use of agricultural land and fulfilment of other ecological,
social and economic functions, is a very important task in Lithuanian forest and
environmental policy.

In the Lithuanian Environmental Strategy, action Programme                   (Ministry of
Environmental Protection, 1996) under “Priorities” is mentioned             that it is an
environmental protection priority “to increase the country‟s forest        area by green
planting in territories not suitable for agriculture, primarily in those   with damaged
agricultural landscape and nature frame territories.”

Provisions related to the forest increase in Lithuania had been changing in the last
decades. In 1986 the optimal ecological forest cover was estimated to be 33-35
percent. In 1997 the Government of Lithuanian supported the planned increase in
forest cover by 2-3 percent reaching 32-33,3 percent. The draft General Plan of
Lithuania foresees the increase in forest area by 7,5 percent.

The Minister of Environment has approved the Lithuanian Forestry Policy and its
Implementation Strategy (Nr. 484, approved 17th of September, 2002). The document
outlines that the aim is to increase the forest cover in the coming 20 years period by 3
percent. In order to fulfil this objective the Lithuanian Forest Increase Programme
2003-2020 in November 2002 has been approved. The aim of the programme is to
foresee the forest cover increase tendencies and volume in Lithuania taking into


Consolidated version as of 5th March, 2008                                            58
consideration the factors influencing the process, forest structure and it‟s territorial
distribution as well as accumulated experience in Lithuania and other countries.

In order to reach the 3 percent goal there is a need to afforestate about 196 thousand
hectares of land, meaning about 10.9 hectares a year. However, taking into account the
developments during the last 20 years, it is realistic that about 4-5 thousand hectares a
year will naturally regenerate and until 2001 the natural forest would make up to 81
thousand hectares. Additionally about 115,5 thousand hectares of forests should be
planted meaning 6415 hectares a year.

In October 2001, the Ministry of Environment of the Republic of Lithuania together
with the Lithuanian – Danish project “Afforestation of agricultural land based on
sustainable land use planning for afforestation and environmentally sound forest
management” organized an international conference “Afforestation in the Baltic Sea
Region – experience, current activities, and future trends”. The conference raised a big
interest among interested parties not only from the Baltic countries but also others
which are already engaged or are planning to be engaged in afforestation on a broader
scale. Moreover, international organizations such as World Bank, FAO have
introduced their actions both past and forthcoming in relation to afforestation. The
Minister of Environment in his conference opening speech declared that “increase in
forest cover of Lithuania is a highly important objective of the Lithuanian forest and
environmental protection policy.” The following benefits arising from afforestation of
agricultural land to the society and environment have been listed by the Minister:
     it is a gain for the protection of biological diversity
     it creates an important infrastructure for recreational purposes
     forests play an important carbon sequestration role
     it is an effective measure for underground and of surface waters protection
     reduces water and wind erosion
Data on afforestation is presented in Table 29. After restoration of independence of the
Republic of Lithuania, over the first few years, afforestation activities were minor –
only some tens of hectares a year. Afforestation gained a significant importance
starting with 1998 – 562 hectares, 1999 – 787, 2000 – 822. The process took place
mainly on abandoned or degraded agricultural lands. It should be noted, however, that
most of afforestation has taken place on public land by State forest enterprises.
Afforestation of private land was until some 1997 not a popular land use form amongst
landowners mainly because of the land reform, traditions in agriculture as well as
uncertainty about the future of agriculture.
Table 28:Average annual afforestation area during the period of 1941-2000
(thousand hectares)
 Year                         Afforestation on non- forest Total planted forest (incl.
                              land                         reforestation)
 1941-1950                              1.5 ?                       8.1
 1951-1960                              11.8                        17.6
 1961-1970                              11.8                        14.2
 1971-1980                              3.0                         10.6
 1981-1990                              3.2                         10.3
 1991-2000                              0.25                        7.9

As regards data about afforestation of private land, it should, therefore, be noted that
there were landowners afforestating their land and not reporting about that to the local
Consolidated version as of 5th March, 2008                                           59
    land management authorities. The main reason was that they were not motivated to do
    so as in the past it required to change the proper land use purpose that was complicated
    and costly procedure. The procedure has been changed and currently doesn‟t
    constitute beurocratic and expensive obstacles.

    Table 29: Afforestation of private agricultural land in 1998-2001, ha
     Year                    Afforested area, ha
     1998                    27
     1999                    76
     2000                    70
     2001                    30

    To conclude, Lithuanian forestry sector is important to the country development,
    though not as much as the agriculture sector. Compared to the agriculture sector, the
    forestry is less important in terms of contribution to the national economy and
    employment. Currently, the state forests play a major role in the sector and the role of
    private forestry is continuously increasing. Thus, the support for the development of a
    private forestry is of great importance in promoting such a development that in turn
    will secure long-term sustainable financial resources for the forest owners and at the
    same time will substantially contribute to the social life of the society and enrichment
    of natural values. No doubt, forestry sector is important in its „alternative to
    agriculture‟ role: development of small-medium enterprises (mostly, sawmills), non-
    wood forest products, opportunities for recreation and tourism, alternative use of
    abandoned agricultural land.


    5.8. State of the environment – agriculture and forestry

    Taking into account the diversity of natural resources of Lithuania, the following
    ecologically sensitive territories are identified:
   Particularly sensitive, very sensitive and sensitive territories. Their area amounts to
    about 1934 thousand ha. The largest area of these territories is in East Lithuania,
    especially in the territories of Lazdijai, Utena, Ignalina, and Trakai Municipalities.
    Sandy soil sensitive to erosion, characterised by the most intensive infiltration of
    precipitation prevail.
   Protection zones of water bodies cover the area of 195 thousand hectares. Within this
    area the economic activity is limited in order to reduce discharges of food substances
    into water bodies and their pollution, to slow down the processes of water
    eutrophication, and to preserve the stability of their banks;
   Karst region of Northern Lithuania is an area of 193.5 thousand hectares. It includes
    61 per cent of Pasvalys District area, 46 per cent of Birţai District area, 16.9 per cent
    of Panevėţys District area and 6.1 per cent of Radviliškis District area. Direct
    pollution of underground water is especially dangerous in this territory;
   The Nemunas River water-meadow region – 52.4 thousand ha, including 47.6 thousand
    ha of Šilutė District area and 4.8 thousand ha - of Klaipėda District area. 75 per cent of
    the water meadows is agricultural land;
   Ecological protected territories. There are 1062 protected territories in the country
    (773903 hectares or 11.9% of the national territory): 5 state strict reserves (24004 ha),

    Consolidated version as of 5th March, 2008                                            60
including 4 natural and 1 cultural reserves, 5 national parks (152294 ha), 30 regional
parks (436000 ha), 258 state nature reserves (150299 ha), 101 municipality nature
reserves (11186 ha), and 662 protected items of a natural landscape.

Further in this chapter an assessment of the key components of the environment,
namely soil, water, air/climate, biodiversity and landscape are presented in the light of
strengths, weaknesses, opportunities and threats. These elements of the surrounding
environment are concurrent parts of agriculture, as economic activity, as well as rural
life.

5.8.1. Soil

In assessing quality of agricultural soils, their properties, and their changes in
particular, it is necessary to take in to account absolutely different farming conditions,
which prevailed before the re-establishment of independence of Lithuania and after it
has been re-established. During those periods use of fertilisers and pesticides as well as
soil liming differed significantly. 160-200 thous. ha of acid soils were annually limed
in the period 1965-1990. Liming was stopped at all in the middle of 1990. Use of
pesticides and fertilisers has decreased several times since 1990. Decreased volumes of
liming and use of pesticides and fertilisers had a considerable effect on the change in
agrochemical properties of Lithuanian soil. Data on changes in the amount of
pesticides used in agriculture are presented in Figure 12.

Figure 12: Changes in the use of agricultural pesticides


              Changes in the use of agricultural
                         pesticides


         3,5
           3
         2,5
           2
   Kg/ha                                       Farming lands
         1,5
                                               Arable lands
           1
         0,5
           0
                1990   1993   1997   2000



The data show that during that period the quantity of pesticides used in arable lands
decreased from 3.3 kg/ha (by the preparation) to less then 0.5 kg/ha, that is, by more
then 6 times. Besides, the quality of pesticides used improved considerably.

Quantities of mineral fertilisers have also decreased notably. Prior to independence, an
abundant use of mineral fertiliser prevailed in Lithuania. The use of mineral fertilisers
had been increasing steadily until 1991. E.g. in 1988, approximately 700 thousand
tonnes of fertilisers (active substance) were used for agricultural purposes in Lithuania.

Consolidated version as of 5th March, 2008                                            61
In 1996 the use of fertilisers decreased to approximately 51 thousand tonnes only. The
Statistics department did not collect data between 1998 and 2000. In 2001 the total
amount of fertilisers used in Lithuania was smaller than in 1997, however the amount
of fertilisers applied per ha of agricultural land has increased (Table 30). This suggests
that fewer farmers use fertilisers, but there are farmers who use significantly bigger
amount of fertilisers.

Table 30: Use of mineral fertilisers (in active substance)

Use of mineral fertilizers in agricultural companies and enterprises 4
                                      1995 1996 1997 1998 1999 2000                2001
Total amount        of    fertilisers 51,7 51,1 56,4 …       …       …             39,5
applied, thou t:
 Nitrogen                             28,8 29    32,6 …      …       …             24,3
 Phosphorus                           10,9 10,5 11,1 …       …       …             6,8
 Potassium                            12   11,6 12,7 …       …       …             8,4
All fertilisers per one ha of           54  67,9    84   …     …       …            144,7
agricultural land, kg
 Amount of Nitrogen                   8,5  8,6   9,7    …    …       …             7,2
per one ha agricultural land, kg
Source: Statistical Yearbook of Lithuania, 2002, p. 375

Agrochemical properties of soil and their effect on plants have been regularly
investigated in Lithuania since 1965. The Agrochemical Research centre of the
Lithuania Institute of Agriculture performs this kind of work.

According to the soil research in the period 1963-1967, the percentage of relatively
acid soils (pH 5.5 and less) accounted for 40.7 % in Lithuania, including 27.7 % of
soils with pH lower than 5.0. Acidity of those soils decreased significantly due to
intensive liming, and according research data in 1985-1993 the percentage of acid soils
(pH <5.5) decreased to 18.7 %, including 8.5 % soils with pH lower then 5.0.
However, the acidification of the soils is presently increasing again. Though
acidification of soils is rather slow with respect to the whole Lithuania, and pH of
agricultural soils changed from 6.12 pH to 6.06 pH during the period 1988-1999, but
this process is much faster in the soils artificially deacidificated earlier. Seeking to
maintain the productivity of those soils liming will have to be started again.

Mobile phosphorus and potassium do not only have an impact on the yield of plants
and its quality but they also determine efficiency of fertilisers. According to the data of
1985-1993 agrochemical research, amount of mobile phosphorus in humic layer of
one-fifth (20,3 %) of agricultural soils was very low (up to 50 mg/kg). Large areas of
soils – 41.5 % contained low amount of phosphorus (51-100 mg/kg), 22,3 of soils
contained medium amount of phosphorus (101-150 mg/kg) and the quantity of
phosphorus was sufficient (over 159 mg/kg) only in 15.9 % of Lithuanian soils.

Lithuanian soils are better supplied with mobile potassium. Soils containing low
(35.4 %) and medium (33.4%) amount of potassium prevail. Soils containing a

4
    The data was not collected in 1998-2000
Consolidated version as of 5th March, 2008                                               62
sufficient amount of potassium (over 150 mg/kg) account for 23,6 %, whereas soils
containing very small amount of potassium (up to 50 mg/kg) constitute 7,6 %.
Change of mobile phosphorus and mobile potassium in agricultural soils is presented
below in Figure 13

Figure 13: Change in the amount of mobile phosphorus in Lithuanian soils


          Changes in the amount of mobile
           phosphorus in Lithuanian soils

              40
              30
      Area,% 20
              10                                     1995
                                                     2000
               0
                   up to   102-   151-   >200
                    100    150    200
                       Amount , mg/kg




The data shows that that amount of mobile phosphorus in agricultural soils changed
insignificantly during the last decade. Even a certain increase in the areas of soil
relatively rich in phosphorus has been recorded.

Changes in the amount of mobile potassium were somewhat different: areas of soil
containing a small quantity of potassium have been on the decrease in nearly all
objects observed, whereas areas of soil containing medium and sufficient quantities of
potassium have increased insignificantly in the most objects were research was carried
out (
Figure 14)

Figure 14: Changes in the amount of mobile potassium in Lithuanian soils




Consolidated version as of 5th March, 2008                                         63
           Changes in the amount of mobile
            potassium in Lithuanian soils

               35
               30
               25
               20
       Area, %
               15
               10                                        1995
                5                                        2000
                0
                    up to   101-   151-   >200
                     100    150    200
                         Amount, mg/kg




Summing up the data presented in Figure 13 and
Figure 14, the following conclusion can be drawn: despite the decrease in fertilisation,
agricultural soil is not exhausted during the recent period. In the conditions of normal
farming it can produce sufficiently rich harvest.

In the climatic conditions of Lithuania the amount of humus in surface mineral layer
depends mainly on the type of soil, its texture and moisture and the degree of soil
cultivation. Automorphic sandy soils contain the smallest amount of humus (0,5-1,5
%), whereas clay soils contain the greatest amount of humus (over 4 %). In the other
types of soil the amount of humus most often ranges from 2 to 4 %.

During the Soviet time intensive anthropogenic factors such as land reclamation, land
cultivation, liming and fertilising did not only speed up formation of humus but also
accelerated its decomposition. However, farming that prevailed in the soils of normal
moisture did not upset the balance of this process. Intensified land cultivation and
liming as well as abundant fertilisation speeded up decomposition of humus, however,
the harvest that increased due to the mentioned factors enriched the soil with organic
matter. Therefore, during the past 40-50 years the amount of humus in these soils
remained almost unchanged. In drained soils saturated with organic matter before
drainage, oxidation processes intensified and due to increased harvest larger quantities
of organic matter decomposed there. Hence, though due to the drainage, harvest
increases, the amount of humus decreased up to the level of 2-3 %. Moreover, the
content of humus in eroded soils of arable areas is on the decrease. After the process of
soil erosion intensifies, the humic layer of soil is carried from higher parts of the relief
to its hollows.

The quantity of nitrogen in the soil is closely related to the content of humus. According
to the data of State Land Survey Institute, the quantity of total nitrogen in humus layer
of soil in the country varies from 0,06 to 0.37 %. Its quantity is lower in sandy soils.
The largest quantity of organic nitrogen is accumulated in the complex compounds of
humus. According to the 1989-1990 research data, the amount of mineral nitrogen in
one-fourth (25.4 %) of the agricultural areas was very low (up to 30 kg/ha), in 61,1 % of
the areas its amount was low (30 – 60 kg/ha), in 12,2 % of the areas – medium (60-90

Consolidated version as of 5th March, 2008                                              64
kg/ha) and in 1,3 % of the areas – high and very high (>90 kg/ha). The amount of
mineral nitrogen in soils is insufficient to produce rich harvests; therefore it is necessary
to supplements its quantity by fertilising soil with mineral and organic fertilisers.

In accordance with the soil monitoring programme, not only the amount of nutrients but
also the concentration of heavy metals (Cr, Cd, Pb, Ni, Cu, Zn) and residuals of
pesticides are determined in the soil. Having summed up the 1993-1997 soil monitoring
data, it has been established that the humic layer of soil (0-20 cm) contains on average
10.7 mg/kg of chrome, 0.46 mg/kg of cadmium, 11.9 mg/kg of lead, 9.9 mg/kg of
nickel, 6.9 mg/kg of copper and 28.6 mg/kg of zinc.

The content of heavy metals mostly depends on the soil texture: when the quantity of
physical clay particles (<0.01 mm) increases, the quantity of heavy metals increases,
too. In the Central Lithuania because of heavier texture and quite big areas of soil of
limnological origin, the amount of heavy metals is higher.

Certain quantities of heavy metals get into soil together with mineral phosphorus and
potassium fertilisers. However, the analysis shows that mineral fertilisers used
permanently for a long time change the concentration of heavy metals in the soil rather
insignificantly. Larger quantities of copper and zinc are found in the surface layer of
garden soils (0-5 cm) as a consequence of pesticides earlier used in large quantities. In
most cases the quality of those pesticides in the Soviet time did not conform with the
requirements and harmful residuals were remaining stable in the environment for a long
time. Some earlier used pesticides were extremely dangerous to the environment (as
DDT) and residuals of those pesticides are still found both in the soil and underground
water. This particular pesticide use is forbidden since 1970. Luckily, the quantities
found are decreasing – for example, the quantity of alpha (a) hexachlorane, in the period
1990-2001 as compared to 1989-2001 has decreased by about 43 times. The residuals of
most pesticides currently used remain in the soil for a short time – from several weeks
to 6 months – and pose an incomparably smaller threat to the environment and human
beings. Decomposition of modern pesticides is very fast, therefore the danger of
polluting the environment has decreased.

One more environmental soil-related concern is soil erosion. Until 1990 the intensity
of agricultural production was not balanced with environmental considerations.
Because of consolidation of fields, destruction of farmsteads and green plantations
about 14 per cent of agricultural land is affected by erosion, resulting in a loss of
valuable topsoil and productivity. The average loss of soil from agricultural land is
approximately 1.8-2.5 tonnes per ha. Approx. 19 per cent of the area of the country are
lands sensitive to deflation. This phenomenon is particularly typical of the coastal
areas of the Baltic Sea. The elevated areas of western and eastern municipalities of
Lithuania are mostly damaged by water and wind erosion. In order to prevent the soil
erosion the requirements to implement certain crop rotation systems are defined. For
example, the farmers should ensure that in hilly areas the anti-erosion crop rotations
are being implemented. If the slope is less then 5°, perennial grasses in the rotation
system should make not less 35-40 % from the total area, if slope is from 5 to 7°,
perennial grasses should make not less then 50 % from total areas, if slope is from 7 to
10°, perennial grasses should make 65-80 %, and if slope is from 10 to 15 only
perennial grasses should be grown. Also, afforestation in these areas is given a


Consolidated version as of 5th March, 2008                                              65
priority. Ecologically sensitive areas (included areas affected by erosion) are provided
below in Map 9.




Consolidated version as of 5th March, 2008                                           66
Map 9: Ecologically sensitive areas




Consolidated version as of 5th March, 2008   67
Consolidated version as of 5th March, 2008   68
With regard to the natural differences, it should be noted that there are 24 types of soil
in Lithuania, which are further classified into 15 agronomic types of soil according to
the locality, topographic and climate specifics. Each type of soil is creating different
agricultural conditions and requiring different farming approach. The quality of soil is
reflected by the soil productivity grading system (lowest – 30 points, highest – 50
points). In accordance with this system it can be seen that soil quality Lithuania varies
approximately 1.65 times on the level of local governments.

The most consistent region in terms of soil quality is Central Lithuania, with smallest
proportion of low quality soil. Soils which fertility is 35 points and less is considered
as a bad quality soil. The greatest concentration of the poor soil quality areas is in the
Eastern, South – eastern and Western parts of the country.

Below in Map 10 and Map 11soil granulometric texture and soil fertility expressed in
fertility factors is presented.




Consolidated version as of 5th March, 2008                                            69
Map 10: Granulometric texture of the soils




Consolidated version as of 5th March, 2008
                                             70
Consolidated version as of 5th March, 2008   71
Map 11: Soil fertility factors on regional level (1998 data)




Consolidated version as of 5th March, 2008                     72
Having presented the soil conditions above, the following strengths, weaknesses,
opportunities and threats could be identified as regards soil.

Strengths:
   1. Use of fertilisers in agricultural land has significantly decreased during the past
       decade, however agricultural lands are not exhausted.
   2. The amount of phosphorus and potassium in the soil is almost unchanged, and
       even a slight increase in the quantity of soil enriched with phosphorus and
       potassium are observed.
   3. Soil pollution with pesticide residues has been significantly reduced due to a
       decreased use of pesticides and stricter regulation on the stock.

Weaknesses:
  1. Soil in Lithuania is rather acid.
  2. Soil erosion

Opportunities:
  1. Gradual self-cleaning is expected to come with the expansion of ecological farms
     and introduction of more environmentally friendly farming in traditional farms.
  1. Expansion of territories covered with forest on the expense of non- productive land
     and territories covered with perennial vegetation will reduce the area of lands
     affected by erosion.

Threats:
   1. Growth of productivity in agricultural crops may have a significant influence on
      the increased use of pesticides and mineral fertilisers that will, in turn, endanger
      soil contamination with pesticide residues and increase leakage of nitrogen
      compounds into groundwater and surface water bodies.

5.8.2. Water

Lithuania abounds in rich water resources. Open internal water bodies cover 2.6 thousand
square kilometres. That accounts for about 4% of the whole territory. The total length of
Lithuanian rivers is about 63,700 km, that is, one kilometre of rivers per square kilometre
of the territory. All Lithuanian rivers fall into the Baltic Sea either directly or through the
territories of the other countries. All the six main river basins in Lithuanian are
transboundary.

Lithuanian also is also rich in underground water resources. The total annual amount of
underground water consumed constitutes only one-fourth of the amount of underground
water possible to use.

Water consumption in the period 1990-2000 decreased from 940 to 240 million m3 per
year that is almost four-fold. One of the reasons was decline in economy as regards water
consumption by industry as well as growth of water prices and newly introduced system
for accounting at municipal sector. As regards water consumption, the structural changes

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                                                                                        73
are presented in Table 31. It shows that after general water consumption decrease, the
structure of water consumption changed comparatively insignificantly.

Table 31: Structure of water consumption, %
Water consumers              1990                               2000
Municipal sector             43                                 45
Industry                     32                                 33
Fishery                      24                                 21
Agriculture                  1                                  1

With the decrease in water consumption, the amount of polluted water during the
transitional period decreased several times – in the year 2000 its total amount constituted
about 170 million cubic meters and this is 2.6 times less then in 1990. During this period
not only the total amount of wastewater but also the level of its treatment changed
significantly. If in 1990 over 27 % of the total wastewater were discharged into the surface
water bodies consisted untreated wastewater, over 50 % - insufficiently treated wastewater
and only 22 % - wastewater treated up to the established standards, currently almost 99 %
of wastewater is treated before its discharge in to the surface bodies (mainly rivers).

Surface water quality studies in Lithuania are carried out following the Law on
Environmental monitoring and the State Monitoring Programme. According to this
programme the water quality is being studied in 105 sites of rivers, in 13 lakes and 1
reservoir. Water quality is assessed on the basis of more then 70 indicators. Lithuanian
rivers are characterised by a high degree of pollution with organic matter and nutrients.
According to water quality classification used based on pollution with organic matter, the
concentration of nitrogen and phosphorus as well as bacteriological pollution, about 10 %
of Lithuanian rivers are attributed to relatively clean rivers (Quality class I-II), about 70 %
- to rivers polluted to an average degree (Quality class III-IV) and about 20 % - to heavy
polluted rivers (Quality Class V-VI). It should be noted that even though the river
pollution has decreased several time (Table 32), the quality of river water changed
insignificantly during the past decade. Partly this can be accounted for by secondary
pollution of rivers by bottom sediments and non-point agricultural pollution.

Table 32: Amounts of pollutants discharged into surface water bodies (tons per year)

Year     Organic    Suspended Total    Total      Oil      Iron                    Heavy
         matter     solids    nitrogen phosphorus products                         metals
         (BOD)
1991     36 200     39 000                                    390         177      98
1992     31 900     36 900         10 600     1438            340         172      109
1993     27 920     30 430         10 280     1534            270         101      97
1994     34 500     38 500         10 733     1502            280         166      93
1995     21 000     26 000         7663       1183            220         71       59
1996     16 600     17 900         6446       960             160         30       48

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1997     15 000    15 000        5401       879          150         10       46
1998     13 000    14 000        4545       795          130         4.4      36
1999     10 000    9000          3923       750          100         2.9      24
2000     7000      7000          3671       645          60          1.9      29
Pollution of Lithuanian rivers with oil products in not considerable. Pollution with oil
products is rather pronounced only downstream the large cities and in some places it
exceeds the allowable standards by 2-3 times.

According to the hydro biological indicators, the water quality of rivers changed
insignificantly during the past five years. By phytoplankton about 90 % of water in the
sites under study was polluted to an average degree and about 10% - heavily polluted.

According to the data of the state lake monitoring, water of lakes is much cleaner than that
of rivers because lakes are not polluted with wastewater and they are subject to non-point
pollution only. In the water of monitored lakes BOD values varied from 1.0 to 3.35 mg
O2/l. The concentration of phosphates varied from 0.010 to 0.044 mg/l and that of total
phosphorus was 0.01-0.072 mg/l. Lakes are not polluted with either ions of heavy metals
– Cu, Pb, Cr, Cd and Ni or chlorine organic pesticides or phenols. According to
phytoplankton research data, lake water is polluted very insignificantly.

The Curonian Lagoon is draining approximately 6% of the Baltic Sea watershed, and 74
% of Lithuania. Thus the eutrophication status of the lagoon and the role of nitrates in the
eutrophication are central issues in the implementation of the Nitrate Directive in
Lithuania.

Concentration of nitrate nitrogen in surface waters started to decrease from year 1993, but
remains higher compared with data before 1990. Increase of nitrate nitrogen concentration
was registered in 1997, caused by increased agricultural production. Average of nitrate
nitrogen concentration reached 2.5 mg/l of rivers in 1998. Concentration of phosphorus
and nitrogen significantly decreased in the rivers of Lithuania during 1990 – 2001 because
decreased usage of fertilisers and quantity of stock. Concentration of phosphorus has
decreased below levels causing eutrophication (0.05 mg/l). Concentration of ammonium
nitrogen has decreased below maximal permitted level 0.39 mg/l. Quantity of phyto-
plankton, which indicates level of water eutrophication, increased in the Curonian lagoon
during the past 15 years by 20 percent and level of the eutrophication shows tendency for
further increasing. Despite the fact that agricultural production, number of livestock and
usage of fertilisers significantly decreased during the last decade, the amount of some
kinds of algae which are typical for eutrofied waters has increased, bigger areas of water
are blooming because of increasing amount of blue algae. In the last 50 – 60 years the
quantity of blue algae has increased 10 times.

No doubt pollution from agriculture of water sources is of great concern. The research
shows that 1 m3 of slurry contains 1-2 kg of total nitrogen. If the slurry tanks are not
installed each year from the farms having more then 10 LU about 500 – 1000 t of total
nitrogen reach surface and ground water.


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Lithuania is perhaps the only European country using only underground water to provide
population with drinking water. Therefore the quality of underground water requires
special attention. In 1989, when underground water consumption was maximum, city
residents consumed 50-75 % of all underground water resources surveyed. After
consumption of drinking water and consumption of water for industrial needs decreased,
only 20-30 % of the underground water resources were consumed in 2000. Water
abstraction sites in Lithuania supplying drinking water to the population in a centralised
way usually abstract underground water from deep compresses aquifers and the quality of
this water is suitable for drinking by all indicator. These aquifers are relatively protected
from surface pollution. The dug wells to extract drinking water is mostly used in rural
areas.

The quality of ground water in rural areas where water from dug wells is used, poses
problems. According to the monitoring data, over 950 thousand rural inhabitants use water
of dug wells. 40-50 % of well water is polluted with nitrates exceeding maximum
allowable concentration, and sometimes it amounts to 100 mg/l and more. The polluted
wells are scattered evenly throughout the whole territory of the country. Most of them are
located close to dwelling houses, barns, toilets, heavily fertilised orchards and gardens.
Main reason of pollution of the well water with nitrates is inadequate distances from the
barns, dunghills and toilets. It is expected that Action programme for the implementation
of the EU Nitrate Directive will contribute significantly in reducing the problem related to
the high nitrate concentration in the drinking water from dug wells. More information
about the Action programme and overall strategy an actions foreseen in relation to the
implementation of the Nitrate directive are spelled out in chapter 6.3.2. and Annex 4.

As regards water as one of the key environmental domains, the following strengths,
weaknesses, opportunities and threats are identified:

Strengths:
   1. Lithuania is rich in water resources
   2. With the reduced water consumption, the amount of polluted wastewater has also
       decreased and it results into cleaner surface waters.
   3. Centrally supplied drinking water is of good quality

Weaknesses:
  1. Most of the houses in the countryside are not connected to the drinking water
     supply network and sewerage systems. Most of them use water from dug well for
     drinking and in most cases the quality of water is not meeting the requirements.

Opportunities:
1. Implementation of the EU directives regulating water policy will provide the
   possibility of using the EU structural funds for construction and modernization of
   wastewater treatment plants, renovation of drinking water supply networks and
   sewerage systems, etc.
2. Investments coming to agricultural sector will significantly contribute to minimising
   pollution of water from agricultural sources due to implementation of modern

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   technologies, construction of manure storages as well as thanks to gradual expansion
   of ecological farming.

Threats:
1. If further investments into wastewater treatment, sewerage systems as well as drinking
water supply in the countryside are not made there is a threat that with the increase of
economy the human health as well as the quality of our surface waters might be
threatened.

5.8.3. Air and climate

The territory of Lithuania is situated in the northern part of the moderate climate zone.
The average annual temperature in the territory varies from 6,5-7,1°C at the sea-side to
5,5°C on the north east. January is the coldest month of the year almost in the whole
country except the sea-side. July is the warmest month (except at the Sea shore August is
considered the warmest month) in Lithuania. The average temperature in July is 16,5-17,5
°C.
After Lithuania re-established its independence, as a consequence of economy decline,
emission of pollutants in to the air has decreased substantially. Monitoring data on the
main pollutants (sulphur dioxide, nitrogen oxides, carbon monoxide, nin-methane volatile
organic compounds and solid particles) show that total emissions of these pollutants
decreased from 1.1. million tons to 430 thousand tons, that is by 2.5 times. The analysis
shows that trends of emission from stationary (industry, energy sector) and mobile
(vehicles) sources of pollution are different. In the period 1990-2000 emission from
stationary sources was on permanent decrease and only in 1998 a temporary increase was
recorded. During the ten year period emissions from stationary sources decreased by 4
times, whereas emissions from mobile sources decreased as little as twice in the same
period due to the fact that transport sector was recovering much faster. After emission of
pollutants in to the air had decreased, the quality of air improved considerably in the past
years.
Agriculture is the second largest source (the energy sector is the largest) of greenhouse
gases, emitting 48% of all methane and 82 % of nitrogen oxide emissions. However, it
should be noted that annual methane emission during the period 1990-2000 decreased
from 350 to 230 thousand tons, that is, by one-third. More information about the
relationship air/agriculture/ forestry is provided in chapter 6.3.2. It should be said, that
until now a very small amount of data is available about air pollution of agricultural origin
in Lithuania because contribution of agriculture to air pollution is considerably small, so
all initiatives have been concentrated on pollution originating from industry and transport.
However, the reduction of methane and ammonia emissions from inappropriate storage
and use of fertilisers and liquid manure is one of the key objectives in implementing the
Action programme within the framework of the EU nitrate directive. As majority of the
farms lack proper manure storage capacities, methane and ammonia emissions and
outdoor pollution are quite common. Due to the lack of financial resources for the
investments into animal husbandry technologies this sector remains still big sources of air
pollution, as regards methane and ammonia emissions, at the moment.


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Strengths:
1. Air pollution has decreased dramatically and is into imposing danger to the
   environment



Weaknesses:
1. Due to the lack of financial resources for the investments into animal husbandry
   technologies this sector remains still big sources of air pollution, as regards methane
   and ammonia emissions, at the moment.

Opportunities:
1. Upcoming possibilities to use EU funds create favourable conditions for investments
    into the technologies in the key sectors, causing air pollution, namely transport,
    industry as well as agriculture and others.
2. Expected increase in wider use of biofuel as well as extensive use of renewable energy
sources will significantly contribute in decreasing greenhouse gas emissions.

Threats:
1. In case of failure to modernise technologies in the key sectors causing pollution of air
   today, the danger of increase in pollution could be a result of this.

5.8.4. Biodiversity

Lithuania can be characterised by a wide biodiversity, because there are 24-25 thousand
species living in it. There are as many as 15 000 species of insects in Lithuania, over 7000
species of fungi. Out of this variety over 200 species of flora, 200 species of fauna and
nearly 100 types of mushrooms are rare and are approaching extinction, therefore, they are
included into the Lithuanian Red Data Book. It regulates the protection in accordance with
the international practice. In the Red Data Book there are 28,7 % of Lithuanian reptiles,
26,5 % of mammals, 23 % of amphibian, 22% of birds, about 15 % of higher plan species
are included. This percentage shows a serious danger to the most important species.

During the Soviet period, biological diversity was most adversely affected by land
drainage, which resulted in the drying out of natural meadows and wetlands, small rivers
were canalised, river valleys were damaged, small plantations in fields and single
farmsteads were removed. Changes of agricultural intensity in any direction causes a
certain fluctuation of biodiversity structure and species numbers. For this reason, any
farming activities have direct impact on the environment. Most often intensive farming
has a negative impact on biodiversity, although in recent years the opposite process is also
taking place in Lithuania. After restoration of independence the agricultural activity has
been decreasing. The agricultural crisis speeded-up the degradation of meadow and other
“open” habitats. This happened due to the decline (and in many cases – abandonment) of
farming activities in some areas. After regaining independence, with decreased agriculture

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and increased fuel prices, use of meadows and pastures has significantly decreased. First
of all the less favoured, most often wet areas that were at further from farms, were
abandoned, and these areas were the most valuable ones from the biodiversity point of
view. In such wet areas that were mowed and grazed, rare species of waders and other
meadow birds that are protected in Lithuania and the EU were breeding. Currently
successional processes are taking place in those abandoned areas, and the open areas are
becoming overgrown with bushes and tall grasses. Such conditions lead to local losses of
these habitats, and thus of the rare bird populations.

Wetlands/forest/meadow ecotones are of particular importance to animals. The biological
diversity of invertebrates and other animals observed in these transitory areas is the
highest. The mosaic of ecosystems in Lithuania is a result of centauries-long economic
activities. A natural trend in the ecosystem changes is the successional growth of forests
over open areas, with a decrease in the diversity of ecosystems. The anthropogenic change
in the ecosystems‟ mosaic is highly dependent upon the social and economic conditions.
With the collapse of the soviet “kolkhoz” system, vast stretches of land were split into
plots, and the ecological mosaic increased. During the first stage of the decline in the
agricultural sector there was an increase in the area of extensively used meadows and
pastures; later on they grew over with shrubs and forest. Anthropogenic increase in
afforestation primarily occurs at the expense of coniferous trees, which does not favour
biological diversity.

Agrarian ecosystems occupy the largest area (53.7%) in Lithuania are very impoverished
from the biodiversity point of view. They are all particularly insufficiently studied: only
some of their functional aspects are known. Of late, with land privatisation and less
intense agriculture, with an increase in the areas‟ disintegration and their diversity, with a
certain part of previously cultivated lands lying fallow and becoming overgrown with
meadows and shrubs, with a reduced or even nearly no use of mineral fertilisers and
chemicals as well as with the disappearance of consequences of land reclamation, the
ecosystems of agrarian environment are becoming suitable for an increasing number of
plant, fungi and animal species. It is believed that in the near future conditions in this
ecosystem will not deteriorate.

Natural meadows ecosystems, particularly in forests and river valleys, typically boast the
richest diversity of plants and related invertebrate and fungi. Unfortunately, during the last
30 years the area of natural meadows has decreased: in 1956 meadows covered 19.6% of
the country‟s territory, whereas in 1980 they accounted for only 6.5%. Particularly
reduced in numbers are natural continental meadows that were intensely cultivated or
planted with forests. The diversity of meadow communities is high. They belong to 5
classes: saline (Asteretea tripolii), steppe (Festuco-Brometea), fertile (Molinio-
Arrhenatheretea), barren (Nardetea), forest meadows on slopes (Trifolio-Geranietea
sanguinei) and belong to 45 associations. Communities of fertile (Molinio-
Arrhenatheretea) meadows prevail and steppe (Festuco-Brometea) meadow communities
reach the northern limits of the distribution area.

Natura 2000

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Like any other country in the world, Lithuania has a moral obligation to protect its share
of biodiversity. This obligation forms the basis for the most important pieces of EU
legislation on nature conservation, the Birds and Habitats Directives. According to these
directives, Lithuania must protect species and habitats, which are rare or threatened at the
European level. A number of species must be strictly protected all over Lithuania, and in
addition we must designate a number of areas to be included into the EU network of
protected areas - Natura 2000.
Since the beginning of 1999, the first steps in the implementation of Natura 2000 in
Lithuania has been the responsibility of a EU approximation project supported by the
Danish governmental funding agency Dancee in co-operation with the Lithuanian
Ministry of Environment. Since 1999 until now (2004), the project has been intensely
working in order to provide a solid scientific and legal basis for the final selection of sites
to be protected under the Natura 2000 network of Lithuania.

A thorough legal analysis has been carried out in order to identify gaps in existing
Lithuanian legislation on nature conservation compared to the requirements of the EU. On
the basis of this analysis, a number of legal amendments have been proposed. Some of
these proposals have already been adopted by the Lithuanian Parliament and enforced.
Also, an assessment of the costs of implementing the two Directives in Lithuania was
carried out.

An analysis of the major differences between the national classification system of habitats
and the classification system used by the EU was carried out. On the basis of this analysis,
important changes to the national system were proposed in order to create a unified system
that will work within Lithuania and would be compatible with the EU classification
system.

A large number of scientific researchers and field workers have been involved in gathering
data in order to determine the current status and distribution of Lithuanian species and
habitats covered by the EU Habitats and Birds Directives. Data has been gathered through
fieldwork as well as literature searches. Furthermore, the project made a special
assessment of already protected territories and areas defined as Important Bird Areas
(IBAs) by the Lithuanian Ornithological Society.

On the basis of thorough scientific work including field investigations as well as literature
studies, a list of proposed Natura 2000 sites which are suitable for the protection of the
species and habitats covered by the Habitats and Birds directives was produced. The list of
Habitats to be protected under Natura 2000 will be submitted to the European
Commission for consideration at the date of accession.
The Natura 2000 territories have been selected according the national criteria for selecting
the Sites of Community importance (SCI) and Special Protected Areas (SPA). By the order
No. 219 of the Ministry of Environment on 20/04/2001 were adopted the criteria for
selection of pSCIs. By the order No. 22 of the Ministry of Environment on 9/01/2001 were
adopted criteria for selection of sites for protection of birds (SPAs). At this moment all
together 83 Natura 2000 territories for protection of wild birds have been selected in

Consolidated version as of 5th March, 2008                                                80
Lithuania. 24 of them are designated (or certain parts of those territories are important) for
protection of nesting meadow birds (corncrake (Crex crex), great snipe (Gallinago media),
aquatic warbler (Acrocephalus paludicola)). Protection of these bird species requires to
keep possible higher the percentage of meadows and pastures. Through establishment new
protected areas or introduction new restrictions in existing protected areas, which are
relevant for meadow birds‟ protection, there is planned to secure meadow and pasture areas
at least on the same level. The total area of meadows and pastures to be saved in these 24
territories is approximately 30 000 ha. There are more restrictions foreseen to be set in
these territories (see information provided below), but most important and causing lost of
farmers income is prohibition of meadow and pastures transformation to arable land. In
cases of great snipe and aquatic warbler protection areas are wet, so it is important to leave
hydrological regime as natural as possible.
Altogether, about 380 separate sites are now included on the list of Natura 2000 proposed
by scientists and technical experts. Preliminary, these territories occupy an area of 606 000
hectares. Out of total number of proposed 380 sites, 83 are SPAs (286 430 ha), while 300
– SACs. Firstly the protected areas for bird protection will be established (until the day of
accession). In case to follow the requirements of protection of such areas the stakeholders
will need to keep new nature protection restrictions, which will be applied in these
territories. The protection of 3 bird species: corncrake (Crex crex), great snipe (Gallinago
media), aquatic warbler (Acrocephalus paludicola) will impact use of agricultural land,
because they are breeding in agricultural lands. For the protection of these birds it is
planned to restrict to plough up meadows and pastures in 24 territories. The map with the
locality of these areas and table providing information about size of territories are included
in Annex 10.

Existing protected areas in Lithuania cover almost 12% of the country. Almost two thirds
of potential NATURA 2000 sites are located in the existing network of protected areas.
Natura 2000 territorial distribution is provided in Map 12.




Consolidated version as of 5th March, 2008                                               81
Map 12: Natura 2000 territories




Consolidated version as of 5th March, 2008
                                             82
Consolidated version as of 5th March, 2008   83
Recommendations for new guidelines for the management of Natura 2000 species were
provided. A template for management plans covering Natura 2000 habitats was produced.
The template plan covered the Daubėnai area, which has been proposed by the project as a
candidate Natura 2000 site.

The database systems for handing the large amount of data gathered on habitats and
species was set up ensuring its compliance with the requirements of the reporting
procedures to the European Commission.

Due to the complexity of Natura 2000 and its interaction with agriculture and forestry, it is
necessary to involve several ministries in finding the best solutions for the implementation
of the Natura 2000 network. Organising round-table discussions and informal meetings
involving staff from the Ministry of Environment as well as staff from the Ministry of
Agriculture, including the Department of Forestry, are facilitating such co-operation.

Strengths:
1. Rich biological diversity
2. Low use of fertilisers, pesticides and other chemicals harmful to the biodiversity

Weaknesses:
1. The agricultural crisis speeded-up the degradation of meadow and other “open”
   habitats. This happened due to the decline of farming activities in some of these areas.
2. Some valuable areas overgrow with low value shrubs and bushes.

Opportunities:
1. With assistance of EU and other international funds it will be possible to implement
   protection measures outlined in the Biodiversity Conservation Strategy.

Threats:
1. Intensive economic development will more and more endanger biodiversity if certain
   protective measures are not implemented in the right time.


5.8.5. Landscape and protected areas

The most valuable Lithuanian landscapes are seashore (the Curonian Spit, the Nemunas
river delta, the continental Baltic seashore), Zemaiciai highlands (the mosaic of forests
and cultivated fields between massive hills), Aukstaiciai highlands (forest islands, massifs
of small and bigger lakes between hills), Dzukai highlands (entire forest massifs, big river
valleys, lakes and continental dunes) and the Middle Nemunas (picturiuos Nemunas river
valley, forests, meadows and pastures). Lithuania abounds in many natural and semi
natural areas with species of plants, mushrooms and animals extincted in the countries of
Western Europe. In protecting traditional Lithuanian landscape, primary objectives are its
traditional use, fostering of its traditional diversity, protection of mounds, parks, nature
monuments and unique complexes.

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                                                                                        84
The structure of the landscape is subject to an active impact of land management.
Currently they are impacted to a great extent by the land reform and the restoration of
private ownership, development of land market and democratic relations, and changing
economic priorities. Significant and rapid economic changes taking place during the
recent decade determined a more intensive change in the structure of the landscape. Due to
collectivisation and intensive land-reclamation in the past, natural meadows and pastures
as well as most wetlands, homesteads of farmers have been destroyed, large open spaces
atypical to Lithuanian landscape were formed, some rivers and streams were regulated and
changed to channels.

After independence, private ownership of land with a small size private plots came back.
Due to this fact, with the increase in the share of private land, contours of land
management increase, the degree of fragmentation land use grows. Where re-
naturalisation has become more active due to the agricultural recession, a minor pattern of
farming lands creates preconditions for the increase in natural territory development.
However, with the changes of land use destination, new conflicts between the
environment protection and development arise. Recently the number of the owners, who
acquired land property in the most valuable areas in relation to nature and recreation, is
increasing. Most of the landowners use the re-claimed land here or wish to use it not for
agricultural or forestry purposes, but for active recreation and/or new constructions. A
rapid and essential change in land use changes traditional landscape structure, visual
expression, threatens natural and cultural values.

The network of protected areas (natural parks, reserves, etc.) in Lithuania was developed
in the last ten years. The system of legally protected areas of Lithuania is aimed at the
conservation and where possible restoration of:
 Nature and cultural heritage features,
 Landscape ecological balance,
 Biodiversity,
 Gene pool for restoration of biota resources.

Also, it creates conditions for the development of interpretive, research and the promotion
of nature and cultural heritage protection.
There are 4 categories of protected areas:
        - Conservation areas- strict nature reserves or culture reserves, protected
            landscape features (nature or culture monuments), nature or culture reserves,
        - Protection areas- protection zones for various purposes (buffer zones for strict
            reserves, national or regional parks, nature or culture monuments, water
            bodies, roads and railways, recreational areas, etc.),
        - Restoration (recuperation) areas- sites where natural resources are protected or
            restored,
        - Integration areas- national parks and biosphere monitoring areas.

In 2002, specially protected areas covered 773.9 thousand hectares, equalling 11.9 per
cent of total country area. There were 1,062 protected sites listed in total, including 5

Consolidated version as of 5th March, 2008                                            85
national parks and 30 regional parks. Most of the protected areas are concentrated in the
Southeast Lithuanian regions.



Table 33: Protected areas, in 2002
                                                                     Share of total area
                             Number               Area (1000 ha)
                                                                     %
Integrated areas:
National parks (IUCN II)     5                    152.3              2.3
Regional parks (IUCN V)      30                   436.0              6.7
Conservation areas:
Strict nature reserves       4                    23.8               0.4
Strict culture reserves      2                    0.3                0.0
Reserves ( IUCN IV )     258                      150.3              2.3
Municipality      nature
                         101                      11.2               0,2
reserves
Landscape objects        662                      .                  .
Total of above listed data   1032                 773.9              11.9

Territorial distribution of protected areas is provided in Map 13.




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Map 13: Protected areas of Lithuania




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                                             87
With the factual development of the system of particularly protected areas before land
reform, good preconditions for the conservation of landscape and biodiversity in Lithuania
have been created. In 1983, in the national Integrated Nature Protection Scheme, the idea
of Lithuania‟s Nature Frame was raised and approved. Lithuania proposed the concept of
Nature Frame, which became the concept and approach for the conservation and
protection of Lithuania‟s natural landscape.

The Nature Frame, which offers a universal approach, was put forward and legally
established under the relevant laws of the Republic of Lithuania on environmental
protection and protected areas. The Nature Frame links all natural protected areas with
other ecologically valuable or relatively natural areas which underpin the general stability
of landscape, to form a landscape system of geoecological compensation zones. It is aimed
not only at development of a complete system for natural buffering and connecting natural
protected areas, but also at conservation of natural landscapes, biodiversity and natural
recreational resources. It does so by providing guidelines and conditions for recovery of
forests, optimising the structure of agrarian landscape from the geoecological point of
view, regulating development of agrarian activities and defining sustainable urbanisation.
It is a concept based on catchments and biologically important areas.

The Nature Frame, however, is not a continuous network of green belts. Instead, it is an
integrated process for all land use, management and protection. Currently, the Nature
Frame covers about 60% of Lithuania varying from 35 to 80% depending upon natural
conditions and land use.

The increasing environmental threats of a local, regional, national and international kind
requires territorially unified nature conservation system in Europe, allowing combination
of individual countries‟ efforts in preservation, reproduction and growth of national
resources. The concept of ecological network represents the process of integration of
conservation and environmental aspects into different sectors, such as agriculture, regional
planning, transport, etc.

In 2000, an operational concept of national ecological networks (NECONET) in
Lithuania, was created, as well as its implementation strategy that conform to European
standards. The implementation of ecological network is necessary for ecologically
balanced development of the region and for implementation of the principles of
sustainable development, maintenance of landscapes and biodiversity, as well as
implementation of the EU Habitat and Bird Directives (Natura 2000 areas), Agri-
Environmental programmes, as a process of the EU accession, and also Biodiversity and
Bern Convention (EMERALD network). The general structure of ecological network -
core areas, corridors, buffer zones and stepping-stones - is accepted in the country.
Development of the national ecological network provides Lithuania a tool for setting
priorities in biodiversity protection and will start integration of general and cross-sectoral
policies, applying concepts of European and Regional Ecological Networks.



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                                                                                       88
The increased amount of natural territories (forests, natural meadows) is one of the most
important measures to increase ecological stability of landscape. From the point of view
of the ecological stability of landscape, forest are needed most and the priority is given to
establish them in the parts of Lithuania where forest cover is less.
Strengths:
1. Lithuanian landscape is very well balanced in terms of natural and traditional
    diversity, characterised by richness of natural values as well as cultural values such as
    mounds, parks, nature monuments and unique complexes.
2. Well developed network of protected areas.

Weaknesses:
1. A rapid and essential change in land use changes traditional landscape structure, visual
   expression, threatens natural and cultural values. #
2. Due to collectivisation and intensive land-reclamation in the past, natural meadows
   and pastures as well as most wetlands, homesteads of farmers have been destroyed,
   large open spaces atypical to Lithuanian landscape were formed, some rivers and
   streams were regulated and changed to channels.

Opportunities:
   1. Participation in the development process of European ecological networks will
      help to gain assistance from international programmes as well as experience of
      other countries for the development of the national protected areas system and the
      formation of the Nature frame.
Threats:
      1. Intensive economic development will more and more endanger elements of the
      natural landscape, protected and recreational areas.
   2. Ongoing changes in the purpose of land use might bring more new conflicts in the
      management of landscape.

5.9. SWOT analysis

Based on the analysis of the situation in rural areas, agricultural sector and forestry, below
are listed the strengths, weaknesses, opportunities and threats which are key elements
based on which the agricultural and rural development objectives, strategy and priorities
are formulated.

There has been a sufficient time and efforts devoted in preparation of SWOT analysis as
it is seen as a crucial tool for the further strategic planning process and it lays down the
lines in defining and selecting the measures to be implemented, including establishment of
the specific objectives for each selected measure. The SWOT analysis is an integral part of
the National Agricultural and Rural Development Strategy adopted by the Parliament of
the Republic of Lithuanian on the 13th of June, 2000, No. VIII-1728.

The SWOT analysis as it itself requires has been performed on two levels – external and
internal. At the external level the opportunities and threats relevant to the fulfilment of the
overall objectives and which cannot directly be influenced were analysed whereas at the

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internal level the strengths and weaknesses, which are directly influenced by the strategies
and actions conducted, are presented. Hence, the external analysis components –
opportunities and threats - have been evaluated in respect to their importance (i.e.
attractiveness of opportunities and seriousness of threats) and the probability that one or
another is going to take place.
In order to make the SWOT analysis more illustrative, especially what relates to the
internal strengths and weaknesses, for each of the components of the internal analysis the
precise and verifiable indicators to the extent possible have been developed in order to
ensure coherence among the chapter describing the current situation, the following chapter
related to the strategy and objectives and the SWOT analysis. It is, no doubt, of great
importance in further monitoring of the designed programme were clarification of whether
the strengths/weaknesses which prevailed during the programme preparation were
used/prevented in the best manner. In addition, internal part of the SWOT-analysis is
divided into the following headings which form a basis for the sustainable development in
rural areas:

       Economic development
       Social development
       Environmental development

5.9.1. External analysis

The following opportunities and threats in the context of the overall objective for
agriculture and rural development have been identified.

Opportunities
   Promotion of modern technologies
   New markets for Lithuanian agricultural products
   Strengthened pre-accession effort will increase the funding opportunities for
    Lithuanian agriculture
   Increasing migration of population lays down the favourable conditions for
    diversified activities in rural areas (rural tourism, need for different services)
   WTO negotiations
   Lithuanian legislation harmonised with the EU aquis will favour the rights and interest
    of rural community
   Conditions for long term planning and development are created

    Threats
   Intensified competitive environment might threaten economic progress in Lithuania,
    including rural development
   Unequal treatment of new member states in the EU in relation to the CAP
   Social stability and environment might be threatened by the external push for market
    efficiency
   WTO negotiations
   Brain drain

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5.9.2. Internal analysis

Based upon the findings in performing the external analysis and subject to the overall
objective, the below presented internal analysis evaluates the internal strengths and
weaknesses of Lithuanian agriculture and rural development.

Table 34: SWOT analysis

  Strengths                                  Baseline data (to fill in the numbers)
  Economic
  Agriculture and forestry sector accounts      Agricultural land –51,6 % of total area
  for an important part of the national         Forests cover 30.6 % of total territory
  economy                                       Contribution of sector to GDP-6,9 %
                                                 (2000)
  Favourable natural conditions and             Value of livestock and poultry
  experience for development of livestock        production-19% of Gross agricultural
  sector                                         output (2001)
                                                Milk production-20%. of Gross
                                                 agricultural output (2001)
  Strengthened positions of food industry         Share of export to EU, EFTA,
  in international markets, increase of              CEFTA and BFTA countries - 59,0
  export                                             % (2000m.)
                                                  Export of dairy products- around
                                                     50% from total dairy produce
  Ecological
  Available resources of drained land and       Agricultural land-3,37 million ha
  high fertility of soil                        Drained land-3,01 million ha
  Rather low contamination of soil, water       Pesticide residues in soil within
  and air                                        restrictive limits
                                                   Water contamination by nitrate
                                                     nitrogen within restrictive limits
  Attractive landscape creates a high           Priority in South-eastern and Western
  potential for tourist activities               regions
  Social
  Established network of advisory and           Offices of advisory service established
  training institutions                          in all municipalities
  Increasing initiatives of rural               Number of agricultural associations-
  communities and self-governance                above 40
                                                Pilot community development projects
  Even rural-urban distribution of              3 counties with an above average urban
  population                                     population, as well as 3 counties with
                                                 an above rural population and 4
                                                 counties with about average.



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 Weaknesses                                  Indicator
 Economic
 Unfavourable farm structure and small  Average size of an agricultural holding-
 size of agricultural holdings                  4,5 ha
                                              Large number of small fairly
                                                competitive holdings
 Outdated technologies, high costs and  Average yield per cow-4,86 t/year
 low efficiency of primary production           (2002)
                                              Average yield of cereals- 2,56 t/ha
                                                (2001)
 Unfavourable investment environment          Low level of investment in agriculture
                                                sector
 Low modernisation level of processing  Meat, grain, fruit-vegetable industries
 industry                                       lacking behind
 Majority of farms and industries are  Meat and dairy farms- above 80 %.
 facing difficulties in meeting EU  Meat processing industries- above 80
 environmental, hygiene and animal              %. (2002m.)
 welfare standards
 Uncompleted land reform, limited land  Restored 81,5 % of land ownership
 market                                         rights (2002)
 Poor technical and environmental status  Drainage and water canals covering an
 of water management systems (canals,           area of 3,01 million ha – depreciated by
 drainage systems, hydraulic structures)        50%
                                              Investment of 80 million Litas a year is
                                                lacking for recovering depreciation and
                                                environmental update of structures
 Limited number of tourist and other  Number of rural tourist undertakings-
 alternative businesses                         229 (2002)
 Unfavourable structure of private forest  Number of private forest holdings- 521
 holdings                                       thousand.
                                              Average holding size -4,4 ha (2002)
 Low incomes in rural areas, particularly in  Income per family member in rural
 LFA.                                           areas per month 310 Litas
 Low population density in LFA                Population density in rural areas 18
                                                persons/sq.m whereas in some LFA
                                                regions it is only 8,8 person/sq.m
 Social                                      


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  Still not sufficiently developed rural         Inadequate support to development of
  communities, lack of leader initiatives         rural communities
  Poorly developed services among rural          Self-governing agricultural associations
  population and rural businesses                 are lacking support
                                                 Inadequate support to marketing of
                                                  high quality products
  Inadequate professional skills among           N.a.
  farming and other rural population
  Poor supply of quality drinking water          30% of rural inhabitants use poor
  and sewage handling                             quality   drinking     water from
                                                  contaminated dug wells
  Limited road and electricity connection        Problem for newly establishing
  to newly establishing holdings                  holdings
  Ageing of rural population                  
  Old aged farmers dominate, especially in    
  diary sector
  Ecological                                  
  Intensive farming using fertilisers,           Average quantity of nitrates in soil
  pesticides and chemicals cause                  (and/or drinking water)
  substantial environmental damage, e.g.         Average quantity of heavy metals in
  soil and water pollution through erosion,       soil
  and contamination with heavy metals
  Contamination of drinking water from           Percentage of farmers.rural dwellers
  dug wells with nitrates                         respecting the protective zones around
                                                  dug wells
                                                 Number of facilities for animal manure
                                                  on farms and capacity of these
  Big areas of abandoned land result in loss     Amount of abandoned land – about
  of existing values in those areas               600,000 ha

Utilisation of strengths

As we can see from the described current situation in agriculture and rural development it
is obvious that agriculture and forestry are of outmost importance to future socio-
economic development of rural areas. Taking this fact the further development in rural
areas should be targeted in a way, which would enable the best use of available resources
aiming at the maximum benefits to the rural community.

Favourable natural conditions as well as experience in agriculture, especially in livestock
production are of great importance and therefore require special attention in order to
maintain and to increase the benefits which come from this type of activity. Rich soil
creates also good condition for growing crop production. Thus, the Government of
Lithuania foresees further support both to the primary production aiming at meeting the
quality requirements and to the processing industry in order to ensure production of value-
added products both for the domestic and foreign markets. The clean, ecologically and

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culturally rich environment, forest resources as well as scenic values lay a sound basis for
the development of alternative activities in rural areas, support for which will be provided
both from EAGGF Guidance and Guarantee section. Due to low contamination of soil,
water and air organic production is seen also as one of the alternatives to traditional
agriculture and it is expected that it will make quite a significant part in the structure of
agricultural output. Aiming at utilisation of this strength support for organic farming has
been included as one of the programmes under agri-environmental scheme to be co-
funded from EAGGF Guarantee section.

As regard strengths in terms of social development, the established network of advisory
and training institutions is an obvious strength as existing resources. What is needed is
reallocation of resources, as in educational institutions the main emphasis has been on
teaching and therefore the changes in the existing curriculum to adjust it to the changing
farming practices and market tendencies therefore is needed. It also obviously relates to
the environmental aspects of farming, in particular to the implementation of the Code of
Good Agricultural Practice.

Development work is impossible without active participation of the local residents.
Although in general the perception in the country is that rural population is indifferent and
very passive however quite a few positive initiatives have been observed. The so called
Local action groups evolve continuously and taking into consideration the fact that few
years ago it was hardly possible to even imagine that such a movement will start so it is
considered as an important strength, which should be further reinforced. The LEADER +
programme it is expected will contribute substantially for this particular development.
Measures maintaining and developing rural environment, physical and social structures
create a positive atmosphere in villages and help to prevent the threat of mental paralysis.
Also, it creates a positive atmosphere for entrepreneurship, which is a precondition for the
development of diversified activities in rural areas. Nice and cosy living and working
environment, it is expected, will attract young population and therefore would contribute
to solving the ageing rural population trend.

Preventing weaknesses

The main weaknesses of rural development are significant and constitute pressing
problems for rural Lithuania. The most serious weakness in terms of economic
development, especially if we bare in mind our overall agriculture-related objective to
increase competitiveness of agricultural sector is the small size of agricultural holdings.
The small farm size creates serious obstacles for improvements in farms due to lack of
investments needed to comply with quality requirements. This weakness is extremely
closely related to another one stating that outdated technologies are used in primary
agricultural production and therefore it results in low efficiency and high costs. To prevent
this weakness it is foreseen to implement the Early retirement scheme by encouraging the
older farmers to give up farming and to transfer their holdings to the younger ones and in
such a way also a problem of ageing farmers would be prevented.




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Also measures, which will support investments in agricultural holdings and will provide
assistance to young farmers are of great importance in restructuring the farm size and
making the primary agriculture more competitive and at the same time providing a better
quality products for the processing industry. The processing industry (especially meat,
grain, fruit and vegetables) still requires substantial investments in order to meet the
quality, environmental, hygiene and animal welfare standards. Thus even though a
substantial support has already been provided from the SAPARD programme further
assistance in modernising the processing is still needed and therefore will be supported.
Furthermore, the necessary framework conditions (land market, infrastructure) are not
functioning in an optimal manner and the support for the adaptation and development of
rural areas will be provided.
Forestry is considered as an important activity in diversifying activities in rural areas and
therefore is perceived as integral part of rural development. However, the existing
structure of forest holdings as well as the fact that many forest owners are not themselves
familiar with sustainable forest management are not in favour for sustainable
development and therefore assistance targeted to forest owners cooperation activities in
terms of both forest management and further marketing of forest products are to be
enhanced and promoted. Also the fact, that currently Lithuania has vast areas of land not
being utilised for agriculture and which daily overgrow naturally with low value shrubs
and bushes and thus threaten the survival of the existing natural values in those territories,
is to be taken in a consideration. Moreover, the economic value of such agricultural
holdings is decreasing on a daily basis. Afforestation of such areas is considered to be an
important alternative land use where other restrictions are not to be applied thus it is
foreseen to substantially contribute within this programme to solving this economically-
socially-and ecologically sensitive issue.

In terms of social development, rural disposable household income is lower than in urban
areas. The issue is even bigger in the areas classified as Less favoured areas and therefore
it is foreseen to provide the farmers in those areas with compensatory allowance in order
to keep their incomes as close as possible to the level of those farming a good conditions.
The low incomes in rural areas no doubt are very closely linked to the over-dependence of
rural population on agriculture. So diversification of rural activities and increase in
employment opportunities are very vital. This will be increasingly important when the
agriculture and processing sectors become more efficient. So, further support for
diversification of activities in rural areas will be provided.

As it was mentioned above while discussing the strengths, the physical infrastructure is
very important part of rural life and therefore it should be given an adequate attention –
water supply and sewage systems, roads and electricity installations. The lack of such
infrastructure at the 21st century should be out of question and therefore this issue will be
also dealt through the measure related to adaptation and development of rural areas.

Finally, it must be considered an essential weakness (or even threat) that current – and
future – intensive farming in the areas mostly suited for agriculture causes considerable
environmental damage through, inter alia, the use of fertilisers and pesticides. Our
strength of clean and safe environment should not be destroyed to the benefit of more

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competitive agriculture and therefore the enhancement of competitiveness will be carried
out in parallel with the ambitious agri-environmental scheme.

Utilization of opportunities

The integration process of Lithuania into the EU has itself opened a great possibilities for
the country to take advantages of the existing experiences in EU countries that relate to
economic, social or ecological development. Thus, Lithuania as all other new member
states have a unique possibility to learn from the development lessons that present
member states have gone through and therefore it is expected that whole development
process will be fostered in such a manner and would help to avoid mistakes that the
country could face if there was no sharing of experiences amongst countries. No doubt,
that concept of rural development is a new one as it is in all the member states and
therefore the harmonisation of Lithuanian legislation with EU aquis will be in favour for
our rural society.

Participation in the EU co-funded programmes open possibilities for the rural population
to become more socially active and at the same time to increase the economic viability in
rural areas. Moreover, the general concept of narrowing the development gaps between
rural and urban areas is one of the core elements in defining the actions. Preparation of
Programmes like this one with financial resources planned creates conditions and
possibilities for a long term planning and development which is very important to make
sure that rural community believes in actions planned and in return results with active
participation in the programme. Thus, the awareness rising about the programme during
the programme preparation has been taken very seriously in order to spread the
information as wider as possible through economic-social partners.

The increase of competitiveness of Lithuania‟s agriculture is one of the overall objectives
of this programme and, no doubt, it is impossible without restructuring of the sector and
investments into new technologies. These actions in return result in to a lower production
costs, better quality products and further to the entry of new markets and at the end to a
higher income and living of rural population. Having put those aspects as one of the
priorities, we support restructuring of both - primary production and processing industry
- which could be called as traditional actions and at the same time encourage people to
engage themselves into an alternative actions bearing in mind that opened market will
bring benefits not only through traditional products but also through alternative ones,
including services. Thus, further development of tourism sector, crafts and other
alternatives is promoted.

Preparing for threats

Promotion of new technologies being as one of the opportunities Lithuania identifies, and
no doubt, is aiming at, might result in an increase of unemployment knowing that new
technologies very often mean less man-work. Bearing in mind this two-sided effect of the
opportunity, in parallel to the measures proposed to take advantages of the new


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technologies other measures encouraging development of alternative business are being
introduced.

The need to increase the market efficiency might also have a negative impact on the
existing environmental values which we list as our strengths and therefore the
implementation of well timed and adequate measures ensuring that the ecological balance
is not harmed are of outmost importance. Also, in relation to social aspects in rural areas,
rural population despite quite a lot of awareness raising regarding the pros and cons of
Lithuanian‟s accession into the EU are not sure which ones – pros or cons - will take over.
Especially, taking into consideration the fact that the EU CAP is undergoing reforms as
well and it is undefined presently. Moreover, the facts that new member states will have
different CAP support level but the market rules will be the same ones applied make
Lithuanian producers very tensed both psychologically and no doubt, economically.

The negotiations currently running in the World Trade Organisation (WTO) are another
external factor that proposes threats as well as opportunities for Lithuania. Becoming
member of the EU, Lithuania will be subjected to the agreements on agricultural trade
between EU and the rest of the world. Given that EU policies are under pressure for being
too protective, it is likely that the WTO negotiations will push the reduction in import
tariffs, export substitution and trade distorting support further. It is difficult to determine
how the WTO negotiations will affect Lithuania and its competitive position, but it is an
external factor that can and most likely will affect Lithuanian agriculture.

The threat named as “brain drain” is very serious in the entire country and not only in
relation to agriculture and rural development. Young generation tends to leave rural areas
especially and move to cities or to other countries. The reasons being the unemployment,
unattractive living and social environment are being addressed through support of
initiatives in creating alternative sources of incomes as well as of the improvement of
social and physical infrastructure in rural areas.

5.10. Key problems in agriculture and rural development

Having presented the baseline data characterizing situation in rural areas and agricultural
as well as forestry sector and consequent SWOT analysis, the following key problems are
considered to be the most important problems to be addressed presently in order to foster
the sustainable development of rural areas.

       1. Small average farm size.
       This problem leads to a low efficiency in agricultural sector, high production costs.

       2. Low income and lack of sources of income (overdependence on
            agriculture)
       It results into the low household incomes and further into the low living standards
       in rural areas.

       3. Lack of technology both in primary production and processing sector.

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       This problem closely relates to the production and processing methods used and
       therefore it results in a much lower quality of produce and difficulties in meeting
       EU standards related to the environment, hygiene and animal welfare. On the other
       hand, improvements in technology can lead to the decreased employment
       opportunities.

       4. Insufficient social infrastructure.
       This problem is closely related to the age structure of farmers and rural population
       in general, low educational level, high unemployment of young generation, low
       degree of involvement and initiative.


       5. Insufficient physical infrastructure.
       The problem of insufficient water supply, sewage, roads, telecommunications
       infrastructure result in rural areas being depopulated especially by young
       generation.

       6. Threats towards the environment and cultural heritage.
       Intensive agriculture in certain areas and abandonment of other agricultural areas
       threaten the environmental and cultural values.


5.11. Impact from the previous programming period (title)

Below the support in relation to the measures which will be implemented in the
framework of this RDP is described. It should be noted, that Early Retirement scheme is a
new mechanism to be implemented in Lithuania and therefore the country has no previous
support/experience in this particular area.

No experience from SAPARD in implementing the Afforestation and Agro environment
measures (which are also the measures within this Rural Development Plan) could be
presented at this stage as both measures have not been started to be implemented in
Lithuania yet. If the implementation of these two measures starts before this Rural
Development Plan enters into force, then the implementation of both – Agri-environment
and Afforestation measures will be terminated once this Rural Development Plan is
approved by the European Commission.

 However, a lot of administrative experience and knowledge was accumulated in
implementing the SAPARD programme.

In general, the administrative capacity on administering EU rural development support has
been developed to a great extent through the implementation of the SAPARD programme.
This capacity is a necessary precondition for a successful administration of the current
programme. A national paying agency, a monitoring committee and a managing authority
within the MoA has been established, and these institutions will also be used for the
coming implementation of this programme.

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The implementation of SAPARD also gives important experience on how big an
administrative capacity it takes to implement one measure with a given amount of
requirements and funds. Through this can it be assessed how much capacity is needed for
the implementation of this programme and if the above-mentioned institutions have
sufficient staff and competences.

Some of the more specific experience with the individual measures is reported below.

5.11.1. Less favourable areas

Lithuania has a big diversity of natural environment factors. In many cases it results into
territorial unevenness of intensity and efficiency of agriculture as well as into different
level of incomes of subjects of agriculture and majority of rural population. Incomes of
agriculture in less favourable areas are one and half time less, than in other agrarian areas.
Support for the less-productivity5 areas in Lithuania has been started after the Rural
Support Fund (RSF) has been established.

Factors for establishment of land productivity was as follows:
 Genetic type of soils,
 Mechanical composition of soils,
 Status of land reclamation (not drained, drained, irrigated),
 Reaction of soils (pH),
 Amount of the nutritious matters in arable lay,
 Climate conditions
 Stoniness, bushiness, swamping,
 Amount of humus.

In 1997, under the provisions of the RSF it has been planned to support priority
investment programmes, among them, reorganisation of agricultural activity in the less-
productivity areas. 3% of the RSF funds had to be allocated for this measure.

In 1998, 2% of the RSF funds has been utilised for reorganisation of agricultural activity
in the less-productivity areas. Objective of the measure was to encourage alternative
agricultural activity, increase employment of rural population and, thus, income of rural
inhabitants.

According to Order No. 39 of the Minister of Agriculture as of 1999 regarding order of
buying of peas, buckwheat and rape crop, buckwheat sales quota (7 thous. tones) was
distributed with respect to the less-favoured areas in the counties (see table below). Price
for 1 tone of buckwheat was set at 800 Lt., subsidy per 1 tone – 400 Lt., total – 1200 Lt.
per 1 tone.


5
  The title of support was "support to farming in less-productivity areas". Later "less –productivity
areas"where renamed into "less favoured areas".

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Table 35: Distribution of buckwheat quota in 1999
 County                        Quota, tones

 Alytus                                      1800
 Kaunas                                       400
 Klaipėda                                     200
 Marijampolė                                  200
 Panevėţys                                    400
 Šiauliai                                     140
 Tauragė                                      160
 Telšiai                                       50
 Utena                                       1100
 Vilnius                                     2550

In 2001 according to the Special Programme for Rural Support, it has been set a direct
payment of 150 Lt. for sowed in 2001 and declared hectare of winter rye as well as 300 Lt.
for buckwheat in the less-productivity areas.

From January 7 of 2002 came into force the new order of the Minister of Agriculture on
procedure for the Selection of Less-Favoured Areas (Order No. 3 of the Minister of
Agriculture of the Republic of Lithuania (January 7, 2002)) and for confirmation of Less-
Favoured Areas (Order No. 4 of the Minister of Agriculture of the Republic of Lithuania
(January 7, 2002)).

In 2002 there are being paid compensatory allowances for the farmers in the less-favoured
areas from the Special Programme for Rural Support.

Farmers and agricultural entities in the less-favoured areas are paid a compensatory
allowance of 40 Lt./ha for the declared utilisable agricultural area of winter rye,
buckwheat, leguminous crop, grassland or natural pastures (abandoned areas are not
eligible). Besides, compensatory allowance of 250 Lt. was set per declared hectare of
sowed in 2002 and matured buckwheat and 150 Lt. per declared hectare of sowed in 2002
and matured rye. In accordance with the order of one-time direct payments, 100 Lt. per
year direct payment is made for the ewes in the less-favoured areas.

Consider the results from previous support should be mentioned that Rural Support Fund
paid direct payments for different cereals in sowed and declared hectare. This order wasn‟t
effective because of close relation to particular types of agriculture products. Detailed
allocation of funds for support in the less-favoured areas is presented in Annex 3.
Less favoured areas for the period 2004 - 2006 programming period are to be attributed in
compliance with the provisions of Regulation 1257/1999. When implementation of Rural
Development Plan for 2004-2006 starts, national support scheme is to be stopped and
farmers will get compensatory allowances according to the RDP.




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5.11.2. Agri-environment

The first pilot program of transition to organic agriculture was prepared in 1987-1993.
Implementation of the program was started in the north-eastern part of Lithuania (in area
of 194 thousand ha), in 1993. It was operated by Tatula‟s Fund. In 1997 it was reorganised
into the public institution “Tatulos programa”. „Tatula‟ was the first program officially
approved and sponsored by the Government with an average annual allocation of 600,000
EUR. 50% of the funds allocated to the program are interest-free credit and subsidies for
the elimination of pollutants, the other 50% is for the elimination of pollutants at certain
points (e.g., processing factories). The programme involves more than 100 farmers and
more than 30 agricultural enterprises and partnerships. The programme aims at
transforming about 5% of agricultural land in the Karst region into organic agriculture by
2005-2010. Since 1997, the project in the Karst region has been spread throughout
Lithuania, and state support for organic agriculture has been provided.

The Rural Support Fund approved support to farmers taking up organic agriculture
activities as a priority investment programme. Through this Fund, 171.8 thousand Litas
was paid for implementation of investment projects and subsidising organic farms in
1997. In 1998, 389.2 thousand Litas was spent for this purpose, in 1999 - 423.4 thousand
Litas, in 2000 – 446 thousand Litas, in 2001 – 900 thousand Litas. In 2002, allocations for
organic farming through the Special Rural Support Programme (previous Rural Support
Fund) was 1.5 million Litas, from which 1 million Litas was paid to farmers (total number
of beneficiary farms – 393). In 2002, the certified organic farmland was 8196 hectares, of
which 4086 ha – grasslands, 2152 ha – cereals, 714 ha - leguminous, vegetables, potatoes,
409 ha – orchards, 57 ha – berry plantations and 778 ha of fallow land.

This support has induced the growth of organic production. The area of certified lands
increased by 2.5 times in 1998 in comparison with 1997. However, during recent years
this process slowed down because of various reasons. Only 50-60 per cent of organic farm
owners received direct payments. In general, the volume of state support was reduced
from Litas 1.4 million in 1998 to Litas 0.45 million in 2000. As a result, pointing out to
the reason of insufficient state support some farmers refused to continue their engagement
in organic farming

Pilot agri-environmental measure was included in Lithuanian SAPARD Programme.
Taking into account the complexity of the measure and its nature of pilot action, this
measure was defined under the consultation and agreement with the Commission. The
implementation of the measure has not started yet even though this measure was approved
in the STAR committee in June 2003. The implementation of this measure is hold back by
the fact that the National Paying Agnecy has not been accredited for the implementation
of this measure yet. Therefore, it was not possible to draw lessons learned for the agro-
environment scheme from SAPARD in the course of preparation of this Rural
Development Plan.

However, some related activities are implemented in Rusne island (one of the SAPARD
pilot areas) since 1998. They are being implemented in the framework of a programme

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carried out by Lithuanian Fund for Nature. The main goals of the project include: to
manage abandoned grasslands on Rusne island in order to make them more suitable for
breeding and migratory birds, to manage breeding habitats of the Aquatic warbler on
Rusne island and neighbouring areas, to encourage environmentally sound and sustainable
agriculture, to promote environmental ecological education among local people, to
develop ecological tourism. Within these projects farmers get payments for environmental
services they provide (mostly management of meadows, cutting trees and bushes, etc.).
Now each year some 50 hectares of abandoned grasslands are mowed, and cleaned from
bushes.

The main economic impact of the project is connected with silage production. Rusnė Fund
for Nature has received some agricultural machinery (tractor, etc.) that is used for project
purposes. The farmers that agree to comply with environmentally friendly farming
practices can use this machinery and technologies. Grass mowed from abandoned
meadows and from places with environmental restrictions (late mowing dates because of
breeding birds) is of low quality as fodder. The project offers to participating farmers to
make from this grass high quality fodder – silage. In 1996 – 2 silage clamps were
produced, in 1997 – 1 clamp, in 1998 – 7 clamps, in 1999 – 4, since 2000– 3 clamps every
year. It is a good fodder, milk production increase 2-3 litres from a cow. The quality of
milk also increases that will allow competitiveness in the EU markets. But economic
effect is not big, since milk prices have dropped by ~30%.

Participating farmers get paid for the environmental services done (mowing of abandoned
meadows). The amounts paid for farmer per year differ subject to the area mowed, but
farmers get several thousand Litas as additional income.

In the areas that are managed by farmers participating in the project, biodiversity and
landscape values increase. The main results are restoration of meadow habitats and
increase of plant diversity in meadows. Later mowing dates allow successful hatching of
meadow breeding birds. Since 2002, the members of Rusnė Fund carry out a monitoring
of meadow plant species and birds for Nature and staff of the Regional Park. In a couple
of years monitoring data will allow to make conclusions and evaluate real environmental
effects of his project. Unfortunately, the areas that are managed in environmentally good
farming are very small comparing to the total area of the project territory.

Beside farmers that get additional income for mowing the abandoned meadows (5 to 8
persons per year), one small local company is being contracted which additionally
employs the same amount of people. The farmers that make silage are bigger and stronger
ones. They still can sustain themselves, although others are decreasing their animal stocks.
A milk buying co-operative was established which is about to start buying milk from its
member farmers. Three more people are employed in this co-operative. Two persons have
submitted applications to start organic farming.

The project is very nice example how farming with nature can be implemented in
Lithuania. It really activated local people who are determined to continue their activities.
However, quite a number of drawbacks can be pointed. First, the number of active people

Consolidated version as of 5th March, 2008                                             102
is not big, due to share of elderly people in the population and poor economic state of
farmers. Such big areas of meadows will not be needed for local farmers. Surplus grass
could be used for fuel. Another thing is that only bigger farmers can benefit from silage
production. The smaller ones need to co-operate due to lack of machinery, and this results
in big distances. It is not possible to make new farmers; activities can only be aimed at
supporting of those willing to farm by providing them knowledge and material support.
This support was not very big until now.


5.11.3. Afforestation of agricultural land

There have been already a number of initiatives taken to increase country‟s forest cover
through afforestation of agricultural land. In 1996, the Government approved the
“National Programme for Development of Forest Sector and Wood Industry” according to
which woodenness of the country shall be increased by 2 to 3 % at the expense of
afforestation of abandoned agricultural land. In 1998 the order of the Ministry of
Agriculture and Forestry has set the targets in afforestation for the period 1998-2000 and
allocated funds to carry out the afforestation. It should, however, be stressed that this plan
contained only afforestation of state land. The General Forest Enterprise was entitled to
organise the afforestation and to control survival of the forests established. The state forest
enterprises and national parks were ordered to establish and maintain forests in the areas
foreseen by the project. Regrettably, only 50 % of the areas foreseen to afforest by this
Project in 1999 were actually afforested. In 2000, forests were established only in 600 ha
of the 1062 ha foreseen for afforestation by the Project.

As regards promotion of afforestation on private land, in 1998-1999 the Minister of
Environment has issued an order according which the nurseries of forest enterprises were
obliged to sell seedlings for private owners for half a price. However, taking the fact that
in 1998 only some 25 ha and in 1999 some 41 ha of private agricultural land was
afforested it could be stated that this initiative didn‟t contribute significantly to promotion
of afforestation. The reason mainly was the lack of awareness rising about such a
possibility and afforestation in general as a potential land use amongst landowners.

In 1999, July 29th, the Ministers of Agriculture and Environment have approved "Main
principles for increase of the country's woodenness and the their implementation over the
period from 1999 to 2003". The document set out the means to implement the principles
for increase of the country's woodenness during the period from 1999 to 2003. However,
not all of the means foreseen are being implemented, as they should be yet. Particularly
those that relate to the foreseen hectares of land - both public and private taken together -
to be afforested. As related afforestation of public land the unfinished land reform and the
fact that it is not clear which areas will actually remain free after the land reform hinder
the process. As relates to afforestation of private land private owners are reluctant to do
that because of no support for that activity and, no doubt, they are awaiting of the
possibilities that the EU accession will bring in relation to agricultural activities. In
general, it could be concluded, that these failures to implement the planned initiatives in


Consolidated version as of 5th March, 2008                                                103
relation to afforestation are attributable to the lack of funds and a number of problems
related to not well-solved organisational, technical, legislation issues.

It should also be noted that in the past years the interest of landowners in turning their
land into forest has increased a lot. Landowners are exploring the possibilities and even
though until now very limited number of hectares of agricultural land has been afforested,
it is expected that with the support possibilities available under this Rural Development
Plan, the landowners will be able to realise their plans. As regards organisational,
technical and legislation issues that hindered afforestation in the last years it is important
to mention that in the last 2 years Forest owners organisations, such a associations,
cooperatives have become extremely active in promoting afforestation and also in
providing services – consultations, trainings, development of afforestation plans, soil
preparation, planting, fencing, etc. Also State Forest Enterprises which have their own
nurseries have increased their stock of seedlings in order to meet the demand once the
financial support becomes available. Thus, it is expected that implementation of the
Afforestation measure under this Rural development plan will contribute significantly in
meeting the targets set in the National Forest Increase programme.

In November 2002 Lithuanian Forest Increase Programme 2003-2020 has been approved.
The aim of the programme is to foresee the forest cover increase tendencies and volume in
Lithuania taking into consideration the factors influencing the process, forest structure and
it‟s territorial distribution as well as accumulated experience in Lithuania and other
countries. The programme foresees that about 115,5 thousand hectares of forests should be
artificially planted in the period 2003-2020 meaning 6415 hectares a year. Thus, it is
expected that substantial support provided for afforestation of agricultural land through
this Rural Development Programme will enable the fulfilment of the set targets. In
addition, other lessons already learnt in relation to awareness rising, availability of
seedlings, technical knowledge, etc. should be taken into consideration.

Danish – Lithuanian project “Afforestation of agricultural land based on sustainable
planning and environmentally sound forest management.

In order to promote the sustainable planning and establishment of new forests on
agricultural lands in Lithuania, the project “Afforestation of Abandoned Agricultural Land
Based on Sustainable Planning and Environmentally Sound Forest Management” was
initiated in May 1999 by the Lithuanian Ministry of Environment, with financial and
technical support from the Danish Ministry of Environment and Energy (presently
Ministry of Environment). Thus the project implementation was focused on:

        1. Formulation of policies and strategies at the national level, favouring sustainable
afforestation, and a significant contribution to the establishment of a revised framework
and procedures concerning legislation and planning for sustainable afforestation;

       2. The development of proper land use planning procedures, and the promotion of
decentralised land use planning and mapping processes from the national to the county


Consolidated version as of 5th March, 2008                                               104
and regional levels. Examples of sustainable land use planning for the designation of
afforestation areas will be carried out in the two pilot municipalities;

        3. Criteria and methods for afforestation, and the development of appropriate
technical methods and approaches to afforestation of marginal agricultural land. The
project will test different silvicultural techniques and establish demonstration forests under
different management objectives, on both public and private land in Utena and Lazdijai
region;

        4. Awareness raising about afforestation through information, campaigns,
training, study tours to neighbouring countries and within Lithuania for policy makers,
technical staff and landowners.

The project was implemented in May 1999-December 2001 at national and regional levels
the latter being Utena and Lazdijai municipalities. Implementation of the project at
regional levels was focused both at land use planning for afforestation aiming at the most
optimal land use for afforestation and at the practical afforestation of the agricultural
private and public land as well as awareness raising about afforestation.

Below are presented the key findings and lessons learned by the project which are taken
into consideration in the programme preparation in general and particularly in developing
the afforestation measure.
Base line survey amongst landowners

One of the activities carried out by the project at a starting phase, was the base line survey
among landowners in Lazdijai and Utena municipalities on socio–economic factors
determining present land use, awareness about afforestation as a potential land use and
motivating factors for afforestation. The survey was conducted by the Lithuanian Forest
Research Institute. The survey results can be used to asses the possibilities for
afforestation as well as interest of the landowners in afforestation in another municipalities
of the country as well.

Conclusions drawn based on the survey results. The following main socio–economic
factors determining land use were identified:

   fertility of agricultural land and its suitability for agricultural or other activities;
   effectiveness of agricultural activities (profitable, unprofitable, detrimental).

About 20 % of respondents in the survey area do not use agricultural land in their
possession. These lands are abandoned and could be afforestated. The main reasons for
not using their land is poor quality of the land and unsuitability for agricultural activities.
This was especially important in Lazdijai region (13 respondents of 17 do not use their
land because of low fertility). More than 28% of respondents (of those who do not use
agricultural land) think that the business related to the production of agricultural products
is unprofitable. Over 50% of respondents intended to afforest their land. This decision is
influenced by new socio–economic conditions (unstable situation in agriculture,

Consolidated version as of 5th March, 2008                                                     105
unprofitability of the activities related to the agricultural production, and etc.). Main
reasons influencing this decision were: (1) it is the best way to use abandoned lands; (2)
ongoing natural regeneration of land; and (3) increase of land value by afforesting it.

Most of the respondents are willing to allocate about 3 ha out of their estate for
afforestation purposes (average size of the holding was 11,3 ha). At the same time they
also want to maintain agricultural activities on their land or at least to be left with a
possibility to engage themselves into agriculture in the future if economic situation in
relation to the integration into EU changes to the better. 32.7% of respondents (25.6% in
Lazdijai region and 40.0% in Utena region) do not intend to afforest their lands. The two
reasons for this decision were: (1) agricultural land should be used for agriculture; and (2)
respondents do not want lose the possibility in the future to use all their land for
agriculture.
Main factors encouraging (or hindering if absent) afforestation were identified and cover:
 state financial support for afforestation (62% of respondents);
 low prices of or free planting material (40.9% of respondents);
 tax breaks (26% respondents).
Two factors directly hindering afforestation are the lack of: (1) financial resources to carry
out afforestation (reported by 62.6% of respondents); and (2) knowledge and support of
specialists (25.1% of respondents).

Survey also assessed the level of knowledge possessed by landowners concerning
afforestation. It was reported that 50.8% of respondents were interested in different
information presented both in mass media and other sources of information about
afforestation. As there is not enough information of this type, one of the most important
reasons hindering afforestation is the lack of knowledge on the topic. Larger amounts of
information as well as the attractive presentation would encourage landowners to afforest
abandoned lands. The most effective and easily accessible means for the dissemination of
information to the potential participants of afforestation process is press. Television, radio
and consultations by specialists are also effective enough. Actually, in solving the
awareness problem, the project has produced a number of technical information available
nation-wide such as technical notes, brochures, booklets, video, has organized a number of
national campaigns.

Generally, one of the lessons learned from this survey is that, with an average agricultural
holding of roughly 10 hectares, it may be expected that half of the farmers will be willing
to afforest about 3 hectares of agricultural land in their possession. Also, that fertility of
land and its suitability to agricultural activities plays an important role in making the
decision to use the land for afforestation or not. Thus, it is expected that most of
afforestation will take place in the areas were conditions for agriculture are not in favour.
And finally, that financial support for afforestation is perceived as the key factor aiming at
promoting afforestation of agricultural land.

Establishment of demonstration areas on both private and public land

Establishment of demonstration areas in the pilot municipalities Utena and Lazdijai has

Consolidated version as of 5th March, 2008                                               106
been of utmost importance. The possibility to show in reality the effect and consequences
of different, new and sometimes forgotten ways of doing things has been crucial in order to
overcome scepticism which very often is faced in forestry. Moreover, the scientifically
based regulations are not always able to meet the wishes of the landowners. Therefore,
establishment of demonstration forests on private and public land provided the opportunity
to test how the approved regulations are able to meet the visions not only from an
afforestation point of view but also from laws and regulations on ownership and land use
purpose. In total demonstration forests were established on 36 ha of private and on almost
100 ha of public land in both municipalities.

The following practical lessons learnt could be pointed out as the most important ones to be
taken into consideration when promoting demonstration activities and larger scale private
and public sustainable afforestation in Lithuania:

1. Up till now state forest owned nurseries within the country have mainly been growing
    seedlings to satisfy their own needs for reforestation as afforestation so far has been in a
    small scale. This means that mainly conifer seedlings have been grown in the nurseries
    (broadleaves very well naturally regenerate in forests). The project has maintained the
    idea of establishing mixed forests with forest edges with a number of native trees and
    bushes. This has become not only the project‟s philosophy but also the general trend in
    afforestation. Also it is part of the recommendation developed for the initiatives of
    private landowners and the new regulations on re- and afforestation. Therefore, the
    demand for broadleaved trees and bushes will increase due to the awareness raising. It
    is necessary for the nurseries to adjust to this demand.

2. Initially most established scientists and professional foresters had very low expectations
    of the ability of the private owners to plan and influence their own forestry plots.
    However, although most owners has no specific forestry knowledge, the project has
    show that the average landowner has very clear ideas of what he or she would like to
    create and also a reasonable overview of what is possible and realistic. Also the wishes
    of the owners are very diverse, ranging from pure fast growing timber stands to forest
    stands with high landscape and biodiversity value or recreational potential. Future
    afforestation on private land will only be successful if it acknowledges the owner‟s
    wishes and ideas and involves the owners in planning and maintenance.

3. Landowners have very limited knowledge on practical afforestation (planting trees).
   During the project 3 workshops in each region were held on seedlings, quality of
   seedlings, mixing of stands, creating forest edges, equipment for planting, training in
   planting, weeding, protection against wildlife, future management and evaluation. The
   landowners took part in these workshops, and clearly all landowners learned from the
   workshops. Future afforestation must be supported by extension e.g workshops and
   extension directly to landowners.

6. Description of the strategy proposed, its quantified objectives, the
rural development priorities selected and the geographical area covered


Consolidated version as of 5th March, 2008                                                107
This chapter outlines the strategy, objectives and priorities for rural development as well
as the geographical area of Lithuania covered by this Rural Development Plan in the
2004-2006 period.

The rural development objectives, strategy and priorities have been outlined on the basis
of the situation in Lithuanian rural areas and in particular the problems identified
following the SWOT analysis.

Before describing the objectives, strategy and priorities for the agriculture and rural
development it is important to mention that the two key legal documents governing
agriculture and rural development and defining the relation among the two were adopted,
namely the Agricultural and Rural Development Strategy and Law on Agriculture and
Rural Development.

The Agricultural and Rural Development Strategy has been approved by the Parliament
(Seimas) Resolution No VIII-1728 of 13 June 2000. The Strategy sets forth agricultural
and rural development trends for the years 2000 – 2006 as well as the objectives,
principles and priorities for agricultural and rural development.

Law on Agriculture and Rural Development was adopted by Seimas on 25 June 2002 by
Resolution No. IX-987. The provisions of the law are in compliance with the EU Common
Agricultural Policy and the main EU legal acts regulating the agricultural sector and rural
development.

The law provides for the first time in legal documents embodied definition of rural
development and it is spelled out as follows:

“Rural development is the improvement of life quality of rural population, rural economic
and social structures, development of social (communal) relations which are all together
targeted at insurance of economic and social cohesion, creation of working places in
rural areas and maintenance, protection and enhancement of ethno culture, landscape
and nature values.”

Thus, the below presented objectives, strategy and priorities have already been assigned a
legal status, have gone through political debates and, no doubt, have been broadly
discussed and finally agreed among politicians, social-economic partners playing the key
roles in agriculture and rural development. Furthermore it should be outlined that practical
experience accumulated by political, administrative authoritative as well as farmers in
implementing the SAPARD programme as well as EU CAP-like nationally funded
measures has been to a great extent taken into consideration while drafting this documents
and in particular measures aiming at implementation of the defined strategy.

6.1. The objectives hierarchy for Rural development

The problems related to agriculture and rural development identified in the chapter 5.10
are the core elements constituting the base for the formulation of the objectives and further

Consolidated version as of 5th March, 2008                                              108
strategy for rural development and agriculture in Lithuania. Below in Figure 15 a
coherence between the objectives set in the Single Programming Document and Rural
Development plan is presented following the objective hierarchy logic.

The objectives laid down in the two main programming documents indicate a vertical
consistency between the operational, specific and overall objectives within the RDP and
SPD respectively. The overall objective in the RDP corresponds to the specific objectives
set in the SPD and it is considered a very important aspect in ensuring that activities
carried out within both documents are aiming at fulfilment of the same objectives.
Additionally, it secures that operational objectives contribute to the specific objectives and
further to the overall objectives for rural development in Lithuania.

Thus, in order to reach the defined objectives in both programming documents the
measures taken all together are designed so in order to address the identified problems in
a coherent and synergy-based manner. Moreover, the National support programme will
also be available and the all three available sources, it is expected, will remedy the
identified problems in the most efficient way.

Further in the Chapter 6.2.1. a more detail presentation of the overall SPD document as
well as measures to be implemented in relation to rural development, agriculture and
fisheries is provided. Chapter 6.2.2. details the Special Rural Support Programme. The
objectives of individual measures to be implemented within the scope of this RDP are
detailed in the section 6.2.3.

The extent to which the strategy takes into account the problems identified and what
measures from the existing programming documents and how will contribute to the
improvements in rural development and agriculture are tackled in Chapter 6.2.




Consolidated version as of 5th March, 2008                                               109
Figure 15: Hierarchy of objectives6
                        Overall objective for Rural Development and Agriculture in SPD
    On the basis of natural resources and existing residents‟ traditions, to seek creation of the modern
     agriculture and fisheries and to mitigate negative social and economic consequences in the rural
                                and coastal areas caused by modernisation.



                           Specific objectives for Rural Development and Agriculture in SPD


    Creation of the competitive EU market-                       Creation of possibilities to diversify                      Creation of the
    oriented agriculture, encouraging of food                    economic activities in rural areas, and                     resource-based and
    safety and development of marketing                          for agricultural producers – to engage                      market-oriented
    allowing to use the existing possibilities                   in additional economic activities by                        modern and
    more     effectively   and   to   ensure                     fostering the biological diversity,                         competitive fisheries
    employment in rural areas;                                   landscape and environment;                                  sector complying
                                                                                                                             with the EU
                                                                                                                             requirements by
                               Overall RDP objective                                                                         lightening social
    Competitive agriculture, possibilities for diversification of activities, protection                                     consequences of the
                                   of environment                                                                            restructuring.


                                                  Specific objectives of RDP
      Iimprovement of agricultural structures and competitiveness
      Improvement of incomes for farmers
      Improvement of the environment
      Provision of alternative sources of income through afforestation programme, compatible with the
       protection of natural values
       2:
MeasureAlleviation of cash flow constraints in the semi - subsistence farms
      Assistance for agricultural producers to cover the expenses they must incur to take their production
       and livestock farming facilities into compliance with applicable EU requirements.
      Awareness raising and capacity building

                                                             MEASURES

Measure 1:                Measure 2:               Measure 3:               Measure 4:            Measure 5:            Measure 6:

 Early                    Less-favored             Agri-                    Afforestation         Support to            Meeting EU
retirement                areas and areas          Environment              of                    semi-                 standards
                          with                                              agricultural          subsistence
                          environmental                                     land                  farms
                          restrictions                                                            undergoing
                                                                                                  restructuring

                                                Measure 7: Technical Assistance



6
    Fishery sector is not further elaborated in this Rural Development Plan as it is addressed by the Single Programming Document

Consolidated version as of 5th March, 2008
                                                                                                                              110
Consolidated version as of 5th March, 2008   111
6.2. Overall Rural Development Strategy and Priorities

Lithuanian rural development strategy aiming at fulfilment of the objectives set above and
in the short run softening whereas in the long run eliminating the key problems identified
is expressed in the three main strategic guidelines for rural development and is formulated
as follows:

     Modernisation of agricultural production sector;

     Improvements of life of rural population by investing in engineering, business and
      services infrastructure and by providing rural people with favourable conditions to
      be involved in alternative activities and receive additional income;

     Development of human resources for adapting to changes in the countryside and
      promotion of initiative of rural communities;

which are further transformed into the concrete measures (priorities) to be implemented
within different programmes, namely SPD, RDP and Special Rural Support Programme
(SRSP) which is funded nationally (state aid from 2004 May 1)7 Rural Development Plan
has been prepared in the context of the Single Programming Document and the measures
proposed in the Rural Development Plan complement the Single Programming Document
measures as well as the SASP in order to ensure that proposed actions interplay with one
another to obtain synergy and sustainable results for rural development.


The current chapter presents in detail the scope and the measures to be implemented
within the Single Programming document (section 6.2.1..), SRSP (section 6.2.2.) and in
much greater detail the role of the Rural Development Plan (section 6.2.3.) as well as
objectives of the individual measures implemented within this Rural Development Plan.


Table 36 provides a summary list of all the measures to be implemented in the period
2004-2006 with the financial allocation for each of the measure. Further the Table 37
presents the compatibility and coherence between the mentioned documents and shows
how the key issues highlighted in section 5.10. will be addresses through all available
measures within the period 2004-2006. It can be easily observed that this RDP will in one
or another manner address most of the problems identified. It is important to emphasize
ones again that none of the Programming documents mentioned is in the position of
solving the identified problems alone and therefore the programmes are designed in a
manner which would ensure that the measures taken all together result in to a maximum
benefit to the process of softening and eliminating the identified problems.



7
  The approval of the list of the state aid measures will be a subject to a separate procedure and therefore at
this stage in this Rural Development Plan only an indicative list of the state aid measures is provided.

Consolidated version as of 5th March, 2008
                                                                                                     112
All the measures included in the Single Programming Document, Special Rural Support
Programme and this Rural Development Plan are integral with the agriculture and rural
development policies both at the European and national levels. It is in line with the
Common Agricultural Policy aiming at gradually reducing direct subsidies for production
while expanding measures which support the maintenance of an environmentally
responsible, competitive and sustainable agriculture. The measures are defined in a way
that would help to establish such farming conditions which would enable those engaged in
agriculture and forestry to meet the challenges of the reformed CAP.
Table 36: List of measures in 2004-2006 and allocated financial resources
Measures                                                                Total Public           EU
                                                                        Funding, million       Contribution
                                                                        EUR                    million. EUR
Single Programming Document
Measure 1: Investment in agricultural holdings                               111,623               40,613
Measure 2: Setting up of young farmers                                        16,334               12,250
Measure 3: Improving processing and marketing of
agricultural products                                                         66,920               22,210
Measure 4: Promoting adaptation and development of rural
areas                                                                         88,293               39,164
Measure 5: Forestry                                                            8,656               4,630
Measure 6: LEADER+ type measure                                                2,715               2,036
Measure 7: Training                                                            2,659               1,995
Measure 8: Fishing fleet related actions                                      12,159               7,276
Measure 9. Protection and development of aquatic resources,                   10,312               3,716
aquaqulture, fishing port facilities, processing and marketing,
and inland fishing
Measure 10. Other (fisheries related) activities                              1,500                1,125
                                                       TOTAL                 321,171              135,015
Rural Development Plan
Measure 1: Early Retirement                                                 89,216,340          71,373,072
Measure 2: Less favoured areas and areas with environmental
                                                                           177,142,600          141,714,080
restrictions
Measure 3 Agri-environment                                                  82,892,620          66,314,096
Measure 4: Afforestation of agricultural land                                6,588,900           5,271,120
Measure 5: Support for semi-subsistence farms undergoing
                                                                            9,140,870            7,312,696
restructuring
Measure 6: Meeting standards                                               117,151,608           93,721,286
Measure 7: Technical assistance                                             5,921,000             4,736,800
Measure 8: Top-ups for direct payments8                                    120,450,000           96,360,000
Projects approved under Regulation (EC) No. 1268/1999                       3,371,062             2,696,850
                                                       TOTAL               611,875,000          489,500,000
Special Rural Support Programme9


8
  Maximum amount of funds possible for reallocation from the Rural development for the direct payments is
indicated in this table. The maximum annual percentage for reallocation is provided in chapter 6.2.3.
9
  The table lists indicative measures to be supported from national budget, which may be subject of further
change. Financial allocations at the stage of the preparation of the RDP were not finalised, therefore those are

Consolidated version as of 5th March, 2008                                                               113
Measure 1. Aid for the acquisition of breeding animals
Measure 2. The breeding programme
Measure 3 Aid for the acquisition of propagating material of
certified plants
Measure 4. Compensation for credit interest
Measure 5. Partial compensation for insurance premiums
Measure 6. Support in providing guarantees
Measure 7. Support for production of high quality
agricultural and food products as well for promoting the
sale of such products
Measure 8. Scientific research
Measure 9. Implementation of the system of licensed
storage depots (formation of the compensation fund)
Measure 10. Aid for aquaculture
Measure 11. Funding of preventive measures as regards
bovine spongiform encephalopathy
Measure 12. Funding of animal waste management
Measure 13. Support for partial compensation of costs
of the procured energy resources by the modernised
winter greenhouses
Measure 14. Aid to agricultural entities engaged in
commercial fruit and berry production
Measure 15. Funding of the programme for the control
of transmissible diseases of animals
Measure 16. Support for applied research in Fisheries
sector
Measure 17: Farmer's training and consultation services
Measure 18. Organisation of national and international
agricultural exhibitions, fairs and contests
Measure 19. Maintenance of land reclamation
installations
Measure 20 Aid for the purchase of state-owned and
private land
Measure 21. Aid in the event of a disaster
Measure 22. For the implementation of eradication
system of potato diseases (potato ring rot, ralstonia
solanacearum)
Measure 23. Aid for commercial horticulture and potato
production
Measure 24. For direct payments to milk producers
Measure 25. Biofuel production development
programme
Measure 26. Compensation for natural and legal body's

not included in the current draft of the RDP. Detailed description of indicativeindicative measures is provided
in chapter 6.2.2.

Consolidated version as of 5th March, 2008                                                              114
claims for agricultural production bought for processing
by undertakings that went bankrupt or are next door to
bankruptcy




Consolidated version as of 5th March, 2008                 115
Table 37: Compatibility and coherence between measures in relation to the key problems in agriculture and rural
development
Problem                 SPD measure                   RDP measure                       SASP measure
1. Small average farm    M.1. Investment in agricultural    M.1. Early retirement                 Measure 4. Compensation for credit interest
size                     holdings                                                                 Measure 5. Partial compensation for insurance
                         M 2. Setting up of young farmers                                         premiums
                         M. 7. Training                                                           Measure 6. Support in providing guarantees
                                                                                                  Measure 20. Aid for the purchase of state-owned
                                                                                                  and private land
                                                                                                  Measure 23. Aid for commercial horticulture and
                                                                                                  potato production
2. Low income and lack   M.1. Investment in agricultural    M. 2. Less favoured areas and areas   Measure 4. Compensation for credit interest
of sources of income     holdings                           with environmental restrictions       Measure 5. Partial compensation for insurance
(overdependence     on   M.2. Setting up of young farmers   M. 4. Afforestation of agricultural   premiums
agriculture)             M.5. Forestry                      land                                  Measure 10. Aid for aquaculture
                                                                                                  Measure 14. Aid to agricultural entities engaged in
                                                                                                  commercial fruit and berry production
                                                                                                  Measure 17. Farmer's training and consultation
                                                                                                  services
                                                                                                  Measure 18 Organisation of national and
                                                                                                  international agricultural exhibitions, fairs and
                                                                                                  contests
                                                                                                  Measure 23. Aid for commercial horticulture
                                                                                                  and potato production
                                                                                                  Measure 24. Direct payments to milk producers
                                                                                                  Measure 25/Biofuel production programme
                                                                                                  Measure 26. Compensation for natural and legal
                                                                                                  body's claims for agricultural production bought
                                                                                                  for processing by undertakings that went
                                                                                                  bankrupt or are next door to bankruptcy.




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3. Lack of technology   M.1. Investment in agricultural      M. 5. Support for semi-subsistence   Measure 1. Aid for the acquisition of breeding
both in primary         holdings                             farms undergoing restructuring       animals
production and          M.2. Setting-up of young farmers     M.6. Meeting standards               Measure 2. The breeding programme
processing sector       M.3. Improving processing and                                             Measure 3 Aid for the acquisition of propagating
                        marketing of agricultural products
                                                                                                  material of certified plants
                                                                                                  Measure 4. Compensation for credit interest
                                                                                                  Measure 5. Partial compensation for insurance
                                                                                                  premiums
                                                                                                  Measure 6. Support in providing guarantees
                                                                                                  Measure 7 Support for production of high
                                                                                                  quality agricultural and food products as well
                                                                                                  for promoting the sale of such products
                                                                                                  Measure 8. Scientific research
                                                                                                  Measure 9. Implementation of the system of
                                                                                                  licensed storage depots (formation of the
                                                                                                  compensation fund)
                                                                                                  Measure 11. Funding of preventive measures as
                                                                                                  regards bovine spongiform encephalopathy
                                                                                                  Measure 12. Funding of animal waste
                                                                                                  management
                                                                                                  Measure 13. Support for partial compensation of
                                                                                                  costs of the procured energy resources by the
                                                                                                  modernised winter greenhouses
                                                                                                  Measure 14. Aid to agricultural entities engaged in
                                                                                                  commercial fruit and berry production
                                                                                                  Measure 15. Funding of the programme for the
                                                                                                  control of transmissible diseases of animals
                                                                                                  Measure 16. Support for applied research in
                                                                                                  Fisheries sector
                                                                                                  Measure 17. Farmers' training and consultation
                                                                                                  services
                                                                                                  Measure 18: Organisation of national and
                                                                                                  international agricultural exhibitions, fairs and
                                                                                                  contests

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                                                                                                          Measure 22. For the implementation of eradication
                                                                                                          system of potato diseases (potato ring rot, ralstonia
                                                                                                          solanacearum

4.    Insufficient   social   M.4. Adaptation and development of   M.7. Technical assistance              Measure 17. Training and consultation services for
infrastructure                rural areas                                                                 farmers
                              M. 6. LEADER+ action
                              M.7. Training
5. Insuficient physical       M.4. Adaptation and development of                                          Measure 19. Maintenance of land reclamation
insfrustructure               rural areas                                                                 installations
6. Threats towards the        M.1. Investments in agricultural     M.2. LFA and areas with                Measure 12. Funding of animal waste management
environment and cultural      holdings                             environmental restrictions             Measure 17. Farmers' training and consultation
heritage                      M.5. Forestry                        M.3.Agrienviroment
                                                                                                          services
                              M.7. Training                        M. 4. Afforestation of agricultural
                                                                   land                                   Measure 19. Maintenance of land reclamation
                                                                                                          installations
                                                                                                          Measure 25 Biofuel production development
                                                                                                          programme




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6.2.1. Single Programming Document

The Single Programming Document outlines the overall development objectives and strategy for the
country as a whole with a view to narrowing the development gap between Lithuania and the EU
countries.

The overall objective of the set out in the Single Programming Document for the period 2004-2006 is
defined as follows:

Strengthen the preconditions for growth in long-term national economic competitiveness and rapid
development of knowledge-based economy in terms of GDP and employment growth, leading to
increasing well-being and higher living standards in the entire country for its all inhabitants.

Thus, the baisis of the national economy development strategy is rapid GDP growth which in the long
run would create favourable conditions both for the increase in employment and income. The strategy
aiming at reaching the above mentioned overall national development objective stands on the three
specific tasks:

The specific objectives of the development plan are set out below:
 to develop physical infrastructure that would allow to encourage new, and use the existing,
   movement of goods, services and people through and in Lithuania to its full extent, and would also
   allow environmentally sustainable economic development;

   to develop adaptable labour force, eliminating deficiency of its qualifications (first of all, among the
    unemployed and youth) and providing it with the required abilities;

   to strengthen potential of economic competitiveness through providing preconditions and promoting
    a more viable setting up and development of businesses and more active economic restructuring;
The Development Strategy set out in the SPD seeks to ensure that resources are invested in such a way
as to maximise the potential benefits for the implementation of the longer-term vision. The national
development strategy focuses on:
          1. Investments into physical infrastructure in order to create possibilities for maximal use
              of the favourable country‟s geographical location which determines big potential for the
              trade (export) as well as transit;
          2. Further implementation of the policy orientated to the lately achieved macroeconomic
              stability, which is the key precondition for the substantial growth of the economy;
          3. Investments into society‟s know-how and abilities to adjust themselves in a rapidly
              changing economic environment;
          4. Investments into social integration oriented to the immediate restructuring of the
              existing poverty zones in rural and urban areas and elimination of the social disjuncture.

The strategy will be addressed through four priority areas:
    social and economic infrastructure of the economy,
    human resources,


Consolidated version as of 5th March, 2008                                                            119
      manufacturing sector and services,
      agriculture, rural development and fishery.

The SPD envisages total expenditure of 1.341,084 million EUR over the 3 years programming period
with 792,100 million EUR of that amount coming from the EU.

As it can be seen, the rural development is perceived as one of the core areas successful development
of which is of utmost importance aiming at the fulfilment of the above-defined national development
overall objectives. Total financing (private and public) foreseen in the SPD for the rural development
and fisheries makes 321,171 million EUR where EU funds will amount to 135,015 million EUR,
national funds and private funds – 186,156 million EUR respectively. In addition, rural areas will also
substantially benefit from investments proposed across the country as a whole related to employment
and training, roads, housing, health, transport etc.

Below it is presented how SPD priority „Agriculture, rural development and fishery“ will address the
identified problems and contribute to the rural objectives set and strategy defined.

Creation of the competitive agriculture, encouraging of food safety and developments of marketing
Investments supported within SPD will be targeted at improvement of the farm structure and ensuring
of the development of economically strong and competitive agricultural units. It will also be sought that
the production efficiency at farms would be increased, modern equipment and technologies would be
purchased, production quality and safety would be ensured and hygienic and environment standard
would be complied with. In addition to that, it will be sought to diversify agricultural activities.

The expectations are that the quality of agricultural products will improve and income of residents
employed in the agricultural sector will increase as a result of these initiatives. The adaptation of new
technologies and development of human resources will create conditions for the enhancement
competitiveness in the farm sector, resident income growth and improvement of life quality in rural
areas.

When improving the farm structure, the growth in the number of young farmers will be promoted in
order to enhance competitiveness in the farm sector as young farmers tend to adapt better to modern
technological changes and new competitive environment. Also, it will be aimed at stabilising the
demographic situation in the countryside, as young people will be encouraged to remain in rural areas.

The greatest attention will be paid to farm restructuring. Mainly, the following three inter-related
Measures will be aimed at achieving this objective:
 “Investment in Agricultural Holdings”,
 “Setting up of Young Farmers” , and
 “Reparcelling” activity of the “Adaptation and Development of Rural Areas” Measure.

The Measure “Investment in Agricultural Holdings” will create conditions for the implementation of
one of the objectives of this priority: to create a market-oriented competitive primary agriculture



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ensuring food safety and marketing development which allows to use more effectively existing multi-
functional sector possibilities and to ensure employment in rural areas. The Measure support will create
conditions for the strengthening and growth of farms as well as more favourable conditions – for
enhancement of their competitiveness.

The implementation of the Measure “Setting-up of Young Farmers” is aimed at the increase of the
number of young farmers. Simultaneously, it is sought to improve competitiveness in the farm sector as
young farmers are able to adapt more effectively to the changes in modern technologies and new
competitive environment. Also, this Measure will help to stabilise the demographic situation in the
countryside, as young people will be encouraged to remain in rural areas.

Support provided by the Measure “Improving Processing and Marketing of Agricultural Products” is
aimed at further modernising companies processing meat, grain, fruit and vegetables, milk and other
products, reducing production costs, implementing quality and environment management systems,
improving hygienic conditions and product quality as well as product marketing. This will allow to
improve competitiveness of the industry.

Creation of possibilities to diversify economic activities in rural areas by fostering biological
diversity, landscape and environment

With the view to achieve the goals of the balanced development of rural areas in Lithuania, particular
attention will be paid to the improvement of the infrastructure and promotion of alternative economic
activities. The following measures have been foreseen to achieve this objective: “Forestry” and
“Adaptation and Development of Rural Areas”. The latter comprises a wide range of activities such as
reparcelling, agricultural water resources management, services to farms and businesses, promotion of
tourism and crafts activities and restoration of the rural (ethnographic) heritage.

Restructuring of the multifunctional agriculture is closely linked with all the groups of rural residents.
Therefore, this Measure comprises support intended for the adaptation and development of rural areas
by creating appropriate conditions for rural residents to engage in farming or other activities ensuring
income and appropriate standard of life and creating additional jobs in the countryside.

In the course of the agricultural reform small and fragmented land plots has been formed, and therefore,
particular attention will be provided to land plot consolidation projects which will be intended for
reorganisation of land plots in order to enlarge them, to form rational land use in farms and to improve
their structure, to create the necessary rural infrastructure and to implement other goals and tasks of the
agricultural and rural development and environmental policy.

A major focus will be put on the improvement of the rural engineering infrastructure, which is a must
for successful farming, engagement in other activities or ensuring of proper living. This includes the
renovation and improvement of settlement and field drainage systems for common use, water network
and their hydro-technical structures.
A great number of farms do not keep their books and accounts and farmers find it complicated to obtain
the most recent information, but they will have to comply with stricter land management obligations as



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part of new cross-compliance requirements, which will be applied to the standards established in the
fields of environment protection, food safety, animal welfare and health and work safety. Taking into
consideration the aforesaid circumstances, it is necessary to activate the provision of advisory services.

The development of activity related to rural tourism and crafts, as well as that of other alternative
businesses, comprises support intended for the development of services in rural areas, creation of
conditions suitable for the diversification of activities and provision of possibilities to rural residents to
earn additional income and improvement of life and work conditions in the countryside. Support for the
preservation of ethnic cultural values will not only help to retain the uniqueness of the Lithuanian rural
municipalities, but it will also promote tourism in the country‟s ethnographic regions and contribute to
the development of the economy of rural areas and creation of attractive image of the country‟s
regions.

The Measure “Forestry” is targeted at the economic, ecological and social value of forests in the
development of rural areas by focusing the main attention on the capital investments in the private forest
holdings. This Measure is scheduled to create conditions for the development of private forests by
providing them with investment support not only for the improvement of the forest infrastructure, but
also for logging and primary wood processing. The intentions are to create new jobs by promoting
investments, and thus, to reduce unemployment in rural areas. Benefit derived from other forest products
(animals, mushrooms, berries, herbs, Christmas trees) also gives an opportunity to rural residents to
obtain additional income.
In addition to that, start-up support will be provided to newly established forest owners‟ associations,
which would help their members to implement modern forest management methods and ensure
production sales, as the network of organisations uniting forest owners is insufficient at present.

Significant attention will be paid to the principles of the harmonious forest sector management and
improvement of the landscape and environment. In compliance with the EC Revised Common Draft
Position, support is scheduled for forest fire prevention measures. This support will be provided under
the Forest Fire Prevention Plan drafted by Lithuania which classifies forest areas according to the risk
of a fire. In compliance with the provisions of Chapter VIII of the EC Regulations No. 1257/1999,
support will be provided for prevention measures to be taken in forests with the high and average fire
risk.

Implementing the provisions of the General Plan of the Territory of the Republic of Lithuania approved
by the Resolution No. IX-1154 of the Seimas (Parliament) of the Republic of Lithuania and those of the
Lithuanian forestry policy and its implementation strategy approved by the order No. 484 of 17
September 2002 of the Minister of Environment regarding the expand the country‟s woodlands, support
will be also provided for afforestation of non-agricultural land and it will supplement the measure
included in this RDP dealing with afforestation of agricultural land. .

The following two Measures have been foreseen to foster human resources and to strengthen self-
confidence of rural residents, namely, “Leader plus type activities” and “Training”.




Consolidated version as of 5th March, 2008                                                               122
Lithuania intends to apply the model combining the two alternatives of the implementation of
LEADER plus initiative proposed by the EC to candidate countries. The essence of this model is that
the actions of preparation for the implementation of this initiative will be taken. These actions will
comprise the institutional and methodological preparation, area studies and development of integrated
rural development strategies and creation of local action groups as well as the actions of the second
alternative by implementing strategies formulated on the territorial basis in pilot areas. This choice is
based on the fact that the actions of Lithuanian institutions and self-government organisations, which
have been carried out together with international support projects until the present, allow to believe that
certain preparation work has already been done in the country, in particular pilot areas in which
partnership groups (prototypes of local action groups) are being formed and they are ready to help to
resolve issues of territorial rural development.

Human resource development in the countryside is one of the most important factors in implementing
the main tasks of rural development. Therefore, the “Training” Measure has been developed; this
Measure comprises development of rural residents‟ abilities to adapt to the technology and market
changes, which is necessary for active participation in all Measures intended for rural development.
Training of farmers and other persons related to agricultural, forestry or alternative activities is
necessary in order to acquaint persons employed in the agricultural sector with the most recent quality,
environmental, hygienic, bio-diversity and landscape preservation requirements, new production
technologies, economic farming methods and alternative activities in rural areas as well as to provide
other knowledge required for the adaptation to the quality and quantity changes taking place in the
countryside.

The SPD will also significantly contribute to the Creation of Modern and Competitive Fisheries.
Since none of the measures to be implemented under this Rural Development Plan has direct relation to
the measures dealing with Fisheries, it has been decided for the sake of consistency and conciseness not
to present the Fishery measures in detail.

Thus, having presented the role of the measures within SPD, in summary, it should be stated that
investments under the rural and fisheries development priority taking into consideration the EU
regulations stipulating the rules for the use of funds of the “Guidance” Section of the European
Agricultural Guidance and Guarantee Fund and the Financial Instrument for Fisheries Guidance, have
been scheduled in the following Measures:

Measure 1: Investment in agricultural holdings
Measure 2: Setting up of young farmers
Measure 3: Improving processing and marketing of agricultural products
Measure 4: Promoting adaptation and development of rural areas
Measure 5: Forestry
Measure 6: LEADER+ type measure
Measure 7: Training
Measure 8: Fishing fleet related actions
Measure 9. Protection and development of aquatic resources, aquaqulture, fishing port facilities,
processing and marketing, and inland fishing



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Measure 10. Other (fisheries related) activities

6.2.2. Special Rural Support Programme

Additionally, National support under Special Agricultural Support Programme is foreseen for the
following indicative measures, which are a subject to separate procedure of approval:

Measure 1. Aid for the acquisition of breeding animals
Measure 2. The breeding programme
Measure 3 Aid for the acquisition of propagating material of certified plants
Measure 4. Compensation for credit interest
Measure 5. Partial compensation for insurance premiums
Measure 6. Support in providing guarantees
Measure 7. Support for production of high quality agricultural and food products as
well for promoting the sale of such products
Measure 8. Scientific research
Measure 9. Implementation of the system of licensed storage depots (formation of the
compensation fund)
Measure 10. Aid for aquaculture
Measure 11. Funding of preventive measures as regards bovine spongiform
encephalopathy
Measure 12. Funding of animal waste management
Measure 13. Support for partial compensation of costs of the procured energy
resources by the modernised winter greenhouses
Measure 14. Aid to agricultural entities engaged in commercial fruit and berry
production
Measure 15. Funding of the programme for the control of transmissible diseases of
animals
Measure 16. Support for applied research in Fisheries sector
Measure 17: Farmer's training and consultation services
Measure 18. Organisation of national and international agricultural exhibitions, fairs
and contests
Measure 19. Maintenance of land reclamation installations
Measure 20 Aid for the purchase of state-owned and private land
Measure 21. Aid in the event of a disaster
Measure 22. For the implementation of eradication system of potato diseases (potato
ring rot, ralstonia solanacearum)
Measure 23. Aid for commercial horticulture and potato production
Measure 24: For direct payments to milk producers who sell their milk for processing
Measure 25: Biofuel production development programme
Measure 26: Compensation for natural and legal body's claims for agricultural
production bought for processing by undertakings that went bankrupt or are next door
to bankruptcy.




Consolidated version as of 5th March, 2008                                                124
Below it is provided short description on the measures Lithuania wishes to maintain in rural
development and agriculture after accession and which will be nationally funded.
Measure 1. Aid for the acquisition of breeding animals
Application period
The measure has been applied since 1994. The end of the application period has not yet been projected.
Objective of aid
The objective of rendering aid for the acquisition of breeding animals shall be to encourage farmers,
agricultural companies and other economic entities to raise animals of better breeds so that the products
manufactured were competitive due to an improved quality.

Measure 2. The breeding programme
Application period
The measure has been applied since 1992 and is planned to be continued.
Objective of aid
The aim of financing in the breeding sector shall be to encourage animal breeders to improve the
genetic potential of animals, to improve the performance of animals and to expand the number of
animals of high performance through the application of modern breeding technologies as well as to
conserve the existing gene pool of animals.

Measure 3 Aid for the acquisition of propagating material of certified plants
Application period
The measure has been applied since 1994 and is planned to be applied until 2007.
Objective of the measure
The objective of the measure is to create more favourable conditions to land users to provide
themselves with propagating material of good quality having regard to a great importance of the quality
of propagating material to the yield of agricultural plants, to the competitiveness of produce and to the
complexity of the production of such material.

Measure 4. Compensation for credit interest
Application period
The measure has been applied since 1992 and is expected to be continued.
Objective of the measure
The aid under this measure aims at creating more favourable conditions for farmers to make use of
loans as well as to increase and promote investments in the development of the agricultural sector.

Measure 5. Partial compensation for insurance premiums
Application period
The measure has been applied since 1999 and will be continued.
Objective of the measure
The objective of the measure is to promote voluntary insurance whereby insurance undertakings would
compensate to a greater extent agricultural entities for the losses incurred as a result of an accident, thus
to reduce the part of state funds earmarked for the support of the victims.




Consolidated version as of 5th March, 2008                                                              125
Measure 6. Support in providing guarantees
Application period
The measure started to be implemented in 1998 and will be continued.
Objective of the measure
The objective of the measure is to provide guarantees to farmers in obtaining loans as well as to ensure
stable functioning of the Rural Credit Guarantee Fund.

Measure 7. Support for production of high quality agricultural and food products as well for
promoting the sale of such products
Application period
The measure has been under implementation since 2001, it is to be continued
Objective of the measure
The objective of the measure is to encourage the improvement of the quality of agricultural products,
implementation of a modern composition and quality testing system, ensure the hygiene,
environmental, plant, animal and food safety requirements.

Measure 8. Scientific research and development
Application period
The measure has been applied since 1990 and is to be continued until 2007..
Objective of the measure
Support will be provided to educational and science, scientific research institutions, groups of scientists
that are engaged in agricultural scientific research as well as implementation of the results of such
research and are involved in promotion of the outcomes of the research.

Measure 9. Implementation of the system of licensed storage depots (formation of the
compensation fund)
Application period
The measure started to be applied in 2003. At least 7 years the licensed storage depots alone will not be
financially capable of establishing the Compensation Fund of a sufficient amount, therefore in 2003-
2010 aid must be granted from the national state aid funds until contributions and payments of the
licensed storage depots to the Compensation Fund even with aid granted for the implementation of the
said measure from the national funds.

Objective of the measure
1. The main objectives of the Compensation Fund shall be as follows:
1.1. to accumulate funds in order to ensure the rights of claim to the commercial banks and other credit
institutions resulting from the crediting relations and compensate for the losses resulting from the loss
or damage of goods incurred by the owners of the stored goods that will not be compensated by a
storage depot or/and insurance company;
1.2. to compensate for the losses incurred by the holders who lost storage certificates, double storage
certificates or mortgage certificates separated from double storage certificates (hereinafter referred to as
„the beneficiary of the compensation“).
Upon the establishment of the Compensation Fund, credit institutions (commercial banks or credit
unions) while extending short-tem loans to the holders of double storage certificates or mortgage



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certificates separated from double storage certificates shall not require to give any additional
guarantees in respect of mortgaged goods kept in the licensed storage depots.

Measure 10. Aid for aquaculture
Application period
2002-2010
Objective of the measure
The objective of the aid is to reduce the morbidity of fishing ponds, to eradicate certain decease's and
parasites, to improve the conditions of fish farming, to improve the quality of fish products as well as
the competitiveness both in the domestic and foreign markets.

Measure 11. Funding of preventive measures as regards bovine spongiform encephalopathy
Application period
Implementation of the measure started in 1997 and is being continued.
Objective of aid
The objective of the aid is to adopt control measures with regard to transmissible spongiform
encephalopathies in the Republic of Lithuania.

Measure 12. Funding of animal waste management
Application period
The measure has been applied since 2002 and is planned to be continued.
Objective of the measure
The objective of the measure is to collect all animal waste and to recycle in order to prevent pollution,
transmission of deceases.

Measure 13. Support for partial compensation of costs of the procured energy resources by the
modernised winter greenhouses
Application period
 Aid granted since 2001 and is expected to be continued until 2007. This measure has been applied
since 2001 and is planned to be applied until 2007.
Objective of the measure
Aid from the state budget would enable agricultural entities, which operate modernised heated
greenhouses, to acquire grading and packaging equipment, packages, labels, etc.

Measure 14. Aid to agricultural entities engaged in commercial fruit and berry production
Application period
Aid paid since 2002 and is expected to be continued until 2007.
Objective of the measure
Aid for commercial fruit and berry production would enable agricultural entities to introduce advanced
production technologies, would stimulate the production of high quality dessert fruits and their
adaptation to environmental requirements, and would accelerate the introduction of the provisions of
compulsory quality requirements. Fruit and berry production would serve as a partial solution to acute
social problems of rural areas as this sector would employ a particularly large workforce.




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Measure 15. Funding of the programme for the control of transmissible diseases of animals
Application period
In accordance with archival data, the control of transmissible diseases of pigs has been carried out from
1946. In the future, it is planned to carry out this measure continuously.
Objective of aid
The Programme objective is to define surveillance and control requirements for transmissible diseases
of animals taking into consideration epizootic situation of transmissible diseases, the analysis of risk
factors, prevention measures and the health status of animal herds.

Measure 16. Support to applied research in Fishery sector
Application period
1995-2010
Objective of the measure
The aim is to ensure scientific technological progress in fishery sector, dissemination and application of
novelties, to increase competitiveness of fishery sector in the domestic and foreign markets.

Measure 17: Farmer's training and consultation services
Application period
Implemented since 1990 and is foreseen to be continued until 2007.
Objectives of the measure
The aim is to assist farmers in improving the quality of their produce, implementing novelties,
developing alternative activities.

Measure 18. Organisation of national and international agricultural exhibitions, fairs and contests
Application period
State aid for the organisation of international and national exhibitions, fairs and competitions and for
the participation thereof has been granted since 1990. Is foreseen to be continued until 2007.
Objectives of the measure
Support for the organisation of agricultural exhibitions, fairs and competitions as well as the
participation thereof of the agricultural enterprises, organisations and other legal entities is aimed at the
promotion of the development of agriculture and food industry, providing conditions for Lithuanian
agricultural and food products to compete successfully on the EU market; presenting agricultural and
food products produced in Lithuania, the promotion of new technologies; market research for
Lithuanian agricultural and food products, development of a long-term and mutually beneficial
cooperation, the promotion of competition as well as the introduction of the latest research and know-
how.

Measure 19. Maintenance of land reclamation installations
Application period
Aid provided since 1921. Support for land reclamation in private land will be continued until 2005, no
limitations for implementation are foreseen in terms of period for the state land.




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Objective of aid
To preserve land reclamation systems installed by the state funds, to provide their proper maintenance
with the ultimate objective – to ensure suitable soil moisture conditions necessary for plants.

Measure 20. Aid for the purchase of state-owned and private land
Application period
2004 - 2011.
Objective of aid
To provide favourable conditions for the purchase of agricultural land in order to carry out land
consolidation, to define rational land use, to facilitate land market processes and to create competitive
agriculture.

Measure 21. Aid in the event of a disaster
Application period
Aid in the cases of disaster has been granted since 1992; aid in cases of disaster is to be granted
continuously.
Objective of the measure
Intended for partial compensation of damage sustained by agricultural entities due to fires and other
natural disasters.

Measure 22. Support for the implementation of eradication system of potato diseases (potato ring
rot, ralstonia solanacearum )
Application period
This a new measure and its application is planned from the year 2004 until 2007.
Objective of the measure
To eradicate the sources of the agents of potato diseases and to preserve the Lithuanian seed potato
production (this measure is intended for rendering support to the Lithuanian seed potato farms in which
the sources of potato diseases (potato brown rot and potato ring rot) have been detected, to temporarily
stop potato production (for 3-4 years) on such a farm.

Measure 23 Aid for commercial horticulture and potato production
Application period
Aid to agricultural entities engaged in the growing of vegetables and potatoes will be applied from
2003 and will continue to be granted until 2006.
Objective of aid
Granting of aid from the state budget during the transitional period is necessary in order to introduce
new agri-technical elements in the production of vegetables and potatoes – new fertilisers, plant and
produce protection products; introduction of integrated sustainable and biological plant protection,
acquisition of the highest quality seed and planting material, training of producers. Horticulture and
potato production are manual labour–intensive. Decline of horticulture will result not only in the
reduction of income of farmers who engage in horticulture and potato growing, but also in the rising
unemployment rate in rural areas.




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Measure 24: For direct payments to milk producers who sell their milk for processing
Application period
Aid will be implemented until 2005.
Objective of aid
To avoid decrease in the income of milk producers in 2004.

Measure 25: Biofuel production development programme
Application period
Will be implemented since 2004 and will be continued.
Objective of aid
To promote production of biofuel, to create employment possibilities in rural areas, To ensure that at
the end of 2005 biofuel makes 2 % from the overall fuel consumption and at the end of 2010 – 5. 75 %.

Measure 26: Compensation for natural and legal body's claims for agricultural production
bought for processing by undertakings that went bankrupt or are next door to bankruptcy.
Application period
2001 – 2006.
Objective of aid
To compensate partially the income lost by farmers due to the fact that produce from them was
procured by the undertakings which are on bankrupt or are next door to bankruptcy. In such a way the
social tension will be minimised in rural areas, farmers will have circulating assets to procure material
for production (fuel, seeds, fertilisers, etc).

6.2.3. Rural Development Plan

Having presented the Single Programming Document and the Special Rural Support Programme, in
this section the detail presentation of the role of the Rural Development Plan in implementing the
defined strategy is presented.

The Rural Development Plan reflects seven structural measures proposed in the 2004-2006.
Nevertheless, the Plan is of fundamental importance and, in terms of both financial and policy impact,
it is as important as other structural measures proposed for the rural development and agriculture. Out
of the seven measures three are optional measures proposed by the Commission aiming at addressing
the specific needs of the new member states and have been chosen by Lithuanian to be implemented in
the period 2004-2006.
As the result the following measures of the Rural Development Plan
      early retirement,
      less-favoured areas and areas with environmental restrictions
      agri-environment
      afforestation of agricultural land
      Support for semi-subsistence farms undergoing restructuring
      Meeting standards
      technical assistance
      top-ups for direct payments


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The measures are specifically targeted at certain problems identified in the chapter 5.10 and include
proposals to address those as follows:
                Improvement of agricultural structures by attracting young people into farming
                Improvement of incomes for farmers in designated disadvantaged areas through the
                  EU annual income support payments
                Improvement of the environment through an ambitious agri-environment programme
                The provision of a further source of income and employment opportunities for
                  farmers and rural dwellers through access to a substantial sustainable managed
                  afforestation programme, compatible with the protection of natural values
                The income support and alleviation of cash flow constraints in the semi - subsistence
                  farms that produce both for their own consumption and for the market through a flat
                  rate annual aid aiming at turning those farms into commercially viable units.
                Assistance for agricultural producers to cover the expenses they must incur to take
                  their production and livestock farming facilities into compliance with applicable EU
                  requirements.

The aim of the additionally proposed “Technical assistance” measure is to increase awareness within
the rural population about the possibilities available through the implementation of this Rural
Development Plan as well as the requirements needed to be met. This measure is also extremely
important in building and increasing the capacities both in absorption of the available funds and the
administration of funds. Also, it will significantly contribute to ensuring close co-operation between the
European Commission and competent national authorities, social and economic partners. It is expected
that this co-operation will result not only in making the measures provided under this Rural
Development Plan available to the public, but also in supervision of efficiency of the implementation of
the measures and effects on agriculture.

Additionally, as it has been agreed during the negotiation process with the EU, Government of
Lithuania has decided to allocate certain part of the Rural Development budget for the direct payments.
The aim is to annually reduce the allocation of the Rural Development funds for the direct payments
meaning maximum of 25 % in the 2004, 20 % in 2005 and 15 % in 2006.

Lithuania has decided not to implement the additionally to the new members states proposed measure
“Assistance in establishing producer groups”. This conclusion has been reached after thorough
consultations with key economic and social partners which consider this measure in comparison to the
others proposed and available of a comparatively low priority and most important - lack of interest in
this measure in rural society which it is expected would result into a very limited number of applicants.

Objectives of Individual Measures under the Rural Development Plan and the expected impact

In this chapter the expected impacts and results from the measures of the Rural Development Plan
related to the overall objectives, specific and operational objectives is presented. Since one of the aims
of the quantification of the objectives is to evaluate the effectiveness of the programme (ex-post
evaluation), the quantification was carried out in a close coordination with the Commission guidelines
for monitoring indicators and questions to be used during mid-term and ex-post evaluation.


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In order to standardise the programme evaluation procedures – both mid-term and ex-post - the
Commission provides a set of guidelines for definition of monitoring indicators as well as for evaluation
questions, judgement criteria and indicators across all measures. In defining the monitoring indicators
the following EU documents have been used: VI/43512/02 FINAL:26.2.2002 and VI/12004/00 Final.
The first document was used in defining the Input and Output indicators whereas the latter one for the
definition of Result and Impact indictors.

As the result, in the Annex 5 are listed physical and financial as well as result and impact indicators in
the format produced by the Commission for each of the measures included in this Plan. It should be
noted, that there has been a difficulty in defining the baselines for some of the indicators because of
lack or no experience in implementing the measures thus the baselines have only been established for
those indicators where certain experience exists or a starting position could be identified. Also, as
requested by the guidelines the targets where possible are set. It is expected that both – the indicators
and targets missing – could be possible to a certain extent to be established in the course of the
programme implementation and if not, then the implementation of the measures will enable this process
to be carried out in the drafting the following programming documents.

Below a summary of the results and impacts for each of the measures in relation to the objectives
hierarchy is presented. As it was already indicated in the beginning of this chapter, impacts relate to the
overall objectives of this RDP, results to specific objectives and outputs to operational objectives.

Early Retirement
The overall objectives for the early retirement measure are

   Improving of the farm and social structure;
   Ensuring a certain income level for elderly farmers who decide to stop farming and for elderly farm
    workers who lose their employment as a result of a farmer‟s early retirement;
   Increasing competitiveness of agricultural sector due to improved economical viability of the
    transferred agricultural holdings.

Further the specific objectives for the early retirement measure are:

 Encourage about 30000 farmers beyond 55 years to stop commercial activities (30.000 holdings,
105.000 ha of land and 240.000 tones of Milk quota transferred to young farmers.
 Average size of holding being transferred by transferor – 3,5 ha
 About 5 per cent of land released for non agricultural purposes

The operational objectives are the immediate output of the measure:

30000 farmers receive early retirement support each allocating an average of 3,5 ha of land and 8 tones
of milk quota to be released. Of these, 75 per cent are small dairy farm holders, who are able to enter
ERS beyond the normal retirement age.
The above could be inserted into a table in order to provide a comprehensive and condensed picture of
the impact of the measure.


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Table 38: Quantified objective hierarchy for Early Retirement measure
Measure      Output                   Result                   Impact
             (Operational             (Specific Objectives)    (Overall objectives)
             objectives)
Early        30000 farmers enter      30.000 farmers and Improving of the farm
retirement   ERS, each allocating     600 farm workers and and social structure by
             an average of 3,5 ha     family helpers older  increasing average
             of land and 8 tones of   than 55 stop comercial farm size from 13,7 to
             milk quota to be         activities and receive 15,9 ha
             transferred.             income support           increasing average
                                      105.000 ha of land herd of milk cows per
             75 percent of benefit-   released            and holding from 2,26 to 3
             ciaries are small        transferred to young  reducing the number
             dairy farm holders,      farmers                 of elderly farmers (over
             who are able to enter                            55) from 60 to 45 percent
             ERS beyond the           240.000 tones of milk  increasing the
             normal     retirement    quota disposed on number of young farmers
             age.                     State     Milk    Quota ( up to 40) from 14,4 to
                                      Reserve             and 16,7 percent
                                      transferred to young Ensuring          a    certain
                                      farmers                  income level for elderly
                                                               retiring farmers, farm
                                      5000       ha      non- workers       and     their
                                      commercially viable family helpers.
                                      land released for non- Increasing        competiti-
                                      agricultural purposes veness of agricultural
                                      (5 percent of 105.000) sector due to improved
                                                               economical viability of
                                                               the transferred agricul-
                                                               tural holdings.

Less Favoured Areas and Areas with Environmental Restrictions

The overall objectives for the LFA measure are:

   to ensure sustainable use of agricultural land and thereby contribute to the maintenance of a viable
    rural community,
   to maintain farming in LFA and to maintain the countryside
   to improve environment in LFA considering compliance with Good farming practice
   to ensure implementation of the environmental restrictions and proper farming in areas with
    environmental restrictions




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The specific objectives for the LFA measure are:

   70000 farmers in LFA comply with good farming practice
   Maintenance of farming in LFA
   Maintenance of farming in territories with environmental restrictions

The operational objectives of the LFA measure:

     26000 farmers in HDA with a total area of 301 305 ha enters the LFA scheme
     44000 farmers in LDA with a total area of 1 165 678 ha enters the LFA scheme
     5000 farmers will apply environmental restrictions in Natura 2000 areas for bird protection.

Expected impacts and results for LFA measure
Measure      Output                   Result                    Impact
             (Operational             (Specific Objectives)     (Overall objectives)
             objectives)
LFA          26000 farmers in         70000 farmers in LFA Ensuring the sustainable use of
             HDA with a total         comply     with  good agricultural land and contribution to
             area of 301 305 ha       farming practice      the maintenance of a viable rural
             enters the LFA                                 community,
             scheme
                                      Maintenance of farming    Maintenance of farming in LFA and
             44000 farmers in         in LFA                    maintenance the countryside
             LDA with a total area
             of 1 165 678 ha       Maintenance of farming Improvement environment in LFA
             enters the LFA        in territories with        considering compliance with Good
             scheme                environmental restrictions farming practice

             5000 farmers will                                  Ensuring implementation of the
             apply environmental                                environmental restrictions and proper
             restrictions in Natura                             farming in areas with environmental
             2000 areas for bird                                restrictions.
             protection


Agri-environment

The overall objectives for the agri-environment measure are the following:
- Improvement of the environment (water quality, biodiversity, soil and landscape; preservation of
   semi-natural agricultural habitats and other important ecological important areas) and production of
   healthy food;
- Provision of further source of income to farmers supplying environmental services resulting from
   the adoption of environmental-friendly farming practices going beyond usual good farming
   practice.


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-   Reduction of the anthropogenic (of agricultural origin) load on the environment;
-   Improvement of the quality of surface and underground water, reduction of negative impact on the
    environment of plant protection products;
-   Restoration or preservation of the traditional landscape of the Lithuanian countryside (meadows,
    wetlands, marshes);
-   Production of good quality agricultural produce, while maintaining healthy environment for future
    generations;
-   Increase of income of the rural population, improvement of their working and living conditions;
-   Keep and rear local endangered breeds of native domestic animals on farms
-   Increase farmers‟ awareness of more environmentally friendly production practices.

The specific objectives for the agri-environment measure are:
 Decrease in run-off by N and a following reduction in eutrophication
 Decrease of temporary not used land;
 Decrease of erosion;
 Farmland under organic farming occupies 2% of all agricultural land.
The operational objectives of the measure:
3 000 farms with a total of 60 000 ha enters the agri-environment scheme.

Table 39: Expected impacts and results in Agri-environment

Measure       Output                  Result                      Impact
              (Operational            (Specific Objectives)       (Overall objectives)
              objectives)
Agri-         3000 farms with a total Decrease in run-off N   Improvement of the environment
environmnet                                                   (water quality, biodiver-stiy, soil and
              of 60 000 ha enters the and a following reduction
              agri-environment        in eutrophication       lands-cape; preservation of semi-
              scheme.                                         natural agricultural habitats and other
                                      Decrease of temporary   important ecological areas) and
                                      not used land           production of healthy food.
                                                              Provision of further source of income
                                      Decrease of erosion     to farmers supplying environmental
                                                              services resulting from the adoption
                                      Farmland under organic of environmental friendly farming
                                      farming occupies 2% of practices going beyond usual good
                                      all agricultural land   farming practice.
                                                              Building capacity and increase of
                                      3000 farmers trained on farmers‟ awareness of more environ-
                                      agri-environmental      menttally     friendly      production
                                      schemes‟ implementation practices.




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Afforestation of agricultural land

The overall objectives for the forestry measure are:

   Reduce dependency on agriculture of rural people
   Increase of economical, ecological and social value of land holdings
   Conservation of the environment, maintenance and promotion of biodiversity, enrichment of
    landscape
   Provision of new and long-term employment opportunities in rural areas
   Provision of further source of income

The specific objectives for the forestry measure are:

   Increase in forest area (12.000 ha of land afforested)
   Not less than 20 per cent of the afforested area is broadleaves species
   Approximately 20 per cent. of the afforested area actualise priority function to contribute to the
    protection of soil, air, water bodies and rural areas.

The operational objectives of the measure are:

   About 2500 landowners receive afforestation support allocating an average 4-5 ha of land to
    afforestation.

Quantified objective hierarchy
Measure       Output                      Result                               Impact
              (Operational objectives)    (Specific Objectives)                (Overall objectives)
Afforestation About 2 500 landowners      Increase in forest area (12.000 ha   Reduce dependency on
of            receive afforestation       of agricultural land afforestated)   agriculture of rural people
agricultural support allocating an
land          average 4-5 ha of land to   Not less than 20 per cent of the     Increase of economical, ecolo-
              afforestation               afforestated area is broadleaves     gical and social value of land
                                          species                              holding

                                          Approximately not more than         Conservation of the
                                          10 per cent of overall afforestated environment, maintenance and
                                          area is short rotation forests      promotion of bio-diversity,
                                                                              enrichment of landscape
                                          Approximately 20 per cent of
                                          the afforested area actualize        Provision of new and long-term
                                          priority function to contribute      employment opportunities in
                                          to the protection of soil, air,      rural areas
                                          water bodies and rural areas
                                                                               Provision of further source of
                                                                               income




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Support for semi-subsistence farms undergoing restructuring

The overall objectives for the semi-subsistence measure are the following:
         Increased farm size and improved structure;
         Increased competitiveness of farms, improvement of market- orientated sector.

The specific objectives for the semi-subsistence measure are:
          Increased income and improved liquidity;

The operational objectives are:
         14000 semi-subsistence farmers receive investment support (1000 EUR per year). Farmers
            also receive practical skills of participation in an investment scheme (preparation and
            submission of business plan, planning and implementation of investments, submission of
            requested documents proving the investments, to the NPA).

Table 40:Expected impacts and results for Support for semi-subsistence farms undergoing
restructuring measure
Measure      Output                Result                 Impact
             (Operational          (Specific Objectives)  (Overall objectives)
             objectives)
Semi-        14 000 semi-          Increased income and   Increased farm size and
subsistence subsistence farmers    improved liquidity;    improved structure
             receive support (1000 increased machines,
             EUR per year)         buildings and land     Increased competitiveness of
                                                          farms, improved of market-
                                                          orientated sector, correspond-
                                                          ding to EU agri- environmental
                                                          requirements.


Meeting standards

The overall objectives for the measure Meeting standards are the following:

   2700 farms in compliance with EU requirements of Nitrate Directive;
   8000 farms in compliance with EU requirements regarding milking, milk storage and
    transportation;
   Improvement of the environment due to reduced nitrogen outlet
   Improved competitiveness due to improved quality of milk and adoption of EU standards

The specific objectives for the Meeting standards measure are:




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   2700 manure storage facilities in accordance with EU requirements with a total capacity of 150.000
    tons established
   7000 milking equipment installed
   8000 milk storage facilities established

The operational objectives of the measure:

   2700 farms with a total of 100 thousand LU enter the Meeting standards – Nitrate Directive
    scheme;
   8000 farmers with a total of 75 thousand cows receive support for milking, milk storage and milk
    transportation under the Meeting standards – Milk Directive scheme.

Table 41: Expected impacts and results for Meeting standards measure

Measure       Output                     Result                     Impact
              (Operational objectives)   (Specific Objectives)      (Overall objectives)
Meeting       2650 farms with a total    2650 manure storage        2650 farmers in compliance with
standards     of 100 thousand LU         facilities in accordance   EU requirements of Nitrate
              enter    the   Meeting     with EU requirements       Directive
              standards – Nitrate        with a total capacity of
              Directive scheme           150 thousand tons          8000 farmers in compliance with
                                         established                EU requirements regarding
                                                                    milking, milk storage and transport
              8000 farmers with a        8000 milking equipment     (Milk Directive)
              total of 75000 cows        installed
              receive support for                                     Improvement of the environment
              milking, milk storage      8000       milk      storage due to reduced nitrogen outlet
              and milk transportation    facilities established
              under the Meeting                                       Improved competitiveness due to
              standards scheme                                        improved quality of milk and
                                                                      adoption of EU standards

Technical Assistance
The overall objective of the measure is to ensure the efficient implementation of the Rural
Development Plan at national, regional and local levels.

The specific objectives are aiming at:
        Distribution of information on the support provided for in the Rural Development
           Programme and conditions of eligibility to potential support beneficiaries;
        Provision of technical support to institutions implementing installation, running and linking
           of computerized management, monitoring and assessment systems;
        Provision of technical support to institutions related with programme implementation targets
           and those carrying out the programme implementation monitoring;


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         Support to programme surveys and related visits, seminars;
         Ensuring support of external expertise;
         Provision of technical support in carrying out programme assessment;
         Notifying the society on the implementation and role of the programme.
As emerge from the tables provided above the quantification of the objectives has only been carried out
for the specific and operational objectives. The overall objectives are of a more qualitative nature and are
therefore difficult to quantify.

In a Table 42 below an estimate of a number of applicants expected to participate in the defined
measures and financial allocations in the programming period for each of the measures are summarised.
In respect to the economic impact of all the measures taken together with the financial resources
assigned, they will no doubt have a considerable impact on incomes in rural areas, particularly if the
multiplier effect is taken into account.

Table 42: Estimated number of applicants and allocated financial resource for measures, 2004-2006

 Measure                                                      Estimated        Total Funds
                                                              number of        allocated 2004-
                                                              applicants       2006, mln. EUR
 Early retirement                                                 30000             76,541419
 Less Favoured Areas and areas with environmental
                                                                  70000             179,948871
 restrictions
 Agri-environment                                                   3000             68,091538
 Afforestation of agricultural land                                 2500             13,032901
 Support for semi-subsistence farms undergoing
                                                                   14000             9,970450
 restructuring
 Technical assistance                                                                5,921000
 Projects approved under Regulation (EC) No. 1268/1999                               3,371062
 Meeting standards                                                 10700            134,547759
 Top-ups for direct payments                                                        120,450000


6.3. Extent to which the Strategy takes into account the specific features of the areas concerned
and compliance of the strategy with other EU policies

It has already been outlined above how the objectives set and the strategy defined will address the
identified key problems in rural development and agriculture. However, it is important to emphasise
that this Rural Development Plan particularly will address the following problems or to be more precise
aspects of the problems listed in the chapter 5.10. Thus, the defined strategy takes into account the
following key features of the identified problems:
     Age structure of farmers which is not in favour aiming at increasing average farm size, efficiency
        as well as competitiveness of agricultural sector, level of incomes – about half of the registered
        farmers are over 60 years old, 21 percent – 50 - 59 years old, and only 14 % – farmers up to 40.


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    The income disparities between those farming in the less favoured areas and normal areas and
     depopulation in LFA. Also cash flow constrains in the semi-subsistence farms aiming at turning
     into a viable commercial units will be addressed as it tremendously relates to problem of lack of
     income in rural areas.
    Difficulties in meeting EU standards related to the environment, hygiene and animal welfare as
     well as lack of technology in primary production. The fulfilment of those requirements is a
     prerequisite for a sufficient quality of produce and the increase of income is impossible without
     the improvements in the methods, technology and further in the quality of the agricultural
     production.
    The need to ensure sustainable development with a particular emphasis on environmental
     aspects.
    Possibility to increase areas of natural resources through afforestation programme and at the
     same time to guarantee additional sources of income in rural areas.

All measures in this particular CAP Plan are to be applied on a national basis. The overall strategy
described earlier is targeted at solving all the rural development issues which are in demand to be
addressed in the period 2004-2006 in relation to agriculture and forestry, including those falling within
the terms of the EAGGF Guidance Fund.

6.3.1. Integration of Women and Men in the Strategy

Equal opportunities have been and is considered a very important aspect both in the preparation of this
Rural Development Plan and further in the implementation stage. The aim is not only to ensure equal
opportunities for men and women but also to secure equal access for all people to use all possibilities
offered by the Plan. The integration of women and men in the strategy is foreseen following the State
Programme on Equal Opportunities for Men and Women. This Programme covers many areas thereby
consolidating gender equality aspect in all areas of political and socio-economic life and implementing
the provision\statement of the Government of Republic of Lithuania:


“To ensure equal opportunities for men and women in seeking education, in upgrading their skills, in
employment, promotion, setting the salaries; to enable women to participate on equal conditions in all
areas of political and public life and high-prestige activities, to occupy leading positions in public
administration institutions”.
The main objectives of the National Programme for Equal Opportunities are to create equal
opportunities for men and women to participate in all spheres of public life, to increase the
representation of men and women in these areas where they do not participate equally, to achieve that
services and financial resources as much as possible equally reach both women and men, to identify and
seek to solve specific problems both of women and men.
Elimination of all forms of discrimination in all spheres of activity is the essential precondition to ensure
human rights and welfare of everybody. Lithuanian legislation de jure provides for equal opportunities
for men and women. However, it is even more important to ensure practical realisation of legal
provisions. In this regard it is expected that this RDP will make a real contribution to the achievement of


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this aim by establishing equal opportunities for everybody to participate in implementation of measures
of this programme. All the measures proposed in this Rural Development Plan are open to men and
women equally. However, it should be noted that historically ownership of land in most cases is in the
hands of men, they very often have the deciding role in investment development which take place on
farms. However, the situation is slowly changing and more and more women are getting involved into
farming. As stated above, all support available under this programme are available to applicants
regardless of sex, once they satisfy defined criteria.

6.3.2. Future Environmental Obligations

Lithuania adhered to the international initiatives and processes related to environment and is actively
engaged in cooperation with European and other countries of the world, with an intent to ensure the
sustainable use of natural resources as well as their preservation for future generations. During the last
decade, following the restoration of Lithuanian independence, the country became an active participant
in international legal collaboration. During this period Lithuania signed and ratified a number of legally
and non-legally binding instruments and joined the whole range of global and regional processes.

The environmental sector is probably one of the sectors, which has been mostly influenced by
international conventions and treaties, establishing a framework for environmental protection and
sustainable development on global and regional levels. Thus in the preparation process of this Rural
Development Plan the international obligations that Lithuanian has a responsibility to fulfil as well as
initiatives in relation to the environment have been taken into consideration. Further the review of the
key international obligations having direct impact on the development of agriculture and forestry are
presented.

Greenhouse gasses

Lithuania signed the Kyoto Protocol at the International Climate Change Conference in 1997 and
committed itself to the agreement to reduce greenhouse gas emissions into the atmosphere at global
level by 5,2 % until 2008-2012. Many European countries, including Lithuania, will have to reduce
their greenhouse gas emissions by 8% until this period. A reduction of carbon dioxide emissions is
possible provided if less organic fuel is combusted, renewable energy sources are used more
effectively, energy efficiency increases, and structure of fuel balance is regulated.

Forests are an extremely important carbon sink in Lithuania and, according to calculations produced by
the Ministry of Environment; forests absorb one fourth of the total carbon dioxide emissions produced
by fossil fuel combustion. Forests occupy one third of the country‟s territory, and three fourths of this
forested area is used for the production of timber.

Pursuant to the provisions of the National Energy Strategy and the revised National Energy Efficiency
Programme, Lithuania has amongst other objectives the following ones which directly are related to the
development of agriculture and forestry to reach:
        Promote use of wood, forest and agricultural as well as household waste and other types of
           local fuel by applying economic, legal and institutional means.


Consolidated version as of 5th March, 2008                                                           141
          Seek that the percentage of energy produced from local and renewable energy resources by
           year 2010 comply with the requirements of the EU Directives.
          Encourage and educate the agricultural and forestry sectors to grow such cultures that could
           be used in the production of energy resources.
          To introduce a compulsory use of local energy resources supplied by a newly built or
           renovated small-scale energy entities of local importance.

The annual wood fuel c consumption potential is about 3 million solid cubic metres (or 1.4 million
solid cubic metres of logging waste in forests, 0.6 million solid cubic metres of industrial waste and 1
million solid cubic metres of firewood). Nowadays about 2 million solid cubic metres of firewood and
wood waste are utilised for energy production by thermal power plants, which supply heat to
centralised networks. Their aggregate capacity is about 100 MW. Wood is also burned in small local
thermal units and installations. The 2 million solid cubic metres of wood combusted instead of heavy
fuel oil reduce the emissions of CO2 by 1000 thousand tonnes, SO2 - by 15024 tonnes, NOx - by 1397
tonnes, and particulate matter - by 69 tonnes a year.

During certain period wood fuel actually was not used in Lithuanian power plants. Today, with the
assistance of PHARE programme and with the help of the Swedish, Danish and other governments, the
total installed capacities of wood-based energy production exceed 110 MW. This would be equivalent
to the combusted 99000 tonnes of heavy fuel oil, and it would cost 8.8 million US dollars. A move
from heavy fuel oil combustion towards generation of an equivalent amount of energy from wood fuel
would reduce the emissions of CO2 by 322839 tonnes, SO2 - by 4851 tonnes, NOx - by 495 tonnes, and
particulate matter - by tonnes 89 per year.

As it can be seen future development of forestry is of great importance in meeting the international
obligations related to the reduction of gas emissions.

As regards agricultural practices, these are also very important in climate change mitigation issues. The
requirements set in the Code of Good Agricultural Practice (the key ones are presented in Annex 4) in
the field of tilling and growing of agricultural crops could be one of the examples.

The protection of the environment through the development of plant-growing agriculture, intensive,
protective and organic agriculture, plants with longer vegetation period and intermediate plants;
mechanical soil cultivation; types of organic fertiliser, their characteristics, nutrient substances in the
manure, application of organic fertilises and the maximum recommended density of animals; times and
technologies for manure and slurry spreading; norms and times for the application of mineral fertiliser;
plans and other fertilisation measures; land liming; plant protection and dangers of pesticide usage; the
reduction of pesticide consumption by alternative measures; pesticide consumption technologies;
measures of safety and protection of the environment when consuming pesticides are very important
factors to be seriously considered while farming as they, if properly applied, contribute significantly to
the climate change mitigation.




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Animal husbandry practices are not less important - setting of grassland and pastures as well as proper
maintenance of them, forage preparation and storage, building of animal shelters, sustainable feeding,
proper manure/slurry storages are very important in minimising the evaporation of ammonia.

Currently an intensive training of farmers is taking place as regards considerations of environmental
requirements in farming in which the basis is the Code of Good Agricultural Practice. The time and
also sufficient funds are needed for all farmers to comply with the defined requirements and this is a
gradual process. However. Already today positive changes are observed in the sector as there are quite
many measures which do not cost a lot to be implemented and the most important is to know how and
when to undertake required actions. Therefore, training is the starting point and is being intensively
undertaken both by consulting services and the farmers themselves.

Having stated the nationally accepted principals related to the development of natural resources – both
in term of increase and consumption – it is expected that measure “Afforestation of agricultural land”
within this Rural Development Plan together with the investment instruments related to forestry,
processing and use of wood within the EAGGF Guidance Section will contribute to the implementation
of Lithuanian Forest Increase Programme 2003-2020 and further to the obligations related to the
reduction/absorption of carbon dioxide emissions. As it was stated before this strategy aims at
increasing Lithuanian forest cover by 3 percent in 20 years

Biodiversity

Lithuania has joined or ratified six conventions and one international agreement regarding protection of
nature and biodiversity. Lithuania has acceded to the Convention on Wetlands of International
Importance (Ramsar Convention) in 1993 as well as the Convention on Fisheries and the Protection of
Fish Resources in the Baltic Sea and Protection Belts (Gdansk) in 1992. The Lithuanian Government
has ratified the Convention on Biological Diversity (Rio de Janeiro) in 1995, the Convention on the
Conservation of European Wildlife and Natural Habitats (Bern Convention) in 1996, CITES - the
Convention on International Trade in Endangered Species of Wild Fauna and Flora (Washington
Convention) in 2001, CMS - the Convention on the Conservation of Migratory Species of Wild
Animals (Bonn Convention) in 2001, and Agreement on the Bat Protection in Europe in 2001. Recently
Lithuania has implemented a state programme “Gene pool” that corresponds the European Council
Directive 1467/94. Lithuania is one of 34 European countries participating in the European Co-
operative Programme for Crop Genetic Resources Networks (ECP/GR) and one of 30 European
countries taking part in the European Forest Genetic Resources Programme (EUFORGEN).

With the ratification of the Rio de Janeiro (1992) Convention on Biological Diversity (CBD) in July, 1995,
Lithuania undertook an obligation to start implementation of the Convention. This includes preparation of
the country study and action plans. The National Environmental Strategy of Lithuania approved in 1996
was the first step in preparing the action plans for biodiversity conservation, and was used as the
background for the Action Plan for Biological Diversity Conservation.




Consolidated version as of 5th March, 2008                                                           143
The National Biodiversity Strategy and Action Plan was approved in 1996. The document is prepared
for 20 years although most of the actions are meant for 5 years (1998-2002). Below the key elements of
the strategy and action plan related to the impact of agriculture on natural values are presented.

With regard to agricultural environment ecosystems, the National Biodiversity Strategy and Action
Plan states that any programme aimed at the restructuring of agriculture, including sustainable farming,
sustainable or bio-organic agriculture should contain special sections and include measures for the
preservation of the biological diversity.

In areas which are highly valuable from the biological diversity protection point of view agricultural
activities can be either regulated or totally prohibited. Considerable delimitation of agricultural
activities should be compensated to juridical and physical persons.

With the aim to ensure stability in biodiversity, the main arrangements in agriculture            are the
following:
        in developing agriculture organic agriculture should given a great priority.
        cultivation systems of relatively low intensity should be applied to many agricultural crops
           traditionally grown in Lithuania,
        traditional technologies of cultivation which were in use before the boom period of mineral
           fertilisers and pesticides application should be used more widely again,
        to preserve and enlarge areas of natural grasslands and pastures, combining harvesting with
           protection of biological species (plants, fungi, animals),
        to stimulate interest in activity which decreases the speed of succession processes in
           grasslands and wetlands, and which does not contradict the principles of biota protection,
        to increase the abundance of fungi and fauna, their variety and activity in tillage area,
        to form and sustain mosaic landscapes,
        to minimise negative effect on the environment from elution of fertilisers and pesticides.
The main economic arrangements for supporting biodiversity within the agricultural landscape:
        support of ecological farming by supplying reduced or cut credits;
        making official agreements on ecological farming, which should foresee limitations (on
           draining, landscape transformation etc.) necessary to product biodiversity in special
           (“sensitive”) places;
        in areas highly valuable for biodiversity, farming activity should be strictly regulated. In
           very special cases some activity should even be prohibited. Compensation for the losses
           which occur due to the regulation will be provided.

As regards forestry, the following tasks were set in this document to facilitate conservation of
biodiversity:
          increase of woodenness in the country,
           to balance the spatial distribution of forests in the country,
          to promote establishment and maintenance of multi-specific forests,
          to balance age structure of the forests,
          to subdivide the forests according to the function,


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           to prepare technical guidelines for management towards greater biodiversity on forest tract
           and forest stand level.

Having highlighted the importance of sustainable activities in agriculture and forestry as well as in
rural development it is obvious that Agri-environment, Afforestation and also measure to be applied in
Less Favoured Areas and Areas with Environmental Restrictions in particular as well as all other
measures in which undertaking of environmental requirements is obligatory is of great importance in
ensuring protection and enhancement of biodiversity.

Water policy

Regarding the water resources and quality, the legal basis is being intensely managed in accordance
with the requirements set by the EU water sector. A number of directives of the EU water sector have
been transposed. In 2003 a new Law on Water (first adopted in 1997) has been approved by the
Parliament which complies with the requirements of the new EU Water Policy Framework Directive
and other EU water sources directives. So is the new Law on Water Management (2002, No. 36-1544).

The strategy for water resources and protection has three basic directions – international, related to the
reduction of the Baltic Sea pollution, national – reduction of pollution of interior surface and
underground waters as well as the reduction of international water pollution to and from other
countries. The principal provisions of the strategy for water resources consumption and protection are
as follows:
         to reduce water pollution with household and industrial wastewater;
         to improve the quality of drinking water;
         to reduce water pollution with toxic substances;
         to reduce water pollution from agricultural sources;
         to improve the condition of waters for recreation;
         to improve the condition of water ecosystems;
         to rationally consume water energy resources;
         to reduce pollution of the sea;
         to seek to reduce the impact exerted by the neighbouring countries on Lithuanian water
            resources.


Nitrates Directive (EU Council Directive 91/767/EEC)

The Nitrates Directive is one of the most important directives in the environmental chapter of the
negotiations of Lithuania‟s accession to the EU. Lithuania has developed Code of Good Agricultural
Practice which was submitted to the Commission in 2000 and is currently under implementation.
Detaileddescription of the measures laid down in the CGAP are presented in Annex 4.

Aiming at implementation of the EU Nitrate Directive Lithuania committed to fully implement the
requirements of the Nitrate Directive through implementation of two action programmes. The first
Action programme for the period 2004-2008 will be implemented in the entire territory of Lithuania.


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This means that the whole country is designated as the Nitrate Vulnerable Zone. In 2002, a working
group was established at the Ministry of Agriculture that was responsible for the preparation of the
Programme for protection of waters from pollution with nitrogen compounds from agricultural sources.
The first Action Programme was approved by the GoL on 26th August 2003 No. 1076 and will come
into force at the date of Lithuania‟s accession to the EU. Beside the mandatory measures related to
proper fertilisation by organic and mineral fertilisers, land use, crop rotations, the installation of proper
manure/slurry storages will be mandatory to be installed in the livestock farms which have more then
300 LU and in all new farms being established. Further in the second action programme also smaller
farms will have to obligatory install the manure storages. Currently, the joint order of the Ministry of
Agriculture and Ministry of Environment is under preparation regarding the distribution of functions
between the two ministries in implementing the Action programme and is expected to be approved in
the 1st quarter of 2004.

A summary of the Action programme is provided below.

Long-term objective of the programme is – to implement Nitrate directive, to reduce water pollution,
paying the biggest attention to nitrates and other chemical factors, which could negatively affect health
of inhabitants, biological diversity, trespass traditional landscape, also to protect water against
eutrophication in the Republic of Lithuania.
Short-term objective is to create institutional capacity and first of all to implement measures laid
down in the Nitrate directive, to reduce water pollution in the farms, which have more then 300
livestock units, to develop water pollution from agricultural sources monitoring and information
system.

The measures to be implemented under the first Action programme are divided in to 5 components,
namely:


I. Competence building
The aim of the measures under this component is to increase capacities of the specialists of the
institutions such as Ministry of Agriculture, Ministry of Environment, National Paying Agency under
the Ministry of Agriculture, Lithuanian Agricultural Advisory Service as well as of the Regional
Environmental Protection Departments and of farmers participating in the implementation of this
Programme - to organise their training, to establish demonstration objects, farms which should be used
for sharing the production experience and where the most suitable pollution prevention measures would
be defined. A special attention is given to the problem related to the bad quality of drinking water in
dug wells in the countryside – to raise awareness in public about measures needed to undertake to
minimise/eliminate the problem to the extent possible.

II. Measure related to the elimination of pollution from livestock farms.
The measures under this component are aiming at elimination of pollution caused by livestock farms,
first of all installing manure and slurry storages in the livestock farms having more then 300 livestock
units. The decision was made by the Government of Lithuania to focus on the big farms in the first
stage of the implementation of the Nitrate Directive as it is expected that those farms will remain in the



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future and therefore the costly investments made will be worth. Whereas at the present time, when
structural changes are still taking place and smaller farms are still not clear whether they will remain in
the future, are not obliged in the first period to make huge investments related to manure storages. It is
expected that in the further period – 2008 – 2011 – the structure of farms will be more settled and by
this period only farms economically viable will remain and therefore these investments will be possible
also in smaller farms. Even though the priority for pollution minimisation from livestock farms is given
to big farms, the smaller farms are also encouraged to install manure storages meeting the set
requirements. However, newly established farms regardless their size are obliged to install proper
manure storages.

III. Implementation of sustainable agricultural system
The measures under this component are aiming at proper fertilisation by organic and mineral
fertilisation, land use management in order both – to protect the nutrient losses, improve environmental
conditions and to economically benefit the farmers.

IV. Pollution from agricultural sources, monitoring
The measures under this component are devoted for the proper water monitoring.

V. Collection of information, scientific research
Measures under this component relate to scientific research which will asses the impact on the
environment of the implemented measures, identify most suitable measures, develop further
recommendations regarding implementation of the measures in applying the novelties of science and
technique. A very important measure under this component relates to the establishment of the data
collection about the implementation of the measures in the farms and on the national level. This data
will allow to analyse to what extent the measures are being implemented and will provide a sound basis
for the development of the second action programme.

As regards water monitoring to asses the impact of the Action programme on the water quality, a state
monitoring programme, water monitoring is a part of, is being revised. The Project Long-Term
Assistance in the Transposition and Implementation of the Nitrate Directive in Lithuania (financed by
the Danish government) assists the MoE in its transposition of EU Nitrate Directive requirements. The
approach for the monitoring programme is to identify stations in rivers collecting water from catchments
with intensive agricultural activity for source apportionment to establish the extent of nitrate loss pr.
hectare arable land in the catchment/watershed. The project has developed a proposal regarding the
revisions of water monitoring – both surface and groundwater.

As regards improvement of surface water monitoring the following proposal was put forward. To
investigate the influence of nitrate from agriculture on the eutrophication status of water bodies
monitoring stations will be needed in the Curonian lagoon and in the Kaunas Reservoir. It has not been
possible to identify any suitable lake candidates in the relevant municipalities with an agriculture
dominated catchment.

The surface water monitoring focus on 15 municipalities in which agricultural land makes more then 60
% of the total land area, mostly in the central part of Lithuania. This is the most intensive agricultural



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areas at present and is expected to be in the future.

In total, 14 stations have been identified, 4 of these for calculation of natural background load, and 10
for calculation of nitrate loss from agricultural land. Of the 14 proposed stations 5 are included in the
present monitoring programme for surface waters.

The proposal for monitoring includes specification of stations, parameters and sampling frequency. In
addition it is proposed to include monitoring of nitrates and total nitrogen in the river transport stations
within the new surface water monitoring programme in line with the requirements of the Water
Framework Directive.

As regards groundwater monitoring, at present the highest density of stations (0.126) is found in the
municipalities with the lowest land-use level. To meet the requirements of the Nitrate Directive, the
number of monitoring stations has to be increased to at least 0.2-0.25 per 100 km2 – 81 additional
monitoring stations are proposed to be installed. With the data contribution from the 47 economic
entity monitoring (livestock farms > 500 LU), the national monitoring network would cover 191
monitoring stations used for shallow groundwater observations. Then the density of monitoring stations
in the municipalities with especially high land-use level (60–80%) would go up to 0.35-0.45 stations
per 100 km2.

As required by the Nitrate Directive, the variation of the nitrates, nitrites, ammonium will be observed
in the shallow groundwater. Depending on the depth of shallow groundwater occurrence and lithology
of the aeration zone and water-containing rocks, water samples are to be taken: once per year (clayey
sediments, intensive land use), once per two-year period (sandy sediments, low land use).

More details on the Action Programme for the implementation of the Nitrate Directive are provided in
Annex 4

6.4. Areas covered by Specific Territorial Measures

Measures introduced under Chapter V of Regulation 1257/1999 will apply only in Less Favoured Areas
designated and approved alongside the adoption of this Plan and in Natura 2000 sites during the period
2004-2006.
This Rural Development Plan covers entire territory of Lithuania and therefore there are no territories
where specific measures will be applied within period 2004-2006.

6.5. Timetable and uptake

The implementation of the measures in Lithuania based on this Rural Development Plan starts after the
approval of this Plan by European Commission after the date of accession. This RDP will be
implemented till the end of 2006.

The expected uptake under the measures is shown under the Physical and Financial indicators provided
in the Annex 5.



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7. Indicative overall financial allocations
For the implementation of the priorities set within the defined rural development and agricultural
strategy the following financial allocations have been assigned to the measures.

Table 43: Indicative overall financial table, including EU contribution (EUR)

                                                                       Programming period 2004 - 2006
                                                                    Total public      EU contribution
                                                                    expenditure
 Priority A –Environment and Less Favored Areas
 Measure A1 – Agri-environment                                                82,892,620       66,314,096
 Measure A2 – Less Favored Areas and areas with environmental
                                                                             177,142,600      141,714,080
 restrictions
 Measure A3 – Meeting standards                                              117,151,608       93,721,286
                                                      Total A                377,186,828      301,749,462
 Priority B – Alternative use of agricultural land
 Measure B1 – Afforestation of agricultural land                               6,588,900        5,271,120
                                                         Total B               6,588,900        5,271,120
 Priority C – Farm restructuring
 Measure C1 – Early retirement                                                89,216,340       71,373,072
 Measure C2 – Support for semi-subsistence farms undergoing
                                                                               9,140,870        7,312,696
 restructuring
                                                      Total C                 98,357,210       78,685,768
 Other Actions
 Technical assistance                                                      5,921,000           4,736,800
 Complementary national direct payments                                  120,450,000          96,360,000
 Projects approved under Regulation (EC) No. 1268/1999                     3,371,062           2,696,850
                                           Total, other actions          129,742,062         103,793,650
 Total Plan                                                              611,875,000         489,500,000


Table 44 Annual programming (EU contribution in EUR million)

                                     2004                           2005                    2006
 Total Plan                         147,300                        164,100                 178,100

The considerations about the balance between the measures available are provided in Chapter 14.




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8. Appraisal showing the expected economic, environmental and social impact
The Ex-ante evaluation of this Rural Development Plan has indicated the importance of the
considerations regarding the width of the strategy made and recommended to reflect how the aspects of
marginal utility, administrative and absorptive capacity have been integrated in developing this Rural
Development Plan.

Seen in the context of the rural development marginal utility has to do with the utility of the funds used.
The funds should be allocated in a way that gives the highest utility for the Lithuanian rural areas as a
whole. It should of course be kept in mind that rural development funds are tied to certain measures
and cannot be allocated and spent without being in line with the requirements for those measures.
However, marginal utility consideration can still be useful inside the framework of the rural
development measures since there is some of room for manoeuvring inside the framework. Measures
can be left out or chosen and varying shares of the total funds available can be allocated to each of the
chosen measures.

Which measures to chose and how to allocate funds among the chosen measures are to a great extent
dependent on the marginal utility expected from the different measures. The funds should in principle
be allocated where they give the highest marginal utility, which again gives the highest total utility.

This exercise has been to a limited extend carried out during the programme development process
(Early retirement and Afforestation measures) and still remains to be carried out in more detail in the
course of the programme implementation.
Another aspect which besides the marginal utility can be worth considering when choosing how to
allocate the funds for rural development is the absorptive capacity since a limited absorptive capacity
can lead to bottlenecks and unused funds. Having considered this aspect it has been decided not to
implement the measure related to the support to producer groups within the framework of this Rural
Development Plan for 2004-2006.

In relation to the administrative capacity it should be emphasised that a lot of technical experience has
already been accumulated in implementing SAPARD programme, especially in relation to the project
selection procedure, monitoring and control. However, measures under this Rural Development Plan
are very new not only to the beneficiaries but also to the administrative authorities and therefore further
training and capacity building will be required in order to ensure as good as possible administration of
the funds available.

The expected impacts for each of the measure are detailed in chapter 6.2.3. in which quantification of
targets is presented.

9. Description of the measures
The detail description of the measures to be implemented under this RDP and their financial allocations
(Million Euro) are as presented in Annex 1



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10. Need for any studies, demonstration projects, training or technical assistance
operations
In order to ensure an effective and correct implementation with high degree of realising set objectives
and to ensure proper monitoring and evaluation of the plan it has been identified a need of support
during the whole programming period and concerning all the measures in the plan.

In SAPARD agri-environment had a pilot character, while the scope of this measure within the RDP is
conciderably broader. Moreover, taking into account limited experience of agri-environment in
Lithuania, it has to be ensured that the implementation of this measure is carried out in the most
effective way and that support is directed to the areas where it is mostly needed.

Furthermore, in order to establish appropriate and efficient monitoring and evaluation system it is
necessary to ensure maintainance and training of the staff, which administers the implementation of the
plan. Also it is necessary to develop mechanisms, which are harmonised throughout Lithuania and it is
necessary to coordinate administrating between national and local bodies.

Prospects and potential of women in ecological farming or other perspective spheres will be analyzed in
2004 – 2006. It will be made in light of ongoing analysis made by FAO, which stress role of women in
agriculture.

Demographic processes, employment rates and income trends in rural areas is another concern the
attention will be paid at. Measures of RDP will make certain impact on rural areas and this impact
should be evaluated.

Membership in EU, increased income of farmers and ability for legal persons to buy agricultural land
may highlight new trends in land market related to formation of farm structure.


11. Designation of competent authorities and bodies responsible

It is requested from the Commission that the following three units are established and in operation in
order to implement the Rural Development Programme:

   Ministry of Agriculture (MA)
    Address: Gedimino 19, 01103 Vilnius-25, Lithuania

   National Paying Agency (NPA)
    Address: Gedimino 19, 01103 Vilnius-25, Lithuania

   Monitoring Committee (MC)




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The relations among the Ministry of Agriculture, National Paying Agency and the Monitoring
Committee are outlined as follows:

   The National Paying Agency is responsible for the day-to-day implementation of the programme
    and will inform the Ministry of Agriculture on a regular basis of the progress of the
    implementation;
   The Ministry of Agriculture will work as secretary for the Monitoring Committee. This would
    include providing the Monitoring Committee with information on the status of the Rural
    Development Programme implementation;
   The Monitoring Committee may ask the Ministry of Agriculture (secretary) to provide in dept
    analyses or additional information/data from the National Paying Agency on specific issues, if
    needed.

It is important to emphasise that the National Paying Agency does not have any direct contact to the
Monitoring Committee as demand and supply of information must pass through the secretariat. This is
illustrated below:




                                     Ministry of
                                     Agriculture


              Monitoring                                  National Paying
              Committee                                       Agency

Figure 16: Chain of Command in Implementing the Rural Development Plan

A more in dept description of the tasks and responsibility of the three units is described below.
11.1. Ministry of Agriculture

The ultimate responsible authority for implementation of this Plan will be the Lithuanian Ministry of
Agriculture; however, implementation of certain measures (projects or actions) might be delegated to
other responsible bodies designated by the Ministry of Agriculture.

Ministry of Agriculture is responsible for the efficiency and correctness of management of this Rural
Development Plan.

The Ministry of Agriculture shall:
1. control setting up a system to gather reliable financial and statistical information on implementation
   of the program its compliance with the monitoring and financial indicators as well as ex-post
   evaluation of the results from the aid;



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2. follow-up submission of information under the previous paragraph to the European Commission;
3. at the request of the Monitoring committee or on its own initiative, propose adjustments of the
   programme to the Monitoring committee, without changing the total amount of the contribution from
   the funds granted to the priority concerned nor its specific targets;
4. after approval by the Monitoring Committee shall inform the Commission of the adjustments under
   the previous paragraph within one month;
5. amend the programme, except for the cases described under point 3, upon receiving a Decision of
   the European Commission and after the approval of the Monitoring Committee;
6. prepares the annual and final implementation reports of the programme;
7. organises the mid-term and final evaluation of the programme;
8. ensures compliance with the obligations concerning information and publicity.

11.2. National Paying Agency

National Paying Agency is responsible for:
 call for applications;
 project selection;
 checking of applications for approval of projects against terms and eligibility conditions, eligibility
against the content of the Programme, including, where appropriate, public procurement provisions;
 laying down contractual obligations between the Agency and potential beneficiaries and the issue
of approval to commence work;
 execution of on-the-spot checks both prior to and following project approval;
 follow-up action to ensure progress of projects being implemented;
 reporting of progress of measures being implemented against indicators;
 checking of payment claims;
 execution of on-the-spot checks to establish eligibility for payment;
 authorisation of payment;
 execution of payment;
 accounting of commitment and payment;
 executing control on beneficiaries after payment of aid to establish whether the terms and eligibility
conditions of the grants continue to be respected.

Part of the authorisation and control function are delegated to branches of the National Paying Agency,
which are in all 10 counties of Lithuania. These bodies will be responsible for collection of
Applications for support and Payment claims. Also they will perform check–on-spot function before
submitting all collected information to the Agency.

The Agency will ensure decent allocation of funds and sound financial control in accordance with
strategic priorities and measures as well as in accordance with selection criteria and procedures set out
in this Plan.




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National Paying Agency will be responsible for administration of public expenditure from both
sources: Special Agricultural Support Programme, which will be used for national co-financing
purposes and EU EAGGF Guarantee Fund assistance.

11.3. Monitoring Committee

The final unit important to include here is the Monitoring Committee. A Monitoring Committee shall be
established for each rural development programme in compliance with Article 35 of Regulation (EC) No
1260/1999.

The aim of the Monitoring Committee is to assess the effectiveness and quality of the overall
implementation of the Programme. The Monitoring Committee shall moreover examine the results of
the Rural Development Programme, in particular the achievement of the targets/objectives set for the
different measures and the progress on utilisation of the financial allocations to those measures.
Furthermore the Monitoring Committee examines the allocations to the sub-measures where relevant. In
this regard, the Ministry of Agriculture shall ensure that all relevant information on the progress of the
programme inclusive the measures and, as appropriate, sub-measures, is made available to the MC.
The Monitoring Committee will be in a position at its first meeting to set down its Terms of Reference.
The Committee:
 shall satisfy itself as to the effectiveness and quality of the implementation of the program;
 shall confirm or adjust the program, including the physical and financial indicators and proposes
  them to the European Commission for approval;
 shall consider and approve the criteria for selecting the operations financed under each measure
  within six months of approval of the assistance
 shall periodically review progress made towards achieving the specific objectives of the assistance
 shall examine the results of implementation, particularly achievement of the targets set for the
  different measures
 shall consider and approve the annual and final implementation reports before they are sent to the
  European Commission;
 shall consider and approve any proposal to amend the contents of the Commission Decision on the
  contribution of the Funds.
The composition of the Monitoring Committee will be approved by the order of the Minister of
Agriculture and will include (but will not be limited to):
     representatives of government,
     other ministries (such as Ministry of Finance, Ministry of Environment, Ministry of Social
        Affairs and Labour, Ministry of Economy, Ministry of Internal Affairs, Ministry of Foreign
        Affairs as well as other ministries),
     a representative (or representatives) of the European Commission in his/her/their capacity of an
        advisor(s) to the Committee,
     local authorities, environmental (such as Lithuanian Fund for Nature)as well as other NGO‟s
        and socio-economic partners in the relevant sector and rural areas (such as meat and processor‟s
        associations, association of agricultural enterprices, Lithuanian Farmer‟s Union, Chamber of
        Agriculture and others).


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12. Monitoring and control, evaluation and publicity

12.1. Controls and Sanctions

Monitoring of the implementation of this Rural Development Plan will be carried out in line with the
Working document for monitoring the Rural Development Plans (VI/43512/02 Final of 26 February
2002).
The Ministry of Agriculture/National Paying Agency is responsible for the control of rural
development measures of the Rural Development Plan.

The control of the development measures presented in this programme consists of several phases. The
control will be conducted with administrative and on-the-spot checks. The administrative and on-the-
spot checks will be conducted so that the compliance with the eligibility and payment criteria for
support is secured and the effectiveness and appropriateness of implementation is verified.

12.1.1. Administrative checks

The administrative checks include:
    checks to be carried out in connection with the handling of support application, and if
      necessary, the related on-the-spot checks in order to verify the compliance with eligibility
      criteria;
    checks to be carried out in connection with the handling of each payment application, and if
      necessary, the related on-the-spot checks in order to verify the compliance with the criteria and
      provisions of support payments;
    cross-checks, inter alia, in order to reveal the unfounded overlapping of supports.

Administrative checks will be exhaustive and will include cross-checks wherever appropriate, inter alia
with data from the integrated administration and control system. This means that administrative checks
will cover all applications for aid, whether initial application to join a scheme or subsequent application
for payment and that all the eligibility elements related to application will be subject to an assessment.
The measures for which cross-checks with the IACS will be appropriate will be those where plots
and/or animals, included in the IACS system, will be elements of the application. All the checks carried
out will documented on a detailed and standardised check list.

Administrative checks will be performed by the Rural Development Programme Department under the
National Paying Agency for the measures "Early retirement", "Afforestation of Agricultural Land",
"Support for semi-subsistence farms undergoing restructuring", "Meeting standards", "Technical
assistance". For the measures " Less favoured areas and areas with environmental restrictions" and
"Agri-environment" administrative checks will be performed and applications collected by the
institutions which are selected in accordance with national legislation.




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12.1.2. On-the-spot checks

The checks imply that the eligibility of expenses related to the measures presented in the programme as
well as the fulfilment of all the obligations and commitments of the beneficiary due to the measures
presented in the programme are checked. In addition, the correctness of support and payment decisions
is checked, which also contributes to the verification of the functioning and effectiveness of
administrative and control system. The checks are conducted in accordance with check lists confirmed
for this purpose. On-the-spot checks can be conducted on the following grounds:
     random sampling
     risk analysis
     cross-checks or
     additional control based on discretion and other specific reason.

On-the-spot checks will cover at least 5% of beneficiaries each year and all the different types of rural
development measures set out in this Rural Development Plan. Checks will cover all the commitments
and obligations of a beneficiary which can be checked at the time of the visit. The Control Department
under the National Paying Agency selects the beneficiaries to be checked centrally and based on
separate risk analyses for each development measure. The risk analysis takes into account, inter alia,
the amount of paid support, observations during previous checks, etc. Risk analysis will be applied for
the selection of beneficiaries to be checked on-the-spot for all measures and will include all risk criteria
provided for by Article 19 of Regulation (EC) No.2419/2001. The selection of beneficiaries for on-the-
spot checks will also include an element of representativeness, such as certain percentage of random
selection (20-25%), in order to avoid the exclusion "a priori" of any beneficiary from possible
selection. On-the-spot checks based on sampling cover all the rural development measures presented in
the programme. On-the-spot checks will be documented on detailed and standardised control reports as
defined in the Article 20 of Regulation (EC) No. 2419/2001.

The beneficiary subject to an on-the-spot check shall be informed in advance so that he/she can fulfil
the beneficiary‟s assistance and information obligations which contribute to the appropriate conduct of
the check. However, according to the discretion of the National Paying Agencyconducting the check,
the information at the latest, if this is considered indispensable in order to secure the purpose of the
check.
Should shortcomings or irregularities be found during the check, the related observations shall be
notified to the National Paying Agency which grants the support, makes the payment decision, and is
competent to take measures required in the rules for the reimbursement of support and imposition of
eventual sanction.

12.1.3. Control of measures

In the control it shall be verified that the project or activity meets all the eligibility requirements related
to rural development measures as stipulated in national or European Community provisions and in
stipulations based on these provisions, and that it has remained eligible. The control is conducted and
the issues listed are checked in the control as is stipulated concerning each control measure. The
control is carried out and the listed matters are checked in the control according to how it is. The


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fulfilment of requirements for the payment of support are checked in administrative checks carried out
in connection with the handling of payment application, based on original receipts, copies of these or a
confirmed, itemised declaration or a declaration concerning estimated costs. In the on-the-spot checks
defined above, it is also verified that the confirmed declarations presented by the beneficiary are correct
and the requirements for the payment of support are met, based on original receipts.

12.1.4. Sanctions

The sanctions related to the support measures of rural programme have been defined in Article 72 of
Commission Regulation (EC) No 817/2004.

Sanctions will be implemented in those cases where participating farmers:

   fail to abide by the terms and conditions of the measure;
   knowingly make false or misleading statements to obtain payment under the measure;
   withhold essential information.

The Paying Agency/Ministry of Agriculture will define the most appropriate sanction system for
implementation. The nature of the sanctions will depend upon the nature and seriousness of the
offence and may include:

   the withholding of some or all of the payment due to participating farmers
   the reimbursement of payments already made to the farmer
   exclusion of the farmer from further participation in the measure
   liability to prosecution (in the most serious cases of non-compliance)

In the event of undue payment, the individual beneficiary under a rural development measure shall be
under an obligation to repay the amount in accordance with the Article 49 of Regulation (EC)
2419/2001.
The Ministry of Agriculture will reserve the right to:

   deduct payments due for reimbursement from other aid due to the farmer,
   take whatever other action is necessary for the recovery of payments due for reimbursement.

The Ministry of Agriculture will also define the most appropriate system for farmers to appeal against
penalties imposed upon them.

The integrated administrative and control system introduced by Council Regulation (EEC) No. 3508/92
shall be used.

False declaration

According to Article 72 of Commission Regulation (EC) No 817/2004, ”Any beneficiary found to have
made a false declaration as a result of serious negligence, shall be excluded from all rural development


Consolidated version as of 5th March, 2008                                                            157
measures falling under the relevant chapter of Council Regulation (EC) No 1257/ 1999 for the calendar
year in question. Where a false declaration was made intentionally, the beneficiary shall be excluded
for the following year as well. This penalties shall apply without prejudice to additional penalties
provided for under national rules.” If a beneficiary of support in accordance with the plan is found to
have made a false declaration as a result of serious negligence, the support granted in accordance with
the concerned chapter of Council Regulation is not paid for the year when this is detected. The decision
on these measures shall be made by the National Paying Agency which has also made the decision on
granting support.

The following are additionally proposed details on controls and sanctions for the measures.

Early Retirement Scheme

Control procedures include:
        Full administrative checks that provide determination of the persons eligibility to enter the
           scheme
        On spot checking, that enables to define are the conditions concerning the transfer of the
           land/holding kept

Administrative checks addressed to transferor include applying to the:
       The Agricultural and Rural Development Registre,
       State Social Insurance Fund Board.

Administrative checks addressed to farm worker include applying to the:
       State Social Insurance Fund Board

Administrative checks addressed to transferee include applying to the:
       Agricultural and Rural Development Register

On spot inspections on transferors and transferees emphasize on determination of:
        The use of accommodation plot retained and livestock or crops kept (Conditions concerning
           transferor and released land);
        Transfer (reassignment of the use) of the land/holding in accordance with the Law of the
           Land (Conditions concerning transferor)
        The maintenance of plant cover on released land reassigned by the transferor to be used for
           non agricultural purposes: checks that no livestock is being kept on this land or no crops are
           being grown (Conditions concerning transferor, transferee, farm worker and land released)
        Location of the transferees holding in the case of land/holding release to farming transferee
           (Conditions concerning transferee);
        Situation of land transferred to non-farming transferee (Conditions concerning transferee).




Consolidated version as of 5th March, 2008                                                          158
Sanctions applied under the Early Retirement Scheme

Table 45: List of sanctions in case of Transferor
Offence                                 Sanction

Incorrect disclosure of lands           Less than 5 per cent –reduction of 20 percent
                                        of annual pension
                                        Between 5-10 per cent – reduction of 40 per
                                        cent of annual pension
                                        More than 20 per cent – reduction up to 100
                                        per cent of annual pension
Farming transactions in transferor‟s    First offence – reduction of 20 per cent of
name after approval for ERS             annual pension
Engaged in farming activities on        Second offence- cancel of the agreement
date of visit
Commercial farming on the retained
land
Use of retained buildings for
commercial farming

Table 46: List of sanctions in case of Transferor of Small Diary Farm
Offence                                 Sanction
Number of cows (during check on         First offence – reduction of 20 per cent of
spot) exceeds the stated number of      annual pension
cows                                    Second offence- cancel of the agreement
Marketing agricultural production,      First offence – reduction of 20 per cent of
continuing commercial farming           annual pension
                                        Second offence- cancel of the agreement


Table 47: List of sanctions in case of Farm Worker
Offence                                 Sanction
Works as a farm worker                  First offence – reduction of 20 per cent of
                                        annual pension
                                        Second offence- cancel of the agreement

Table 48: List of sanctions in case of Transferee
Offence                                 Sanction
Cessation of the agreement              Cancel of the priority and one year suspension
concerning the duration of              to apply for participation in other RDP
obligations in the farm                 measures



Consolidated version as of 5th March, 2008                                               159
Less Favoured Areas

Support for the less-favoured areas and areas with environmental restrictions scheme will be subject to
the Integrated Administration and Control System (IACS).

All applicants for compensatory allowances must submit Aid application setting out the area available
to the producer for the year in question. All parcels will be identified individually. Details of the land
parcels are entered into the system, which identifies those parcels of land which are regarded as Highly
Disadvantaged Area and Least Disadvantaged Area. During the period covered by a commitment,
parcels receiving support may not be exchanged.

All land parcels are subject to cross-checks with a view to ensuring that the same parcel is not claimed
by two or more applicants. In addition, other computerised and office checks will be carried out and
5% of all applications will be subject to on-the-spot controls.

All applications are date stamped upon receipt in each local agricultural division and recorded.
Applications are initially checked for obvious errors, which are brought to the attention of applicant
and are to be corrected.
5% of applications will be given on-farm inspections to ensure eligibility of applications. Selection of
applicants for on-farm inspections will be performed on a random basis.
Applications found to be in order following the completion of checks are prepared, certified and
authorised for payment.

Table 49: List of sanctions to be applied for Less favoured areas and areas with environmental
restictions measure


                                         I. General inconformity
                        Offence                                                Sanction
If applicant doesn‟t follow requirement to remain in     Applicant is dismissed from RDP support for two
farming at least for 5 years from the first payment of   years (only new applications, except transferors
compensatory allowance                                   from the Early retirement measure)
Application form submitted behind time                   For any date behind time calculated amount of
                                                         support is decreased 1 per cent (if neccesary after
                                                         sanctions).
                                                         Application form submitted after 25 artificial days
                                                         of the last submission day is reject.
                                    II. Sanctions for over declaration
                       Offence                                                Sanction
                                                         Actual area is decreased by double difference
When the over declaration is either 3% or two
                                                         (between declared and actual size). Compensatory
hectares but not more than 20%
                                                         allowances calculated for decreased area
When the over declaration is 20% - 50%                   Support will not be provided in current year
When the over declaration is more than 50%               Applicant is dismissed from measure for two years



Consolidated version as of 5th March, 2008                                                                     160
                                                      (support will not be provided in current and next
                                                      year).
                                                      Applicant is dismissed from measure for two years
In case of deliberate infraction                      (support will not be provided in current and next
                                                      year).
                      III. Sanctions for incompliance with Good Farming Practise
                                                                            Sanction
                       Offence
                                                                  (calculated in the holding)
4.Non farming in accordance with requirements of     Annual payment is reduced by 10 percent in the
Good Farming Practice                                first occasion, by 30 percent in second occasion; if
                                                     beneficiary repeats offence once more, support
                                                     shall be ceased.
                     IV. Sanctions for incompliance with Good Agrarian Condition
                                                                            Sanction
                        Offence
                                                                    (calculated in the field)
                                                     For any incompliance set sanction of 5% (support
In case of one infraction (incompliance with Good    will be provided for field area decreased by 5 per
agrarian condition)                                  cent). Total amount of these sanctions not above 5
                                                     per cent of all declared areas.
                                                     For any deliberate incompliance set sanction of
                                                     20% (support will be provided for field area
In case of deliberate infraction (deliberate
                                                     decreased by 20 per cent). Total amount of these
incompliance with Good agrarian condition)
                                                     sanctions not above 100 per cent of all declared
                                                     areas.
If applicant doesn‟t keep deliberately all           Support will not be provided for the field in which
requirements of Good agrarian condition in the field there is incompliance with good agrarian condition
If applicant doesn‟t keep deliberately all
requirements of good agrarian conditions and that    Support will not be provided for all area declared in
area is more than 50% of all declared area in the    the application form
application form

The above sanctions are applied except for the cases of force majeure

Agri-environment

The implementation of an effective control system for the agri-environment measure is essential and
will have four main objectives:

       to ensure that the agri-environment measure achieves its overall objectives;
       to prevent fraud or over-payments and to contribute to an efficient use of financial resources;
       to ensure compliance with the relevant national and EU regulations regarding the use of
        EAGGF co-financing;
       to provide data on the actual implementation of the agri-environment measure measures at farm
        level.




Consolidated version as of 5th March, 2008                                                                   161
Although the main aim of the agri-environment control system relates to the checking of compliance
with the agri-environment contracts, it also produces valuable farm level data that can be used in the
evaluation of the agri-environment measure.

The payment shall be made after a necessary checking has been carried out.

The control system should:
        be responsible for administering day-to-day procedures for applications and payments;
        ensure that AEP achieves its original objectives;
        contribute to the efficient use of financial resources by preventing fraud or over-payments;
        ensure compliance with the relevant national and EU regulations regarding the use of public
           funds, and;
        provide national data on the implementation of the measures at a farm level (can be used for
           monitoring and evaluation).

Checking shall be carried out by the inspectors of the Paying Agency and Programme consultants with a
view to ensure the fulfilment of the conditions laid down in the agreement during the entire period of the
agreement. The subdivisions of the Paying Agency shall be responsible for the on-site checking of the
farms participating in the Programme. The subdivisions shall be also responsible for the checking of the
annual applications for the participation in the Schemes, monitoring of the implementation of
agreements and obligations in the selected farms.

Farms applying organic agriculture measure shall be checked by certification bodies in accordance with
the procedure provided for in the rules of the organic farming.

The assistance may be terminated if the entity submits misleading or incomplete data or fails to fulfil
the commitments undertaken under the agreement. In this case the entity may be obliged to repay all or
a part of the payments made to him.

It shall not be required to return the payments made if the commitments were not fulfilled due to force
majeure. The entity must, within 20 days, inform the Paying Agency in writing about the force
majeure and describe the circumstances. The Paying Agency shall adjust the payments taking into
account the circumstances caused by force majeure.

In the scheme good farming practice is in compliance with the enacted essential national environmental
requirements. The supervision of the compliance with the national environmental requirements is
carried out in accordance with the procedure established by legal acts.

Table 50: Sanctions – Agri-environment


              Violation                                              Sanction
1.If during the check on spot is found   Support is calculated for the actual size (stated during the check-
that declared area is less as foreseen   on-spot) area.


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in commitment (till 10 %)

If found, except force majeure cases:     One annual payment is reduced by 50%.
i) area is 10 % bigger than declared,
but the difference does not exceed 20
%
ii) the difference between declared       Support is not paid, obligation will be ceased and the beneficiary
and actual area is bigger than 20%        shall pay support back.

If found, that it is paid for the area,   Overcompensation shall be paid back.
larger than declared
2.If doesn‟t comply with the              In the year of violation support is not paid.
deadlines stated in the obligation        If beneficiary repeats offence, support shall be ceased,
                                          beneficiary loses right to present application by the measure one
                                          forthcoming year.
3.Forbidden means (actions) are used      In the year of violation support is not paid.
                                          Support shall be ceased, beneficiary loses right to present
                                          application by the measure one forthcoming year.
4.Non farming in accordance with         Annual payment is reduced by 10 percent in the first occasion,
requirements of Good Farming             by 30 percent in second occasion; if beneficiary repeats offence
Practice                                 once more, support shall be ceased.
5.Knowingly false or deceitful           Support shall be ceased, beneficiary loses right to present
information is presented                 application by the measure one forthcoming year.
6 In case the beneficiary initiates the  25% of all paid support must be paid back (except force majeure
cease of the obligation earlier          cases)
7. If beneficiary doesn‟t present        1. In the year of violation support is not paid.
annual application                       2. For the Organic farming scheme and Rare breed scheme,
                                         support shall be ceased, beneficiary loses right to present
                                         application by the measure one forthcoming year.
8. If beneficiary is late to present the Annual payment is reduced by 2 % for every day behind the
annual request for payment or deadline of submission
documents needed (certificate of
organic farm; note from competent
authorities regarding part in
breeding program and number of rare
breed animals in the farm).
9. If beneficiary doesn‟t keep number In the year of violation support is not paid.
animal of rare breed, indicated in       If beneficiary repeats offence, support shall be ceased,
application                              beneficiary loses right to present application by the measure one
                                         year
10. If area of Organic farming was       In the year of violation support is not paid.
decreased                                If beneficiary repeats offence, support shall be ceased,
                                         beneficiary loses right to present application by the measure one
                                         year.
11. If beneficiary doesn‟t follow        In the year of violation support is not paid.
programming requirements,                If beneficiary repeats offence, support shall be ceased,
indicated in application                 beneficiary loses right to present application by the measure one



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                                       year.

Support shall be stopped:
Than research of violations and decision of disputes are needed.
Paying agency reserves the right:
       - to deduct payments from other support assigned to the farmer;
       - in accordance with regulation 747/96 if support is not repaid till the stated deadline, the
          interest may be started to calculate from the deadline date for the repay of support;
       - initiate other means necessary for the repay of support.
Beneficiary, who ceases his/her obligation before the end (foreseen in the application) 25% of paid support must
be paid back, except force majeure cases. Beneficiary shall within 20 days inform PA about force majeure and
describe it. All issues are pending by lawful rights.

Afforestation of agricultural land

All participating in the afforestation scheme will be subject to pre-payment checks and compliance
checks. In the case of non-compliance, penalties are imposed, the nature of which depends on the
conditions not fulfilled. In case of a serious breach, participants may be excluded from the scheme and
full refund of all aid previously paid. Interest may also be charged. Penalties range from 10 to 100 % of
the payment.

The sanctions to be applied are as follows:
If the areas actually determined is found to be less that that declared, the area actually determined on
inspection shall be used for calculation of aid. However, except in cases of force majeure, the area
actually determined on inspection shall be reduced by twice the difference found if this is more than 3
% or two hectares but not more then 20 % of the determined area. If the difference found is more then
20 % of the determined area no aid shall be granted. Additionally, in all cases where it is found that aid
has already been paid on an over declared area, such aid shall be reimbursed.




Table 51: List of sanctions to be applied in Afforestation measure

             Offence                                            Sanction

1. If the afforested area is over
declared (more than 7 %)
1.1. when the over declaration is      The payment for forest establishment is decreased by
7% - 15%                               20%.
1.2. when the over declaration is      The payment for forest establishment is decreased by
16% - 20%                              50%.


Consolidated version as of 5th March, 2008                                                                164
1.3. when the over declaration is      The payment for forest establishment is decreased by
more than 20%                          100%.
2. The quality of the forest
establishment works
2.1. the quality of soil preparation
2.1.1. If the quality of soil          The payment for forest establishment is decreased by
preparation is satisfactory            10%.
2.1.2. If the quality of soil          The payment for forest establishment is decreased by
preparation is bad                     20%.
2.2. the quality of seedlings
(seeds)
2.2.1. the quality of seedlings        The payment for forest establishment is decreased by
(seeds) is satisfactory                10%.
2.2.2. the quality of seedlings        The payment for forest establishment is decreased by
(seeds) is bad                         20%.
2.3. the quality of planting
(seeding) works
2.3.1. the quality of planting         The payment for forest establishment is decreased by
(seeding) is satisfactory              20%.
2.3.2. the quality of planting         The payment for forest establishment is decreased by
(seeding) is bad                       50%.
2.4. the compatibility to the
density requirements (evaluation
takes according to afforestation
project)
2.4.1. the density of established      The payment for forest establishment is decreased
forest is satisfactory                 10%.
2.4.2. the density of established      The payment for forest establishment is decreased
forest is bad                          30%.
3. The quality of the forest
maintenance
3.1. the quality of the forest         The Lost incomes premium after the inspection is
maintenance is satisfactory            canceled for one year.
3.2. the quality of the forest         The Lost incomes premium after the inspection is
maintenance is bad                     canceled for five years.
4. The evaluation of the
established forests in 5-8 years
after planting (in 5-6 years after
planting evaluation of
deciduous trees, in 7-8 -
coniferous and rigid deciduous)
4.1. the plantation was evaluated      The Lost incomes premium after the inspection is
as satisfactory                        decreased 50 % for one year.



Consolidated version as of 5th March, 2008                                                    165
4.2 the plantation was evaluated      The Lost incomes premium after the inspection is
as bad (the afforested area can not   canceled at all.
be assigned as forest)

       Remarks:

       1. the evaluation foreseen at the paragraphs 2 – 4 will be implemented in accordance the
Methodology for the evaluation and Inventory of forest seedlings and Afforestation works, approved by
the order No. 659 of The Minister of Environment on December 18, 2003.
       2. the sum of all sanctions, foreseen in the paragraphs 1-2 should not exceed 100%.
       3. the sum of all sanctions, foreseen in the paragraphs 3-4 should not exceed 100%.

Support for semi-subsistence farms undergoing restructuring

The following sanctions are to be applied in case of incompliance with obligations.

Table 52: List of sanctions to be applied to a beneficiary in measure Support for semi-subsistence
farms undergoing restructuring
                 Offence                                     Sanctions
Not implementing the business plan as The support for the subsequent 2 years
stated during the check after the 3rd year shall not be granted.
of support


Meeting standards

The following sanctions are to be applied in case of incompliance with obligations.

Table 53: List of sanctions to be applied in Meeting standards measure
                   Offence                                    Sanctions
Not following the commitments declared After first violation penalty of 20% of
in action plan                               yearly support for next year;
                                             in case of a subsequent violation -
                                             support will be stopped.
It is found that factual figure of LU is     Factual figure of LU is reduced by 20 %.
less than was declared in application.
It is found that factual figure of cows for Factual figure of LU is reduced by 20 %.
which support is granted is smaller than
was declared in application.
It is found that factual figure of LU is     Payments are made only for LU declared
bigger than was declared in application.     in application
It is found that factual figure of cows for Payments are made only for are declared
which support is granted is bigger than      in application


Consolidated version as of 5th March, 2008                                                       166
was declared in application.
The applicant did not submit annual          Support for running year is not granted.
report of investment
The applicant did not submit copies of       The applicant loses the right for support
bookkeeping records                          and payments already paid must be
                                             returned
The applicant receives support under         The applicant loses the right for support
RDP measure Early retirement                 and payments already paid must be
                                             returned
After investment period the farm is not in   The payments must be returned
line with requirements of Council
Directive 92/46/EEC
After investment period the farm is not in   The payments must be returned
line with requirements of Council
Directive 91/676/EEC
After investment period the beneficiary      The difference between the payment
has not reached the planned increase of      received and the payment calculated for
heard in cows                                the actual herd in cows has to be returned;
                                             the payment calculated for the actual herd
                                             in cows is reduced by 20 %, and this part
                                             also has to be returned.
After investment period the beneficiary      The difference between the payment
has not reached the planned increase of      received and the payment calculated for
heard in LU                                  the actual herd in LU has to be returned;
                                             the payment calculated for the actual herd
                                             in LU is reduced by 20 %, and this part
                                             also has to be returned.

12.2. Financial circuits

The movement of applications for rural development measures as well as financial means is as
following:

   National Paying Agency (NPA) is the authority responsible for payment of support for all measures
    in the Rural Development Plan 2004-2006. National Paying agency will be accredited paying
    agency.
   Applications will be submitted by financial beneficiaries to one of ten (10) Regional units of NPA
    for all RDP measures other than LFA and “Agri-environment” measures, for which collection of
    application will be done by the institutions which are selected in accordance with national
    legislation).
   Once the applications reached the Center, the staff of Rural Support Programmes Unit (RSPU)
    starts the detailed checks. If the checks are successful, the processing officer will recommend the
    application for payment to the authorizing officer. The authorizing officer will carry out certain



Consolidated version as of 5th March, 2008                                                        167
    other specific checks and if the results of these prove satisfactory, the application will then be
    authorized for payment.
   In the case of two rural development measures: “Afforestation of agricultural land” and “Technical
    assistance” payments will be made after evaluating and approving payment claims (when
    expenditure is made and declared by final beneficiary). This is the responsibility of Payment claims
    unit of Finance and accounting department (FAD) of NPA.
   Once the payment is authorized, it is then passed by electronic means to Support Programmes
    Accounting and Reporting unit (SPARU) of FAD. FAD staff responsible for making payments will
    carry out checks to ensure that only authorized payments are processed.
   FAD will be responsible for accounting of creditors, execution of payments and reporting. When
    the payments have been made (by Payments unit of FAD), the data will be passed from Payables
    System to General Ledger. In order to get interim payments, FAD will be responsible for preparing
    and submitting Applications for interim payments. Also FAD will be responsible for preparing and
    submitting Application for payments of the final balance.
   The system and organization structure ensure that the three functions of authorization, execution
    and accounting for payments are separated in NPA.
   In operating the measures NPA will ensure that the necessary detailed accounting information is
    recorded and maintained for the purpose of the clearance of EAGGF Guarantee accounts. For the
    purpose of the clearance of accounts FAD will be responsible for preparing and submitting to
    European Commission:
            (a) annual expenditure summarised by rural development measure;
            (b) a table showing the differences between the expenditure declared under (a) and that
                declared for the purpose of the interim payments;
            (c) a table, extracted from the debtors' ledger, showing the total debts identified but not yet
                recovered at the end of the financial year for rural development measures.
   Irregularities and reimbursement of irregularities will be reported in accordance with agreed
    procedures. FAD will prepare reports of irregularities according to Regulation Nr. 595/91. FAD
    will be responsible for holding Debtors ledger.


12.3. Publicity

Rural development measures to be implemented in Lithuania will be made public in the following way:
making potential beneficiaries aware of the possibilities for support;
making the general public aware of the co-financing role of the EU in this plan.

Information and publicity is based on Article 32 of Council Regulation (EC) 2082/93. Potential
beneficiaries are informed of the rate of support and the application procedures. Information on the
measures and the eligibility criteria will be provided by the National Paying Agency.

Application forms for all measures with the exception of the measures Agri-environment and Less
favoured areas and areas with environmental restrictions will be available at on of ten Regional units of
National Paying Agency. For the latter measures application forms will be available at the institutions
which are selected in accordance with national legislation.


Consolidated version as of 5th March, 2008                                                            168
Information is made available to the public through:
- annoucements in the press;
- information on the websites of Minsitry of Agriculture and National Paying Agency;
- press releases by the Ministry of Agriculture and National Paying Agency;
- the public is informed by way of seminars, conferences and exhibitions;
- publications.

If the number of applications at the mid-stage of the call for applications is less then expected, it is
envisaged to strengthen the usual publicity about the measures available, aiming at providing the rural
population with more information both about the possibilities available as well as the requirements to
be fulfilled.

12.4. Evaluation

There will be no mid-term evaluation of the programme as there is no such an obligation to the
countries that enter the EU in the year 2004.

The ex-post evaluation of the programme will be carried out by the independent evaluators selected by
competitive tendering in accordance with national and EU rules. The evaluation will be carried out as
prescribed in the Commission Regulation (EC) 1257 Articles 48 and 49 as well as Commission
Regulation (EC) 817/2004, Articles 62-65, also in accordance with VI/12004/00 of December 2000
(Common Evaluation Questions with Criteria and Indicators). An ex-post evaluation as defined by the
Commission Regulation (EC) 817/2004 Article 64(2) will be carried out and reported to the Commission
not later then two years after the end of the programming period – by the year end 2008.

The evaluation will have regard to the issues and data comprising socio-economic and environmental
analysis and specifically will address the following aspects:
 the original validity and continuing relevance of the plan rationale
 the degree to which objectives have been achieved relative to the timing of the evaluation and the
   expected final achievement
 the progress made by beneficiaries selected for aid in meeting EU standards.
 management and administrative issues
 an estimate of economic, social and environmental benefits in net terms where possible and their
   sustainability
 the public expenditure/resource costs involved
 overall conclusions and recommendations concerning costs in relation to net benefits, qualitative as
   well as quantitative. Also any actions needed to improve value for money or management and
   whether or not there is a continuing need for further intervention.
The evaluation will be performed in line with the Commission guidelines VI/43512/02 FINAL of
February 26, 2002 on common evaluation questions, criteria and indicators.




Consolidated version as of 5th March, 2008                                                         169
12.4.1. Ex-ante evaluation

The report of the Ex-ante evaluation carried out in January-February 2003 is presented in Annex 7. The
conclusions presented to the Ministry of Agriculture by the Evaluator are spelled out below. Also, how
the recommendations for improvements were incorporated in to the final documents are shortly
presented.

“As stated at the outset of the evaluation, it is the impression of the evaluator that the current draft
represents a considerable progress compared to the SAPARD RDP. The description of rural areas and
disparities to be addressed as well as the SWOT analysis and the quantification of targets constitute
substantial improvements.

It is the firm impression of the evaluator that the RDP is relevant, in the sense that is addressing
important and major needs and problems of rural Lithuania.

The RDP as a product is basically in compliance with the EU requirements to the preparation of the
plan and the process leading to the draft RDP is considered effective.

The utility of the plan when implemented as a programme is assessed to be high, but the evaluator finds
that there is a need for an elaboration of the marginal utility of the specific measures chosen, the
resources allocated to each of the measures and the quantified targets stated in the RDP.

The implementation of the RDP is realistic and the RDP can as such be considered sustainable.

As it is emphasised in the evaluation there is room for improvements, which can help a successful
implementation of the Lithuanian RDP. The main deficiencies in the draft RDP have to do with the
following matters:

1. Insufficient ranking of disparities
2. Analysis of previous results could be elaborated and used more proactively in the current
   programming phase
3. The expected impacts and results could be presented in a more systematic way following the
   objectives hierarchy as recommended by the Commission
4. Reflections on absorptive capacity in the rural areas, administrative capacity in MoA and NPA and
   marginal utility of the funds used for rural development could ensure that these aspects are taken
   into consideration in the programming phase.
5. The general readability of the RDP could be improved by carrying out some editorial improvements
   that tighten up the structure and the clarity of the RDP.

The conclusions made in the ex ante evaluation are itemized in 47 recommendations, which can be
used by the MoA in the finalization of the RDP. “




Consolidated version as of 5th March, 2008                                                         170
The Ministry of Agriculture has taken into consideration all 47 recommendations provided by the ex-
ante evaluator. The table below provides how the main deficiencies listed above were taken into
consideration by the Ministry of Agriculture.
Table 54: Ex-ante evaluation findings and the Actions taken by the Ministry of Agriculture

Ex-ante evaluation main findings              Ministry of Agriculture action
1. Insufficient ranking of disparities        A more clear, condensed and structured ranking of
                                              disparities and problems within the sector carried
                                              out and presented in chapter 5.10.
2. Analysis of previous results could be      To the extent possible the analysis of previous
elaborated and used more proactively in       results was carried out in a manner which would
the current programming phase                 reveal the lessons learnt in the past in order to have
                                              them considered in the development of this
                                              documents.      In    particular    an     experience
                                              accumulated in implementing the SAPARD
                                              programme (including the procedures for the
                                              monitoring and evaluation) have been taken into
                                              consideration.
3. The expected impacts and results could     The expected impacts and results have been
be presented in a more systematic way         presented on each measure basis in the light of the
following the objectives hierarchy as         objective hierarchy for each measure. It is expected
recommended by the Commission                 to contribute significantly in preparing and carrying
                                              out mid term and ex-post evaluations of the
                                              programme.
4. Reflections on absorptive capacity in      The consideration on the marginal utility of the
the rural areas, administrative capacity in   chosen measures has to a limited extent been taken
MoA and NPA and marginal utility of the       into consideration in the programme preparation.
funds used for rural development could        The calculations have been exercised for the
ensure that these aspects are taken into      Afforestation and Early retirement measures and
consideration in the programming phase.       are expected to be carried out also in the course of
                                              the programme implementation               for other
                                              measures. It is expected that this exercise will
                                              contribute significantly in the preparation of the
                                              following programming documents. As regards the
                                              absorptive and administrative capacity those were
                                              seriously considered both by the Ministry of
                                              Agriculture and the National Paying Agency in
                                              order to ensure that the capacities are in place and
                                              would not result into the mismanagement of funds
                                              or insufficient amount of applicants. As the result
                                              of this analysis the measure related to Assistance to
                                              Producer groups was left out and not included in
                                              the framework of this programme.
5. The general readability of the RDP         The structure of the document was adjusted aiming


Consolidated version as of 5th March, 2008                                                             171
could be improved by carrying out some at improving the readability. Also, the editorial
editorial improvements that tighten up the improvements were carried out.
structure and the clarity of the RDP.
13. Resuls of consultations and designation of associated authorities and bodies as
well as economic and social partners
The entire process of preparing this Rural Development Plan was based on the dialogue with the social
and economic partners. There have been in total 3 rounds of circulating the draft Rural Development
Plan to the key partners in order to get their views on the document. Also, during the entire course of
the preparation of the document ongoing informal coordination of the document preparation was taking
place with the key stakeholders, which not only commented on the draft document but also
significantly contributed to the development of certain sections of the document. The most active social
and economic partners taking part in the development of this Rural Development Plan were the
Ministry of Environment, Ministry of Economy, Ministry of Social Security and Labour, Lithuanian
Forest Owners Association, Lithuanian Fund for Nature, Farmer's Union, Chamber of Agriculture,
Water Management Institute and others. Apart from informal collaboration, the draft Rural
Development Plan was circulated to the number of institutions and organisations directly or indirectly
affected by the implementation of this document. Further, all the institutions were called for a meeting
in which their comments were received and discussed. The list of the social and economic partners
consulted during the document preparation process is provided in Annex 8.

For designing a good working agri-environmental schemes, it is very important to have consultations
with farmers. A lot of consultations with farmers took place while preparing agri-environmental scheme
for the pilot area (Rusne island) within the project “Agri-environmental programme in Central and
Eastern Europe". Some simple measures were practically tested in the area since 1998. Later, the area
became a pilot area for SAPARD agri-environmental measure.

During preparation of the draft national agri-environmental programme, farmers organisations were
consulted through Chamber of Agriculture, whose representative was a member of the national
working group. Other stakeholders were: Ministry of Agriculture, Ministry of Environment, Lithuanian
Agricultural University, Lithuanian Agricultural Consulting Service, Lithuanian Water Management
Institute, Lithuanian Institute of Agriculture, Lithuanian Institute of Agricultural Economics, Institute
of Geography, Environmental NGO's such as Lithuanian Fund for Nature, Lithuanian Ornithological
Society, County administrations. Thus, the preparation of the agri-environment measures was
extremely focused on as close as possible contacts with the farmers.

There have been no essential differences in the views of social and economic partners in relation to the
draft Rural Development Plan. The consultation process was more of a questions-answers nature where
social and economic partners seek for more clear definition of the requirements for the applicants as
well as clear definitions of the eligible actions under each of the measures. Thus, this process was
extremely important in ensuring that the document is easy to understand for the beneficiaries and that
the ambiguity is avoided.




Consolidated version as of 5th March, 2008                                                          172
 Early retirement
Consulta-       Social                Content                  Accepted           Comments
 tion date     partner
August       SoDra        Regards the calculation of the       Yes
2003                      constant part of the compen-
                          satory allowance (proposal to
                          use the average retirement
                          payment foreseen for 2004-2006
                          (instead of the average of 2001-
                          2002) as a basis)
September Lithuanian      Regards the checks of the            Yes
2003      Institute of    retrospective number of cows
          Agrarian
          Economics
October   Lithuanian      Regards the elaboration of the       Yes        Following a previously
2003      Institute of    checks of the retrospective                     expressed observation, a
          Agrarian        number of cows                                  single date for the checks of
          Economics                                                       the number of cows has
                                                                          been adopted (1 January
                                                                          2003), in particular, the
                                                                          checking date in the Animal
                                                                          Register is moved with
                                                                          every year of application
                                                                          submission (the date for
                                                                          applications of 2004 is 1
                                                                          January 2003, the date for
                                                                          applications of 2005 is 1
                                                                          January 2004, the date for
                                                                          applications of 2006 is 1
                                                                          January 2005.

Less favorable areas and areas with environmental restrictions
Consulta-   Social        Contents                             Accepted   Comment
tion date   partner
October,    Ministry of   Proposal concerning the              Yes        The proposal has been
2003        Environ-      inclusion of the protection of the              approved to include 24
            ment          dwelling places of birds                        localities with protected
                          mentioned in Natura 2000 into                   dwelling places of birds. It
                          the Plan                                        has also been approved
                                                                          which localities have to be
                                                                          included
January,    Lithuanian    Methodology to determine less        Yes        Rural development plan



Consolidated version as of 5th March, 2008                                                          173
2004        Institute of   favorable areas has been                      makes uses this
            Agrarian       elaborated                                    methodology
            Economy)
Agri-Environment
Consulta-     Social                   Content                Accepted          Comments
 tion date   partner
October    Institute of    Ministry of Agriculture together Yes
2003       Water           with Institute of Water Economy
           Economy         has prepared a training
                           programme for farmers.
October     Lithuanian     Presented observations on the
2003;       Agricultural   description of the measure and
December    Advisory       establishment of the amount of
2003        Service        the direct payments:
                           1. Programme for protective
                                                              Yes        The payment is paid for
                           shore belts of surface water
                           bodies: is the payment for the                the management of the
                           management of the protective                  protective belt since the
                           shore belt of a surface water                 establish-ment of the belt
                           body paid only for the                        is mandatory under the
                           mandatory protective belt or is it            national legislation.
                           also paid for its management?

                           2. As regards sanctions in relation Yes       The bias increased from
                           to the area declared, a larger bias           3% up to 10%.
                           should be allowed since it will be
                           difficult to calculate and check the
                           area declared.
December    Lithuanian     Has presented observa-tions on
2003        Fund of        the description of the measure:
            Nature         1. The payments proposed in the
                           draft do not meet the actual Yes              Calculations for
                           management costs, e.g. in the                 substantiating all
                           Landscape stewardship scheme,                 payments have been
                           costs of mowing 1 ha of                       made.
                           meadow/wetland and removal of
                           mowed grass are higher than 221Lt.
                           2. Landscape stewardship
                           scheme: meadows should be
                           mowed not earlier than                        Accepted.
                                                              Yes
                           September 1st.




Consolidated version as of 5th March, 2008                                                      174
December     „Tatulos      Specify the amounts of payments Yes             Accepted; all
2003        programa”      under the Organic Farming                       substantiations for the
                           scheme                                          amounts of organic
                                                                           farming payments have
                                                                           been specified.
January     Lithuanian     Substantiations for the              Yes        These calculations are
2004        Institute of   calculation of the payments                     used.
            Agrarian       under the measure have been
            Economics      made.


Afforestation of agricultural land
Consulta-   Social         Contents                             Accepted   Comment
tion date   partner
September   Ministry of    Proposal to make amen-dments       Yes
2003        Environ-       in the conditions for the
            ment           payments for forest maintenance
                           and protection
November    Lithuanian     Proposal concerning the rate for Yes
2003        Association    labor cost in the case if a person
            of Forest      makes himself the works of
            Owners         forest planting and maintenance
December    Ministry of    Revision of priority points        Yes
2003        Environ-
            ment
January,    Ministry of    Proposal to review the list of the   Yes        Kinds of trees have been
2004        Environ-       kinds of trees and shrubs to be                 determined, prices have
            ment           used in forest planting and to                  been recalculated
                           recalculate the labor cost rates
                           for reforestation works taking
                           into account the current situation

Support for semi-subsistence farms undergoing restructuring
Consulta-     Social                    Content                 Accepted          Comments
 tion date   partner
2002       Lithuanian      Methodology has been prepared        Yes        The methodology is used
           Institute of    establishing criteria for the size              when drafting the
           Agrarian        of a semi-subsistence farm as                   description of the
           Economics       well as several groups of semi-                 measure
                           subsistence farms according to
                           their specialisation




Consolidated version as of 5th March, 2008                                                       175
December    Lithuanian     Proposals on forms of business       Partly
2003        Institute of   plans
            Agrarian
            Economics
January     Lithuanian     Proposals on forms of business       Yes       The form of the business
2004        Institute of   plans - the LIAE proposed                      plan has been drafted
            Agrarian       indicators to be included into the             together with the
            Economics      business plan. These indicators                National Paying Agency
            (LIAE)         would be used in estimating                    and the Lithuanian
                           economic viability of farms. The               Institute of Agrarian
                           Lithuanian Institute of Agrarian               Economics
                           Economics is prepared to carry
                           out forecasting work required.



14. Balance between the different support measures
The table below provides the weight of each of the measure in the total Rural Development package.
Further an explanation of the balance between the measures is provided in order to justify the
distribution of funds among the measures chosen.

Table 55. Distribution of funds among measures, 2004-2006
Measure                            Total public funds, EUR                % allocated for
                                                                         each measure
                                     Total            EU contribution
Early retirement                      89,216,340          71,373,072            15
Less favoured areas and areas
                                      177,142,600        141,714,080            29
with environmental restrictions
Agri-environment                      82,892,620          66,314,096            13
Afforestation of agricultural land    6,588,900            5,271,120             1
Support for semi-subsistence
                                       9,140,870          7,312,696              1
farms undergoing restructuring
Meeting standards                     117,151,608         93,721,286            19
Technical assistance                   5,921,000          4,736,800             1
Complimentary national direct
                                     120,450,000         96,360,000
payments                                                                        20
Projects approved under
                                       3,371,062          2,696,850
Regulation (EC) No. 1268/1999                                                   1
                          TOTAL      611,875,000         489,500,000           100

As it can be seen two measures namely Early Retirement and LFA are the most funds consuming
measures. The use of Early Retirement scheme to restructure milk production sector is of vital


Consolidated version as of 5th March, 2008                                                      176
importance aiming at increasing the competitiveness of agricultural sector in general and milk
production in particularly. The Government of Lithuania has decided to take advantage of using this
possibility in the period of 2004-2006, moreover, that it is a derogation from the EC Regulation
1257/1999 rules governing implementation of the ERS and will only be applied in the period 2004-
2006.

Ensuarance of certain living standard in rural areas particularly in relation to the incomes of farmers is
very important aiming at solving the problem of depopulation. As Lithuania has quite a big area of
agricultural land classified as LFA it is very important to seek that those areas are not being left
abandoned due to adverse farming conditions. Especially, when incomes of those farming in LFA and
those farming in relatively good conditions differentiate enormously. Thus, income support for those
farming in LFA is crucial in reaching the overall and specific objectives of the programme.

Although the environmental status can be regarded in Lithuania as in a quite favourable condition it has
still been decided to allocate substantial amount of available funds for the implementation of the Agri-
environment measure. As it has already been indicated, the experience of other countries emphasises
that a proactive rather then reactive approach should be maintained in relation to the environment
protection. Thus, the measure will address the problems related to the status of environment and at the
same time will ensure that already existing values protection and enhancement of which is needed or
desirable today are protected in a sustainable manner.

Since Lithuania has quite good conditions for further development of livestock production, especially
milk production, it is considered that it is vital to allocate, in addition to the funds available from
EAGGF Guidance section, a sufficient amount of rural development funds for the development of
production which meets the EU requirements in relation to the milk quality and also in relation to the
environment protection requirements as regards protection of waters from pollution by nitrates. The
latter requirement will be implemented through installation of manure/slurry storages.

15. Compatibility and consistency with EU policies
Article 12 of the Council Regulation 1260/1999 laying down the general provision on the Structural
Funds requires that all measures be compatible with Community policies on “environmental protection
and improvement and on the elimination of inequalities and the promotion of equality between men
and women”. Both of these issues have been covered in detail in Chapter 6.3.

16. Additional state aid

No additional state aid it is intended to provide in addition for the measures to be implemented within
the scope of this Rural Development Plan and for which the Community support will be granted.




Consolidated version as of 5th March, 2008                                                           177
Annex 1: Technical sheets per measure

Measure 1. Early retirement

This measure implements articles 10-12 of Council Regulation (EC) No 1257/1999 of 17 May 1999 on
support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF)
and amending and repealing certain regulations.

1.1 Introduction
Implementation of the early retirement scheme is an important measure targeted to improve farm
structure by promoting extension of the farm size due to termination of agricultural production on
small-scale agricultural holdings, consolidation of the agricultural plots in order to improve the
economical viability and competitiveness of remnant agricultural holdings. This will also positively
influence farmers‟ age structure, as encourage the replacement of elderly farmers by farmers able to
improve effectiveness of agricultural production.

The aid is targeted to ensure elderly farmers to stop commercial activities by transfer of the holding to
younger farmers with special education in agriculture or to economically viable agricultural enterprises.


Problem of small dairy farms is defined as a problem of a great importance. According to the data of
Agricultural Information and Rural Business Centre (AIRBC) by 1st of January 2002 there were
224.582 dairy cow owners in the Animal Register, more than 95 per cent of which owned less than 5
cows. The structure of dairy farms according to the number of dairy cows shows, that among small
(less than 5 cows) dairy farms holders at the age between 55 and 75 dominate.
Lithuania has addressed the request for funding a programme for the termination of milk production in
small-scale farms within the framework of the early retirement scheme as provided in Regulation (EC)
No.1257/1999. As the major part of small dairy farm holders are over normal retirement age it is
granted to Lithuania to include individuals who already are of normal retirement age but not yet 70
years old. This should stipulate the improvement of the structure of dairy farms through the elimination
from the market of small-scale milk producers failing to meet hygiene requirements for dairy farms
after the date of accession and the end of period of grace (2007).

1.2. Description of the measure

Support under this measure includes retirement grant to be paid to cover income loss for farmers, who
decided to stop commercial farming for a period of up to 15 years (the period will vary depending on
the applicant‟s age on the date of application).

An annual allowance per hectare shall be paid to differentiate income compensation in order encourage
medium size farmers to participate in early retirement scheme. The aid amount depends on the released
land area.



Consolidated version as of 5th March, 2008                                                          178
Small dairy farm holders are defined as certain target group. The aid amount depends on the individual
milk quota size (production index).

There is a possibility to receive a certain part of state social retirement pension in advance payments,
foreseen in national legislation (Law on Advance Payments of State Social Retirement Pension10,
coming into force from 1st July 2004). A person who has not more than 5 years left till the normal
retirement age, complies with other requirements, and is entitled to a state social retirement pension
when reaching normal retirement age, can receive a certain part of state social retirement pension in
monthly advance payments. When such person reaches normal retirement age, his/her state social
retirement pension is decreased by 0,4 percent for every month he/she has received the advanced
payments of state social retirement pension.

Concerning the normal retirement age in Republic of Lithuania, it has been set11 as 62.5 years for men
and 60 years for women, and a transition is foreseen, during which the actual retirement age is
gradually increased by 0.5 years annually until reaching the normal retirement age (it has already been
reached for men (transfer from 60 to 62.5), and for women it shall be reached in 2006 (transfer from 55
to 60)). So, for the duration of this programming period, the actual retirement age for women is 59
years in 2004, 59.5 years in 2005, and 60 years in 2006, reducing the initial 5 years difference between
retirement aged for men and women from 5 to 2.5 years. Thus in 2006, at the end of the programming
period of this document (RDP), the reform on the increase of the retirement age, which was begun in
1995, shall be concluded.

To exclude the possible overcompensation the constant part of the annual allowance is reduced by the
annual amount of social payments received (state social retirement pension or advance payments of
state social retirement pension in this case).

1.3. Definitions

For the purposes of this measure:

„Agricultural activities„ shall mean activities related to producing, processing and marketing of
agricultural production, produced in private agricultural holding. It involves provision of agricultural
services as well.

„Agricultural holding‟ shall mean all production units managed by a farmer situated within the territory
of Lithuania.

„Agricultural enterprise‟ shall mean legal person engaged in agricultural activities, whose annual
income from agricultural production constitutes more than 50 % of all annual income.




10
     State Gazette, 2003, Nr. 114-5116
11
     The Law on State Social Retirement Pension (State Gazette, 1994, No. 59-1153)


Consolidated version as of 5th March, 2008                                                         179
 „Compensatory allowances‟ shall mean an aid provided to cover income loss in holdings where
commercial farming is terminated.

„Farmer‟ shall mean an individual agricultural producer, alone or with partners involved in agricultural
activities and forestry.

„Farmer‟s partners‟ shall mean persons involved in agricultural activities together with the farmer,
according to the written partnership agreement.

„Farming transferee‟ shall mean the person who succeeds the transferor as the head of the agricultural
holding or a farmer who takes over all or part of the land released by a transferor in order to expand his
own agricultural holding;

 „Non-farming transferee‟ shall mean any other person or body who takes over all or part of the
released land to use it for non-agricultural purposes, forestry or the creation of ecological reserves;

„Normal retirement age‟ – this age in is Lithuania 62.5 years for men and 60 years – for women12.

„Small dairy farm holder‟ shall mean an individual milk producer with a herd of less than 5 cows.

„Transferor‟ shall mean a farmer who stops all commercial farming activity definitively pursuant to this
early retirement scheme.

„Worker‟ shall mean a paid farm worker who was employed on a transferor‟s agricultural holding
before his early retirement and who is entitled to the old age pension.

1.4. Objective Hierarchy for the early retirement measure

The overall objectives for the early retirement measure are defined as follows:

      Improving of the farm and social structure;
      Ensuring a certain income level for elderly farmers who decide to stop farming and for elderly
       family helpers and farm workers who lose their employment as a result of a farmer‟s early
       retirement;
      Increasing competitiveness of agricultural sector due to improved economical viability of the
       transferred agricultural holdings.

The specific objectives for the early retirement measure are:

-          Encourage about 30000 farmers beyond 55 years to stop commercial activities (30.000
           holdings, 105.000 ha of land transferred to young farmers or agricultural enterprises and
           240.000 tones of Milk quota released);

12
     As defined in The Law on State Social Retirement Pension (State Gazette, 1994, No. 59-1152)


Consolidated version as of 5th March, 2008                                                             180
-      Average size of holding being transferred by transferor – 3,5 ha;
-      About 5 per cent of land released for non agricultural purposes.

The operational objectives are the immediate output of the measure:

30000 farmers (landowners and small dairy farm holders) receive early retirement support each
allocating an average of 3,5 ha of land and 8 tones of milk quota to be released. Of these, 75 per cent
are small dairy farm holders, who are able to enter ERS (transfer the individual milk quota and land)
beyond the normal retirement age.

Measure       Output                     Result                   Impact
              (Operational               (Specific Objectives)    (Overall objectives)
              objectives)
Early         30000 farmers enter   30.000 farmers and            Improving of the farm and social
retirement    ERS, each allocating  600 farm workers and          structure by
              an average of 3,5 ha  family helpers older          - increasing average farm size from
              of land and 8 tones ofthan       55      stop       13,7 to 15,9 ha
              milk quota to be      commercial activities         - increasing average herd of milk cows
              transferred.          and receive income            per holding from 2,26 to 3
                                    support                       - reducing the number of elderly
              75 percent of         105.000 ha of land            farmers (over 55) from 60 to 45 percent.
              beneficiaries are     released            and       - increasing the number of young
              small dairy farm      transferred to young          farmers (up to 40) from 14,4 to 16,7
              holders, who are able farmers or agricultural       percent.
              to enter ERS beyond enterprises                     Ensuring a certain income level for
              the normal retirement                               elderly retiring farmers, farm workers
              age.                  240.000 tones of milk         and their family helpers.
                                    quota disposed on             Increasing       competitiveness      of
                                    State    Milk   Quota         agricultural sector due to improved
                                    Reserve                       economical viability of the transferred
                                                                  agricultural holdings.
                                         5000       ha     non-
                                         commercially viable
                                         land released for non-
                                         agricultural purposes
                                         (5 % of 105.000)


1.5. Type of aid

Early retirement aid granted to transferors consists of two parts – constant and variable.

Constant part of the grant consist of:




Consolidated version as of 5th March, 2008                                                             181
-        Retirement grant, calculated as an average annual old age pension prognosis for the period
2004-2006. The retirement grant is a flat rate per annum for equivalent in national currency of 1290
Euros per transferor.
- Extra-allowance in the case of dependant spouse (the spouse must be between ages of 55 and
    normal retirement age, unemployed, and receive no state social payments). In the case of attending
    of the dependant spouse, extra allowances not dependent on the land released at an annual rate 645
    EUR should be paid to the transferor. The extra-allowance can not be provided in the case if the
    spouse enters farm worker early retirement scheme or is employed under a labour contract or if the
    spouse gets incomes from national social insurance funds (old age pension, disability or invalidity
    pension). Extra-allowance is paid until the dependant spouse reaches normal retirement age.
As the aid grant goes beyond normal retirement age, after transferor has reached it, the constant part of
the retirement grant is decreased by the amount of national retirement pension to which the transferor is
entitled.

Variable part of the grant consists of:
-       Milk Quota premium (compensation for the income forgone is calculated basing on the
individual milk quota valid for the date of application). In order to encourage small dairy farmers cease
commercial farming an annual Milk Quota premium will be paid in the form of lump sum of 175 EUR
per ton of Milk quota released for the first year of participation in the scheme. The sum shall gradually
decrease, and for the second year in the scheme 150 EUR per ton of Milk quota released shall be paid,
and 125 EUR per ton of Milk quota released for the third year and 80 EUR per ton of Milk quota
released for subsequent years in the scheme.
-       Annual allowance per hectare of released land. In order to induce farmers, especially small and
medium size farm holders, to stop farming an annual allowance per hectare up to 24 ha of released land
will be paid to compensate the income loss. Annual allowances per hectare make 90 EUR.

Only beneficiaries satisfying both the criteria for transferor-farmer and transferor-small dairy farm
holder are entitled to the variable part of the grant, consisting of both annual allowances for hectares of
released UAA land and milk quota premium. Transferor-small dairy farm holder can receive the annual
allowance for hectares of released land if he/she corresponds to all criteria for the transferor-farmer,
except the latter‟s age criteria.

 Early retirement aid Amount, EUR            Beneficiaries                  Duration of the aid
 forms
 Retirement grant per 1290                   Applicants from 55 years       15 years but shall not go
 beneficiary                                 of age until retirement age    beyond the 75th birthday of
                                             (excluding farm workers)       transferor
 Retirement grant per 1290                   Applicants from 55 years       7,5 years but shall not go
 beneficiary                                 of age until retirement age    beyond the retirement age
                                             (farm workers)                 of the beneficiary
 Extra-allowances in 645                     Applicant with a dependant     10 years but shall not go
 the case of dependant                       spouse                         beyond       the    normal
 spouse                                                                     retirement age of the
                                                                            dependant spouse


Consolidated version as of 5th March, 2008                                                            182
 Annual allowance per 90                        Land transferors (both        15 years but shall not go
 hectare                                        transferors-farmers     and   beyond the 75th birthday of
                                                small dairy farm holders)     transferor
 Lump sum per ton of 175 in 1st year            Individual milk quota         15 years but shall not go
 Milk quota released      150 in 2nd year       transferors                   beyond the 75th birthday of
                          125 in 3rd year                                     transferor
                          80              in
                          subsequent
                          years
1.6. Eligibility criteria

1.6.1. Transferor:
Transferor must stop commercial farming definitively. Transferor may retain the use the buildings and
the area on which the buildings in which he/she lives are situated, which may not be used for
commercial purpose.

Transferor - farm worker cannot return to the farm worker‟s work.
Transferor may retain 1 dairy cow, which may not be used for commercial purpose. Excess cows shall
be sold, and they can not be sold to a transferor‟s spouse. The sale of the remaining 1 cow shall not be
considered the return to the commercial farming.

Transferor-farmer must transfer the holding or part of it by sale, or gift to a farming transferee
satisfying certain conditions. Individual milk quota is returned to the national milk quota reserve with
no additional compensation payment. If the farming transferee cannot be found, the holding may be
disposed without quota rights to non-farming transferee to be used for non-agricultural purposes,
forestry or the creation of ecological reserves or can be reassigned by transferee to be used for non-
agricultural purposes, forestry or the creation of ecological reserves.

An applicant (applying to transferor-farmer, and to transferor-small dairy farm holder) who is not the
owner of the farm (agricultural holding) involved will be admitted to the scheme only if he/she is in
actual joint management with the owner. Only one of the partners will be payable. 13 In case of spouses
in actual joint management both partners have to cease commercial farming. In case of transferor-small
dairy farm holder – all criteria are individual, except the criteria defining number of cows registered
(cumulative - checked and summarised for all partners).

An application to participate in the ERS from the applicants/beneficiary‟s spouse can be submitted only
in case of transferor-farm worker.
1.6.1.1. Farmer (on the date of submission of application):
- A male transferor must be between ages of 55 and 62 and 6 months, a female transferor – between
    55 and 60.
- Has practised farming for the 10 years preceding transfer;14

13
     EC No 817/2004
14
     EC No1257/1999 Chapter IV, Article 11(1)


Consolidated version as of 5th March, 2008                                                            183
-      Has declared, according to the determined order, tillage and/or cattle for not less than 4 years
       preceding the application to the Scheme.
-      Has practised farming on the area no less than 1 hectare of UAA;
-      must be have a right to receive state social retirement pension when he/she reaches the normal
       retirement age;
-      Agricultural holding must be on Agriculture and Rural Development Register.
-      If the beneficiary dies within the period of the early retirement support, the support may be payable
       to his or her spouse/dependant. Entitlement to the early retirement support for the balance of the
       period will be contingent on full compliance with the conditions of the scheme by the transferor‟s
       spouse/dependant and the transferee. The inheritance of the entitlement applies to all eligible
       applications received in 2004-2006.
-      If the beneficiary dies after the submission of application but prior the decision for support is taken,
       the early retirement support may be payable to his or her spouse/dependant for the balance of the
       period, provided the conditions of the scheme continue to be met. The inheritance of the entitlement
       applies to all eligible applications received in 2004-2006.

1.6.1.2. Owner of a small dairy farm (on the date of submission of application)
- Must be from 55 till less than 70 years of age for both genders;
- Has practised farming for the 10 years proceeding transfer;
- Has less than 5 cows registered in the Cattle Register (for the applications of 2004, the date of
    check is 01/01/2003, for the applicants of 2005 - 01/01/2004; and for the applicants of 2006 -
    01/01/2005);
- Must be notified in Milk Quota Register with an individual milk quota assigned;
 - Agricultural holding must be on Agriculture and Rural Development Register.
- If the beneficiary dies within the period of the early retirement support, the support may be payable
    to his or her spouse/dependant. Entitlement to the early retirement support for the balance of the
    period will be contingent on full compliance with the conditions of the scheme by the transferor‟s
    spouse/dependant and the transferee. The inheritance of the entitlement applies to all eligible
    applications received in 2004-2006.
 - If the beneficiary dies after the submission of application but prior the decision for support is taken,
    the early retirement support may be payable to his or her spouse/dependant for the balance of the
    period, provided the conditions of the scheme continue to be met. The inheritance of the entitlement
    applies to all eligible applications received in 2004-2006.

1.6.1.3. Farm worker
On the date of submission of application of the transferor, a farm worker must:
- be employed in the farm the holder of which have entered the early retirement scheme;
- be aged between 55 and 62 and 6 months (a male farm worker) or 55 and 60 (a female farm
    worker);
- have devoted no less than half of his working time as a family helper or farm worker in the 5
    years15 preceding the early retirement of the transferor;


15
     EC No1257/1999 Chapter IV, Article 11(3)


Consolidated version as of 5th March, 2008                                                                184
-    and have worked on the transferors farm for at least the equivalent of two years full time during the
     four year period preceding the early retirement of the transferor16;
-     have a right to receive state social retirement pension when he/she reaches the normal retirement
     age.
-    When a worker dies within the period of support the early retirement support is payable to his
     spouse/dependant for the balance of the period, provided the conditions of the scheme continue to
     be met. The inheritance of the entitlement applies to all eligible applications received in 2004-2006.
-    If the beneficiary dies after the submission of application but prior the decision for support is taken,
     the early retirement support may be payable to his or her spouse/dependant for the balance of the
     period, provided the conditions of the scheme continue to be met. The inheritance of the entitlement
     applies to all eligible applications received in 2004-2006.

1.6.2.Transferee:
1.6.2.1. Farming transferee
        On the date of submission of application of the transferor transferee must:
-    be up to 50 years old, except in the case of free and definitive transfer of the holding to a family
     member (the holding can not be transferred to a transferor‟s spouse);
-    Succeed the transferor as the head of the agricultural holding or to take over all or part of the land
     released.17
-    Possess occupational skills and competence.18
-    Undertake to practice farming on the agricultural holding for not less than five years; at the end of
     these five years shall present the documents proving that (one of the following):
                  the surface area of holding has increased (compared with the data of the year entering
               the Scheme as transferee) by 5% for specialized farms, 10% - for non-specialized farms;
                  the volume of works (livestock heads, tillage area, number of farm workers, the
               volume of contracted works) has increased, compared with the data of the year entering
               the Scheme as transferee;
                  the income has increased, compared with the data of the year entering the Scheme as
               transferee;
                  transferee has attended vocational training courses equivalent to minimum 100 hours;
-    Notify the Agriculture and Rural Development Register;
-    shall have no taxing arrears.
     Released land may be included in a re-parcelling operation or in a simple exchange of parcels. In
     such cases, the conditions to released land must be applied to areas equivalent to those of released
     land.

1.6.2.2. Non-farming transferee
        On the date of submission of application of the transferor transferee must:
-    be up to 50 years old, except in the case of free and definitive transfer of the holding to a family
     member (the holding can not be transferred to a transferor‟s spouse);
16
   EC No1257/1999 Chapter IV, Article 11(3)
17
   EC No1257/1999 Chapter IV, Article 11(2)
18
   EC No1257/1999 Chapter IV, Article 11(2)


Consolidated version as of 5th March, 2008                                                              185
-    must take over the released land and use for non-agricultural purposes, forestry or the creation of
     ecological reserves for not less than five years;
-    at the end of period of five years shall present the documents proving that (one of the following):
              the surface area of holding has increased (compared with the data of the year entering
             the Scheme as transferee) by 5%;
              the volume of contracted works has increased, compared with the data of the year
             entering the Scheme as transferee;
              the income has increased, compared with the data of the year entering the Scheme as
             transferee;
              transferee has attended vocational training courses equivalent to minimum 100 hours;
-    notify the Agriculture and Rural Development Register;
-    shall have no taxing arrears.

1.6.2.3. Agricultural enterprise
On the date of submission of application of the transferor transferee (legal person):
-has practiced farming at least for full 10 years preceding transfer;
-has no taxing arrears;
-can prove economic viability corresponding to the economic viability required19 from the applicant for
support under the SPD measure Investments in agricultural holdings;
-at the end of period of five years can prove economic viability corresponding to the economic viability
required20 from the applicant for support under the SPD measure “Investments in agricultural holdings”
and shall present the documents proving that (one of the following):
             the surface area of holding has increased (compared with the data of the year entering
            the Scheme as transferee) by 5% or there were at least 10 transferors succeeded during the
            period;
             the volume of contracted works has increased, compared with the data of the year
            entering the Scheme as transferee;
             the income has increased, compared with the data of the year entering the Scheme as
            transferee.

1.7. Duration of the payments

Early retirement support shall not exceed a total period of 15 years and shall not go beyond the 75
birthday of a transferor.
In the case of early retirement of farm worker early retirement support shall not exceed 7,5 years and
shall not go beyond the applicant‟s normal retirement age.


Indicative financial allocations for 2004-2006, EUR

19
   State Gazette, 2004, No.34-1112, Decree of minister of agriculture on the regulations for the establishment of economic
viability for the natural persons applying for support under the rural development and fisheries priority under the SPD
20
   State Gazette, 2004, No.34-1112, Decree of minister of agriculture on the regulations for the establishment of economic
viability for the natural persons applying for support under the rural development and fisheries priority under the SPD


Consolidated version as of 5th March, 2008                                                                         186
    Year        Total public        %              EU               %          National           %
                    cost                       contribution                  contribution
   2004          30,125,000        100,0          24,100,000       80,0         6,025,000        20,0
   2005          32,327,155        100,0          25,861,724       80,0         6,465,431        20,0
   2006          26,764,185        100,0          21,411,348       80,0         5,352,837        20,0
 2004-2006       89,216,340        100,0          71,373,072       80,0        17,843,268        20,0




Measure 2. Less-favoured areas and areas with environmental restrictions

This measure implements articles 13-21 of Council Regulation (EC) No 1257/1999 of 17 May 1999 on
support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF)
and amending and repealing certain regulations.

2. 1. Introduction
Due to natural, social, economic, traditional and other circumstances regional differences emerged in
Lithuania. Crop production, animal production and, accordingly, income and quality of life varies up to
3-4 times among the regions. It has also been observed a tendency of worsening demographic
indicators and more intense migration of population from the poor regions, which in certain areas lead
to critical level of depopulation.
With regard to this situation and arising problems, thorough analysis of regional disparities has been
performed considering all the major factors determining quality of life in different regions. As a result
of the analysis the Eastern, South – eastern and Western parts of the country were designated as less-
favoured.
It has been made a strategic decision by the Ministry of Agriculture of the Republic of Lithuania to
provide focused and systematic support to these designated areas by including this measure into the
Rural Development Plan of Lithuania 2004-2006. Under this measure farmers in the less-favoured
areas will be supported by compensatory allowances as provided by Article 14 of Regulation (EC) No
1257/1999.
Due to the implementation of nature protection requirements, the Natura 2000 network will be
established in Lithuania. The components of this network will be areas designated for protection of
wild birds and natural habitats. Firstly the protected areas for bird protection will be established. To
follow the requirements of protection of such areas the stakeholders will need to adhere to new nature
protection restrictions, which will be applied in these territories. The protection of three bird species:
corncrake (Crex crex), great snipe (Gallinago media) and aquatic warbler (Acrocephalus paludicola)
will have impact on the use of agricultural land, because they are breeding in agricultural land. For the


Consolidated version as of 5th March, 2008                                                            187
protection of these birds it is planned to restrict to plough up meadows and pastures in 24 sites. A map
indicating these areas and a table providing information on their size are included in Annex 10.


2.2. Delimitation and types of the less-favoured areas


The legal basis for delimitation of less-favoured areas and areas with environmental restrictions is
Regulation (EC) No 1257/1999.
According to Regulation (EC) 1257/1999, less-favoured areas may include:
        mountain areas (Article 18) of which there are none classified in Lithuania;
        other less-favoured areas (Article 19) characterised by:
             the presence of land with poor soil productivity,
            production which results from low productivity of the natural environment which is
           appreciably lower than the average;
             low population density.
        Other areas affected by specific handicaps (Article 20).

2.2.1. Less favoured areas according Article 19


       Less favoured areas for the programming period 2004 - 2006 are attributed using the following indices:
        the yield of cereals is lower than 80 per cent of the national average,
        the value of total agricultural production per capita employed in agriculture is lower than 80
       per cent of the national average,
        the population density is lower than 50 per cent of the national average,
        the percentage of active population engaged in agriculture is more than 15 per cent,
        the rate of population regression is 0.5 per cent per year or more.


   The presence of land of poor productivity;


The land productivity has substantial impact on the production and economic results of the farming
(particularly in crop production). Yield of crops varies more than 3 times in the land with different soil
productivity. The tendency of crop yield variation caused by soil productivity shows its significant
impact on the efficiency of cereal production.




Consolidated version as of 5th March, 2008                                                               188
According to data from the Lithuanian Department of Statistic the average yield of cereals was 2.73
ton/ha in 2002. The yield of cereals not exceeding 80 per cent of the national average is considered to
be considerably below the national average (2.18 ton/ha). According to this criterion the yield of
cereals is defined as considerably below the national average in 26 municipalities, of which 6
municipalities have reported the yield of cereals less than 60 per cent of the national average and 9
municipalities less than 70 per cent of the national average (Table 1, Annex 3).

   The agricultural production per capita is appreciably lower than the national average;

   The criterion of the value of total agricultural production per capita employed in agriculture is taken
to justify a lower efficiency of production. The total agricultural production is calculated in current
prices and covers the value of production of the gross yield harvested in year, of production of
perennial grasses and decorative seedlings, of livestock and poultry products, fish catch in artificial
ponds and breeding animals for fur production. It comprises products sold to the public institutions, at
market places and other places; products consumed, products used as raw material in processing, by-
products (straw, downs, etc.) and variation of the residual value of work-in-progress goods at the
beginning and at the end of the year (Table 2, Annex 3).
 A low or dwindling population predominantly dependent on agricultural activity, the accelerated
decline of which would jeopardise the viability of the area concerned and its continued habitation.
The criteria of population density, rate of regression and percentage of population engaged in
agriculture were used to justify third criteria of Article 19.
The low population density criterion is defined as 50 per cent below the national average. In the
beginning of 2003 the average population density in Lithuania was 30.7 inhabitants per square
kilometre (excluding cities and townships). According to this criterion 22 municipalities with the lower
population density than 50 per cent of the national average have been selected (15,4 people per square
kilometre) (Table 3, Annex 3).
The critical rate of regression has been set at the level of 0.5 per cent or more. A total of 36
municipalities during 2000 – 2003 had corresponding regression to this criterion (Table 4, Annex 3).
The share of active population engaged in agriculture exceeding the limit of 15 per cent has been
observed in 49 municipalities (forecast data of Population and housing census 2001) (Table 5, Annex
3).
After evaluation of economic, social and demographic criteria in different rural areas 19 municipalities
have been designated as less favoured areas of Article 19 of Regulation 1257/1999.
Four municipalities marginally do not match the criteria on population density (Salcininkai, Šilutė,
Pagegiai) and rate on population regression (Plunge). However, these municipalities play an important
role in terms of protection of landscape and biodiversity (see Annex 3). Moreover, they are designated
as less favoured areas as well. Šilutė municipality and Pagegiai municipality are also attributed to the
areas vulnerable to flooding, where floods occur on regular basis. These areas are important in terms of
living environment for local people and in terms of native environment for Lithuania itself as well as
for all Baltic countries. The meadows of Nemunas lower reaches serve as a filter for silt and pollution
from the Nemunas catchment‟s area. Flooded parts of lower reaches of Nemunas river‟s meadows and



Consolidated version as of 5th March, 2008                                                           189
lagoon are the main spawning areas for fishes from the Curoonean sea. Besides, in the autumn and
spring time flooded meadows serve as resting areas for migrant birds.

Table 1. Summary of calculations

Criterion                                National      Target value for Number            of
                                         average       LFA‟s            municipalities which
                                                                        fulfil criterions
Yield of cereals, ton/ha                 2.7           2.18                 26
The value of total agricultural 21 500                 17 200               19
production per capita employed in
agriculture, Lt/year
Population density, people/km2           30.7          15.4                 22
Share of active population engaged in                  > 15                 49
agriculture, %
The rate of population regression,                     > 0.5                36
%/year


Table 2. Municipalities according Article 19

                Municipalities                      Agricultural area, ha

Švenčionys r.                                              45537

Molėtai r.                                                 62675

Zarasai r.                                                 49041

Ignalina r.                                                60065

Trakai r.                                                  37146

Varėna r.                                                  46841

Rokiškis r.                                                98591

Utena r.                                                   60882

Anykščiai r.                                               96097




Consolidated version as of 5th March, 2008                                                 190
Ukmergė r.                                                     74489

Rietavas                                                       21253

Šalčininkai r.                                                 64690

Širvintos r.                                                   49571

Lazdijai r.                                                    57392

Telšiai r.                                                     72063

Plungė r.                                                      55068

Pagėgiai                                                       37613

Šilutė r.                                                      80900

Elektrėnai                                                     24958

LFA according          to   19   Article   (at                1094872
municipality level)

The significant contrasts of the Lithuanian demographic situation and land productivity can be
observed. Therefore it is essential to attribute to less favoured areas also some areas on ward (NUTS 5)
level. The wards which meet the demographic criteria and the criterion of yield of cereals are listed
below (Table 3).

Table 3. LFA in ward level
                    Yield of    Population Rate of      Population engaged Agricultural
         Ward       cereals,    density 1 regression in agriculture and     area, ha
                                    2
                    ton/ha      /km                     forestry, %
Alytus r.
Daugai                     2,04        14,2        -3,9                19,5          8101
Raitininkai                1,17        12,4        -2,6                53,4          4196
Druskininkai r.
Leipalingis                1,86        10,5        -0,8                  33          7239
Viečiūnai                  1,63         7,9        -0,5                15,6          1350
Jonava r.
Dumsiai                    1,47        10,8        -0,7                22,8          1656
Upninkai                   2,03        10,9        -1,7                19,7          5089
Kaunas r.
Zapyškis                   11,5        14,9        -0,5                28,4          3627
Kaišiadorys r.



Consolidated version as of 5th March, 2008                                                         191
Nemaitonys                       1,69          15,1           -2,7                     48,6              4187
Kruonis                          1,76          13,4           -0,6                     42,5             10469
Palomenė                         1,91          12,3           -5,6                     42,0              6925
Paparčiai                        1,69          12,9           -1,4                     57,8              4529
Prienai r.
Stakliškes                       1,85          13,4           -1,3                     45,0             10846
Klaipėda r.
Dovilai                          1,74          15,3          -19,4                     28,5              8294
Priekulė                        1,49          22,6            0,7                     29,7              7912
Raseiniai r.
Šiluva                           1,83          14,4           -2,8                     52,9              8737
Skuodas r.
Barstyčiai                       1,88           8,1           -1,8                     55,1              4643
Notėnai                          2,15          14,8           -1,7                     80,8              6569
Kazlų Rūda
Jankai                           2,17          9,19           -4,0                     59,6              4216
Šakiai r.
Lekėčiai                         1,95          10,8           -1,3                     44,6              2369
Vilkaviškis r.
Vištytis                         1,63           9,3           -2,5                     34,7              7093
Graţiškiai                       2,16          10,1           -0,6                     69,7              8254
Kupiškis r.
Kupiškis                         2,02          15,1           -0,5                     15,7             15473
Panevėžys r.
Karsakiškis                      2,13          10,6           -0,5                     34,7             11225
Akmenė r.
Kruopiai                          2,1          11,9           -7,3                     33,6              6738
Kelmė r.
Vaiguva                          2,03          14,7           -2,9                     61,9              5477
Uţventis                         2,18          14,9           -0,5                     56,5             13279
Kraţiai                          2,16           9,9           -0,5                     57,5             14997
Šaukėnai                         1,94          15,2           -0,9                     56,5             11846
Pakraţantis                      2,11          14,8           -0,6                     60,8              9955
Radviliškis r.
Šiaulėnai                        1,76         11,98           -2,1                     50,6              9823
Jurbarkas r.
Viešvilė                         2,01          13,6           -0,6                     24,2              2521
Šilalė r.
Bijotai                          1,79          15,2           -0,9                     74,7              4939
Bilionys                         1,37          13,7           -1,3                     61,9              2786


  Priekule does not meet criteria of population density and rate of regression but as flooding area is important to the
biodiversity and its richness, to landscape protection.


Consolidated version as of 5th March, 2008                                                                      192
Kaltinėnai                    1,62         14,2         -0,5                   53,2              9295
Kvėdarna                      1,47         15,4         -0,5                   29,3              7234
Laukuva                       2,02         15,2         -0,6                   50,8             10615
Palentinys                    1,33         11,6         -3,8                   61,1              1841
Šilalė rural                   1,8         15.2         -0.5                   40,6              7565
Teneniai                       2,0          6,3         -1,2                   52,3              2146
Traksėdis                     1,69         15,2         -0,5                   40,6              4480
Upyna                         1,65         15,4         -0,5                   72,5              6768
Ţadeikiai                     2,14         14,4         -0,8                   50,7              3324
Tauragė r.
Gaurė                         1,93         12,1         -1,4                   41,7              7702
Batakiai                       1,9         14,3         -4,1                   47,2              5119
Lauksargiai                   1,94         14,4         -2,1                   65,3              5143
Ţygaičiai                     1,76         12,6         -1,7                   72,9             10869
Mažeikiai r.
Seda                          2,14         15,4         -2,0                   35,5             7254
Vilnius r.
Buivydţiai                     1,8         11,3         -0,6                   42,4            3444
Dūkštai                       1,36         13,2         -0,5                   40,2            5024
Medininkai                    0,91         13,5         -1,2                   31,5            4019
Suţionys                      1,49         13,5         -0,7                   46,2            7988
Total                                                                                        345190
A total of 42,7 % or 1 440 062 ha of agricultural land is attributed to LFA under Article 19.


2.2.2. Areas affected by specific handicaps (Article 20)
The Extreme Karst zone in which the Karst phenomena constitute natural handicap to farming has been
designated as less-favoured area.
Karst process and the phenomena related with it spread in one third of the world land. The deliquescent
solid and internal water streams are the necessary factors for the Karst process. Distinctive relief and
underground Karst formations are the outcomes of the Karst process and as a result they cause the
restrictions to farming aiming to protect underground water from pollution. North Lithuanian Karst
zone differs and is composed of Karst protection zone and Extreme Karst zone. Considering the criteria
of ecological vulnerability, different crop structure, different plant fertilization and protection systems
in the Extreme Karst zone are recommended. Parts of Birţai and Pasvalys municipalities are designated
as Extreme Karst zone by the resolution of Lithuanian Government No 589 of 1991.


Agricultural activities in Extreme Karst zone is regulated by this resolution. According to it the limits
of 40-50 per cent of grain and 40-60 per cent of perennial grass are set in crop structure. In some cases
only meadows must compose the crop structure. Planting of cultivated crops (potatoes, vegetables,
sugar beat) is forbidden or can be limited up to 10 per cent of crop structure. In some cases the use of
fertilizers is forbidden or it is under restrictions (can not go beyond the limits of 60 – 80 kg/ha of


Consolidated version as of 5th March, 2008                                                              193
azote, phosphorus and kalium). The use of chemical plant protection materials in some cases is
forbidden; in other cases it is limited only to particular chemicals.
Due to the restrictions of using manure and chemicals or due to prohibition of using them the yield of
agricultural plants in extreme Karst zone decreases by 20 – 50 per cent. (Table 8, Annex 3). The yield
of cereals in extreme Karst zone is below 80 per cent of the national average (2,18 ton/ha). Due to these
additional requirements that go beyond the Nitrates Directive the cereal yield decreases and therefore it
has an effect on the farms‟ economical results.


Municipality and ward                        Karst zone in agricultural land, ha
Biržai municipality
Nemunelio Radviliskis                        1243
Pabirţė                                      6786
Pačeriaukštė                                 1871
Parovėja                                     1632
Širvena                                      6829
Pasvalys municipality
Krinčinas                                    2072
Smilgiai                                     1921
Pasvalys                                     4567
Total                                        26921

A total of 0,8 % or 26 921 ha of the agricultural land in Lithuania falls within areas affected by specific
handicaps (Article 20).


The total less-favoured utilisable agricultural area covers 1.466,983 ha or 43.5 % of the total utilisable
agricultural area in Lithuania, which is 3.369,9 thous. ha. The map showing all designated less favoured
areas is presented in Annex 3.


2.2.3. Areas with environmental restrictions (Natura 2000 areas)


The Natura 2000 territories have been selected according the national criteria for selecting the Sites of
Community Importance (SCI) and Special Protected Areas (SPA). By Order No. 219 of 20 April, 2001
of the Minister of Environment the criteria for selection of pSCIs were adopted. By Order No.22 of 9
January, 2001 of the minister of Environment the criteria for selection of sites for protection of birds
(SPAs) were adopted. At this moment all together 83 Natura 2000 territories for protection of wild birds


Consolidated version as of 5th March, 2008                                                            194
have been selected in Lithuania. The list of special protected areas (SPA) and list of potential sites of
Community importance (pSCI) were submitted to the Commission on the 30 of April 2004.
24 of 83 sites (or certain parts of these sites) are designated to protect nesting birds in meadows
(corncrake (Crex crex), great snipe (Gallinago media), aquatic warbler (Acrocephalus paludicola)). The
locations of these protected habitats of birds vere approved by the order No. D1-270 of Ministry of
Environment in May 17, 2004. Protection of these bird species requires keeping the possibly higher
percentage of meadows and pastures. Therefore it is planned to preserve existing meadows and pastures
through the establishment of new protected areas or introduction of new restrictions relevant for
protection of meadow‟s birds in existing protected areas. The total area of meadows and pastures to be
saved in these 24 sites is approximately 30 000 ha. The other restrictions to be set in these territories (as
provided in the text below) are foreseen as well. The most important restrictions set is the prohibition to
transform meadows and pastures into arable land and the prohibition to mow grass until 15 of August. In
cases of great snipe and aquatic warbler protection areas are wet, so it is important to leave hydrological
regime as natural as possible (See Annex 10).
2.3. Objectives of the measure

As already mentioned the overall objectives for the LFA measure are:

   to ensure sustainable use of agricultural land and thereby contribute to the maintenance of a viable
    rural community,
   to maintain farming in LFA and to maintain the countryside
   to improve environment in LFA considering compliance with Good farming practice
   to ensure implementation of the environmental restrictions and proper farming in areas with
    environmental restrictions

The specific objectives for the LFA measure are:

   70000 farmers in LFA comply with good farming practice
   Maintenance of farming in LFA
   Maintenance of farming in territories with environmental restrictions

The operational objectives of the LFA measure:

     26000 farmers in HDA with a total area of 301 305 ha enters the LFA scheme
     44000 farmers in LDA with a total area of 1 165 678 ha enters the LFA scheme
     5000 farmers will apply environmental restrictions in Natura 2000 areas for bird protection.

Expected impacts and results for LFA measure
Measure      Output                     Result                    Impact
             (Operational objectives)   (Specific Objectives)     (Overall objectives)
LFA          26000 farmers in HDA 70000 farmers in LFA Ensuring the sustainable use of
             with a total area of 301 comply with  good agricultural land and contribution to
             305 ha enters the LFA                      the maintenance of a viable rural


Consolidated version as of 5th March, 2008                                                             195
             scheme                   farming practice         community,

             44000 farmers in LDA                              Maintenance of farming in LFA and
             with a total area of 1 Maintenance of farming     maintenance the countryside
             165 678 ha enters the in LFA
             LFA scheme                                        Improvement environment in LFA
                                    Maintenance of farming     considering compliance with Good
             5000 farmers will in territories with             farming practice
             apply environmental environmental
             restrictions in Natura restrictions               Ensuring implementation of the
             2000 areas for bird                               environmental restrictions and proper
             protection                                        farming in areas with environmental
                                                               restrictions.


   2.4. Eligibility criteria

Compensatory allowances will be paid to private or legal persons registered on Agriculture and Rural
Development Register.
Compensatory allowances will be paid on an area basis. An eligible hectare of land is each declared
hectare of utilizable agricultural land (arable land, pastures, and permanent crops) in the designated
less-favoured areas subject to a minimum of one hectare. Forest area will not be eligible for support.
An eligible hectare in areas with environmental restrictions is each declared hectare of meadows,
pastures to a minimum of one hectare.
So in order to be eligible for compensatory allowances:

    Private or legal person must to declare utilizable agricultural land (arable land, pastures,
     permanent crop);
    farm or part of it on which compensatory allowance is claimed must be registered in the
     designated less-favoured area or area with environmental restrictions;
    a minimum area to be farmed in less favoured areas is 1 hectare;
    a minimum area of meadows, pastures in areas with environmental restrictions is 1 hectare;
    farmer must undertake to remain in farming for 5 years from the first payment of compensatory
     allowance;
    legal persons have not debts to the budget of the Republic of Lithuania, to the budgets and
     funds of municipalities,
    farm in accordance with the principles of Good farming practice,
    the land in less favoured areas must be of good agricultural condition (except areas with
     environmental restrictions).

After the beneficiary enters Early Retirement scheme granting of support under this scheme should be
stopped.



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Beneficiaries receiving support for Natura 2000 are not eligible for support under Landscape
stewardship and Protection shore belts of surface water bodies in meadows and arable land schemes in
Agri-Environment measure.


Environmental restrictions applied on agricultural land in the Natura 2000 areas for bird
protection:
    prohibited to change objective land purpose
    prohibited to transform meadow and pastures to arable land
    prohibited to change hydrological regime, if for that, the area‟s protective conditions will get
       worsen
    prohibited to plant forest
    prohibited to mow grass until 15 of August.

The supervision of proper pursuance of these restrictions will be checked by The National Paying
Agency.


2.5. Differentiation
Article 15 of Regulation (EC) No. 1257/1999 provides that compensatory allowance payments shall be
duly differentiated taking into account:
          the situation and development objectives peculiar to the region;
          the severity of any permanent natural handicap affecting farming activities;
          the particular environmental problems to be solved;
          the type of production and economic structure of a holding.
In Lithuania the aid will be differentiated to reflect different levels of severity of permanent natural
handicap experienced within LFAs. Analysis of the Lithuanian LFAs showed significant differences
within these areas. Therefore, LFA land will be further subdivided into two land classification
categories as follows:
          Highly Disadvantaged Areas (HDA)
          Less Disadvantaged Areas (LDA).
The municipalities that fall under category HDA and LDA are presented in Table 6 of Annex 3. The
areas attributed to LFA at ward level and areas affected by specific handicaps fall under category LDA.


2.6. Compensatory allowances




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As it is stated by the Article 15 of Regulation (EC) No. 1257/1999, compensatory allowance shall be
fixed at a level which is sufficient in making an effective contribution to compensation for existing
handicaps and avoids overcompensation.
One of the objectives of this measure is reducing differences of income levels between non-LFA areas
and less-favoured areas. To identify income differences and to calculate compensation allowances the
data of the value of gross production per hectare (in constant prices) has been used (Table 7, Annex 3).
The compensatory allowances are provided in the table below:

                Area                              Compensatory allowance
                                                          EUR
                HDA                                           75.3
                LDA                                           56.4

If only a part of holding (several blocks or fields) is attributed as LFA, compensation allowances will
be calculated for this part.

Areas with environmental restrictions cover LFA and non-LFA areas. The compensatory allowance is
set at 89 EUR/ha (308 Lt/ha) and will be paid starting 2005.
The amount of compensatory allowance in these areas calculated setting the difference between usual
practice and practice with restrictions (Table 10, Annex 3). The case of usual agriculture practice is
comparing with set restriction not to mow grass until 15 of August.




2.7. Indicative financial allocations, EUR

  Year       Total public      %          EU              %            National      %
                 cost                 contribution                   contribution
  2004        47,000,000     100,00    37,600,000        80,0         9,400,000     20,0
  2005        48,000,000     100,00    38,400,000        80,0         9,600,000     20,0
  2006        82,142,600     100,00     65,714,080       80,0        16,428,520     20,0
2004-2006     177,142,600    100,00    141,714,080       80,0        35,428,520     20,0




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Measure 3. Agri-Environment

This measure is in accordance with Articles 22-24 of Council Regulation 1257/1999

3.1 Introduction

The aim of implementation of common environmental objectives is to guarantee the balanced
development in the country‟s territory, to form healthy and harmonious living environment, natural and
cultural landscape elements and ecological stability. Also to differentiate country‟s management
according to the differences in socio-cultural, economical conditions and distribution of resources.
Lithuania traditionally is agricultural country that rural landscape and culture are of utmost important
for forming natural and cultural individuality.
These facts were considered establishing agricultural policy. Aim of this policy is to use the appropriate
structure of the use of land, to stop the decay of ecosystems, to protect the natural shore of rivers and
lakes, natural meadows, recreation environment, to optimise natural resources and to preserve
landscape and biodiversity, to decrease the negative effect of agricultural activities and to establish a
healthy natural environment.

3.2 Evaluation Of Agrarian Environmental Situation Of Lithuania

The area of agricultural land is 53 % of total area of the country. Therefore situation of agrarian
ecosystem is very important. The changes of land use restitution of land ownership rights decrease
areas of agricultural land and not such intensive farming also scarce use of agricultural engineering
made the conditions for the increase of temporary not used agricultural land for production, for the bad
land management.
Most affected meadows were used intensively and were impoverished. The area of remaining meadows
is decreasing, either because these meadows accrete by low value forest and/or bushes. Economically
strong farms use these meadows intensively for the pastures and impoverish them, because the
economical – juridical basis for the protection of meadows is not created yet. In some regions there is
temporarily not used agricultural land, which transforms itself with time into a not tended, shrubby
meadow.
The rearing of animals of local breeds in danger of extinction is designed to assist in the conservation
of rare breeds. These breeds might otherwise become extinct, were no support made available.
Main source of drinking water is underwater (groundwater). About 2/3 of Lithuanian population use
water-supply system, feeding by drinking water and about 1/3 of inhabitants (mostly in countryside)
store for drinkable water individually from dig wells (in Lithuania is about 300.000 of dig shaft wells).
In 1/3 of them concentration of nitrates is better than allowable norm. Imputed wells are located
gradually in all Lithuanian territory. Main reasons for the pollution of water wells are wrongly chose
location of well, infraction of protection and sanitary zones from dangerous pollution sources. The
most problem quality of water wells is in countryside.
In surface water bodies from 1993 concentration of nitrates started to decrease, but was still better than
1990. In 1997 was registered increase concentration of nitrates. In 1998 concentration of nitrates



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reached middling tainted rivers level 2.5 mg/l. Last 15 year in Kuršių sea quantity of fitoplancton,
which signify level of water eutrofication, increased 20% and has trend to mount.
Agriculture and agri-environment are inseparable and experience of various country shows that most
agri-environmental effect maybe achieved in using methods of agriculture production, which are best
for country. In Lithuania dominant small and medium size of that farms is 9.1 ha. Number of such
farms is 230.00 or 83%. Size of average farm is 10-50 ha, number of such farms - 43.000 or 15%.
Changes of farming system, decrease of size of farms and decrease of use of pesticides make good
conditions for organic farming.
In different country‟s places were made some researches and they shows that in food number of
pesticides and number of heavy metals in milk, potatoes, in carrot, in bitterroot, in flour of rye and
wheat, in egg, in chicken meat, in beef meat is allowed by hygiene norms.

Organic farming in Lithuania started in 1990, and the certification system was established. From 1997
organic farmers receive direct payments from national budget. Certificated areas in year 2003 increased
to 23244 ha (0.8% of total utilised agricultural area), or to 3 times the area in year 2002. This shows
the expedience of promotion and development of organic farming, and expedience of improvement of
conditions of agrarian environment. Organic farming, implemented by modern environment-friendly
technology, will motivate: the produce of high quality agricultural products; increase the fertility of
soil, reduce of environmental pollution, preserve the biodiversity, keep food production of natural
quality, provide favourable conditions for social living conditions in rural areas.

3.3 Objectives of measure

The overall objectives for the agri-environment measure are the following:
        -   Improvement of the environment (water quality, biodiversity, soil and landscape;
            preservation of semi-natural agricultural habitats and other important ecological important
            areas) and production of healthy food;
        -   Provision of further source of income to farmers supplying environmental services resulting
            from the adoption of environmental-friendly farming practices going beyond usual good
            farming practice.
        -   Reduction of the anthropogenic (of agricultural origin) load on the environment;
        -   Improvement of the quality of surface and underground water, reduction of negative impact
            on the environment of plant protection products;
        -   Restoration or preservation of the traditional landscape of the Lithuanian countryside
            (meadows, marshes (wetlands));
        -   Production of good quality agricultural produce, while maintaining healthy environment for
            future generations;
        -   Improvement of rural population working and living conditions;
        -   Keep and rear local endangered breeds of native domestic animals on farms;
        -   Increase farmers‟ awareness of more environmentally friendly production practices.
The specific objectives for the agri-environment measure are:
   Decrease in run-off by N and a following reduction in eutrophication;
   Decrease of erosion;


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   Farmland under organic farming occupies 2% of all agricultural land.
The operational objectives of the measure:
3 000 farms with a total of 60 000 ha enters the agri-environment scheme.
Expected impacts and results

Measure       Output                   Result                     Impact
              (Operational             (Specific Objectives)      (Overall objectives)
              objectives)
Agri-         3000 farms with a total Decrease in run-off N   Improvement of the environment
environment                                                   (water quality, biodiversity, soil
              of 60 000 ha enters the and a following reduction
              agri-environment        in eutrophication       and landscape; preservation of
              scheme.                                         semi-natural agricultural habitats
                                      Decrease of temporary   and other important ecological
                                      not used land           areas) and production of healthy
                                                              food.
                                       Decrease of erosion    Provision of further source of
                                                              income to farmers supplying
                                       Farmland under organic environmental services resulting
                                       farming occupies 2% of from the adoption of environmental
                                       all agricultural land  friendly farming practices going
                                                              beyond usual good farming
                                                              practice.
                                                              Building capacity and increase of
                                                              farmers‟ awareness of more
                                                              environmentally            friendly
                                                              production practices.

3.4 Motivation of selection of schemes

Scientific research shows that leaving of an unattended protection belt alone does not solve all
environmental problems. Unattended belts overgrow with lush vegetation, bushes. This results in the
changes in the traditional agrarian landscape, whereas due to left over fallen plants the washing of
nutrients into surface waters increases.
In implementing reclamation works equipped 65.000 trench, which protected shore belts unattended
suitably and don‟t accord theirs purpose.
Countryside, agriculture and agri-environment are inseparable, because of pollution emerged by
nitrates and pesticides and caused by agricultural activities impoverishes environment. Therefore to all
countryside‟s problems shall be viewed like to social and organic integer. One of most popular social-
economical and agri-environmental measure of solution in countryside is organic agriculture
production. That hang of farming helps to solve not only employment of dwellers, agriculture
production and supplementary incomes questions and but also influence like preventive agri-
environmental measure.



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3.5 Scope of the Measure

The agri-environmental measure consists of the following schemes:
1. Protection shore belts of surface water bodies in meadows and arable land and prevention of soil
erosion;
2. Landscape Stewardship Scheme;
3. Organic Farming Scheme;
4. Rare Breeds Scheme.

3.6 General requirements for the participation

Beneficiaries:
Farmers, private or legal persons on own or tenant land (land lease contract must be signed at least for
5 years) which are registered their agricultural holding in Agriculture and Rural Development Register.

Requirements for beneficiaries:
       -   Size of owned or leased farm – minimum 1 hectare;
       -   Agricultural holding must be registered in Agriculture and Rural Development Register;
       -   Shall accept agri-environmental obligations for at least five years;
       -   Fill in a standard application and undertake to meet the requirements laid down in the
           Scheme;
       -   Shall commit to adhere Good Farming Practice requirements throughout the farm.

If applicant decides to participate in several schemes of the measure the payments can be paid only for
activities carried out in the different fields of the farm (this provision does not apply for Rare breeds
scheme);
If applicant during the period of participation in the scheme wishes to join another scheme, then filling
in a new standard application form is required.

3.7 Procedure for submission of application
Applicant shall present:
       -   document proving land ownership or land lease contract (land lease contract must be signed
           at least for 5 years);
       -   filled standard application form and the plan of farm, which provides the marked area where
           the scheme is to be implemented.




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3.8 Description of Schemes

3.8.1 Protection shore belts of surface water bodies in meadows and arable land and prevention
of soil erosion
Scientific research shows that leaving of an unattended protection belt alone does not solve all
environmental problems. Unattended belts overgrow with lush vegetation, bushes. This results in the
changes in the traditional agrarian landscape, whereas due to left over fallen plants the washing of
nutrients into surface waters increases.
The problem of installing of protective shore belts of surface water bodies especially actual in the
northern part of Lithuania, distinguished for a peculiar geological composition and geological
phenomena, characterised by Karst process in the surface of the ground. Due to intensive farming and
cattle rearing in Karst areas the pollutants with surface water flow penetrate rather easily trough
sinkholes and porous soil into underground waters and cause the deterioration in the status of the
underground water.
Installation of protective shore belts in meadows and in arable land is necessary for protection of water
pollution by nutritional load.
It is very important to avoid negative effect of soil erosion. Harm caused by water and wind erosion
varies very much: washout of fertile soil layer and nutrients from slopes, destruction of crop fields in
eroded slopes and in arable land, destruction of ditch slopes and roads, blocking of ditch bed with
sediments, silting of water bodies and water pollution. Installation of protective shore belts decreases
soil erosion, especially in the most affected areas.

Specific requirements:
      Protection shore belts of surface water bodies (hereinafter referred to as protection belts) shall
       be installed on the banks of natural or regulated rivers and streams, melioration ditches, the
       shores of lakes and quarries ;
      The total length of protection shore belts along a water bodies must be at least 50 metres;
      All surface water bodies in farm should be covered by the action;
      Protective shore belt in meadows and in arable land shall include the obligatory protection shore
       belt (the one obligatory according to the national regulations defining protection zones of
       surface water bodies and protection shore belts) and additional extension according with this
       scheme, which has to be marked on farm map.
Applicant shall:
to install the following width of protection belts:
       -   when width of protection shore belts according national legal acts are till 5 metres
           additionally leave 1 metres width belt;
       -   when width of protection shore belts according national legal acts are from 5 to 10 metres
           additionally leave 2 metres width belt;
       -   when width of protection shore belts according national legal acts are from 10 to 25 metres
           additionally leave 3 metres width belt;



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       -   when width of protection shore belts according national legal acts are more than 25 metres
           additionally leave 5 metres width belt;
    additional protective belt in arable land shall be installed by sowing it with mixtures of
   perennial grasses not later than 1 July in the first year of the participation in the programme;
    grazing on the protection belts and on the slopes of the shores of surface water bodies is
   prohibited;
    ploughing, use of fertilisers, use of plant protection products, cutting of trees on the
   protection belt is prohibited. Grass mowing shall be made once a year (start mowing not earlier
   than 15 of August and end not later than 30 of September);
    mow the slopes of melioration ditches once a year (start mowing not earlier 15th August and
   end not later than 30th of September) cut bushes;
    remove mowed grass and cut bushes from the protection belt or the slope of the shores of
   surface water bodies not later than 15th of October.

Beneficiaries receiving support for Natura 2000 under Less favoured areas and areas with
environmental restrictions are not eligible for support under Protection shore belts of surface water
bodies in meadows and arable land scheme.

Payment rates:
For management of protection shore belt of surface water body and of slopes of melioration ditches in
accordance with the national legal acts - 206 EUR/ha;
For management of protection shore belt additionally installed meadow - 93 EUR/ha;
For management of protection shore belt additionally installed arable land –140 EUR/ha.

3.8.2 Landscape stewardship scheme
The objective of this Scheme is to maintain meadows, especially natural and semi-natural meadows,
marshes (wetlands). This scheme is very important for the protection of biodiversity, biotopes, natural
and semi-natural meadows. As agricultural landscape with insertions of natural components comprises
biggest part of Lithuanian territory, farmers will help a lot in conservation of biological diversity and
restoration of traditional landscape. By implementing of this scheme the whole complex of living
organisms species, their habitats and genetic diversity will be preserved.
Marsh (wetland) – is a soggy area distinguished for typical vegetation, where waterlogging is in
process
Natural or semi-natural meadows mean meadows, which have been established more than for 2 years
before entering the scheme.

Specific requirements:
       -   actions shall be applied only in meadows, marshes (wetlands);
       -   minimum 0.5 ha of land should be covered by the action.
Applicant shall:




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       -   not use pesticides and fertilizers in meadows marshes (wetlands), to move them every year,
           start of moving not earlier than 15th of August, but not later than 30th of September;
       -   preserve traditional biotypes in the meadows by not ploughing and re-sowing with cultural
           grass species;
       -   retain isolated trees in meadows, cut bushes;
       -   not graze in the marshes (wetlands);
       -   mowed grass and cut bushes must be removed (till 15th of October);
       -   not install new drain systems near marshes, ponds, situated on the farm.

Beneficiaries receiving support for Natura 2000 under Less favoured areas and areas with
environmental restrictions are not eligible for support under this scheme.
Landscape stewardship scheme can be implemented either on a part of holding or on all holding.


Payment rates:
For management of marshes (wetlands) - 229 EUR/ha;
For management of meadows - 89 EUR/ha.

3.8.3 Organic farming scheme
The aim of this scheme is to support organic farming as the production system that provides both
environmental and socio-economic benefits for rural areas and produces quality food products with
good and increasing market potential.

Support is given for the organic farms and farms in transitional period to organic farms for the certified
and declared area of land used for the production of organic food products.
Scheme of organic farming can be implemented either on a part of holding or on all holding.

Applicant shall:
       - follow the rules of organic production in accordance with the national legal requirements of
organic farming and requirements of the EU Regulation 2092/91;
       - yearly present certificate of organic farming;
       - not reduce certified area of organic farm;
       - yearly declare tillage.
Administration for year 2004:
In order to get payments for Organic farming scheme for year 2004 Organic farming certificate issued
by the competent certification body shall be presented. The certificate will approve that applicant has
implemented the requirements of the Organic farming programme that year. The payments for the year
2004 for organic farms will be maid till the end of calendar year 2004 on the basis of the certificates
presented.

Payments rates:
For cereals (including legumes and protein crops) – 416 EUR/ha;


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For vegetables and potatoes – 551 EUR/ha;
For orchards plantations –752 EUR/ha;
For berry plantation –734 EUR/ha;
For perennial grass –118 EUR/ha;
For herb plantations –456 EUR/ha.

3.8.4 Rare Breeds Scheme
This scheme is designed to preserve the local breeds of animals in danger of being lost to farming. The
objective of this measure is to encourage keeping and rearing of local endangered breeds of native
domestic animals.
Potential beneficiaries are allowed to breed animals by the pure-breeding only, i. e. using animals for
breeding inside race only, in accordance to the breeding plan.
Participants of the programme may renew the animal herds purchased from Gene Fond herds only, or
typical animal races, find during speditions, organised by competent authorities. Number of animals
involved in a programme established by recommendations of the competent authorities, depending on
breeds. Number of animals indicated in a commitment.
The local breeds in danger of being lost to farming and the number of breeding females according to
the Register of gene fund on 12th of December 2003 are the following:
      Ţemaitukai horses (Also Big Ţemaitukai) – 188 females;
      Lithuanian Weighted horses – 280 females;
      Lithuanian Rufous – 100 females;
      Lithuanian Black and White cattle (local found) – 100 females;
      Lithuanian Ash-Grey – 680 females;
      White-Backed cattle – 493 females;
      Lithuanian White pigs (old genotype) – 86 females;
      Lithuanian Native (Wattle) pigs – 150 females;
      Lithuanian Native Coarse woollen sheep – 554 females
      Lithuanian Blackhead sheep (old type) – 950 female;
      Vištinės geese – 300 females.

Specific requirements:
      The participant shall participate in breeding programme;
      The participant shall present note from competent authorities regarding the number of supported
       animals.

Applicant shall:
          keep number of animals indicated in a commitment;
          follow animal health and zoohygiene requirements, also animal welfare standards;
          yearly present note from competent authorities regarding the number of rare breeds animals
           in the farm.


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Payment rates:
- Ţemaitukai horses –191 EUR/livestock unit
- Big Ţemaitukai horses –197 EUR/livestock unit
- Lithuanian Weighted horses –148 EUR/livestock unit
- Lithuanian Ash-Grey and White-Backed cattle –180 EUR/livestock unit
- Lithuanian Rufous and Black and White cattle (local found) –180 EUR/livestock unit
- Lithuanian White pigs (old genotype) –186 EUR/livestock unit
- Lithuanian Native (Wattle) pigs –186 EUR/livestock unit
- Lithuanian Native Coarse woollen sheep –200 EUR/livestock unit
- Lithuanian Blackhead sheep (old type) –200 EUR/livestock unit
- Vištinės geese –188 EUR/livestock unit


0,83 horse = 1 livestock unit;
1 cattle = 1 livestock unit;
2,86 pig = 1 livestock unit;
7,14 sheep = 1 livestock unit;
56 geese = 1 livestock unit.
This definition is to be applied exclusively for the implementation of this measure.

Payments will be made for the animals of maturity age. This age for each breed will be determined in
national legislation.

Participant may expand the animal herd by own discretion and payments may be made for the number
of animals committed (annual payment).

3.9 Administration of measure
Implementing authority shall be the National Paying Agency under the Ministry of Agriculture.
The payment shall be made after a necessary checking has been carried out with a view to ensure the
fulfilment of the commitment conditions during the entire period.
Farms applying Organic agriculture measure shall be checked by certification bodies in accordance
with the procedure provided for in the Rules of the organic farming.
Farms applying for the Rare breeds scheme shall be controlled by the competent authorities.

3.10 Control

The implementation of an effective control system for the agri-environment measure is essential and will
have main objectives:
      - to prevent fraud or over-payments and to contribute to an efficient use of financial
          resources;




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        -      to ensure compliance with the relevant national and EU regulations regarding the use of
               EAGGF co-financing.

3.11 Selection Criteria

Upon receiving an application, the scheme administrators will check to ensure that it is eligible, that it
includes all the required information and has been submitted with the necessary supporting
documentation.
After application evaluation will be made, the applications will be ranked according to certain selection
criteria (see below) and those applications with the highest ranking (i.e. those capable of delivering the
most significant environmental and other benefits) will be selected.

No.         Priority criteria                                                               Points
            Location of the farm in a protected area (if at least one part of farm is in    50
1.
            protected area, all farm is in protected area)
2.          Organic farm                                                                    30
3.          Area, in that is implementing agri-environmental obligations - or each          20
            supplement ha – 1 point, maximum 20 points
            Total                                                                           100
In case of equal number of priority points, priority is given to the earlier submitted projects.


3.12 Indicative financial allocations, EUR

      Year           Total public           %               EU                  %            National        %
                         cost                           contribution                       contribution
      2004              15,000,000 100,00                  12,000,000          80,0              3,000,000   20,0
      2005              22,981,200 100,00                  18,384,960          80,0              4,596,240   20,0
      2006              44,911,420 100,00                  35,929,136          80,0              8,982,284   20,0
2004-2006               82,892,620 100,00                  66,314,096          80,0          16,578,524      20,0




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Measure 4. Afforestation of agricultural land

This measure implements articles 29-32 of Council Regulation (EC) No 1257/1999 of 17 May 1999 on
support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF)
and amending and repealing certain regulations.

4.1. Introduction
Afforestation of agricultural land is considered an important measure for diversification of agricultural
activities in order to reduce dependency on agriculture and improve environmental conditions in rural
areas. This measure is very important in international point of view, seeking to reduce environmental
pollution, because forests play an important role absorbing the pollutants discharged to the
environment. In addition, sustainable forest management contribute to the maintenance and enriching
of biodiversity, landscape entertaining and conservation of cultural heritage. Council Regulation (EC)
1257/1999 based on which the Rural Development Plan is being prepared and where this measure is
included, article 29(1) emphasizes that support for forestry, including afforestation of agricultural land,
shall contribute to the maintenance and development of the economic, ecological and social functions of
forests in rural areas.

4. 2. Description of the measure

As stated in the Council Regulation (EC) 1257/1999 article 29(3) support under this measure shall be
granted only for areas owned by private owners or by their associations or by municipalities or their
associations. The article 31(1) of the same Regulation sets that support shall be granted for the
afforestation of agricultural land provided that such planting is adapted to local conditions and is
compatible with environment.

Support under this measure in addition to planting costs (afforestation grant scheme) will also include
(Council Regulation 1257/1999 article 31):
      - an annual premium per hectare afforested to cover maintenance costs (forest maintenance
          premium scheme) for a period of up to five years, and
      - an annual premium per hectare to cover loss of income (lost income premium scheme)
          resulting from afforestation for a maximum period of 20 years for farmers or their groups
          (associations) thereof who worked the land before its afforestation for agricultural purposes,
          or for any other private physical or legal person.

The article 31(2) of the same Regulation states that support for afforestation of agricultural land
undertaken by public authorities will be provided only according to the afforestation grant scheme -
only the costs of forest establishment will be covered. In the case of fast growing species cultivated in
the short term (meaning that the period between two harvest cuts on the same parcel is less than 15
years – as defined in the Commission Regulation 817/2004 article 33(2)), support for afforestation shall
be granted for planting costs only (according to EC Regulation 1257/1999 article 31(3)). According to
the same article 31(3) no support will be provided in respect of the planting Christmas trees and for
those benefiting from early retirement scheme.



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The premium for establishment and maintenance of afforested land compensate actually made
expenditures of planting and maintenance costs occurred, not exceeding the maximum eligible amount
defined in this measure.

This afforestation measure proposed under Rural Development Plan will be complemented by a Forestry
measure under the Single Programming Document for Lithuania 2004 – 2006.

4.3. Objectives of the measure

The aim of the measure is to promote afforestation of agricultural land as an alternative land use, to
promote the development of forestry activities on the farm and also to help to solve the unemployment
problems in rural areas. These in turn will contribute to an eventual improvement of forest resources and
form of countryside management more compatible with environmental balance. Hence, the overall
objectives of the measure are as follows.

The overall objectives for the forestry measure are:

   Reduce dependency on agriculture of rural people
   Increase of economical, ecological and social value of land holdings
   Conservation of the environment, maintenance and promotion of biodiversity, enrichment of
    landscape
   Provision of new and long-term employment opportunities in rural areas
   Provision of further source of income

The specific objectives for the forestry measure are:

   Increase in forest area (12.000 ha of land afforested)
   Not less than 20 pct. of the afforested area is broadleaves species
   Approximately 20 pct. of the afforested area actualise priority function to contribute to the
    protection of soil, air, water bodies and rural areas.

The operational objectives of the measure are:

   About 2500 landowners receive afforestation support allocating an average 4-5 ha of land to
    afforestation.

Quantified objective hierarchy
Measure       Output                      Result                            Impact
              (Operational objectives)    (Specific Objectives)             (Overall objectives)
Afforestation About 2 500 landowners      Increase in forest area (12.000   Reduce dependency on agriculture
of            receive afforestation       ha of agricultural land           of rural people
agricultural support allocating an        afforestated)
land          average 4-5 ha of land to                                     Increase of economical, ecological
              afforestation               Not less than 20 pct. of the      and social value of land holding



Consolidated version as of 5th March, 2008                                                                 210
                                       afforestated area is broadleaves
                                       species                          Conservation of the environment,
                                                                        maintenance and promotion of
                                       Approximately 20 pct. of the biodiversity, enrichment of
                                       afforested area actualize        landscape
                                       priority function to
                                       contribute to the protection Provision of new and long-term
                                       of soil, air, water bodies and employment opportunities in rural
                                                                      areas
                                       rural areas
                                                                       Provision of further source of
                                                                       income


4. 4. Definitions

The chapter provides the definitions of “agricultural land “ and “farmers or associations thereof“ as
required by the Commission Regulation 817/2004 Annex II.

The EC Regulation 817/2004 article 32 defines that under this measure only afforestation of
agricultural land is a subject for support. This article requests to name what agricultural land could be
afforested. Therefore, the support is provided for afforestation of agricultural land, which has the
agricultural purpose status:

        -   Arable land
        -   Meadows
        -   Pastures
        -   Other land, which is registered in the Real Estate Cadastre as those having agricultural
            purpose status.

According to the EC Regulation 1257/1999 article 31(2) and the Annex of this Regulation request, the
applicants will be divided into two categories, namely “farmers and association thereof“ and “any other
private law person”.

Definition of “farmers or association thereof” in relation to lost income premium scheme is defined
according to Article 33 of Commission Regulation (EC) No. 817/2004.


4. 5. Eligibility criteria

The applicant must be the farmer, agricultural company, cooperative company (cooperative) or another
subject of agriculture activity, any other private law person, which are owner of agricultural land,
municipality or their association.
For this measure a “farmer or associations thereof” will be attributed to a private person or legal
entity if they fulfil these conditions:


Consolidated version as of 5th March, 2008                                                              211
1) At least 2 years prior forest establishment have declared their own utilised agricultural land (the
   land must be of good agricultural condition) to be afforested and agricultural holding to be
   afforested must be on Agriculture and Rural Development Register.
2) Have been doing bookkeeping for at least for 2 years prior forest establishment in accordance with
   national legislation or provide confirmation of local authority or other documents directly proving
   the land to be afforested had to be used for production of agricultural output. 21

The applicant who falls into this category also:

l. Must have no taxing arrears to the state budget of the Republic of Lithuania, budgets of
municipalities or other funds, into which taxes are collected and administrated by State Tax
Inspectorate, also is not indebted to State Social Insurance Fund Board.
2. Farmer shall have take bookkeeping in accordance with national legislation.
3. Farmer will not be granted support under this measure if he/she claims support under “Early
Retirement” measure.

All other applicants outside the “farmers and associations thereof” category fall under “any other
private law person” category and therefore qualify for the “any other private law person” rate in the
case of the lost income premium.
Their land must be of good agricultural condition. The status of agricultural condition will be checked
by the National Paying Agency.

The requirements for good agricultural condition are these:

     1. Arable land shall be planted with agricultural plants or it shall be left as green or black fallow. Black
        fallow shall be cultivated periodically in order to free it from weeds and to improve the quality of the soil.

     2. Meadows and pastures as well as perennial grasslands and pastures shall be maintained in good condition,
        used for grazing animals or/and the hay shall be harvested at least once a year (till the 15th of July).

     3. Hay or green mass shall be got in trim and removed from the field till the 1 st of August. Hay, straws and
        remnant plants may be mowed up on the edge of the field.

     4. Arable land, meadows, pastures as well as perennial grasslands and pastures shall be free from trees and
        scrubs, except in the case of the area of detached trees and bushes or a group of trees and bushes which is
        not to be deforested and not eligible one (i.e. excluded from the eligible area).

     5. Agricultural land shall be free from remnant herbs (hard herb plants - wormwood, thistle, and others). The
        presence of detached weed or herb humps on the field shall not be considered as non-eligibility.




21
  The "association" in this context means associations of forest or land owners, cooperatives or other structures established
by land or forest owners. All requirements are also valid for associations aiming at receiving higher Lost income premium.


Consolidated version as of 5th March, 2008                                                                             212
The applicant who falls into this category also has to register agricultural holding to be afforested in
Agriculture And Rural Development Register and have no taxing arrears to the state budget of the
Republic of Lithuania, budgets of municipalities or other funds, into which taxes are collected and
administrated by State Tax Inspectorate, also is not indebted to State Social Insurance Fund Board.

Afforestation Grant Scheme

To qualify for an afforestation grant an applicant must fulfil the following criteria:

           -    Permission for afforestation must be obtained from the local land management authorities.
                In addition, the afforestation plan should be prepared which has to be approved by state
                officer of forests22. Both documents together with application form should be submitted to
                the responsible authority.

           -    The area for afforestation and it‟s borders, tree species, their composition, densities and
                amounts to be planted according to the tree species, afforestation techniques, soil
                preparation pattern as well protection means to be used and the purpose of forest according
                to the Forest Law of the Republic of Lithuania should be described in the afforestation plan.
                There should be at least 20 percent of broad leave species and bushes in the planted forest.
                No support should be given to the establishment of pure conifer stands.

           -    Afforestation plan should be prepared in line with the guidelines established by the Ministry
                of Environment. In selecting tree species soil conditions should be considered.

           -    Selection of the protection means to protect forest from wildlife should be made choosing
                the most cost effective and environmental friendly method depending on the species
                planted.

           -    No support should be given for afforestation of areas less then 1 ha. In the case if newly
                established forest becomes a part of already existing forest min size restriction is not
                applied.

           -    No support for the establishment of shelterbelts.

Forest Maintenance Premium

To ensure that planted forest is being maintained and supervised in a sustainable manner the following
criteria should be fulfilled in order to qualify for a forest maintenance grant:
         - The plantation must be adequately planted and protected and be in line with the afforestation
            plan. That should be approved by state officer of forests during 1 month after planting.
         - Inventory of the planted forest carried out in first and third year after planting and the results
            of the inventories signed by the owner or his legitimate representative and state officer of

22
     The list of state officers of forests is approved by the order No. 427 of Minister of Environment on August 19, 2003.


Consolidated version as of 5th March, 2008                                                                                   213
           forests.
       -   In the case of not satisfactorily survival of the planted seedlings/sowed seeds (if more then 15
           % of planted seedlings/sowed seeds die) replanting/resowing should be made in order to
           fulfil the approved afforestation plan.
       -   The applicant must submit the certificate of the forest seedlings/seeds origin.
       -   Afforestation must be carried out and further maintenance of the stand should be compatible
           with the protection of the environment and comply with the regulations and guidelines issued
           by the Ministry of Environment.
       -   The condition of protection means applied (fences, individual tubes) are of satisfactory
           condition.

Lost Income Premium Scheme

This scheme applies to those who plant some or all of their land under the afforestation grant scheme.

The lost income premium is paid for 20 years for farmers or associations thereof who worked the land
before its afforestation or for any other physical or legal person. To qualify for the farmer rate of
premium applicants must comply with the definition of farmers or associations thereof (see definition
above).

4. 6. Description of eligible actions

Afforestation grant scheme

All undertaking afforestation of agricultural land may apply for afforestation grant. The afforestation
can be done using different forest establishment methods such as planting of seedlings, sowing.

The afforestation grant scheme is applicable all over the country and covers the following costs:
       -   Preparation of afforestation plan
       -   Site preparation
       -   Seedlings/seed costs (including transportation of seedlings)
       -   Planting/seeding of seedlings/seeds

Forest maintenance grant scheme

The forest maintenance and protection grant is paid on the yearly basis to all who afforested their land
and received afforestation grant for the period of up to 5 years after the date of afforestation on
condition that eligibility criteria described above are fulfilled. The premium covers the following
forest maintenance costs:
       - Protection of plantation against browsing animals and rodents (fences, repellents, individual
           protection means etc.)
       - Weeding, mechanical removal of trees and shrubs shading planted seedlings
       - Plantation supplementing



Consolidated version as of 5th March, 2008                                                           214
       -   Protection against diseases and pests, mechanical damages, fire protection
       -   Mounting of fire prevention shelter belts


Lost income premium scheme

Lost income premium will only be paid to the applicants who received afforestation grant and will be
paid on a yearly basis. Compensation will be paid for 20 years after the completion of afforestation.

4.7. Provisions ensuring that actions are adapted to local conditions and are compatible with the
environment

Local land management authorities are in charge of issuing the permits for afforestation. In the cases
when land afforestation should be considered to avoid negative effects on social - ecological values
prior issuing the permission local authorities consult appropriate institutions. Institutions in different
cases to be consulted and the field of their competency is listed below:

Valuable wildlife habitats                   Administrations of Regional and National parks, State
                                             Service of Protected Areas
Culture heritage objects                     Local Culture Heritage Departments
Land reclamation systems                     Local agricultural divisions
Outstanding landscapes                       Municipality architecture specialists

4. 8. Aid Intensity and/or amount and differentiation applied

The amount of aid is actually made expenditure in the case of afforestation grant and forest
maintenance premium, not exceeding maximum grant level given in the table.


                Afforesta-     Forest maintenance premium**                                Total grant
                tion grant *   1st year  2nd year 3rd year 4th year             th
                                                                               5 year
                EUR/ha         EUR/ha EUR/ha EUR/ha EUR/ha                     EUR/ha      EUR/ha

 Conifer     1009              885         101         101         101         63          2260
 stand with
 broadleaves
 up to 30 %
 Conifer     1158              915         122         122         122         80          2519
 stand with
 broadleaves
 31 - 50 %




Consolidated version as of 5th March, 2008                                                           215
 Broadleaves 1394             962        152        152       152         92         2904
 in the stand
 make up 51
 - 80 %
 81 - 100 % 1548              992        203        203       203         161        3310
 broadleaves
 stand
* The afforestation grant is cost-based up to the maximum grant levels presented in the table and is
paid after the forest was established and invoices proving the eligible costs submitted. In case if
landowner performs afforestation activities himself (prepares afforestation plan, performs site
preparation, plants seedlings/seeds) and doesn‟t submit invoices proving the eligible costs,
compensation covers 60 percent of maximum grant level.

** Forest maintenance premium is cost-based up to the maximum grant levels presented and will be
paid on a yearly basis. The premium covers the following costs:
        - supplementary planting costs (up to 30 percent of the afforestation grant (see table above)
for supplementing the planted seedlings/sowed seeds and planting/sowing costs, except for the costs for
development of an afforestation project and land preparation)
        - weeding costs (manual weeding - 60 EUR/ha;
        - costs of protection against browsing animals - 650 EUR/ha (fences, individual protection
tubes, repellents, etc.);
        - costs of maintenance of protective measures in proper conditions (if repellents were used,
costs of their purchase and use);
        - installation of fire prevention shelter belts.
        In accordance with legislation of the Republic of Lithuania, in the event of major emergencies,
forest plantation supplement may be compensated in as far as it is needed for complete regeneration of
the forest but no more than 100 percent of expenses for plants and/or seeds to be planted and expenses
related to plant transportation as well as planting and/or sowing foreseen in the support contract
(expenses for the development of an afforestation project and land preparation shall not be
compensated). Moreover, no more than 100 percent of forest maintenance premium in the first year
provided in the support contract but not used can be allocated for the maintenance and protection of the
forest under regeneration
        Plantation supplementing should be done during one year after inventory of planted forest. The
protection means should be specified in the afforestation plan including their costs. Fences and
individual protection tubes are compensated only for the first year. Fire prevention shelter belts are
compensated for first year under 15 EUR/km. The premium for tending and protection of the
established stand for another 2 - 4 years is to cover the weeding and protection of the stand against
browsing animals and rodents (fixing of the built protection means, purchasing and application of
repellents if those were used), diseases and pests, mechanical damages, fire protection. Chemicals and
work with chemicals are not eligible under support. In case if owner of established forest performs
forest maintenance activities (supplement of seedlings/sowed seeds, weeding, installation of fences,
individual protection tubes, use of repellents etc.) himself, compensation covers 60 percent of
maximum eligible expenditures mentioned above, except eligible expenditures for seedlings/seeds or



Consolidated version as of 5th March, 2008                                                         216
material for protection needs, that are compensated 100 percent up to maximum grant level according
to invoices proving the costs submitted.


Afforestation grant

The maximum afforestation grant levels are derived using the following maximum allowed densities of
seedlings/seeds and their cost per ha.

 Activity                           Unit        EUR/1000      Max density,    Full  cost
                                                seedlings     seedlings /ha   EUR/ha
 1. Elaboration of the              EUR/ha                                           25
 afforestation plan
 2. Site preparation                EUR/ha                                            120
 3. Costs for seedlings of main
 coniferous trees species*:
 Pine – Pinus sylvestris L.         EUR/1000             35            5500           193
                                    seedlings
 Spruce - Picea abies (L.) H.       EUR/1000            115            3500           403
 Karst.                             seedlings
 Larch – Larix Mill.                EUR/1000            225            2000           450
                                    seedlings
 4. Costs for seedlings of main
 deciduous trees species*:
 Oak – Quercus robur L.,            EUR/1000            345            4100          1415
 Quercus petraea Liebl.             seedlings
 Birch – Betula pendula Roth.       EUR/1000             88            4100           361
                                    seedlings
 Ash – Fraxinus excelsior L.        EUR/1000            170            4100           697
                                    seedlings
 Lime tree – Tilia cordata Mill.,   EUR/1000            750            3500          2625
                                    seedlings
                                    EUR/1000            750            4100          3075
 Maple – Acer platanoides L.        seedlings
 Black alder – Alnus glutinosa L.   EUR/1000             88            3500           308
                                    seedlings
 Poplar - Populus tremula L.        EUR/1000          1160             2000          2319
 (only selection)                   seedlings
 5. Costs for seedlings of other
 deciduous trees and bushes
 species*:
 Rosa dumalis Bechst., Rosa         EUR/1000            500             400           200
 majalis Herrm., Rosa canina L.,    seedlings



Consolidated version as of 5th March, 2008                                                    217
 Crataegus oxyacantha L.,
 Crataegus monogyna Jacq.,
 Padus avium Mill., Pyrus
 communis L., Pyrus pyraster
 Burgsd., Malus sylvestris (L.)
 Mill., Euonymus europaea L.,
 Euonymus verrucosa Scop.,
 Viburnum opulus L., Lonicera
 xylosteum L., Cornus sanquinea
 L., Ribes nigrum L., Ribes
 rubrum L., Ribes alpinum L.,
 Prunus spinosa L., Cerasus
 vulgaris Mill.
 Ulmus glabra Huds., Ulmus         EUR/1000        1100            400          440
 minor Mill., Carpinus betulus L., seedlings
 Rhamnus catharticus L., Sorbus
 aucuparia L., Ulmus laevis Pall.,
 Corylus avellana L.
 6. Costs for seedlings of other
 coniferous trees and bushes
 species*:
 Juniperus communis L.             EUR/1000         500            400          200
                                   seedlings
 7. Fast growing species*:
 Poplar - Populus tremula L.       EUR/1000          43         10 000          430
                                   seedlings
 Willow - Salix L.                 EUR/1000          43         20 000          860
                                   seedlings
 8. Seeds:
 Pine seeds                        EUR/1kg          270             0,5         135
 Spruce seeds                      EUR/1kg          200             0,5         100
 Acorns                            EUR/1kg            2              60         120
 9. Planting costs for coniferous  EUR/1000          30           4500          135
                                   seedlings
 10. Planting costs for deciduous EUR/1000           40           3900          156
                                   seedlings
 11. Transportation of             EUR/1km         0,65            300          195
 seedlings**
 12. Sowing of coniferous‟ seeds EUR/1kg             50            0,5           25
 13. Sowing of acorns              EUR/1kg          1,5             60           90

* Species are named in English and/or Latin. The amount of seedlings/seeds per ha is derived
according the species composition and the costs accordingly calculated.



Consolidated version as of 5th March, 2008                                              218
** Max compensated distance is up to 300 km.

Lost Income Premium Rates

The Lost Income Premium will be paid for 20 years. The Lost Income Premium rates will be
differentiated between the various types of agricultural land to be converted to forests broadly reflecting
differences in income foregone from the typical agricultural activity, with the more productive land
attracting the higher rate of payment. The rates for any other private law persons are 4 times lower than
the rates for farmers or associations (According the Annex of Council Regulation (EC) No 1257/1999). The
rates are as follows:




In case of a “farmers or associations thereof :
Areas            Highly Disadvantaged Less Disadvantaged Outside HAD
                 Areas (HDA)               Areas (LDA)   and LDA
EUR/ha/year               72.40                    91.23     147.7


In case of “any other private law person”:

Areas             Highly Disadvantaged Less Disadvantaged Outside HAD
                  Areas (HDA)          Areas (LDA)        and LDA
EUR/ha/year               18.10                22.80          36.92


4.9. Priority criteria
The following priority criteria are to be applied in case more applicants then the amount of funds for
the measure are allocated apply:

No.     Priority criteria                                   Score
1       Afforestation takes place in less favoured area     35
2       Percentage of deciduous planted (for every          max 14
        additional (higher then 30 percent) 5 percent of
        deciduouos species – 1 additional point )
3       No chemical use foreseen in the establishment       5
        and maintenance of forest
4       Afforestation area is more then 1 ha (for each      max 15
        ha above 1 ha – 0,5 points)
5       Applicant falls under the category farmers and      15
        associations thereof




Consolidated version as of 5th March, 2008                                                           219
6.          Applicant is the member of association23       5
7.          Application submitted by a group of applicants 11
            who afforest neighbouring land
            Total                                          100

4.10. Linkage between proposed actions and national/sub-national forest programmes or
equivalent instruments

The measure of agricultural land afforestation proposed under Rural Development Plan would
contribute to implementation of Lithuanian Program on Increase of Forest Coverage, adopted by the
joint Ministers‟ of Environment and Agriculture order Nr.616/471 adopted in 2002 the 2 of December.

This measure will be complemented by “Forestry” measure under the Single Programming Document for
2004 – 2006. The structural funds will support the following actions:

        -     Investment in forests aimed at significant improving their economic, ecological or social
              value
        -     Restoration of forest areas damaged by natural disasters and fire and introducing appropriate
              prevention instruments
        -     Investment to improve and rationalise the harvesting and logging of round wood
        -     Afforestation of non-agricultural land.

4.11. Indicative Budget
The budget calculations have been made in relation to the National afforestation programme which sets
the target afforestation volume of 4000 ha a year in the period 2004-2006. It is expected that in 2004 –
3000 ha, in 2005 – 4000 ha and in 2005 – 5000 ha will be afforested within this programming period.

Indicative financial allocations, million EUR

     Year          Total public            %              EU                    %           National             %
                       cost                           contribution                        contribution
2004              2,000,000             100,00              1,600,000         80,0               400,000        20,0
2005              4,425,200             100,00              3,540,160         80,0               885,040        20,0
2006              163,700               100,00                130,960         80,0                32,740        20,0
2004-2006         6,588,900             100,00              5,271,120         80,0             1,317,780        20,0




23
  The "association" in this context means associations of forest or land owners, cooperatives or other structures established
by land or forest owners.


Consolidated version as of 5th March, 2008                                                                             220
Measure 5. Support for semi-subsistence farms undergoing restructuring

This measure implements article 33b of the Accession Treaty.

5.1 Introduction

Land reform in Lithuania started in 1991. Land ownership rights have been restored to 87,8 percent of
the area indicated in citizens‟ requests as of March 1, 2004. The main aim of agricultural and rural
development is to fulfil principles and measures of common agricultural policy of the EU. Great
attention is paid to the creation of market orientated, competitive and to the diversification of
economical activity in rural areas. The producers of agricultural production are stimulated to cherish the
environment, biological diversity and landscape.

Since Lithuania‟s average farm size is small and uncompetitive in comparison with EU, support for
semi-subsistence farms would help to enlarge them and would increase their competitiveness at the same
time.

At the mean time semi- subsistence farms are one of the factors, impeding agricultural and rural
development. Support would help to develop agriculture, stimulate alternative activities in rural areas;
also attention will be paid to the implementation of agri- environmental requirements.

Analysis on farms‟ economic activity shows that small farms in Lithuania can not be described as
temporary and vanishing. Most farms in the country are small and keep producing agricultural
production and breeding livestock in traditional ways even if it is of low benefit. It is difficult to strive
for more effective farming without support.

According to the survey24 data, farmers with farms smaller than the stated 10.9 ha of UAA average
make about 81 percent of all the questioned farmers, and their land – accordingly 28 percent of the area
indicated by the survey. 13 percent of these are commercial farms, 40 percent market some part of their
production, and 33 percent are subsistent farms.

There are about 34 thousand farmers corresponding to the farm size and production criteria for semi-
subsistence farm (survey data). The real number (corresponding to all the set criteria) of farmers
applying for support at this measure is estimated then at 14 thousand.

5.2. Description of the measure

Making semi-subsistence farming commercially viable is one of the ways for speeding up the
restructuring process and promoting competitiveness in the agricultural sector.

This measure will help farmers to enlarge their farm and to develop it. Farmers who apply for support to

24
   Survey (circa 188000 questionnaires, data of 2002), conducted by the Agriculture Information And Rural Business Center
in 2003;


Consolidated version as of 5th March, 2008                                                                        221
“Investments in Agricultural Holdings” from SPD may also apply for support to semi- subsistence farms
as long as they correspond with all the requirements below.


5.3. Definitions

For the purposes of this measure:

 Agricultural activities„ shall mean activities related to producing, processing and marketing of
agricultural production, produced in private agricultural holding. It involves provision of agricultural
services as well.

„Agricultural holding‟ shall mean al production units managed by a farmer situated within the territory
of Lithuania.

 „Farmer‟ shall mean a natural person (alone or with partners) involved in agricultural activities, with
an agricultural holding registered in Agricultural and Rural Development Register.

„Farmer‟s partners‟ shall mean natural persons involved in mutual agricultural activities according to
the partnership agreement.

„Semi-subsistence farm‟ shall mean the agricultural holding with an income from selling a part of the
production allowing some minor investments for the restucturisation to be made.

5.4. Objective hierarchies for the Support for semi-subsistence farms undergoing restructuring
measure

The overall objectives for the semi- subsistence measure are the following:
              Increased farm size and improved structure;
              Increased competitiveness of farms;
              Improvement of market- orientated sector.

The specific objectives for the semi-subsistence measure are:
         Increased income and improved liquidity; improved machines, buildings and land.

The operational objectives are:
         14000 semi-subsistence farmers receive income support (1000 EUR per year). Farmers
            also receive practical skills of participation in an investment scheme (preparation and
            submission of business plan, planning and implementation of investments, submission of
            requested documents proving the investments, to the NPA).




Consolidated version as of 5th March, 2008                                                         222
Expected impacts and results

Measure                Output                Result                  Impact
                       (Operational          (Specific Objectives)   (Overall objectives)
                       objectives)
Semi- subsistence      14 000 semi-          Increased income and    Increased farm size and improved
farms undergoing       subsistence farmers   improved liquidity;     structure
restructuring          receive investment    improved machines,      Increased competitiveness of
                       support (1000 EUR     buildings and land      farms
                       per year)                                     Improvement of market-orientated
                                                                     sector, complying with EU agri-
                                                                     environmental requirements.


5.5. Eligibility criteria

The farmers aiming at getting support under this measure at the date of submission of application for
support must comply with the following criteria:

      1. Farm size25:
          5-20 ha, 5-10 cows - for mixed production;
          4- 8 ha – for horticulture (specialization in vegetables);
          1- 4 ha – for horticulture (specialization in fruit and berries).
      2. Agricultural holding must be on Agriculture And Rural Business Register;
      3. Farmer shall have bookkeeping from the day of application for support;
      4. The applicant must have no taxing arrears;
      5. Farmer has to submit an appropriate business plan.

5.6. Beneficiaries

Beneficiaries of this measure can be farmers targeted to the commercialisation of their agricultural
holdings, especially those overtaking agricultural holdings (transferee – Early Retirement Scheme), and
able to submit business plans.

5.7. Financial provisions

Flat rate aid - 1000 Euro per annum. The aid would be payable for up to 5 years, with a review after 3
years.

If farmer enters the Early Retirement Scheme as a transferor while the semi- subsistence aid is paid, the
latter aid shall be stopped.


25
     Evaluation by the Lithuanian Institute of Agrarian Economics


Consolidated version as of 5th March, 2008                                                          223
Indicative financial allocations, million EUR

     Year          Total public             %               EU                  %            National             %
                       cost                             contribution                       contribution
   2004                 2,464,000        100,00              1,995,200         80,0               498,800        20,0
   2005                 4,004,000        100,00              3,203,200         80,0               800,800        20,0
   2006                 2,642,870        100,00              2,114,296         80,0               528,574        20,0
 2004-2006              9,140,870        100,00              7,312,696         80,0             1,828,174        20,0


5.8. Business plan

Every candidate for support shall present an appropriate business plan. This plan shall: a) demonstrate
the future economic viability of the farm; b) contain details of investments required; and c) describe
specific milestones and targets.

The recommendations to the preparation of business plans are set by national legislation 26.

The net profitability prognosis in the submitted bussines plan shall correspond to the net profitability27
required from a farmer applying for support under the SPD measure “Investments in agricultural
holdings”.




26
   State Gazette, 2004, No. 54-1866, Decree of minister of agriculture on the Recommendations for the preparation of
business plan for the measure “Support for semi-subsistence farms undergoing restructuring” under the RDP 2004-2006;
27
   State Gazette, 2004, No.34-1112, Decree of minister of agriculture on the regulations for the establishment of economic
viability for the natural persons applying for support under the Rural development and fisheries priority under the SPD


Consolidated version as of 5th March, 2008                                                                         224
Measure 6. Meeting standards

This measure implements Regulation (EC) No 1257/1999, Title II, Chapter Va, Articles 21a, 21b, 21c

6.1. Description of situation

At the beginning of 2003 there were 13000 dairy farms, which owned no less than 5 cows (140 000
cows in total). Though the number of dairy farms meeting requirements of Council Directive
92/46/EEC for milking, collection of raw milk and its transport at the beginning of 2003 was small
(only 4,8 % of dairy farms meet above mentioned requirements), it is expected that about additional
12000 dairy farms holding more than 5 cows will comply with EU requirements until 2007 (about 4000
farms will use their own funds). To assure that all raw meets minimal hygiene requirements for raw
milk, the process of restructuring must be reinforced and investments needed for meeting EU standards
supported.

Aiming at implementation of Council Directive 92/46/EEC laying rules for the production and placing
on the market of raw milk, heat-treated milk and milk-based products Lithuania committed fully
implement the requirements of Directive until the end of 2006. The Directive is transposed into
Lithuanian legislation by the issue of director of State Food and Veterinary Service on 17 th of March
2004 No. B1-21728. The requirements of Directive become binding for farmers from 1st of January
2007.

The problems in agri-environment concerns pollution by nitrogen compounds. Washing out of nitrogen
compounds from agricultural area increased concentration of nitrogen by 20 per cent in Nemunas river.
In the Curonian lagoon over the last 15 years amount of phytoplankton, that reflects level of
eutrophycation, increased by 20%. In more than one third wells of Lithuania the concentration of
pollutants of nitrates is above the allowed limit (50 mg). For these reasons, with aim to increase
environmental protection, the Programme of reduction of pollution by nitrates from agricultural sources
is developing. In this programme review of agri-environmental standards and terms of implementation
of them has been anticipated according to Council Directive 91/676/EEC.

Aiming at implementation of the EU Nitrate Directive Lithuania committed to fully implement the
requirements of the Nitrate Directive through implementation of two action programmes. The first
Action programme for the period 2004-2007 will be implemented in the entire territory of Lithuania.
This means that the whole country is designated as the Nitrate Vulnerable Zone. The first Action
Programme was approved by the GoL on 26th August 2003 No. 107629 and will come into force at the
date of Lithuania‟s accession to the EU. Nitrate Directive is transposed to national legislation through
Requirements for the protection of waters from pollution with nitrogen compounds from agricultural
sources (approved by order of the Minister of Agriculture of the Republic of Lithuania and the Minister
of Environment of the Republic of Lithuania, 2001 12 19 resolution No. 452/607 30) and Order of the
Minister of Environment on the approval of the environmental requirements for manure and
28
   State Gazette, 2004, No. 65-2338.
29
   State Gazette, 2003, No. 83-3792.
30
   State Gazette, 2002, No. 1-14.


Consolidated version as of 5th March, 2008                                                         225
wastewater management on farms, LAND 33-99. - V., 199931. The installation of proper manure/slurry
storages will be mandatory to be installed in the livestock farms, which have more than 300 livestock
units (LU) and in all new farms being established. Requirements of Directive become binding for
farms, which have more than 300 LU from 1st of January 2008. Further in the second action
programme also smaller farms will have to obligatory install the manure storages (becomes binding for
farms which have 10 – 299 LU from 1st of January 2012).

6.2. Description of measure

As stated in Regulation (EC) No 1257/1999, Title II, Chapter Va, Article 21a support may be granted
to help farmers to adapt to demanding standards based on Community legislation in the fields of the
environment, public, animal and plant health, animal welfare and occupational safety.
Temporary support intended to contribute partly to costs incurred and income foregone may be granted
to farmers who have to apply demanding standards based on Community legislation and newly
introduced in national legislation.

To be eligible for support, the standard should impose new obligations or restrictions on farming
practice which have a significant impact on typical farm operating costs and which concern a
significant number of farmers.

Under this measure support will be granted to farmers to help to adapt to Council Directive 92/46/EEC
(hereinafter as Milk Directive) and Council Directive 91/676/EEC (hereinafter as Nitrate Directive).

Support will be granted during a 5 years period from the date the standard becomes mandatory in
accordance with Community legislation.

Support will be granted annually in the form of flat rate aid and on degressive basis, in equal
installments. By the way of derogation from Articles 21a, 21b and 21c, costs linked to investments
needed to comply with standard set by the Community before the date of accession, may be taken into
consideration for determining the level of annual support. This possibility is limited to the first three
years of the period of support, up to the annual ceiling per farm – 25 000 Euro. During this investment
period, the degressivity shall not apply. Loss of income and additional costs resulting from compliance
with the standard will not be taken into consideration until the end of the investment period.

Payment shall be fixed at level, which avoids over-compensation.

6.3. Objectives of the measure

The overall objectives for the measure Meeting standards are the following:

      2.650 farms in compliance with EU requirements of Nitrate Directive;


31
     State Gazzete, 2000, No. 8-217


Consolidated version as of 5th March, 2008                                                          226
   8000 farms in compliance with EU requirements regarding milking, milk storage and
    transportation;
   Improvement of the environment due to reduced nitrogen outlet;
   Improved competitiveness due to improved quality of milk and adoption of EU standards;

The specific objectives for the Meeting standards measure are:

   2.650 manure storage facilities in accordance with EU requirements with a total capacity of
    150.000 tons established
   8000 milking equipment installed
   8000 milk storage facilities established

The operational objectives of the measure:

2650 farms with a total of 100 thousand livestock units (hereinafter as LU) enter the Meeting standards
– Nitrate Directive scheme;
8000 farmers with a total of 75 thousand cows receive support for milking, milk storage and milk
transportation under the Meeting standards – Milk Directive scheme.

Expected impacts and results for Meeting standards measure
Measure       Output                     Result                     Impact
              (Operational objectives)   (Specific Objectives)      (Overall objectives)
Meeting       2650 farms with a total    2650 manure storage        2650 farmers in compliance with
standards     of 100 thousand LU         facilities in accordance   EU requirements of Nitrate
              enter    the   Meeting     with EU requirements       Directive
              standards – Nitrate        with a total capacity of
              Directive scheme           150 thousand tons          8000 farmers in compliance with
                                         established                EU requirements regarding
                                                                    milking, milk storage and
              8000 farmers with a        8000 milking equipment     transport (Milk Directive)
              total of 75000 cows        installed
              receive support for                                   Improvement of the environment
              milking, milk storage      8000 milk storage          due to reduced nitrogen outlet
              and milk transportation    facilities established
              under the Meeting                                     Improved compe-titiveness due
              standards scheme                                      to improved quality of milk and
                                                                    adoption of EU standards


6.4. Eligibility criteria

The applicant:




Consolidated version as of 5th March, 2008                                                        227
- must be farmer, agricultural company, cooperative company (cooperative) or any other agricultural
entity who declared, according to the determined order, tillage and/or cattle for not less than 1 year
preceding the application;
- must be owning or leasing no less than 3 ha of agricultural land;
- would have to supply a plan of the upgrading and/or alterations in husbandry practices required to
meet the relevant standards (including list of investments which will result in all relevant standards
being met);
- must have no taxing arrears to the state budget of the Republic of Lithuania, budgets of municipalities
or other funds, into which taxes are collected and administrated by State Tax Inspectorate, also is not
indebted to State Social Insurance Fund Board;
- Agricultural holding must be on Agricultural And Rural Development Register;
- Farmer shall have bookkeeping in accordance with requirements of national legislation from the day
of submission of application;
- Applicants applying for support under Milk Directive must have a herd of at least 5 but no more than
200 cows;
- Applicants applying for support under Nitrate Directive must have at least 10 LU;
- Capacity of liquid manure tank forseen in Action plan can be no more than 2500 m³ (in case of
application for support under Nitrate Directive).
- Applicants are eligible for support under Nitrate Directive only when appropriate national legislation
setting demanding requirements is in force.

6.5 Requirements of Directives

6.5.1. To comply with Nitrate Directive requirements farmer must ensure:

- Animal density in farm should not exceed 1,7 livestock units per hectare of utilized agricultural land.
- The capacity of storage vessels for cattle, horse and sheep manure for the storage period no less than 6
months and for pig and poultry manure no less than 8 months**;
- The amount of livestock manure applied to the agricultural land each year, including animals
themselves, shall not exceed the amount of manure containing 170 kg/ha of nitrogen**;
- Organic fertilizer (manure, sewage sludge, composts, etc.) will be spread from drying up of soil in
spring to freezing of soil in autumn. Organic fertilizer should not be spread from 1 December to 1 April
(on exceptional base it can be done in different time if soils are not frozen and covered with snow)**.


  Requirements for the protection of waters from pollution with nitrogen compounds from agricultural sources. Approved
by order of the Minister of Agriculture of the Republic of Lithuania and the Minister of Environment of the Republic of
Lithuania, 2001 12 19 resolution No. 452/607.
**
   Order of the Minister of Environment on the approval of the environmental requirements for manure and wastewater
management on farms, LAND 33-99. - V., 1999.




Consolidated version as of 5th March, 2008                                                                       228
6.5.2. To comply with Milk Directive requirements farmer must ensure:

- Premises where milking is performed or milk is stored, handled or cooled must be so sited and
constructed as to avoid all risk of contamination of the milk. They must be easy to clean and disinfect
and have at least:
     Walls and flooring which are easy to clean in those areas liable to soiling or infection;
     Flooring laid in such a way as to facilitate the draining of liquids and satisfactory means of
        disposing of waste;
     Adequate ventilation and lighting;
     An appropriate and sufficient supply of potable water for use in milking and in cleaning the
        equipment and instruments;
     Adequate separation from all sources of contamination such as lavatories and dung heaps;
     Fittings and equipment, which are easy to wash, clean and disinfect.
- Premises for the storage of milk must have suitable milk refrigeration equipment, must be protected
against vermin and must have adequate separation from any premises where animals are housed.
- The isolation of animals, which are infected, or suspected of being infected, from the rest of the herd
must be possible and effective.
- Animals of all species must be kept away from premises and sites where milk is stored, handled or
cooled.
- Premises for milking or storage of milk must be used only for storage of milk and milking equipment;
- Absolute cleanliness shall be required of milker.

6.6. Application and checks

National Paying Agency will verify if the investment is necessary to meet the standard in question.
Where the application to join the scheme relates to an annual aid amount in excess of EUR 10 000,
checks on this application will include an on-the-spot visit.

In case of applications for payment National Paying Agency will ckeck if the investment has been
carried out. Where the application for payment relates to an annual aid amount in excess of EUR
10 000, checks on this application will include an on-the-spot visit.
At the end of investment period every applicant will be checked if the farm meets requirements of
Directive in question. If the applicant is not in line with requirements he must reinburse all amount of
support.

6.7. Compatibility with other measures

Under this measure only investments related to instalation of liquid manure tanks with a capacity of no
more than 2500 m³ are supported. Investments related to instalation of liquid manure tanks with a
capacity of more than 2500 m³ fall under SPD measure “Investment in agricultural holdings”. So the


Consolidated version as of 5th March, 2008                                                          229
applicant can receive support for meeting requirements of Council Directive 91/676/EEC only under
one measure, either “Investment in agricultural holdings” or “Meeting standards” depending on manure
tank capacity needed.

Only applicants which have a herd of no more than 200 cows can apply for support in meeting
requirements of Council Directive 92/46/EEC under this measure. Applicants which have a herd of
more than 200 cows can apply for support in meeting requirements of Council Directive 92/46/EEC
only under SPD measure “Investment in agricultural holdings”.

For the purpose to avoid double funding these additional measures will be taken:
- Project evaluation division of NPA responsible for evaluation of projects under SPD measure
“Investment in agricultural holdings” once per year after the end of collection of applications forms the
list of participants and their investments planed in business plans.
- This list is forwared to every evaluator of applications under measure “Meeting standards”.
- If applicant wants to receive support under both measures starting the same year, evaluator of
applications under measure “Meeting standards” checks if there is no overlapping between investments
foreseen in business plan under SPD measure “Investment in agricultural holdings” and investments
foreseen in action plan under “Meeting standards” measure.
- If there is an overlapping found the applicant is not eligible to get support under “Meeting standards”
measure.
- If the application is submitted under SPD measure “Investment in agricultural holdings” next year
after starting to receive support under measure “Meeting standards” and there is an overlapping found
the applicant is not eligible to get support under SPD measure “Investment in agricultural holdings”.

6.8. Amount of payments and total financial allocations

6.8.1 Nitrate Directive scheme

The payment is calculated basing on the herd size in LU indicated by the beneficiary for the end of the
investment period (either unchanged herd size in LU from the year entering this scheme, or the herd
size in LU with planned increase).

In case of investment period of 3 years:
Farms with 10-29 LU gets 278,33 euro per LU per year;
Farms with 30-99 LU – 274,67 euro per LU per year but no more than 25 thousand euro per holding
per year;
Farms with 100 LU and more – 233 euro per LU per year but no more than 25 thousand euro per
holding per year;

Indicative need for investments (Nitrate Directive)

                                                         LU per holding
         Indicators
                                     20           50           100          200           300



Consolidated version as of 5th March, 2008                                                          230
1. Capacity of storage,
thousand m 3                       0,28        0,699        1,398       2,796        4,194
2. Investments for liquid
manure storage, thousand          10,795      26,685       52,766       104,7       155,640
EUR
2.1. Investments per LU           0,540        0,534        0,528       0,524        0,519
3. Investment for specialized
machines, thousand EUR            6,000       14,500       28,000       54,000       54,000
3.1. Investments per LU            0,30         0,29        0,28         0,27         0,27
4. Total investments (2+3),
thousand EUR                     12,743       41,185       80,766      158,7      209,64
5. Investments per LU,
thousand EUR                      0,840        0,824        0,808      0,794       0,699
There will be paid no payments for additional costs and income forgone because additional operating
costs are not significant.

6.8.2 Milk Directive scheme

The payment is calculated basing on the herd size in cows indicated by the beneficiary for the end of
the investment period (either unchanged herd size in cows from the year entering this scheme, or the
herd size in cows with planned increase), which in total should not be over 200 cows.


Investment period of 3 years:

Farms with 60 – 89 cows – 269 euro per cow per year;
Farms with 90 cows and more – 239 euro per cow per year but no more than 25 thousand euro per
holding per year.

Investment period of 2 years:
Farms with 5-19 cows – 282,50 euro per cow per year;
Farms with 20-39 cows – 351,50 euro per cow per year.
Farms with 40 – 59 cows – 380,00 euro per cow per year.




Consolidated version as of 5th March, 2008                                                      231
Indicative need for investments (Milk Directive)


                                             Grouping of farms according number of cows
Purpose of investment
                                   10             28             40            100             200


1. Premises for the storage of
milk and equipment, thousand      1,448          7,24           7,24          17,377        28,962
Euro
2. Milking equipment, thousand
                                  1,738         8,109          17,377         49,235        86,886
Euro
3. Cooling equipment, thousand
                                  2,462         4,344           5,792         17,377        27,514
Euro
                                     4. Need for investment:
4.1 Total per farm, thousand
                                  5,648         19,693         30,409         83,989        143,362
Euro
4.2. per cow, thousand Euro       0,565         0,703           0,760         0,840          0,717
Type of investment is given in Annex 12.

There will be paid no payments for additional costs and income forgone because additional operating
costs are not significant.


6.8.3 Indicative financial allocations, EUR

   Year          Total public        %              EU                  %         National            %
                     cost                       contribution                    contribution
   2004             36,303,688     100,00          29,042,950          80,0           7,260,738      20,0
   2005             50,362,445     100,00          40,289,956          80,0          10,072,489      20,0
   2006             30,485,475     100,00          24,388,380          80,0           6,097,095      20,0
 2004-2006         117,151,608     100,00          93,721,286          80,0          23,430,322      20,0




Consolidated version as of 5th March, 2008                                                           232
Measure 7. Technical assistance

This measure is in accordance with Article 33e, Chapter IXa of Regulation (EC) No 1257/1999.

7.1. Introduction

This measure is designed to provide support for activities, which are necessary to improve RDP
performance, management, effectiveness and delivery. Support may be granted for costs associated
with the RDP preparation, monitoring and evaluation, which are necessary for the implementation of
RDP as set out in paragraph 7.3 below.

7.2. Objectives of the measure

The overall objective of the measure is to ensure the efficient implementation of the Rural
Development Plan.

The specific objectives are aiming:
      to ensure an adequate flow of information and publicity;
      to support studies, visits and seminars;
      to provide support for the monitoring of the RDP;
      to provide support for the evaluation of the RDP;

7.3. Description of the measure

The support shall be provided for the expenditure associated with the following activities related to the
improvement of RDP performance, management and effectiveness:
1. Activities, which are under responsibility of the Ministry of Agriculture:
     Organisation of the Monitoring Committee meetings, including costs of experts and other
        participants necessary to the effective work of the committee;
     Organisation and performance of RDP evaluation including assistance of experts in the
        consideration and review of basic data and indicators;
     Organisation of translations to be provided on request to the Commission, and for interpreting;
     Organisation of visits, conferences, studies and seminars.

2. Activities, which are under responsibility of National Paying Agency:
     Preparation, publication and dissemination of information material (including application
        forms);
     Organisation of information campaigns;
     Training of staff and of socio-economic partners;


Consolidated version as of 5th March, 2008                                                          233
      Organization of consultations, studies, seminars, workshops and information days.

7.4. Final beneficiaries
          Ministry of Agriculture
          National Paying Agency

7.5. Indicative financial allocations, EUR

    Year         Total public         %            EU               %          National     %
                     cost                      contribution                  contribution
   2004               1,800,000      100,00        1,440,000       80,0           360,000   20,0
   2005               2,000,000      100,00        1,600,000       80,0           400,000   20,0
   2006               2,121,000      100,00        1,696,800       80,0           424,200   20,0
 2004-2006            5,921,000      100,00        4,736,800       80,0         1,184,200   20,0




Consolidated version as of 5th March, 2008                                                   234
Measure 8. Complementary National Direct Payments (CNDPs)


The Community support for CNDPs shall not exceed 20 % of the annual Rural Development Fund
allocation. However, as an alternative, Member State may choose to differentiate this limit in various
years: 25 % in 2004, 20 % in 2005, and 15 % in 2006. The latter possibility was chosen by the
Republic of Lithuania.

National Paying Agency is designated as paying agency.

Indicative financial allocations, million EUR

   Year         Total public        %               EU             %           National         %
                    cost                        contribution                 contribution
   2004            46,031         100,00          36,825          80,0               9,206     20,0
   2005            41,025         100,00          32,820          80,0               8,205     20,0
   2006            33,394         100,00          26,715          80,0               6,679     20,0
 2004-2006        120,450         100,00          96,360          80,0              24,090     20,0




Consolidated version as of 5th March, 2008                                                       235
          Annex 2: Good Farming Practice

No.                          Requirements                                               Legislation
                                 PROTECTION OF WATERS, WATERCOURSES AND PREVENTION OF SOIL EROSION
1.    Farmers must follow requirements of preservation protective strips at water bodies.       On approval of the rules for the establishment of protective
      Coastal protective strips are established at surface water bodies.                        zones of surface water bodies and coastal protective strips. Order
      For natural and regulated rivers which have the basin area bigger than 25 km2, lakes      of the Minister of Environment of the Republic of Lithuania,
      and ponds bigger than 0,5 ha, and quarries bigger than 2 ha, width of the protective      2001 11 07 resolution No. 540.
      strip is determined depending on local conditions:                                        (Directive 91/676/EEC concerning the protection of waters
       When inclination of riverside is up to 5 degrees – not smaller than 5 m;                against pollution caused by nitrates from agricultural sources)
       When inclination of riverside is 5-10 degrees – not smaller than 10 m;
       When inclination of riverside is more than 10 degrees – not smaller than 25 m
      Twice as wide as determined above, protective strips of the water bodies are
      established along the coast of the water bodies that are:
       In the territories of state parks or nature reserves;
       Within 3 km from the boundaries of the cities (outside the city)
       Within 1 km from the boundaries of the towns (outside the town).

      Half as wide as determined above, protective strips of the water bodies are
      established along the coast of natural rivers which have the basin area smaller than 25
      km2, regulated rivers which have the basin area 10-25 km2, lakes and ponds smaller
      than 0,5 ha, and quarries smaller than 2 ha.

      For regulated rivulets and reclamation ditches, which have basin area smaller than 10
      km2, width of the preservation strip is determined depending on local conditions:
      When inclination of riverside is up to 5 degrees – 1 m;
      When inclination of riverside is 5-10 degrees – not smaller than 2.5 m;
      When inclination of riverside is more than 10 degrees – not smaller than 5 m.
2.    It is prohibited to discharge directly sewage polluted by dangerous substances Order No 472 of the Minister of Environment of 21 September
      into the ground water.                                                                2001 on Approval of the rules concerning protection of ground


          Consolidated version as of 5th March, 2008                                                     236
                                                                                                waters against pollution from dangerous substances.
                                                                                                (Directive 80/68/EEC on the protection of groundwater against
                                                                                                pollution caused by certain dangerous substances)
           MANURE MANAGEMENT
3.   Livestock density on the farm shouldn‟t exceed 1.7 LU per hectare of agricultural    Requirements for the protection of waters from pollution with
     land.                                                                                nitrogen compounds from agricultural sources. Approved by
     It means that maximum amount of livestock manure applied to the land cannot          order of the Minister of Agriculture of the Republic of Lithuania
     exceed 170 kg/N per ha.                                                              and the Minister of Environment of the Republic of Lithuania,
     If livestock density on the farm exceeds 1.7 LU per hectare of agricultural land, the2001 12 19 resolution No. 452/607.
     owner should purchase additional land or should pass surplus manure to another       (Directive 91/676/EEC concerning the protection of waters
     farm, which has lower livestock density than the established limits.                 against pollution caused by nitrates from agricultural sources)
4.   Manure storage should be established in the farms having more then 10 livestock      Order of the Minister of Environment on the approval of the
     units, except farms where animals are kept in deep barns.                            environmental requirements for manure and wastewater
     Farms having more then 300 livestock units are obliged to install manure storage in  management on farms,
     the period of four years after the date of membership in the EU. Farms having 10-299 LAND 33-99. - V., 1999.
                                                                                          (Directive 91/676/EEC concerning the protection of waters
     livestock units are obliged to install manure storage within the period of 8 years after
     the date of membership into the EU.                                                  against pollution caused by nitrates from agricultural sources)
5.   The capacity of storage vessels for livestock (cattle, horses and sheep) manure      Order of the Minister of Environment on the approval of the
     for a storage period of at least 6 months; 8 months storage capacity is required     environmental requirements for manure and wastewater
     for pig and poultry manure.                                                          management on farms,
                                                                                          LAND 33-99. - V., 1999.
                                                                                          (Directive 91/676/EEC concerning the protection of waters
                                                                                          against pollution caused by nitrates from agricultural sources)
                                                                                       st
6.   Organic fertiliser is allowed to be applied in the period starting from April 1 Requirements for the protection of waters from pollution with
     up to December 1st and it is prohibited to use organic fertilizers near by the nitrogen compounds from agricultural sources. Approved by
     water sources and intakes.                                                           order of the Minister of Agriculture of the Republic of Lithuania
     It is not allowed to apply fertiliser on frozen, flooded and snow-covered ground.    and the Minister of Environment of the Republic of Lithuania,
                                                                                          2001 12 19 resolution No. 452/607.
                                                                                          (Directive 91/676/EEC concerning the protection of waters
                                                                                          against pollution caused by nitrates from agricultural sources)


         Consolidated version as of 5th March, 2008                                                     237
            USE OF PLANT PROTECTION PRODUCTS
7.    Application of plant protection products has to be carried out following the               Law on plant protection 1998, Nr.56, revised 2001.
      Rules for import, storage, marketing and use of plant protection products.                 No. 48, article 56, part 2.
      These Rules determinate requirements and conditions for operator, using plant              Order No.3D-564 of the Minister of Agriculture of 30th
      protection products. Only certified spraying equipment can be used when plant              December, 2003, On rules for import, storage, marketing and use
      protection products are utilized. Only persons having the certificate of the appropriate   of plant protection products.
      training can use the plant protection products.                                            (Directive 91/414/EEC concerning the placing of plant
                                                                                                 protection products on the market)
            SOIL PROTECTION
8.    Prior to the intended use of sewage sludge in agriculture it is necessary to prepare a Concerning the prolongation of the validity of the legal
      project agreed with Regional environment departments and regional public health document on utilisation of sewage sludge (LAND 20-96).
      center.                                                                                Approved by order of the Minister of Environment of the
                                                                                             Republic of Lithuania, 2000 03 03 resolution No. 81
                                                                                             (Directive 86/278/EEC on the protection of the environment and,
                                                                                             in particular of the soil, when sewage sludge is used in
                                                                                             agriculture).
9.    It is forbidden to tillage soil along inclination on the sharp slopes and to grow Law for the Special conditions of forest and land use.
      cultivated crop.                                                                       Government of Lithuanian Republic 1992 05 12 resolution
                                                                                             No.343
                                           PROTECTION OF BIODIVERSITY AND NATURE RESOURCES
10.   Owners and private or legal persons of the land situated in protected areas shall Law amending the law of the Protected areas, 2001 12 04 No.
      follow the established regulations and requirements (laws and other legal basis,       IX-628.
      documents for domain planing in Protected areas).                                      (Directive 92/43/EEC on the conservation of natural habitats and
                                                                                             of wild flora and fauna;
                                                                                             Directive 79/409/EEC on the conservation of wild birds)
11.   If sewage on farm contains dangerous substances                                        Order No 624 of the Minister of Environment of 21 December
      agricultural entities shall obtain permission for the impact of the Pollution 2001 on Approval of the rules on pollution of waters by
      Prevention and Control.                                                                dangerous substances
                                                                                             (Directive 76/464/EEC on pollution caused by certain dangerous
                                                                                             substances discharged into aquatic environment of the


          Consolidated version as of 5th March, 2008                                                     238
                                                                                      Community;
                                                                                      Directive 96/61/EEC concerning integrated pollution prevention
                                                                                      control)
 MAINTENANCE OF VISUAL APPEARANCE OF FARMYARD

12.   The visual appearance of the farmyard shall conform to the principles for Law on Waste Management of the Republic of Lithuania on 16
      farmstead management.                                                       June 1998.
                                                                                  (Directive 75/442/EEC on waste)
           GRASSLAND MANAGEMENT
13.   Meadows and pastures, also perennial meadows and pastures should be in good Order No 3D-40 of the Minister of Agriculture of 6 February
      agrarian conditions. Meadows and pastures should be used for the grazing 2004 on Approval of the administration and control rules for
      or/and should be mowed at least once per year.                              2004 year for the direct payments for usable agricultural land
                                                                                  and area of crops.
                                                                                  (Directive 92/43/EEC on the conservation of natural habitats and
                                                                                  of wild flora and fauna.)
           ANIMAL WELFARE
14.    Animals should be kept according to the requirements of animal welfare.    Veterinary law of the Republic of Lithuania. 1991 12 17 LRAT
                                                                                  No. I-12110.V.
                                                                                  Law on animal care, housing and use of the Republic of
                                                                                  Lithuania. 1997 11 6 LRAT No. VIII-50.V.
                                                                                      (Directive 98/58/EC of 20 July 1998 concerning the protection
                                                                                      of animals kept for farming purposes)




          Consolidated version as of 5th March, 2008                                          239
Annex 3: Details on Less Favoured Areas


Table 1. Yield of cereals in 2003.

Municipalities       Yield of cereals             Municipalities          Yield of cereals
                     ton/ha                                               ton/ha
    < 80 per cent of national average                  > 80 per cent of national average
Trakai r.                    1,13                 Kupiškis r.                     2,24
Molėtai r.                   1,17                 Tauragė r.                      2,32
Švenčionys r.                1,45                 Kazlų Rūda                      2,36
Zarasai r.                   1,48                 Akmenė r.                       2,37
Ignalina r.                  1,50                 Alytus r.                       2,51
Šalčininkai r.               1,62                 Birštonas                       2,54
Vilnius r.                   1,77                 Kaišiadorys r.                  2,57
Varėna r.                    1,77                 Prienai r.                      2,58
Klaipėda r.                  1,77                 Jurbarkas r.                    2,81
Utena r.                     1,78                 Birţai r.                       2,91
Ukmergė r.                   1,81                 Kelmė r.                        2,92
Druskininkai                 1,86                 Kalvarija                       2,95
Šilutė r.                    1,88                 Jonava r.                       3,01
Rokiškis r.                  1,90                 Raseiniai r.                    3,01
Elektrėnai                   1,90                 Vilkaviškis r.                  3,09
Skuodas r.                   1,95                 Kėdainiai r.                    3,20
Šilalė r.                    1,98                 Šiauliai r.                     3,21
Plungė r.                    1,98                 Radviliškis r.                  3,35
Anykščiai r.                 1,99                 Kaunas r.                       3,38
Kretinga r.                  2,08                 Marijampolė                     3,47
Rietavas                     2,08                 Panevėţys r.                    3,47
Telšiai r.                   2,11                 Pakruojis r.                    3,57
Širvintos r.                 2,12                 Joniškis r.                     3,58
Maţeikiai r.                 2,16                 Pasvalys r.                     3,62
Lazdijai r.                  2,18                 Šakiai r.                       3,73
Pagėgiai                     2,18
Source: Counties of Lithuania. Economic and social development. Department of Statistic. Vilnius, 2003.

Table 2. The value of total agricultural production per capita engaged in agriculture

Municipalities           The value of total agricultural production Percent from the national
                           per capita engaged in agriculture, Lt        average, per cent
National average                            21489                              100
Anykščiai r.                                15243                               71
Elektrėnai                                  6631                                31


Consolidated version as of 5th March, 2008                                                                240
Ignalina r.                                       16991                                      79
Lazdijai r.                                       16084                                      75
Molėtai r.                                        12314                                      57
Plungė r.                                         15218                                      71
Rietavas                                          16295                                      76
Rokiškis r.                                       16950                                      79
Šalcininkai r.                                    10712                                      50
Pagėgiai                                          14665                                      68
Šilutė r.                                         16190                                      75
Širvintos r.                                      15510                                      72
Švenčionys r.                                     13018                                      61
Telšiai r.                                        15870                                      74
Trakai .r                                         10077                                      47
Ukmergė r.                                        16490                                      77
Utena r.                                          10657                                      50
Varėna r.                                         13398                                      62
Zarasai r.                                        14483                                      67
Source: Department of Statistic, Lithuanian Institute of Agrarian Economics , 2003.


Table 3. Population density

Municipalities             Population density         Municipalities              Population density
                           per 1 km2                                              per 1 km2
   < 50 per cent from national average                   > 50 per cent from national average
Švenčionys r.                 8,2                     Joniškis r.                   15,9
Varėna r.                     9,1                     Pagėgiai                      16,2
Zarasai r.                   10,2                     Pakruojis r.                  16,3
Ignalina r.                  10,2                     Šilalė r.                     16,6
Rietavas                     11,3                     Radviliškis r.                17,2
Rokiškis r.                  11,7                     Maţeikiai r.                  17,6
Anykščiai r.                 12,1                     Raseiniai r.                  17,7
Druskininkai                 12,7                     Tauragė r.                    18,4
Birţai r.                    12,8                     Šalčininkai r.                18,4
Molėtai r.                   13,1                     Jonava r.                     18,6
Utena r.                     13,2                     Panevėţys r.                  18,9
Telšiai r.                   13,3                     Pasvalys r.                   19,1
Akmenė r.                    13,6                     Šakiai r.                     19,2
Kazlų Rūda                   13,6                     Skuodas r.                    19,4
Kupiškis r.                  13,8                     Šilutė r.                     19,7
Širvintos r.                 14,1                     Birštonas                     19,8
Ukmergė r.                   14,3                     Kalvarija                     19,9
Trakai r.                    14,5                     Kėdainiai r.                  20,3


Consolidated version as of 5th March, 2008                                                             241
Lazdijai r.                       15,3       Alytus r.                         20,5
Jurbarkas r.                      15,3       Šiauliai r.                       20,9
Kelmė r.                          15,4       Kaišiadorys r.                    22,0
Plungė r.                         15,4       Prienai r.                        22,1
Elektrėnai                        15,4       Klaipėda r.                       22,2
                                             Kretinga r.                       23,2
                                             Vilkaviškis r.                    23,3
                                             Marijampolė                       30,1
                                             Vilnius r.                        39,3
Source: Counties of Lithuania. Economic and social development 1997, 1998, 1999, 2000, 2001, 2002.- V.
Department of Statistic, 1998-2003.


Table 4. The rate of population regression
Municipalities       The rate of           Municipalities             The rate of
                     regression, per cent                             regression, per cent
                 >-0,5 per cent                               <-0,5 per cent
Anykščiai r.                      -1,8       Marijampolė                       -0,4
Molėtai r.                        -1,6       Vilkaviškis r.                    -0,4
Rokiškis r.                       -1,5       Kėdainiai r.                      -0,3
Ignalina r.                       -1,5       Kaišiadorys r.                    -0,3
Alytus r.                         -1,4       Tauragė r.                        -0,2
Švenčionys r.                     -1,4       Jonava r.                         -0,2
Birštonas                         -1,3       Plungė r.                         -0,2
Varėna r.                         -1,2       Šiauliai r.                       -0,2
Lazdijai r.                       -1,2       Maţeikiai r.                      -0,1
Ukmergė r.                        -1,2       Panevėţys r.                      +0,2
Širvintos r.                      -1,2       Klaipėda r.                       +0,3
Šalčininkai r.                    -1,1       Kretinga r.                       +0,4
Zarasai r.                        -1,1       Vilnius r.                        +0,9
Jurbarkas r.                      -1,1       Kaunas r.                         +1,3
Akmenė r.                         -1,0
Birţai r.                         -1,0
Kalvarija                         -1,0
Prienai r.                        -1,0
Rietavas                          -1,0
Elektrėnai                        -0,9
Raseiniai r.                      -0,9
Pakruojis r.                      -0,9
Skuodas r.                        -0,9
Pasvalys r.                       -0,9
Radviliškis r.                    -0,9
Šilutė r.                         -0,9


Consolidated version as of 5th March, 2008                                                       242
Joniškis r.                       -0,9
Kupiškis r.                       -0,8
Telšiai r.                        -0,7
Kazlų Rūda                        -0,7
Šakiai r.                         -0,6
Kelmė r.                          -0,6
Trakai r.                         -0,6
Druskininkai                      -0,5
Utena r.                          -0,5
Šilalė r.                         -0,5
Pagėgiai                          -0,5
Source: Counties of Lithuania. Economic and social development 1997, 1998, 1999, 2000, 2001, 2002.- V. Department of
Statistic, 1998-2003.

Table 5. Percentage of population engaged in agriculture, hunting and forestry

       Municipality              Population engaged in agriculture, hunting and
                                                  forestry, %
Druskininkai                                          12,3
Alytus r.                                             38,5
Varėna r.                                             21,7
Lazdijai r.                                           24,9
Vilnius r.                                            16,9
Elektrėnai r.                                         17,6
Trakai r.                                             16,6
Ukmergė r.                                            34,3
Šalčininkai r.                                        25,8
Švenčionys r.                                         31,3
Širvintos r.                                          26,8
Jonava r.                                             33,9
Kaišiadorys r.                                        23,2
Kaunas r.                                             16,6
Kėdainiai r.                                          53,6
Prienai r.                                            37,7
Raseiniai r.                                          51,6
Klaipėda r.                                           20,2
Kretinga r.                                           40,8
Skuodas r.                                            58,2
Šilutė r.                                             42,5
Marijampolė r.                                        38,7
Vilkaviškis r.                                        40,7
Kalvarija r.                                          40,9
Kazlų Rūda r.                                         42,9


Consolidated version as of 5th March, 2008                                                                   243
Šakiai r.                                             36,6
Birţai r.                                             52,5
Kupiškis r.                                           30,9
Panevėţys r.                                          33,7
Pasvalys r.                                           56,2
Rokiškis r.                                           58,2
Akmenė r.                                             25,7
Joniškis r.                                           33,5
Kelmė r.                                              34,3
Pakruojis r.                                          36,5
Radviliškis r.                                        45,4
Šiauliai r.                                           31,5
Pagėgiai                                              44,8
Tauragė r.                                            49,1
Šilalė r.                                             49,7
Jurbarkas r.                                          41,5
Maţeikiai r.                                          30,4
Plungė r.                                             42,0
Rietavas                                              47,0
Telšiai r.                                            45,6
Anykščiai r..                                         30,0
Zarasai r.                                            31,2
Ignalina r.                                           29,5
Molėtai r.                                            44,9
Utena r.                                              51,8
Source. Department of Statistic, 2004.


Table 6. The calculations of highly disadvantaged and less disadvantaged areas

      Municipalities               Agricultural area, ha         Index
Švenčionysr.                              45537                  0,4021
Molėtai r.                                62675                  0,4300
Zarasai r.                                49041                  0,4402
Ignalina r.                               60065                  0,4439
Trakai r.                                 37146                  0,4405
Varėna r.                                 46841                  0,4760
Highly disadvantaged                     301305
areas
Rokiškis r.                               98591                  0,5424
Utena r.                                  60882                  0,5446
Anykščiai r.                              96097                  0,5656
Ukmergė r.                                74489                  0,5681


Consolidated version as of 5th March, 2008                                       244
  Rietavas r.                                21253                         0,5692
  Šalčininkai r.                             64690                         0,5997
  Širvintos r.                               49571                         0,6222
  Lazdijai r.                                57392                         0,6529
  Telšiai r.                                 72063                         0,6074
  Plungė r.                                  55068                         0,6175
  Pagėgiai                                   37613                         0,6675
  Šilutė r.                                  80900                         0,6689
  Elektrėnai r.                              29458                         0,6711
  Less disadvantaged areas                  793567
  Total                                    1094872

  Remark: Example of calculation of index. Svenčionys r. index = 1,45 (ton/ha – Yield of cereals in
  Svencionys) / 2,7 (ton/ha – National average) + 8,2 (population/km2 in Svencionys) / 30,7
  (population/km2 - national average)/2 = 0,4021

  Table 7. Details of calculation of compensatory allowance in LFA

Areas         Total      Output      Output      Other      Costs Variable Fixed         Gross
              output     crops      livestock    output     Lt/ha  costs   costs         profit
              Lt/ha                                                                      Lt/ha
            1=2+3+          2          3           4        5=6+7    6         7         8=1-5
               4
HDA              1344         757          560         27     1094       643       451      250
LDA              1502         841          647         14     1187       716       471      315
Non-LFA          1719        1627           78         14     1208       703       505      510
areas

  Data about agricultural enterprises.
  Remarks: variable costs of crops = seeds and seedlings, mineral other fertilizers, crop protection
  products, and other variable costs of crops; variable costs of livestock = feedingstuffs, veterinary
  services and other variable costs of livestock; fixed costs = fuel, electricity, mainten. of buildings and
  of machinery, land tax and rent, wages paid and other fixed costs.
  Compensatory allowance is calculated in this way: Gross profit in non-LFA area minus Gross profit in
  HDA or LDA.




  Consolidated version as of 5th March, 2008                                                           245
Table 8. Yield of crops in Birzai and Pasvalys municipalities and in the Extreme karst zone.


Agricultural                                              Yield, ton/ha
production
                   Birzai              Pasvalys                         Extreme Karst zone
                   municipality        municipality           Without manure Under restrictions of
                                                                               using manure
Cereals            2,91                3,62                   1.75-2,17        2,12-2,64
Potatoes           12,7                16,8                   7,6-10,1          9,3-12,3
Vegetables         9,6                 12,5                   5,8-7,5           7,0-9,1
Sugar beat         36,4                40,9                   21,8-24,5         26,6-29,9
Source: Cultivated agricultural crops, yield, 2002 – Department of Statistic.




Consolidated version as of 5th March, 2008                                                           246
Consolidated version as of 5th March, 2008   247
Consolidated version as of 5th March, 2008   248
Table 9. Support for the Less-favoured Areas (1997 – 2002)

No.              Support                1997          1998    1999    2000   2001           2002
1.     Rural Support Fund
       Reorganisation of agricultural
       activity in the less-favoured    2 106         1 710   1 457   513
       areas
        Total (thous. LTL)
2.     Special Rural Support
       Programme 2001
2.1.   Direct payments for winter
       rye of 2001 (thous. LTL)                                              696
2.2.   Direct payments for
       buckwheat of 2001 (thous.                                             1 225
       LTL)
2.3.   Total in 2001 (thous. LTL)                                            1 921
3.     Special Rural Support
       Programme 2002
3.1.   Compensatory allowances                                                             11 642
       (thous. LTL)                                                                        ( 9 745 )*
3.2.   Direct payments for winter                                                           2 654
       rye (thous. LTL)
3.3.   Direct payments for                                                                 3 598
       buckwheat (thous. LTL)
3.4.   Direct payments for                                                                  672
       leguminous crop (thous.
       LTL)
3.5.   Total in 2002 (thous. LTL)                                                          18 568
                                                                                           ( 15 000 )*
*estimated for 2002




Consolidated version as of 5th March, 2008                                           249
   Table 10. Details of calculation of compensatory allowance in Natura 2000 areas

                                   Usual practise                                                  Natura 2000 areas for bird protection
                   Costs Lt/ha                               Income Lt/ha                      Costs Lt/ha                      Income Lt/ ha

First mowing of meadow done in June            176,6 Hay (2,2 t* 138Lt/t) 303,6

Second      mowing              done      in         Hay (1,75t* 138
July/August                                    176,6 Lt/t)                  241,5
                                                                                    Grass mowing                63,5     Hay for litter (2     60,00
                                                                                                                        t*30Lt/t)
                                                                                    Tedding and racking         31,7
                                                                                    Pick-up, transport          81,4

TOTAL (T1)                                     353,2 TOTAL (T2)             545,1 TOTAL (T3)                    176,6   TOTAL (T4)             60,00
Profit from usual practice, Lt/ha                                           191,9 Profit from practice
P1=(T2-T1)                                                                        applying this restrictions,
                                                                                  Lt/ha
                                                                                  P2=(T4-T3)                                                   -116,6
                                                                                    Income forgone, Lt/ha                                      308,5
                                                                                    I=(P1-P2)
                                                                                    Income forgone                                             89
                                                                                    (EUR)/ha


Agronomic and economic assumptions

Hay (June)                             176,6          From first mowing
                                                      we can get 2,2 t/ha of
                                                      hay
Grass mowing
(39,2+6,8+17,5+8,7=72,2Lt/ha)          63,5

   Consolidated version as of 5th March, 2008                                                                                                250
(Deorection of machinery-39,2 Lt/ha
;diesel – 6,8 Lt/ha; salary –
17,5 Lt/ha; Cost of activity – 8,7 Lt/ha).
Tedding and raking
(12,4+4,0+15,3+3,8=35.5Lt/h
a);
(Depreciation of machinery-12,4
 Lt/ha; diesel – 4,0 Lt/ha; salary –
                           31,7
15,3 Lt/ha; Cost of activity –3,8 Lt/ha).
Pick-up, transport         81,4                      From 2nd mowing we can get               Haymaking            176,6   Not fertilising and prevailing dry
                                                                                                                           weather average yielding of natural
(37,7+12,4+31,3+11,6= 93.0                           1,7 t/ha of hay, 138 Lt/ t is price                                   meadows decrease up to 2 t/ha.
Lt/ha;                                               of normal feed value hay
(Depreciation of machinery-37,7 Lt/ha;
diesel – 12,4 Lt/ha; salary –
31,3 Lt/ha; Cost of activity –11,6 Lt/ha).
                                                     Price of hay decrease by 10 % due to worse
                                                     quality, compared with that of cultural
                                                     meadows.                                   Grass mowing       63,5
Hay (July/August)                            176,6   Hay quality                              Tedding and raking   31,7
Grass mowing                                 63,5                                             Pick-up, transport   81,4
Tedding and raking                           31,7
Pick-up, transport                           81,4




   Consolidated version as of 5th March, 2008                                                                                                  251
Annex 4: Details of the Code of Good Agricultural Practice and the Action programme for
implementation of EU Nitrate Directive


Under the guidance of the Water Management Institute of Lithuania and the Danish Agricultural
Consultancy Centre, the Code for Good Agricultural Practice (CGAP), which is a compendium of
compulsory and recommended measures for the management of agricultural production, was prepared
and adapted to Lithuania‟s economic and environmental conditions in 2000. It is an optimal farming
system, ensuring sustainable economic development of a farm. The CGAP is a first document of this
type in Lithuania, providing the framework for sustainable and environmentally friendly agricultural
management system. It is a compendium of regulations and advice set up by legal acts of the European
Commission, the Helsinki Commission and national legislation on sustainable and profitable farming
without infringing the environmental regulations and damaging the environment.

The CGAP includes rules relating to:

1. Periods when the land application of certain types of fertiliser is prohibited. Organic fertiliser is not
   allowed to be applied in the period starting from November 15th up to March 15th. It is also not
   allowed to apply fertiliser on frozen, flooded and show-covered ground. The organic fertiliser
   should be incorporated into the soil within 6 hours.
2. Livestock densities corresponding to manure application - maximally 170 kg of nitrogen per year
   per hectare of utilised agricultural area;
3. The capacity of storage vessels for livestock (cattle, horses and sheep) manure for a storage period
   of at least 6 months; 8 months storage capacity is required for pig and poultry manure. In the
   intensive Karst region and in the Seashore within 10 km, the manure storage capacity should be 8
   months for cattle and 10 months for pigs and poultry.
4. Limitations on the application of fertilisers to the land, consistent with good agricultural practice
   and taking into account:
 soil conditions, soil type and slope;
 climatic conditions and rainfall;
 land use and agricultural practices, including crop rotation systems and a balance between:
  the foreseeable nitrogen requirements of the crops, and
  the nitrogen supply to the crops from the soil and from fertilisation corresponding to:
         -    the amount of nitrogen present in the soil at the moment when the crop starts to use it to a
             significant degree (outstanding amounts at the end of winter),
         -    the supply of nitrogen through the net mineralization of the reserves of organic nitrogen
             in the soil,
         -    additions of nitrogen compounds from livestock manure,
          additions of nitrogen compounds from mineral fertilisers. All farms at present having more
         then 150 ha are obliged to perform soil analysis and develop fertiliser plans prior fertilisation
         each year. It is foreseen to require to develop fertiliser plans in all farms during the
         implementation of the second Action programme, in the period 1008-2011.
5. Ratio between perennial and annual crops, increase of vegetation cover during periods when the
   soil is most vulnerable to nitrate leaching. All farms having more then 15 ha of land should have in


Consolidated version as of 5th March, 2008
   their crop rotation at least 50 % over-wintering crops.
6. Measures that do not allow agricultural effluents to pollute surface and ground water;
7. Land reclamation, biological diversity and landscape.

A summary of the Action programme is provided below.




Consolidated version as of 5th March, 2008
                                                                                                     Annex to the State programme
                                                                                                             for reduction of water's
                                                                                                 pollution from agricultural sources


    MEASURES FOR IMPLEMENTATION OF THE STATE PROGRAMME FOR REDUCTION OF WATER'S
                       POLLUTION FROM AGRICULTURAL SOURCES


   Title   of       the Objectives                    Implementation    Responsible
   measure                                            period            institutions   Expected result
                                                           I. Competence building
   1.     To      create To develop training          2004              MoA, MoE,      Specialists administrating EU support for
   training system and programmes on the                                Ministry of    environment protection in agriculture will be
   to organise training. CGAP and to organise                           Education      introduced to the requirements for reduction of
                         training with a particular                     and Science,   water pollution from agriculture; farmers will be
                         attention given to the                         Ministry of    trained how to store and use manure, slurry and
                         problem with nitrates in                       Health         mineral fertilisers without harm to the
                         the private dug wells.                         Protection     environment, how to balance nutrients used by
                                                                                       plants, to choose the best crop structure, how to
                                                                                       increase economic and nature protection effect ,
                                                                                       how to implement all measures foreseen in this
                                                                                       Programme; methodical material regarding
                                                                                       protection of dug wells from pollution will be
                                                                                       developed.




Consolidated version as of 5th March, 2008                                                                                        254
   Title   of      the Objectives                  Implementation      Responsible
   measure                                         period              institutions     Expected result
                         To organise               2005                MoA, MoE,        In demonstration farms the mandatory measures
                         establishment of                              Ministry of      from the Nitrate directive will be implemented,
                         demonstration farms in                        Science and      also impact of those measures to the
                         which pollution                               Education,       environment will be observed. Based on this
                         preventive measures                           physical and     research the recommendations on how to
                         would be implemented                          legal entities   minimise pollution from agricultural sources
                         and the effect of those                                        will be prepared, the most effective measures
                         measures investigated                                          will be demonstrated during the field days and
                                                                                        seminars; information will be provided about
                                                                                        planning of manure storages, slurry and effluent
                                                                                        tanks, about the requirements for those
                                                                                        installations, instalment and possible suppliers
                                                                                        of material for construction.
   2. To prepare legal To prepare new and to      2004                MoA, MoE          The legal acts will be prepared, the technical
   acts and technical  improve the existing                                             regulations will be improved, the conditions for
   regulations.        legal acts and technical                                         the development of the technical projects for
                       regulations according to                                         manure storages and slurry tanks meeting EU
                       the EU requirements                                              requirements will be created.
                       related to the instalment
                       of manure storages and
                       slurry tanks.
                               II. Measure related to the elimination of pollution from livestock farms.
   3. Elimination of First of all to install      2007                MoA, MoE, Manure and slurry storages will be installed
   pollution caused by manure storages, slurry                        physical and according to the defined environmental
   big livestock farms and effluent tanks in big                      legal entities requirements.
                       farms with more then
                       300 LU
                       To foresee that in the     2007                MoA, MoE,       Manure and slurry will be transported to the
                       farms having more then                                         fields and applied with special equipment, which
                       300 LU the manure                                              ensures that environmental requirements are
                       would be applied on the                                        followed.
                       fields by special
                       equipment


Consolidated version as of 5th March, 2008                                                                                         255
   Title      of     the Objectives                   Implementation      Responsible
   measure                                            period              institutions   Expected result
   4. To reduce          To create conditions to      2007                MoA, MoE There will be conditions created for smaller
   pollution from        install manure storages,                                        livestock farms to install manure storages, to
   small livestock       tanks for slurry or other                                       procure slurry application equipment meeting
   farms                 waste water, to use                                             the defined requirements; in all farms
                         special equipment for                                           undergoing reconstruction it will be mandatory
                         application of mineral                                          to install manure storages and slurry tanks
                         and organic fertiliser                                          meeting the defined technical requirements.
                         which are in line with
                         defined requirements
                                            III. Implementation of sustainable agricultural system
   5. To reduce run-     To define that organic       2005                MoA            Fertilisation with manure and slurry will be
   off of nitrogen,      fertiliser is only used in                                      performed during the defined period, organic
   especially of         the right periods.                                              fertiliser will be incorporated into the soil within
   nitrates from                                                                         defined time.
   agricultural fields.
                         To limit fertilisation on    2007                MoA, MoE,      Fertilisation on steep slopes, walleyes will be
                         steep slopes                                                    performed according to the defined requirements
                                                                                         based on the vegetation cover, slopes, and soils
                                                                                         condition.
                         To limit fertilisation of    2007                MoA, MoE       Lowlands (sinks), where surface water may
                         waterlogged , flooded                                           accumulate will not be fertilised; waterlogged
                         soils.                                                          soils will be fertilised according to defined
                                                                                         requirements.
                         To limit animal grazing 2007                     MoA, MoE,      Animals in the protection zones of water bodies
                         close to water courses.                                         will be grazed according to the defined
                                                                                         requirements; protective zones of water bodies
                                                                                         will not be damaged.




Consolidated version as of 5th March, 2008                                                                                             256
   Title   of       the Objectives                   Implementation     Responsible
   measure                                           period             institutions    Expected result
                          To organise rational       2007               MoA             There will be requirements set so that
                          fertilisation by manure                                       fertilisation with manure and other fertilisers
                          and mineral fertilisers.                                      will be done in the periods when plants can
                                                                                        absorb most of nutrients based on the balance
                                                                                        between the plants' need of nitrogen and
                                                                                        nitrogen which plants get from soil and
                                                                                        fertilisers, in accordance with the amount of
                                                                                        nitrogen in soil in the moment when the plants
                                                                                        start absorbing most of nitrogen; the fertilisation
                                                                                        plans will be developed for each farm, the
                                                                                        ongoing registration of the use of fertilisers will
                                                                                        be carried out.
                          To organise land use       2007               MoA,            There will be defined requirements and achieved
                          management according                                          that farms would develop land use plans and
                          the balance between                                           would define land area for perennial and annual
                          perennial and annual                                          crops.
                          crops.
                          In all farms which have    2007               MoA,           Having defined requirements it will be achieved
                          more then 300 LU to                                          that having incorporated all manure accumulated
                          limit amount of manure                                       in the farms, including manure applied on the
                          applied on the soils.                                        land while grazing animals, the limit of the
                                                                                       allowed application norm of 170 kg of nitrogen
                                                                                       per ha of agricultural land will not be exceeded.
                                             IV. Pollution from agricultural sources monitoring
   6. To implement        To monitor land use,       2007                MoE, MoA      Monitoring of agro ecosystems will be carried
   monitoring for         animal density, manure                                       out in all main natural-geographical regions;
   pollution by           storage and fertilisation                                    there will be established GIS with the database
   nitrates from          in characteristic                                            for diffused pollution to be defined and
   agricultural sources   agroecosystmes; to                                           prognosed.
                          analyse and prognose
                          the changes.




Consolidated version as of 5th March, 2008                                                                                           257
   Title     of    the   Objectives                Implementation       Responsible
   measure                                         period               institutions    Expected result
   7. To implement       Continuously to monitor   2007                 MoE             Improved (expanded) according to coordinated
   water pollution       ground and surface                                             programmes water pollution monitoring will be
   monitoring            water status                                                   implemented in the entire territory of Lithuania,
                                                                                        nitrate concentration showing the extent of water
                                                                                        pollution from agricultural sources will be
                                                                                        monitored in surface and ground water.
                                              V.Collection of information, scientific research
   8.Information         To create a system for       2005             MoE, MoA         There will be an information system created,
   collection            collection of information                                      which will include data about pollution by
                         about pollution by nitrates                                    nitrates and the implementation of the measures
                         sources and applied                                            of this programme and evaluation.
                         measures
   9. To implement       To define the                2007             MoE, MoA,        The impact on the environment of the
   Scientific and        environmental and                             Ministry of      implemented measures will be researched, most
   applied research      economic effectiveness of                     Science and      suitable measures will be identified, further
                         the implemented measures,                     Education        recommendations regarding implementation of
                         to provide proposals                                           the measures in applying the novelties of science
                         regarding application of                                       and technique will be developed
                         science and technical
                         novelties.




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Annex 5: Physical and financial indicators of the measures (cumulative data per year)

                    Measure                          Table                                                            2004      2005             2006
                                                               Number of beneficiaries:                              9,500     19,500           30000
                                                               Number of hectares released ('000 ha)                 30,000    65,000          105,000
      Early retirement (Ch. IV, art. 10-12)              d.1   Number of milk quota released, tons                  120,000   200,000          240,000
                                                               Amount of public expenditure        Total             30,125    32,327           26,764
                                                               committed ('000 EUR)                of which EAGGF    24,100    25,861           21,411

                                                               Number of beneficiaries:                              60,000    65,000           70,000,
Less-favoured areas and areas with environmental               Number of hectares supported ('000 ha.)              606,900   714,.000         835,100,
                                                         e.1
         restrictions (Ch. V, art. 13-21)                      Amount of public expenditure        Total             47,000    48,000           82,142
                                                               committed ('000 EUR)                of which EAGGF    37,600    38,400           65,714

                                                               Number of beneficiaries:                               750       1,500           3,000
                                                               Number of hectares supported ('000 ha.)               30,000    45,000          60,000
     Agri-environment (Ch. VI, art. 22-24)                f
                                                               Amount of public expenditure        Total             15,000    22,981          44,911
                                                               committed ('000 EUR)                of which EAGGF   12,000     18,385          35,929

                                                               Number of beneficiaries:                              700       1500             2500,
     Afforestation of agricultural land; other                 area supported ('000 ha)                             3,000      7,000           12000,
                                                     h & I.1
       afforestation (Ch. VIII, art. 30-31)                    Amount of public expenditure     Total               2,000      4,425             164
                                                               committed ('000 EUR)             of which EAGGF      1,600      3,540             131

                                                               Number of beneficiaries                               6,500     10,000          14,000
Semi- subsistence farms undergoing restructuring n/a
                                                               Amount of public expenditure
                                                                                                Total                2,494     4,004            2,643
                                                               committed ('000 EUR)
                                                                                                of which EAGGF       1,995     3,203            2,114

                                                               Number of beneficiaries
          Technical assistance (1.5 %)             n/a
                                                               Amount of public expenditure     Total                1,800     2,000            2,121


Consolidated version as of 5th March, 2008                                                                                               259
                                                     committed ('000 EUR)           of which EAGGF    1,440     1,600          1,697
                                                     Number of beneficiaries                          6,000     8,000           2,070
             Meeting standards                 n/a   Amount of public expenditure   Total            36,304    50,362          30,485
                                                     committed ('000 EUR)           of which EAGGF   29,043    40,290          24,388

                  Top-ups                                                           Total            46,031    41,025          33,394
                                                     Amount of public expenditure
                                                     committed ('000 EUR)           of which EAGGF   36,825    32,820          26,715

 Projects approved under Regulation (EC) No.         Amount of public expenditure   Total             3,371      0               0
                  1268/1999                          committed ('000 EUR)           of which EAGGF    2,697      0               0

                                                     Amount of public expenditure   Total            184,125   205,125         222,625
            Total of all measures
                                                     committed ('000 EUR)           of which EAGGF   147,300   164,100         178,100




Consolidated version as of 5th March, 2008                                                                               260
Annex 6:      Result and Impact indicators

Early Retirement Scheme
n/a – not applicable, TBD – to be defined
                         Questions and indicators                           EU      Baseline year   Baseline   Forecast 2006
                                                                         document
                                                                          chapter
To what extent has aid for early retirement contributed to the earlier     IV.1.
transfer of farms?

Average difference in age between transferor and transferee (years)

Average age of transferors in ERS                                                        n/a          n/a          58,5


Average age of transferees in ERS
                                                                                         n/a                        n/a
Less than 40 years (%)
40 years and over (%)
                                                                                                      n/a
Surface area released early (ha)

Number of holdings released under the scheme                                            2004                      105.000

Cumulative no. of ha released for agricultural purposes                                  n/a                       2500
                                                                                                     30000
Cumulative no. of ha released for non-agricultural purposes                              n/a                       99750
                                                                                                      n/a
                                                                                         n/a                       5250
                                                                                                      n/a

                                                                                                      n/a
To what extent has aid for termination of the milk production in small      n/a
dairy farms under the ERS contributed to the restructuring of dairy
sector?


Quantity of milk production quota released to State Milk Quota


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                        Questions and indicators                                    EU      Baseline year   Baseline   Forecast 2006
                                                                                 document
                                                                                  chapter
Reserve.(tones)                                                                                  n/a          n/a         240.000

To what extent has aid for                                                        IV.1.A
early retirement contributed to the earlier transfer of farms. In
particular, to what extent has there been synergy between „early
retirement‟ and „setting-up of young farmers‟ in terms of an earlier
change of holders?

Ratio of {number of beneficiaries of setting-up aid replacing beneficiaries of
early retirement aid} to {all cases of assisted retirement}
                                                                                                 n/a          n/a          TBD
Ratio of {average age of the beneficiaries of early retirement aid
replaced by beneficiaries of setting-up aid} to {average retirement age of all
farmers receiving early retirement aid}                                                                                    TBD
                                                                                                 n/a          n/a
                                                                                   IV.2


                                                                                                 n/a          n/a          TBD



                                                                                                              1,55          2,2

                                                                                                2004          n/a          11,5

                                                                                                 n/a          n/a          25,0




                                                                                                                           TBD
                                                                                                 n/a


Was the income offered to the transferors (small dairy farm holders)               IV.3.

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                       Questions and indicators                             EU      Baseline year   Baseline   Forecast 2006
                                                                         document
                                                                          chapter
appropriate in terms of encouraging them to abandon farming and
subsequently offering them a fair standard of living?


Average ERS pension (€)                                                                 2004          2243         2250

Average ERS pension (farm worker) (€)                                                   2004          1024         1024

Number of farm workers supported                                                        2004          n/a           600

Average compensation per small dairy holding (€)                                        2004          1353         1353

Number of small dairy farm holders supported through ERS.
                                                                                        2004          8600         27200
Number of transferors penalized under ERS
                                                                                         n/a          n/a           n/a

Context indicators

Average farm size                                                                       2002          13,7         15,9

Average number of milk cows per holding, or average milk quota per
holding.                                                                                2002          2,26          3,0

% of farmers under 40 years of age                                                      2002          14,4         16,7

% of farmers over 55 years of age                                                       2002           60          45,0

Ratio of average disposable income in rural area to average disposable
income in urban area                                                                    2001          68,3         70,0




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Less Favoured Areas
                      Questions and indicators                           EU      Baseline year         Baseline   Forecast 2006
                                                                      document
                                                                       chapter
To what extent have compensatory allowances helped in ensuring       V.2.
continued agricultural land use?

Change in UAA in LFAs (ha 000)                                                   2004            606              835
Change in UAA in LFAs ( %)                                                       2004            41               72
Change in UAA in LFA with natural handicaps (ha 000)                             2004            20               25
Change in UAA in LFA with natural handicaps ( %)                                 2004            75               94
Change in UAA in LFA with environmental restrictions (ha 000)                    2004            15               23
Change in UAA in LFA with environmental restrictions ( %)                        2004            50               77
To what extent have compensatory allowances contributed to the       V.3.
maintenance of a viable rural community?

Compensatory allowance (EUR, mln)
In Highly disadvantaged areas                                                    2002                             10 000
In Least disadvantaged areas                                                     2002                             42 000

Change in number of beneficiaries                                                2004            45000            70000

To what extent has the scheme contributed to the protection of the   V.4.A
environment by maintaining or promoting sustainable
farming that takes account of environmental protection
requirements in LFAs?

Number of beneficiaries in areas with natural handicaps                                                           1500
Number of beneficiaries in areas with environmental restrictions                                                  4250
Number of beneficiaries, compliant with environmental requirements                                                100%
(concerns LFA)




Consolidated version as of 5th March, 2008                                                                                 264
Agri-environment
 Type of indicators       EU document                                    Indicator                                         Forecast 2006
                            chapter
Uptake                                       - Number of beneficiaries (abs.; % of all farmers)                 12,5 %
                                              - Number of hectares (abs.; % of all agricultural land);          5%
                                             - Number of hectares (abs.; % total area)                          1%
Agricultural indicators

Livestock density                            - Livestock density, livestock units/ha of forage                  1




Organic farming                              - Number of hectares (abs.; % of all agricultural land)            Farmland under organic farming
                                                                                                                occupy 2% of all agricultural land

Environmental
indicators

Water quality                                - Ntot, Ptot concentration in the surface water (small lakes and   Decrease of nitrate      nitrogen    from
                                             rivers)                                                            agrarian territories

Soil quality                                 - Erosion (% of area covered by measures)                          Decrease of erosion

Landscape                                    - Percentage of land or contracts with provision on the            Increase by 10 % number of meadows
                                             maintenance of countryside and landscape;

Biodiversity                                 - Area of meadows                                                  Increase of area taken by natural and
                                                                                                                semi-natural meadow
Local breeds                                 - Number of animals per breed                                      Keeping a constant number of animal
Socio-economic
indicators

Farm size                                    - Farm size (comparing participating farms and Lithuanian          30 % of farms will be less than 20 ha.
                                             average)


Consolidated version as of 5th March, 2008                                                                                             265
Afforestation of agricultural land
Questions and indicators                                                          EU document   Baseline year   Baseline   Forecast 2006
                                                                                  chapter

To what extent are forest resources being maintained and
enhanced through the programme particularly by influencing land use
and the structure and quality of growing stock?
                                                                                                2001            3000       5000
Area of assisted plantings (ha/year)

Forests planted in less favoured areas (%), of which in:                                                        n/a        80
        -HDA                                                                                                               40
         LDA                                                                                                               40

Percentage of broadleaf‟s in the planted forests with assistance (%)
                                                                                                                n/a        50

To what extent have the assisted actions enabled forestry                         VIII.2.A.
to contribute to the economic and social aspects of rural
development by maintenance and encouragement of the
productive functions on forests holdings?

Ratio of lost income premiums to net income from previous land use (%)                                          n/a        100

Share of beneficiaries being connected to associations of forest holders thanks
to assistance (%)                                                                                               n/a        20

Share of beneficiaries which are supported under “farmers and associations
thereof” category thanks to assistance (%)                                                                      n/a        90

Share of beneficiaries which are supported as a group of applicants who                                         n/a        10
afforest neighbouring lands thanks to assistance (%)

Percentage of short rotation forests established

To what extent have the assisted actions enabled forestry                         VIII.2.B.
to contribute to the economic and social aspects of rural

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Questions and indicators                                                      EU document   Baseline year   Baseline   Forecast 2006
                                                                              chapter
development by maintenance and development of employment and other
socio-economic functions and conditions?

Additional attractive/valuable area or sites due to assistance (forests for                                 n/a        1500
recreation) (ha)

To what extent have the assisted actions enabled forestry                     VIII.2.C.
to contribute to the economic and social aspects of rural development by
maintenance and appropriate enhancement of protective functions of
forest management?

Area planted with a view to protective functions (ha)                                                       n/a        1500

Area planted with a view to economic functions (ha)                                                         n/a        2500

To what extent have the assisted actions contributed to the                   VIII.3.A.
ecological functions of forests by maintenance, conservation
and appropriate enhancement of biological diversity?                                                        n/a        500

Established forest in Protective areas (ha)


Support for semi-subsistence farms undergoing restructuring

Questions and indicators                                                      EU document   Baseline year   Baseline   Forecast 2006
                                                                              chapter
To what extent has aid for semi- subsistence farms contributed to the
transferring farms into commercial farms?

Number of supported projects                                                                2003            0          17 000

Average age of farmers in semi- subsistence farming                                                         n/a        n/a

Farmers aged:                                                                                               n/a        n/a
Less than 40 years (%)
40 years and over (%)



Consolidated version as of 5th March, 2008                                                                                      267
Questions and indicators                                                             EU document   Baseline year   Baseline   Forecast 2006
                                                                                     chapter


To what extent has aid for semi- subsistence farmers contributed to the
transferring farms into commercial farms? In particular, to what extent
has there been synergy between “support to semi- subsistence farming” and
“early retirement” in terms of farm restructuring?

Ratio of {number of beneficiaries of semi- subsistence farms taking over the
released land from “early retirement”} to {all cases of assisted semi- subsistence                 n/a             n/a        n/a
farms}

To what extent has aid for semi- subsistence farmers contributed to the
transferring farms into commercial farms? In particular, to what extent
has there been synergy between “Support to semi- subsistence farming”
and “Investments in agricultural holdings” (from SPD) in terms of farm
restructuring?

Ratio of {number of beneficiaries of semi- subsistence farms, supported after
“Investments in agricultural holdings” from SPD} to {all cases of assisted semi-
subsistence farms}                                                                                 n/a             n/a        n/a


To what extent has the economic viability of the remaining agricultural
holdings improved?

Increase in average semi- subsistence farm size after support (ha)                                 2004            n/a        n/a

Average size of holding (ha) being overtaken by transferee (from ERS)
                                                                                                   2004            11.5       11.5
Average size of holding (ha) taking part in „Investments in agricultural
holdings“ in SPD and getting semi- subsistence support                                             2004            n/a        n/a

Average values of indicators to show economical viability of farms:

- Net profit Margin (%)                                                                            2002            n/a        3

-
                                                                                                   n/a             n/a        n/a

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Questions and indicators                                                    EU document   Baseline year   Baseline   Forecast 2006
                                                                            chapter
Specialisation in milk production in number of supported farms (%)
                                                                                          n/a             n/a        n/a
Specialisation in live stock production in number of supported farms (%)

Specialisation in crops production in number of supported farms (%)                       n/a             n/a        n/a


Context indicators

Average farm size (ha AAU)                                                                2004            n/a        n/a




Meeting standards

Questions and indicators                                                    EU document   Baseline year   Baseline   Forecast 2006
                                                                            chapter
Established manure storage facilities (using funding of Meeting standards
measure)?                                                                                 2003            0          2650 units

Installed milking equipment (using funding of Meeting standards                           2003            0          8000 units
measure)?

Established milk storage facilities (using funding of Meeting standards                   2003            0          8000 units
measure)?




Consolidated version as of 5th March, 2008                                                                                    269
Annex 7: Executive Summary of Ex-ante evaluation


Background
The following summarizes the results of the ex ante evaluation of the Rural Development Plan 2004-
2006 for the Republic of Lithuania (draft December 2002). The evaluation has been carried out by
Kvistgaard Consult ApS (Copenhagen, Denmark) on behalf of the Ministry of Agriculture (MoA) and
the Agri-information and Rural Business Centre in the Republic of Lithuania. The evaluation was
carried out from 15 of January 2003 to 25 of March 2003.

According to Article 63 in Commission Regulation 817/2004 an ex ante evaluation of the Rural
Development Plan must be carried out prior to final approval of the Plan. The purpose and content of
the ex ante evaluation are described in Guidelines for Evaluation of Rural Development Programmes
2000-2006 (VI/8865/99-Rev) in annex III regarding ex ante evaluations.

In practical terms the objective of the ex ante evaluation is to contribute to the development of the RDP
and through this assist the MoA in the programming of the Lithuanian rural development programme.

Results of the Prior Appraisal

The following aspects of the RDP have been analysed:

      The disparities, gaps and potentials of the current situation in rural Lithuania, including an
       assessment of previous results
      The consistency of the proposed strategy
      The consistency with the Common Agricultural Policy and other Community policies
      The expected impact of the selected priorities
      The quantification of targets
      The proposed implementing arrangements.

These aspects are summarized below. Before turning to the evaluation results it is urgent for the
evaluator to point out that focus in the ex ante evaluation has been to contribute to the improvement of
the draft RDP. Therefore attention also has been on what could be done better; where could arguments
be improved; where could the presentation be clearer. This means that the evaluation report has a bias
towards pointing out missing links and flaws.

In order to justify the positive and good elements of the draft RDP in a proper way, it should be
emphasised at the outset that the present draft RDP represents a substantial improvement compared to
the draft SAPARD RDP from October 1999 and also ex ante evaluated of Kvistgaard Consult. The
description of the current situation, the SWOT-analysis and the quantification have been elaborated
considerably.




Consolidated version as of 5th March, 2008
Disparities, gaps and potentials of the current situation in rural Lithuania, including an
assessment of previous results

The description of the current situation in the RDP is generally adequate. The description focuses on
agriculture, forestry and the processing industries, but do also include sufficient information on the
demographic, social, economic and environmental situation in the rural areas as well as the status
regarding employment and infrastructure. All sections contain quantified data. The main flaw of
description is the structure and organisation of the content. A few sections are misplaced and the
numbering and naming of the headlines are in some cases inconsistent.

The SWOT analysis represents one of the important improvements of the RDP. The SWOT is
consistent with the description of the current situation and sums the main points in a coherent way. In
addition, it has an analytical dimension, which makes it a suitable point of departure for outlining a
strategy for rural development. The main weakness in this regard is the missing ranking of disparities.
The disparities are listed but there is no explicit ranking. This ranking is an important part of the
foundation for developing a focused strategy.

The analysis of previous results is another part of the RDP that could be improved. In the current draft
only the section on forestry is adequate in terms of analysing the results and drawing out lessons. The
remaining sections could be improved by using the section on forestry as inspiration

Assessment of the consistency of the proposed strategy

Overall the RDP reflects the fact that there is a clear connection between the disparities to be addressed
on the one hand and the strategy and the priorities on the other hand. The disparities presented in the
description and addressed in the SWOT analysis are targeted by the measures selected in the RDP.

The clarity and the justification of the strategy could be improved by a coherent ranking of the
disparities, which make clear what problems are the most severe. Accordingly, it could strengthen the
RDP if reflections on the concentration of the strategy were presented. The strategy could be either
focused further or widened, each having different consequences. In this regard considerations on
absorptive capacity of relevant groups of beneficiaries, administrative capacity of the MoA and
marginal utility of selected measures could be presented in order to verify the adequacy of the chosen
strategy.


The objectives hierarchy presented in the RDP is coherent and there is a clear link from operational to
specific to overall objectives, securing internal consistency in the RDP. Furthermore the relation to the
Single Programming Document (SPD) and the national measures (SASP) are clear, which suggest that
the RDP is coordinated with overall strategy for development in Lithuania.

The financial allocation between the different measures (the balance between measures) is not clearly
linked to the description and the SWOT. This could partly be due to the missing ranking of problems,
which could form a suitable base for carrying out the financial allocation. In addition, the calculations



Consolidated version as of 5th March, 2008
and extrapolations that presumable lies behind the financial allocation are not made explicit, causing
some blurring of the underlying reasons for the allocation.

Another aspect with regard to the balance of the strategy has to do with the relation between the
measures (and specific objectives) and the overall objectives. It can be argued that only one of the
selected measures (afforestation) directly contributes to the second overall objective on diversification
in rural areas. Therefore it is recommended that the MoA tones down diversification in the overall
objective in order to enhance the correspondence between overall and specific objectives. This change
can be justified by the fact that diversification is targeted in the SPD.

Consistency with the Common Agricultural Policy and other Policies

It is the impression of the evaluator that the RDP is consistent with regulation regarding the CAP.
Regulation 1257/1999 and 445/2002 set out different environmental and financial requirements for the
RDP. All requirements made in the regulation are met. Furthermore, controls and sanctions
implemented in order to enforce the legislation are set out in the RDP.

Moreover, there are no signs of inconsistencies towards other regulation. There are no sign of unequal
treatment of men and women, and the obligations towards greenhouse gasses, water quality and
biodiversity seems to be respected. However, making clear how Code of Good Agricultural Practice
(CGAP) and Good Farming Practice (GFP) relate to each other and to different international
obligations could enhance the transparency of the sections on these issues.

Assessment of the expected impact of the selected priorities for action described in the RDP

The expected outputs, results and impacts presented in the RDP could be presented in a more
systematic and coherent way. The objectives hierarchy as recommended by the Commission is not
reflected in the presentation of expected outputs, results and impacts. A restructuring according to the
objectives hierarchy will improve the clarity of the intervention logic as well as prepare the subsequent
development of adequate development indicators.

In addition, it could improve the coherence of the overall objectives hierarchy if the overlaps between
the expected outputs, results and impacts of the SPD and the RDP were taken into consideration and
presented in the RDP.

It is clear from the evaluation that all measures have regard to one or more of the issues raised by the
common evaluation questions and correspondingly all issued raised by the common evaluation
questions are addressed by one or more of the measures in the RDP.

The evaluation questions have been raised by the Commission in order to evaluate the extent to which
measures contribute to the overall objectives of rural development set by the Commission. The fact that
all measures have regard to the evaluation questions therefore indicates that all measures contribute to
the Commissions overall objectives of rural development. Correspondingly, the fact that all evaluation




Consolidated version as of 5th March, 2008
questions are addressed by at least two measures indicates that the RDP measures will have broad
impacts and contribute to all overall objectives of rural development.

Quantification of targets wherever they lend themselves thereto

Quantification has been taken a long way in the current draft. Useful indicators have been developed
and many indicators have been turned into quantified targets. These are furthermore grounded in
baseline data describing the current situation. However, the quantification is not structured in
accordance with objectives hierarchy as recommended by the Commission.

The quantification should be carried out thoroughly on the specific and operational level, and to the
extent this is regarded possible and meaningful also on the RDP level (overall objectives). Furthermore,
effort should be given to providing the missing baseline data, paving the way for the completion of
quantification of objectives.

Verification of the proposed implementing arrangements

It is clear from the description in the RDP that the overall division of responsibility between the MoA,
the NPA and the Monitoring Committee (MC) is appropriate. The independence between the NPA and
the Monitoring Committee is sketched in the RDP and the different areas of responsibility are outlined.
However, the chain of command and communication between the three authorities could be described,
in order to make the definition of responsibilities even clearer. For example it could be made clear that
all communication between the MC and the NPA goes through the MoA. The division of
responsibilities is implemented as prescribed by the Commission, which verifies the impression that the
overall set up is appropriate.

The arrangements for monitoring and evaluation (M&E) could be addressed more thoroughly in the
RDP. It not entirely demonstrated that the necessary preparations for sufficient monitoring and
evaluation are in place. Many valuable experiences and arrangements have been provided during
implementation of the SAPARD program, and these could be presented and reflected upon in the RDP.
It is stressed that special attention are paid to designing a well-equipped data collection and monitoring
system, and that the relevant application forms, business plans and indicators are developed
accordingly.

The eligibility and selection criteria applied in the different measures are generally clear and adequate.
Within all measures the necessary criteria have been applied and definitions of key concepts have been
set out, in order to secure a project selection and implementation that are contributing to the
achievement of the outlined objectives. The relations with national and EC regulation are clear and the
definitions in use are closely related and in compliance with the corresponding EU definitions. The
applied measures are to a great extent using the same basic eligibility criteria. This gives a consistent
use of criteria, which are relatively easy to enforce, as well as justifiable and comprehensible for
applicants.




Consolidated version as of 5th March, 2008
    Annex 8: List of social partners consulted during the preparation of this Rural Development Plan
Nr.                                 Institutions/organization
1      Presidency of the RL
2      Ministry of Environment
3      Department of Forests and protected areas
4      State food and veterinary service
5      Lithuanian academy of veterinary
6      Lithuanian institute of agriculture
7      "Tatula"programme
8      State seed and grain service under the MoA
9      State plant protection service
10     Lithuanian agrarian economic institute
11     Lithuanian institute of horticulture
12     Association of grain processors
13     Lithuanian association of municipalities
14     Lithuanian forest owners association
15     Association of meat processors
16     Lithuanian rural tourism association
17     Lithuanian association of Agricultural partnerships
18     Lithuanian milk producers association
19     Lithuanian farmers union
20     Lithuanian agricultural advisory service
21     Lithuanian Chamber of agriculture
22     State enterprise "Agency of Lithuanian agricultural produce market regulation"
23     Society of Lithuanian farmers
24     Union of Lithuanian family farms
25     Lithuanian water management institute
26     State enterprise Agricultural information and rural development centre"
27     Union of the young farmers
28     Union of Lithuanian land management and hydrochnical engineers
29     Lithuanian university of agriculture
30     Alytus country administration
31     Kaunas county administration
32     Klaipeda county administration
33     Marijampole county administration
34     Panevezys county administration
35     Siauliai county administration
36     Tauragė county administration
37     Telšiai county administration
38     Utena county administration
39     Vilnius county administration
40     Lithuanian Fund for Natura



    Consolidated version as of 5th March, 2008
41   Ministry of Social Security and Labour
42   Ministry of the Interior
43   European Committee under the Government of the Republic of Lithuania
44   Ministry of Economy
45   Ministry of Finance




 Consolidated version as of 5th March, 2008
Annex 9 : Statistical data on municipalities

Total land area and share of agricultural land, as of January 1, 2002, in hectares

Municipality      Total land area      Agricultural land   % of agricultural land
Varena                        221814              52165                        23.52
Svencionys                    169179              48481                        28.66
Kazlu ruda                     55469              17480                        31.51
Trakai                        120789              39540                        32.73
Zarasai                       133436              50442                        37.80
Rietavas                       58570              22677                        38.72
Ignalina                      149621              61525                        41.12
Salcininkai                   149137              66716                        44.73
Lazdijai                      130939              59163                        45.18
Vilnius                       212916              98297                        46.17
Jonava                         94404              44010                        46.62
Moletai                       136779              64315                        47.02
Kaisiadorys                   105781              52266                        49.41
Silute                        170625              84638                        49.60
Utena                         122906              62339                        50.72
Plunge                        110555              57119                        51.67
Taurage                       117896              61029                        51.77
Elekternai                     53802              27874                        51.81
Kaunas                        149595              78605                        52.55
Telsiai                       143891              76188                        52.95
Kretinga                       98901              53010                        53.60
Jurbarkas                     150745              81593                        54.13
Ukmerge                       139528              76042                        54.50
Klaipeda                      133590              74707                        55.92
Sirvintos                      90580              50740                        56.02
Rokiskis                      180651             101249                        56.05
Anyksciai                     176488              99186                        56.20
Siauliai                      180732             101892                        56.38
Silale                        118799              67646                        56.94
Akmene                         84373              48299                        57.24
Panevezys                     217834             124853                        57.32
Kupiskis                      108013              62277                        57.66
Kelme                         170530              99216                        58.18
Alytus                        140394              81726                        58.21
Prienai                       103073              62240                        60.38
Mazeikiai                     122025              73747                        60.44
Raseiniai                     157337              99033                        62.94
Radviliskis                   163480             105250                        64.38
Birzai                        147625              95272                        64.54
Kedainiai                     167700             109275                        65.16




Consolidated version as of 5th March, 2008
Sakiai                     145337            98794   67.98
Pagegiai                    53700            38015   70.79
Skuodas                     91094            64832   71.17
Pakruojis                  131557            94288   71.67
Marijampole                 75507            54357   71.99
Joniskis                   115225            83935   72.84
Kalvarija                   44044            32972   74.86
Pasvalys                   128911            96806   75.10
Vilkaviskis                125898            97303   77.29




Consolidated version as of 5th March, 2008
Annex 10: SPA's for meadow birds protection in Lithuania




Distribution of meadows and pastures in areas designated for bird protection in the view of favorable farming
                                                 Total area of the       Area of meadows and
           Name of the territory for bird         territory, ha             pastures in the
           protection                                                        territory, ha

 1.        Apšė river valley                           328,73                      51,99
 2.        Erlas – Salantas rivers valleys            1297,10                    1054,56
 3.        Ţemaitija National Park                   26870,65                    2451,22
 4.        Ventos river valley                        3355,80                     304,28
 5.        Kamanos strict nature reserve              3681,70                     708,12
 6.        Minija river valley                        2239,40                     624,52
 7.        Kliošiai nature reserve                     480,20                      84,44
 8.        Svencelė meadows                             178,0                      77,54
 9.        Nemunas delta Regional park               29005,54                    9136,49
 10.       Sausgalviai meadows                         247,80                     230,92
 11.       Lakes of Old and New Rusnė                 1585,70                    1019,33


Consolidated version as of 5th March, 2008
 12.      Jūra-Šešuvis rivers valleys        1352,53        982,49
 13.      Nemunas river valley                584,50        467,31
 14.      Dubysa river                       1117,00        186,98
 15.      Meadows between Raudonė            5781,80        471,94
          and Gelgaudiškis
 16.      Širvinta river valley                495,82        215,30
 17.      Nevėţis river valley                1153,60        252,08
 18.      Ţuvintas biosphere reserve         18492,97       2859,02
 19.      Kalvarija surroundings agro-       27191,50        5468,9
          landscape
 20.      Svila river valley                  364,10        160,38
 21.      Birvėta fishing ponds               861,72        420,99
 22.      Dysnai and Dysnyksčiai lakes       4016,56        127,40
 23.      Šaltoji and Vyţuona rivers         1569,32        651,60
          valleys
 24.      Nemunėlis river valley             2706,12        493,88
          Total:                                134958.16        28501.68




Consolidated version as of 5th March, 2008
   Annex 11. Calculations of payments for the measure Agri-environment


Table 1: Protection of shore belts of surface water bodies in meadows and in arable land and prevention of soil erosion
Calculation of premium per ha regarding management of protection shore belts of surface water bodies installed in meadows
                                    Usual practise                                                      Agri-environment
                Costs Lt/ha                             Income Lt/ha                      Costs Lt/ha                        Income Lt/ ha
Fertilizing                           298,10
1. mowing (done in June)              238,7
Grass mowing                         66,5    Hay (4t*153 Lt/t)     612,00
Tedding and raking                   34,6
Pick-up, transport                   137,6
2. mowing (July/August)              176,9
                                                                                                                     Hay for litter (2t*     60,00
Grass mowing                         63,5      Hay (2t*153 Lt/t)   306,00   Grass mowing                    63,5    30Lt/t)
Tedding and raking                   31,7                                   Tedding and racking             31,7
Pick-up, transport                   81,7                                   Pick-up, transport              81,7

TOTAL (T1)                           713,7     TOTAL(T2)           918,00   TOTAL(T3)                       176,9   TOTAL(T4)                60,00

Profit from usual practice, Lt/ha                                           Profit from practice applying
(P1=T2-T1)                                                                  the scheme, Lt/ha
                                                                   204,3    (P2=T4-T3)                                                       -116,9

                                                                            Income forgone, Lt/ha
                                                                            (I=P1-P2)                                                        321,2

                                                                            Income forgone, EUR/ha                                           93




   Consolidated version as of 5th March, 2008                                                                                          280
Agronomic and economic assumptions
Hay (June)                              238,7   From first mowing we can get 4 t/ha of
                                                hay
                                                153 Lt/t is price of normal feed value
                                                hay
Grass mowing
40,4+7,5+18,6=66.5Lt/ha)
Depreciation -40,4 Lt/ha; salary- 7,5
Lt/ha; Diesel-18,6 Lt/ha.               66,5
Tedding and raking
12,9+4,6+17,1=34,6 Lt /ha)
Depreciation -12,9 Lt/ha; salary- 4,6
Lt/ha; diesel -17,1 Lt/ha.              34,6
Pick-up, transport                      137,6                                                                          If it is not in use fertilities and dry
74,0+19,1+44,5=137,6 Lt/ha)                                                                                            weather in 2nd part of summer medium
Depreciation-74,0 Lt/ha; salary- 19,1                                                                                  fertility of naturals meadows decrease
Lt/ha; diesel -44,5 Lt/ha.                                                                                             till 2 t/ha.

                                                                                                                       For this reason grass can be used as a
                                                                                                                       litter or for compost without additional
                                                                                                                       incomes.



Hay (July/August)                       176,9    From 2nd mowing we can get 2 t/ha Haymaking                   176,9
                                                of hay
                                                153 Lt/t is price of normal feed
                                                value hay
Grass mowing 39,2+6,8+17,5=Lt/ha;       63,5                                             Grass mowing          63,5
depreciation-39,2 Lt/ha; salary-6,79
Lt/ha; diesel -17,5 Lt/ha.
Tedding and raking                      31,7                                             Tedding and racking   31,7
12,4+4,0+15,3= Lt/ha)
Depreciation-12,4 Lt/ha; salary- 4,0
Lt/ha; diesel –15,3 Lt/ha.
Pick-up, transport                      81,7                                             Pick-up, transport    81,7
38,0+12,4+31,3= Lt/ha)
Depreciation-38,0 Lt/ha; salary- 12,4
Lt/ha; diesel -31,3 Lt/ha.


   Consolidated version as of 5th March, 2008                                                                                               281
Fertilizing                  298,10
(76+108+72,1+42=298,1Lt/ha);
Amonium nitrate 200 kg*0,38
Lt=76Lt/ha;
Superphosphate 200 kg*0,54
Lt=108 Lt/ha;
Kalium chloride 140 kg*0,51
Lt=72 Lt/ha;
Mechanised work 42 Lt/ha.


Table 2: Calculation of premium per ha regarding management of protection shore belts of surface water bodies installed
in arable land and conversion of arable land into grassland
                                 Usual practise                                                        Agri-environment
                Costs Lt/ha                           Income Lt/ha                         Costs Lt/ha                       Income Lt/ ha
                                                                               Grass sowing (785,12 Lt/ha 5   157
                                                                               years)
Winter wheat                               Wheat (4 t*400 Lt/t)      1600,00
Mechanised work                  762,4     Straw (6 t*30 L/t )       180,00
Seed                             152,0
                                                                               Grass mowing                   63,5   Hay for litter (2 t*30   60,0
Fertilisers (NPK)                 311,3                                                                              Lt/t)
Allowed plant protection products 345,5                                        Tedding and racking            31,7
                                                                               Pick-up, transport             81,7

TOTAL (T1)                        1571,2   TOTAL (T2)                1780      TOTAL (T3)                        333,9 TOTAL (T4)             60,0
Profit from usual practice, Lt/ha                                    208,8     Profit from practice applying the                              -273,9
(P1=T2-T1)                                                                     scheme, Lt/ha
                                                                               P2=(T4-T3)
                                                                               Income forgone,       Lt/ha                                    482,7
                                                                               I= (P1-P2)

                                                                               Income forgone, EUR/ha                                         140




  Consolidated version as of 5th March, 2008                                                                                     282
Agronomic and economic assumptions

Mechanised work                                                      Grass sowing                                            785,12
453,2+87,3+221,9=762,4 Lt/ha;       762.4                            Preparation of land for sowing                          360,6
Depreciation of machinery,                                           Seed                                                    179,8
maintenance – 453.2 Lt/ha;salary–                                    Chalk
                                                                                                                             47,7
                                                                     Lime
87,3 Lt/ha; diesel – 221,9 Lt/ha.                                                                                            197,02
Cultivation, ploughing, discing     192,7
Tillage (spring)                    132,6                                                                                             Costs of equipment of perennial
                                                                                                                                      grass distributed for 5 years.
Harrow                              35,3                                                                                              Grass can be used as a litter or for
                                                                                                                                      compost without additional incomes.
Rolling                             16,7                             Haymaking                                               176,9
                                                                     Grass mowing 39,2+6,8+17,5=63,5 Lt/ha;
                                                                     depreciation-39,2 Lt/ha; salary-6,79 Lt/ha; diesel -
Sowing                              54,4                             17,5 Lt/ha.                                          63,5
Harvesting, crushing of straw       364,9                            Tedding and raking
                                                                     12,4+4,0+15,3=31,7 Lt/ha)
                                                                     Depreciation-12,4 Lt/ha; salary- 4,0 Lt/ha; diesel -
                                                                     15,3 Lt/ha.                                             31,7
Spreading of mineral fertilisers    41.8
Crops spraying                      26,0                             Pick-up, transport                                      81,7
                                                                     38,0+12,4+31,3=81,7 Lt/ha)
                                                                     Depreciation-38,0 Lt/ha; salary- 12,4 Lt/ha; diesel -
                                                                     31,3 Lt/ha.

Seed                                152
Fertilisers 1 ha                    311,3 Market price of straw 30
(83,6+151,2+76,5=311,3 Lt)                Lt/t t
Ammonium nitrate 220 kg
(220kg x 0,38 Lt=83,6 Lt);
Superphosphate 280 kg
(280 kg x 0,54 Lt = 151.2 Lt);
Kalium chloride 150 kg
(150 kgx 0,51 Lt=76,5 Lt);




   Consolidated version as of 5th March, 2008                                                                                                   283
Allowed plant protection              345,5 Market price of wheat 400
products 1 ha                               Lt/
(21+98+69+157,5=345.5 Lt/ha)
Beices 0,3 kg;
(0.3 kgx70 Lt=21 Lt);
Herbicides-dialen 21
(2x49 Lt=98 Lt);
Fungicides-sportac 1l
(1x 69 Lt= 69 Lt);
Tango super 1,5 l
(1.5 x 105 Lt=157,5 Lt);



   Table 3: Calculation of premium per ha regarding management of protection shore belts of surface water bodies
                                   Usual practise                                               Agri-environment
                     Costs Lt/ha                       Income Lt/ha                  Costs Lt/ha                 Income Lt/ ha
                                                                         Cut shrubs              27,8
                                                                         Burning of shrubs       5,2
                                                                          Mowing by hand on
                                                                         slope                   474,3
                                                                         Racking by hand on
                                                                         slope                   75,9
                                                                         Removal of hay          65,3
                                                                         Transport               61,4
                                                                                                             TOTAL
TOTAL (T1)                 0,00                TOTAL (T2)         0,00   TOTAL (T3)                 709,9   (T4)      0,00
Profit from usual practice                                               Profit   from   practice
Lt/ha                                                                    applying this   scheme,
P1= (T2-T1)                                                              Lt/ha
                                                                  0,00   P2= (T4-T3)                                  - 710
                                                                         Income forgone Lt/ha                         710
                                                                         I=(P1-P2)
                                                                         Income          forgone                      206
                                                                         EUR/ha


   Consolidated version as of 5th March, 2008                                                                         284
Agronomic and economic assumptions
Usually farmers do not mowing slopes of surface water bodies. In case of agri-environmental Mowing of grass by hand, racking,                remowing 676,9
action, remowed grass from slopes can be used as a litter or for compost, without additional of grass from slope, transport
incomes.
Cutting 100 m2 of small shrubs requires 0,83 hour.                                         Mowing by hand on slope (85 hour/ha; 5,58 Lt/ hour)           474,3
Cut shrubs for 1 ha requires 83 hour.                                                      Racking by hand on slope (13,6 hour/ha; 5,58 Lt/hour)         75,9
Burning of shrubs 1 ha requires 15,57 hour.                                                Removal of grass (11,7 hour/ha; 5,58 Lt/hour)                 65,3
Slope of ditch overgrew by shrubs 30 %                                                      Transport
                                                                                           (35,2+18,6+7,6)=61,4 Lt/ha
                                                                                           (Depreciation of machinery-35,2 Lt/ha; diesel – 18,6 Lt/ha;
                                                                                           salary –7,6 Lt/ha).                                           61,4
                                                                                           Cut shrubs (83 hour*5,58 LT*0,3)/5          27,8
                                                                                           Burning of shrubs (15,57 hour*5,58LT*0,3)/5 5,2


Landscape Stewardship Scheme
Table 4: Calculation of premium per ha regarding management of meadows
                                     Usual practise                                                                  Agri-environment
                     Costs Lt/ha                               Income Lt/ha                          Costs Lt/ha                                   Income Lt/ ha

First mowing of meadow done in June 176,6 Hay (2,2 t* 138Lt/t) 303,6

Second mowing done in July/August               176,6   Hay (1,75t* 138 Lt/t) 241,5
                                                                                      Grass mowing                            63,5      Hay for litter (2          60,00
                                                                                                                                       t*30Lt/t)
                                                                                      Tedding and racking                     31,7
                                                                                      Pick-up, transport                      81,4
TOTAL (T1)                                      353,2 TOTAL (T2)              545,1 TOTAL (T3)                                176,6 TOTAL (T4)                     60,00
Profit from usual practice, Lt/ha                                             191,9 Profit from practice applying
P1=(T2-T1)                                                                          this scheme, Lt/ha
                                                                                    P2=(T4-T3)                                                                     -116,6
                                                                                    Income forgone, Lt/ha                                                          308,5
                                                                                    I=(P1-P2)
                                                                                      Income forgone (EUR)/ha                                                      89

   Consolidated version as of 5th March, 2008                                                                                                            285
Agronomic and economic assumptions


Hay (June)                               176,6   From first mowing we can get
                                                 2,2 t/ha of hay
Grass mowing
(39,2+6,8+17,5=63,5Lt/ha)
(Deorection of machinery-39,2 Lt/ha
;diesel – 6,8 Lt/ha; salary –
17,5 Lt/ha).                             63,5
Tedding and raking
(12,4+4,0+15,3=35.5Lt/ha);
(Depreciation of machinery-12,4
 Lt/ha; diesel – 4,0 Lt/ha; salary –
15,3 Lt/ha).                             31,7
Pick-up, transport                       81,4    From 2nd mowing we can get               Haymaking            176,6   Not fertilising and prevailing dry
                                                                                                                       weather average yielding of natural
(37,7+12,4+31,3= 93.0 Lt/ha;                     1,7 t/ha of hay, 138 Lt/ t is price                                   meadows decrease up to 2 t/ha.
(Depreciation of machinery-37,7 Lt/ha;           of normal feed value hay
diesel – 12,4 Lt/ha; salary –
31,3 Lt/ha).
                                                 Price of hay decrease by 10 % due to worse
                                                 quality, compared with that of cultural
                                                 meadows.                                   Grass mowing       63,5
Hay (July/August)                        176,6                                            Tedding and raking   31,7
Grass mowing                             63,5                                             Pick-up, transport   81,4
Tedding and raking                       31,7
Pick-up, transport                       81,4




    Consolidated version as of 5th March, 2008                                                                                             286
Table 5: Calculation of premium per ha regarding management of wetlands
                              Usual practise                                                          Agri-environment
                Costs Lt/ha                         Income Lt/ha                        Costs Lt/ha                         Income Lt/ ha

                                                                           Grass mowing by hand            569,1
                                                                           Pick-up                         91,5
                                                                           Removing                        130
TOTAL (T1)                              0,00   TOTAL (T2)          0,00    TOTAL (T3)                      790,6   TOTAL (T4)                    0,00
Profit from usual practice, Lt/ha                                          Profit from practice applying
(P1=T2-T1)                                                                 this scheme, Lt/ha
                                                                   0,00    (P2=T4-T3)                                                            - 791
                                                                           Income forgone, Lt/ha                                                 791
                                                                           (I=P1-P2)
                                                                           Income forgone, EUR/ha                                                229
Agronomic and economic assumptions

Usually farmers do not mowe wetlands.                              Mowing of wetland                               In case of agri-environmental
                                                                                                                   action, removed grass from
                                                                                                                   wetland can be used as a litter
                                                                                                                   or for compost, without
                                                                                                                   additional incomes.
                                                                   Grass mowing (85 hour/ha x 5,58 Lt/
                                                                   hour
                                                                    x 1,2 =569,1Lt/ha);
                                                                   569,1                                           Haymaking – 85 hour/ha
                                                                   Pick-up (13,65 hour/ha x 5,58 Lt/ hour 91,5     Picking - up of hay – 13,66
                                                                    x 1,2 =91,5 Lt/ha);                            hour/ha
                                                                   Removing (19,4 hour/ha x 5,58 Lt/
                                                                   hour
                                                                    x 1,2 =130 Lt/ha)                     130
                                                                                                                   Transport of hay 19,4 hour/ ha.
                                                                   Total                                   790,6



  Consolidated version as of 5th March, 2008                                                                                        287
Rare Breeds Scheme
Table 6: Calculation of costs for keeping one specimen of rare endangered breeds of Lithuanian Ash-Grey cattle per
annum
                         Usual practise                                                       Agri-environment
      Costs Lt/cattle                Income Lt/cattle                       Costs Lt/cattle                         Income Lt/ cattle


                         Meat (0,450t*2200Lt/t)      990                                                  Meat (0,25t*1480Lt/t) 370
Salary              196 Calf (1calf* 40kg*2,2 Lt/kg) 88 Salary                                       196 Calf (1calf* 40kg*2,2 Lt/kg) 88
Electrical energy   7                                     Electrical energy                          7
Forage              892                                   Forage                                     892
Pharmaceutical      156                                   Pharmaceutical                             156
Depreciation        119                                   Depreciation                               119
Other costs         187                                   Other costs                                187
TOTAL T1            1557 TOTAL T2                    1078 TOTAL T3                                   1557 TOTAL T4                    458
                                                             Income, Lt/cattle
                                                        -479 (P1=T4-T3)                                                                 -1099
                                                             Costs, Lt/cattle                                                           -479
                                                             (P2=T2-T1)
                                                             Income forgone, Lt/cattle                                                  620
                                                             (P1-P2)
                                                             Income forgone, EUR/cattle                                                 180
                                                             Income forgone, EUR/livestock unit                                         180
                                                             1 cattle=1 livestock unit




  Consolidated version as of 5th March, 2008                                                                                 288
Agronomic and economic assumptions
Animal net                                                                Animal net
Salary                             Salary is calculated on the basis of   Salary                             Salary is calculated on the basis of
                                   average wage per hour 3,36 Lt./                                           average wage per hour 3,36 Lt./ hour;
                                   hour; 58,3 hour/cattle;                                                   58,3 hour/cattle;
                                   195,67 Lt/cattle; 12,58 %.                                                195,67 Lt/cattle; 12,58 %.
Electrical energy                  7,06 Lt/cattle;                        Electrical energy                  7,06 Lt/cattle;
                                   0,29 Lt/kwh;                                                              0,29 Lt/kwh;
                                   24,33 kwh/cattle;                                                         24,33 kwh/cattle;
                                   0,45 %.                                                                   0,45 %.
Forage                             Total feeding for cattle per annum     Forage                             Total feeding for animal per annum
                                   2855 forage unit/cattle;                                                  2855 forage unit/cattle;
                                   0,31 Lt/forage unit;                                                      0,31 Lt/forage unit;
                                   891,55 Lt/cattle;                                                         891,55 Lt/cattle;
                                   57,30 %.                                                                  57,30 %.
Pharmaceutical                     155,6 Lt/cattle                        Pharmaceutical                     155,6 Lt/cattle
                                   10 %                                                                      10 %
Depreciation                       119,39 Lt/cattle                       Depreciation                       119,39 Lt/cattle
                                   7,67 %                                                                    7,67 %
Other costs (Other costs consist   186,72 Lt/cattle                       Other costs (Other costs consist   186,72 Lt/cattlel
veterinary costs: blood test,      12 %                                   veterinary costs: blood test,      12 %
vaccination, vitamin)                                                     vaccination, vitamin)
Total                              1555,98 Lt/cattle                      Total                              1555,98 Lt/cattle
Calculation for salary                                                    Calculation for salary
Medium salary                       430 Lt                                Medium salary                       430 Lt
Number of workdays                  21,3                                  Number of workdays                  21,3
Number of working hours             170,4                                 Number of working hours             170,4
Wage per hour                       3,4                                   Wage per hour                       3,4
Depreciation                                                              Depreciation
Barn                                14688 Lt                              Barn                                14688 Lt
Standard of depreciation            1,67%                                 Standard of depreciation            1,67%
Price of equipment                  680 Lt                                Price of equipment                  680 Lt
Standard of depreciation            16,6%                                 Standard of depreciation            16,6%
Amount of depreciation              358,1696                              Amount of depreciation              358,1696
Number of cattle                    3 cattle                              Number of cattle                    3 cattle


Consolidated version as of 5th March, 2008                                                                                         289
   Depreciation for 1 tone               119,39 Lt/cattle                  Depreciation for 1 tone                  119,39 Lt/cattle
   Forage
                             Standard, cnt   Price,     Worth, Lt                                Standard,      Price, L./cnt          Worth, Lt
                                             Lt/cnt                                              cnt
  Hay                        8               15,3       122,4               Hay                  8              15,3                   122,4
  Beetroot                   20              8,6        172                 Beetroot             20             8,6                    172
  Green crop                 69,75           3,4        237,15              Green crop           69,75          3,4                    237,15
  Concentrate                8               45         360                 Concentrate          8              45                     360
  Total                                                 891,55              Total                                                      891,55
  Price of feeding unit      0,31 Lt


   Table 7: Calculation of costs for keeping one specimen of rare endangered breeds of Lithuanian White-Backed cattle per annum
                         Usual practise                                                         Agri-environment
     Costs Lt/cattte                   Income Lt/cattle                         Costs Lt/cattle                      Income Lt/ cattle

                             Meat (0,450t*2200Lt/t)         990                                                       Meat (0,25t*1480Lt/t)        370
                                                                                                                      Calf (1calf* 40kg*2,2
Salary              196      Calf (1calf* 40kg*2,2 Lt/kg)   88   Salary                                      196      Lt/kg)                       88
Electrical energy   7                                            Electrical energy                           7
Forage              892                                          Forage                                      892
Pharmaceutical      156                                          Pharmaceutical                              156
Depreciation        119                                          Depreciation                                119
Other costs         187                                          Other costs                                 187
TOTAL T1            1557     TOTAL T2                       1078 TOTAL T3                                    1557     TOTAL T4                     458
                                                                 Income, Lt/cattle
                                                            -479 (P1=T4-T3)                                                                        -1099
                                                                 Costs, Lt/cattle                                                                  -479
                                                                 (P2=T2-T1)
                                                                 Income forgone, Lt/cattle                                                         620
                                                                 (P1-P2)
                                                                    Income forgone, EUR/cattle                                                     180
                                                                    Income forgone, EUR/livestock unit                                             180
                                                                    1 cattle=1 livestock unit


   Consolidated version as of 5th March, 2008                                                                                              290
Agronomic and economic assumptions
Animal net                                                                    Animal net
Salary                                   Salary was calculated taking into    Salary                                   Salary was calculated taking into
                                         account average wages per hour                                                account average wages per hour 3,36
                                         3,36 Lt./ hour;                                                               Lt./ hour;
                                         58,3 hour/cattle;                                                             58,3 hour/cattle;
                                         195,67 Lt/cattle;                                                             195,67 Lt/cattle;
                                         12,58 %.                                                                      12,58 %.
Electrical energy                        7,06 Lt/cattle;                      Electrical energy                        7,06 Lt/cattle;
                                         0,29 Lt/kwh;                                                                  0,29 Lt/kwh;
                                         24,33 kwh/cattle;                                                             24,33 kwh/cattle;
                                         0,45 %.                                                                       0,45 %.
Forage                                   Total feeding for cattle per annum   Forage                                   Total feeding for animal per annum
                                         2855 forage unit/cattle;                                                      2855 forage unit/cattle;
                                         0,31 Lt/forage unit;                                                          0,31 Lt/forage unit;
                                         891,55 Lt/cattle;                                                             891,55 Lt/cattle;
                                         57,30 %.                                                                      57,30 %.
Pharmaceutical                           155,6 Lt/cattle                      Pharmaceutical                           155,6 Lt/cattle
                                         10 %                                                                          10 %
Depreciation                             119,39 Lt/cattle                     Depreciation                             119,39 Lt/cattle
                                         7,67 %                                                                        7,67 %
Other costs                              186,72 Lt/cattle                     Other costs                              186,72 Lt/cattlel
(Other costs consist veterinary costs:   12 %                                 (Other costs consist veterinary costs:   12 %
blood test, vaccination, vitamin)                                             blood test, vaccination, vitamin)
Total                                    1555,98 Lt/cattle                    Total                                    1555,98 Lt/cattle
Calculation for salary                                                        Calculation for salary
Medium salary                             430 Lt                              Medium salary                             430 Lt
Number of workdays                        21,3                                Number of workdays                        21,3
Number of working hours                   170,4                               Number of working hours                   170,4
Wage per hour                             3,4                                 Wage per hour                             3,4
Depreciation                                                                  Depreciation
Barn                                      14688 Lt                            Barn                                      14688 Lt
Standard of depreciation                  1,67%                               Standard of depreciation                  1,67%
Price of equipment                        680 Lt                              Price of equipment                        680 Lt
Standard of depreciation                  16,6%                               Standard of depreciation                  16,6%
Amount of depreciation                    358,1696                            Amount of depreciation                    358,1696
Number of cattle                          3 cattle                            Number of cattle                          3 cattle

Consolidated version as of 5th March, 2008                                                                                                  291
  Depreciation for 1 tone                 119,39 Lt/cattle                    Depreciation for 1 tone                      119,39 Lt/cattle
  Forage
                      Standard, cnt          Price,          Worth, Lt                                  Standard,      Price, Lt/cnt          Worth, Lt
                                             Lt/cnt                                                     cnt
  Hay                 8                      15,3            122,4            Hay                       8              15,3                   122,4
  Beetroot            20                     8,6             172              Beetroot                  20             8,6                    172
  Green crop          69,75                  3,4             237,15           Green crop                69,75          3,4                    237,15
  Concentrate         8                      45              360              Concentrate               8              45                     360
  Total                                                      891,55           Total                                                           891,55
  Price of feeding    0,31 Lt
  unit

  Table 8: Calculation of costs for keeping one specimen of rare endangered breeds of Lithuanian Black and White cattle (local
  found) per annum
                       Usual practise                                                      Agri-environment
     Costs Lt/cattte                Income Lt/cattle                       Costs Lt/cattle                    Income Lt/ cattle

                              Meat (0,450t*2200Lt/t)             990                                                         Meat (0,25t*1480Lt/t)        370
                                                                                                                             Calf (1calf* 40kg*2,2
Salary               196      Calf (1calf* 40kg*2,2 Lt/kg)       88   Salary                                        196      Lt/kg)                       88
Electrical energy    7                                                Electrical energy                             7
Forage               892                                              Forage                                        892
Pharmaceutical       156                                              Pharmaceutical                                156
Depreciation         119                                              Depreciation                                  119
Other costs          187                                              Other costs                                   187
TOTAL T1             1557     TOTAL T2                           1078 TOTAL T3                                      1557      TOTAL T4                    458
Costs, Lt/cattle                                                      Income, Lt/cattle
(P2=T2-T1)                                                       -479 (P1=T4-T3)                                                                          -1099
                                                                      Costs, Lt/cattle                                                                    -479
                                                                      (P2=T2-T1)
                                                                      Income forgone, Lt/cattle                                                           620
                                                                      (P1-P2)
                                                                      Income forgone, EUR/cattle                                                          180



  Consolidated version as of 5th March, 2008                                                                                                      292
                                                           Income forgone, EUR/livestock unit                                       180
                                                           1 cattle=1 livestock unit
Agronomic and economic assumptions
Animal net                                                          Animal net
Salary                         Salary was calculated taking into    Salary                             Salary was calculated taking into
                               account average wages per hour                                          account average wages per hour 3,36
                               3,36 Lt./ hour;                                                         Lt./ hour;
                               58,3 hour/cattle;                                                       58,3 hour/cattle;
                               195,67 Lt/cattle; 12,58 %.                                              195,67 Lt/cattle; 12,58 %.
Electrical energy              7,06 Lt/cattle;                      Electrical energy                  7,06 Lt/cattle;
                               0,29 Lt/kwh;                                                            0,29 Lt/kwh;
                               24,33 kwh/cattle;                                                       24,33 kwh/cattle;
                               0,45 %.                                                                 0,45 %.
Forage                         Total feeding for cattle per annum   Forage                             Total feeding for animal per annum
                               2855 forage unit/cattle;                                                2855 forage unit/cattle;
                               0,31 Lt/forage unit;                                                    0,31 Lt/forage unit;
                               891,55 Lt/cattle;                                                       891,55 Lt/cattle;
                               57,30 %.                                                                57,30 %.
Pharmaceutical                 155,6 Lt/cattle                      Pharmaceutical                     155,6 Lt/cattle
                               10 %                                                                    10 %
Depreciation                       119,39 Lt/cattle                 Depreciation                       119,39 Lt/cattle
                                   7,67 %                                                              7,67 %
Other costs (Other costs consist   186,72 Lt/cattle                 Other costs (Other costs consist   186,72 Lt/cattlel
veterinary costs: blood test,      12 %                             veterinary costs: blood test,      12 %
vaccination, vitamin)                                               vaccination, vitamin)
Total                              1555,98 Lt/cattle                Total                              1555,98 Lt/cattle
Calculation for salary                                              Calculation for salary
Medium salary                       430 Lt                          Medium salary                       430 Lt
Number of workdays                  21,3                            Number of workdays                  21,3
Number of working hours             170,4                           Number of working hours             170,4
Wage per hour                       3,4                             Wage per hour                       3,4
Depreciation                                                        Depreciation
Barn                                14688 Lt                        Barn                                14688 Lt
Standard of depreciation            1,67%                           Standard of depreciation            1,67%
Price of equipment                  680 Lt                          Price of equipment                  680 Lt
Standard of depreciation            16,6%                           Standard of depreciation            16,6%

Consolidated version as of 5th March, 2008                                                                                  293
   Amount of depreciation                358,1696                        Amount of depreciation                   358,1696
   Number of cattle                      3 cattle                        Number of cattle                         3 cattle
   Depreciation for 1 tone               119,39 Lt/cattle                Depreciation for 1 tone                  119,39 Lt/cattle
   Forage
                      Standard, cnt         Price,      Worth, Lt                              Standard,      Price, Lt./cnt.        Worth, Lt
                                            Lt./cnt.                                           cnt.
  Hay                8                      15,3        122,4             Hay                  8              15,3                   122,4
  Beetroot           20                     8,6         172               Beetroot             20             8,6                    172
  Green crop         69,75                  3,4         237,15            Green crop           69,75          3,4                    237,15
  Concentrate        8                      45          360               Concentrate          8              45                     360
  Total                                                 891,55            Total                                                      891,55
  Price of feeding   0,31 Lt
  unit


   Table 9: Calculation of costs for keeping one specimen of rare endangered breeds of Lithuanian Rufous cattle (local found) per
   annum
                        Usual practise                                                       Agri-environment
      Costs Lt/cattte                 Income Lt/cattle                       Costs Lt/cattle                       Income Lt/ cattle

                             Meat (0,450t*2200Lt/t)         990                                                     Meat (0,25t*1480Lt/t)        370
                                                                                                                    Calf (1calf* 40kg*2,2
Salary               196     Calf (1calf* 40kg*2,2 Lt/kg)   88   Salary                                    196      Lt/kg)                       88
Electrical energy    7                                           Electrical energy                         7
Forage               892                                         Forage                                    892
Pharmaceutical       156                                         Pharmaceutical                            156
Depreciation         119                                         Depreciation                              119
Other costs          187                                         Other costs                               187
TOTAL T1             1557    TOTAL T2                       1078 TOTAL T3                                  1557     TOTAL T4                     458
                                                                 Income, Lt/cattle
                                                            -479 (P1=T4-T3)                                                                      -1099
                                                                 Costs, Lt/cattle                                                                -479
                                                                 (P2=T2-T1)
                                                                 Income forgone, Lt/cattle                                                       620
                                                                 (P1-P2)

   Consolidated version as of 5th March, 2008                                                                                            294
                                                             Income forgone, EUR/cattle                                               180
                                                             Income forgone, EUR/livestock unit                                       180
                                                             1 cattle=1 livestock unit
Agronomic and economic assumptions
Animal net                                                            Animal net
Salary                           Salary was calculated taking into    Salary                             Salary was calculated taking into
                                 account average wages per hour                                          account average wages per hour 3,36
                                 3,36 Lt./ hour;                                                         Lt./ hour;
                                 58,3 hour/cattle;                                                       58,3 hour/cattle;
                                 195,67 Lt/cattle; 12,58 %.                                              195,67 Lt/cattle; 12,58 %.
Electrical energy                7,06 Lt/cattle;                      Electrical energy                  7,06 Lt/cattle;
                                 0,29 Lt/kwh;                                                            0,29 Lt/kwh;
                                 24,33 kwh/cattle; 0,45 %.                                               24,33 kwh/cattle; 0,45 %.
Forage                           Total feeding for cattle per annum   Forage                             Total feeding for animal per annum
                                 2855 forage unit/cattle;                                                2855 forage unit/cattle;
                                 0,31 Lt/forage unit;                                                    0,31 Lt/forage unit;
                                 891,55 Lt/cattle;                                                       891,55 Lt/cattle;
                                 57,30 %.                                                                57,30 %.
Pharmaceutical                   155,6 Lt/cattle                      Pharmaceutical                     155,6 Lt/cattle
                                 10 %                                                                    10 %
Depreciation                     119,39 Lt/cattle                     Depreciation                       119,39 Lt/cattle
                                 7,67 %                                                                  7,67 %
Other costs (Other costs consist 186,72 Lt/cattle                     Other costs (Other costs consist   186,72 Lt/cattle
veterinary costs: blood test,    12 %                                 veterinary costs: blood test,      12 %
vaccination, vitamin)                                                 vaccination, vitamin)
Total                            1555,98 Lt/cattle                    Total                              1555,98 Lt/cattle
Calculation for salary                                                Calculation for salary
Medium salary                     430 Lt                              Medium salary                       430 Lt
Number of workdays                21,3                                Number of workdays                  21,3
Number of working hours           170,4                               Number of working hours             170,4
Wage per hour                     3,4                                 Wage per hour                       3,4
Depreciation                                                          Depreciation
Barn                              14688 Lt                            Barn                                14688 Lt
Standard of depreciation          1,67%                               Standard of depreciation            1,67%
Price of equipment                680 Lt                              Price of equipment                  680 Lt


Consolidated version as of 5th March, 2008                                                                                    295
Standard of depreciation            16,6%                              Standard of depreciation               16,6%
Amount of depreciation              358,1696                           Amount of depreciation                 358,1696
Number of cattle                    3 cattle                           Number of cattle                       3 cattle
Depreciation for 1 tone             119,39 Lt/cattle                   Depreciation for 1 tone                119,39 Lt/cattle
Forage
                   Standard, cnt.     Price,       Worth, Lt                                 Standard,       Price, Lt./cnt.     Worth, Lt
                                      Lt./cnt.                                               cnt.
Hay                8                  15,3         122,4               Hay                   8               15,3                122,4
Beetroot           20                 8,6          172                 Beetroot              20              8,6                 172
Green crop         69,75              3,4          237,15              Green crop            69,75           3,4                 237,15
Concentrate        8                  45           360                 Concentrate           8               45                  360
Total                                              891,55              Total                                                     891,55
Price of feeding   0,31 Lt
unit

Table 10:Calculation of costs for keeping one specimen of rare endangered breeds of Vištinės geese
                        Usual practise                                                       Agri-environment
         Costs Lt/geese                 Income Lt/geese                      Costs Lt/geese                               Income Lt/geese


                                 Meat (5kg*8Lt/t)       40                                                      Meat (4kg*7,1Lt/t) 28,4
Salary                    39     Eggs (40*0,8Lt/unit)   32       Salary                                  39     Eggs (40*0,8 Lt/unit) 32
Electrical energy         0,22                                   Electrical energy                       0,22
Forage                    55                                     Forage                                  55
Pharmaceutical            4                                      Pharmaceutical                          4
Depreciation              1                                      Depreciation                            1
Other costs               12                                     Other costs                             12
TOTAL T1                  109,22 TOTAL T2               72,00    TOTAL T3                                109,22 TOTAL T4              60,4
Profit      from    usual                               -37,22   Profit from practice applying this                                   -48,82
practice, Lt/animal unit                                         scheme, Lt/geese
(P1=T2-T1)                                                       (P2=T4-T3)
                                                                 Income forgone (I=P1-P2), Lt/geese                                       11,6

                                                                 Income forgone, EUR/geese                                                3,36


Consolidated version as of 5th March, 2008                                                                                           296
                                                              Income forgone, EUR/livestock unit                                 188
                                                              56 goose=1 livestock unit
                                                              (56*3,36=188 EUR/livestock unit)


Agronomic and economic assumptions
Salary                           Salary was calculated taking into   Salary                             Salary was calculated taking into
                                 account average wages per hour                                         account average wages per hour
                                 3,36 Lt./ hour;                                                        3,36 Lt./ hour;
                                 11,7 hour/geese;                                                       11,7 hour/geese
                                 39,27 Lt/geese; 35,85 %.                                               39,27 Lt/geese; 35,85 %.
Electrical energy                0,22Lt/geese;                       Electrical energy                  0,22Lt/geese;
                                 0,29 Lt/kwh;                                                           0,29 Lt/kwh;
                                 0,76 kwh/geese;                                                        0,76 kwh/geese;
                                 0,20 %.                                                                0,20 %.
Forage                           Total feeding for geese per annum   Forage                             Total feeding for geese per annum
                                 95 forage unit/geese;                                                  95 forage unit/geese
                                 0,58 Lt/forage unit;                                                   0,58 Lt/forage unit;
                                 55,03 Lt/geese                                                         55,03 Lt/geese;
                                 50,24%.                                                                50,24%.
Pharmaceutical                   3,29 Lt/geese                       Pharmaceutical                     3,29 Lt/geese
                                 3%                                                                     3%
Depreciation                     0,77 Lt/geese                       Depreciation                       0,77 Lt/geese
                                 0,64 %                                                                 0,64 %
Other costs (Other costs consist 10,95Lt/geese                       Other costs (Other costs consist   10,95Lt/geese
veterinary costs: blood test,    10 %                                veterinary costs: blood test,      10 %
vaccination, vitamin)                                                vaccination, vitamin)
Total                            109,52 Lt/geese                     Total                              109,52 Lt/geese
Calculation for salary                                               Calculation for salary
Medium salary                     430 Lt                             Medium salary                       430 Lt
Number of workdays                21,3                               Number of workdays                  21,3
Number of working hours           170,4                              Number of working hours             170,4
Wage per hour                     3,4                                Wage per hour                       3,4
Depreciation                                                         Depreciation
Barn                              4600 Lt                            Barn                                4600 Lt
Standard of depreciation          1,67%                              Standard of depreciation            1,67%

Consolidated version as of 5th March, 2008                                                                                   297
Price of equipment                       0 Lt                                  Price of equipment                  0 Lt
Standard of depreciation                 16,6%                                 Standard of depreciation            16,6%
Amount of depreciation                  76,82 Lt                               Amount of depreciation             76,82 Lt
Number of goose                          100 goose                             Number of goose                     100 goose
Depreciation for 1 tone                 0,77Lt /geese                          Depreciation for 1 tone            0,77Lt /geese
Forage
                   Standard, cnt.      Price,           Worth, Lt                                   Standard,     Price, Lt./cnt.         Worth, Lt
                                       Lt./cnt.                                                     cnt.
 Beetroot           0,8                8,6              6,88          Beetroot                      0,8           8,6                     6,88
 Carrot             0,50               40               20            Carrot                        0,50          40                      20
 Green crop         1,2                3,4              4,08          Green crop                    1,2           3,4                     4,08
 Concentrates       0,54               45               24,3          Concentrate                   0,54          45                      24,3
 Total                                                  55,26         Total                                                               55,26
 Price of           0,58 Lt
 feeding unit

Table 11: Calculation of costs for keeping one specimen of rare endangered breeds of Lithuanian Native pigs per annum
                            Usual practise                                                            Agri-environment
     Costs Lt/pig          Income Lt/pig                                             Costs Lt/pig                            Income Lt/pig

                           Meat (0,2t*3200Lt/t)/3               213                                             Meat (0,16t*2750Lt/t)/3               147
                           Piglets (2*8 piglets*3,2             819                                             Piglets (2*8
                           Lt/kg*16kg)                                                                          piglets*2,75Lt/kg*15kg)               660
Salary            39                                                 Salary                                39
Electrical energy 3                                                  Electrical energy                     3
Forage            480                                                Forage                                480
Pharmaceutical 32                                                    Pharmaceutical                        32
Depreciation      21                                                 Depreciation                          21
Other costs       64                                                 Other costs                           64
TOTAL T1          639      TOTAL T2                             1032 TOTAL T3                              639 TOTAL T4                               807
Profit       from                                               393 Profit from practice applying this                                                168
usual practice,                                                      scheme, Lt/pig
Lt/pig                                                               (P2=T4-T3)
(P1=T2-T1)


Consolidated version as of 5th March, 2008                                                                                                298
                                                            Income forgone (P1-P2), Lt/pig                                               225
                                                            Income forgone, EUR/pig                                                      65
                                                            Income forgone, EUR/livestock unit                                           186
                                                            2,86 pig=1 livestock unit
                                                            (2,86*65=186 EUR/livestock unit)

Agronomic and economic assumptions
Animal net                                                              Animal net
Salary                           Salary was calculated taking into      Salary                            Salary was calculated taking into
                                 account average wages per hour 3,36                                      account average wages per hour
                                 Lt./ hour;                                                               3,36 Lt./ hour;
                                 11,7 hour/pig;                                                           11,7 hour/pig;
                                 39,27 Lt/pig; 6,14 %.                                                    39,27 Lt/pig; 6,14 %.
Electrical energy                2,96 Lt/pig;                           Electrical energy                 2,96 Lt/pig;
                                 0,29 Lt/kwh;                                                             0,29 Lt/kwh;
                                 10,2 kwh/pig; 0,46 %.                                                    10,2 kwh/pig; 0,46 %.
Forage                           Total feeding for pig per annum 1103   Forage                            Total feeding for pig per annum
                                 forage unit/animal;                                                      1103 forage unit/animal;
                                 0,43 Lt/forage unit;                                                     0,43 Lt/forage unit;
                                 479,78 Lt/pig;                                                           479,78 Lt/pig;
                                 75,06 %.                                                                 75,06 %.
Pharmaceutical                   31,96 Lt/pig                           Pharmaceutical                    31,96 Lt/pig
                                 5%                                                                       5%
Depreciation                     21,31 Lt/pig;                          Depreciation                      21,31 Lt/pig
                                 3,33 %                                                                   3,33 %
Other costs (Other costs consist 63,92 Lt/pig                           Other costs (Other costs          63,92 Lt/pig
veterinary costs: blood test,    10 %                                   consist veterinary costs: blood   10 %
vaccination, vitamin)                                                   test, vaccination, vitamin)
Total                            639,2 Lt/pig                           Total                             639,2 Lt/pig
Calculation for salary                                                  Calculation for salary
Medium salary                     430 Lt                                Medium salary                      430 Lt
Number of workdays                21,3                                  Number of workdays                 21,3
Number of working hours           170,4                                 Number of working hours            170,4
Wage per hour                     3,4                                   Wage per hour                      3,4
Depreciation                                                            Depreciation

Consolidated version as of 5th March, 2008                                                                                     299
Barn                                    6000 Lt                                Barn                              6000 Lt
Standard of depreciation                1,67%                                  Standard of depreciation          1,67%
Price of equipment                      680 Lt                                 Price of equipment                680 Lt
Standard of depreciation                16,6%                                  Standard of depreciation          16,6%
Amount of depreciation                  213,08 Lt                              Amount of depreciation            213,08 Lt
Number of pigs                          10 pigs                                Number of pigs                    10 pigs
Depreciation for 1 tone                21,31 Lt /pig                           Depreciation for 1 tone          21,31 Lt /pig
Forage
                   Standard, cnt.          Price, Lt./cnt.   Worth, Lt                                Standard, cnt.    Price,          Worth, Lt
                                                                                                                        Lt./cnt.
Beetroot           6,85                    8,5               58,23             Beetroot               6,85              8,5             58,23
Green crop         6,25                    3,4               21,085            Green crop             6,25              3,4             21,085
Concentrate        8,9                     45                400,5             Concentrate            8,9               45              400,5
Total                                                        479,81            Total                                                    479,81
Price of feeding   0,43 Lt
unit

Table 12: Calculation of costs for keeping one specimen of rare endangered breeds of Lithuanian White pigs (local genofound) per
annum
                        Usual practise                                                     Agri-environment
     Costs Lt/pig     Income Lt/pig                                        Costs Lt/pig                           Income Lt/pig

                          Meat (0,2t*3200Lt/t)/3             213                                             Meat (0,16t*2750Lt/t)/3             147
                          Piglets (2*8 piglets*3,2           819                                             Piglets (2*8
                          Lt/kg*16kg)                                                                        piglets*2,75Lt/kg*15kg)             660
Salary            39                                              Salary                              39
Electrical energy 3                                               Electrical energy                   3
Forage            480                                             Forage                              480
Pharmaceutical 32                                                 Pharmaceutical                      32
Depreciation      21                                              Depreciation                        21
Other costs       64                                              Other costs                         64
TOTAL T1          639     TOTAL T2                           1032 TOTAL T3                            639 TOTAL T4                               807
Profit       from                                            393 Profit from practice applying this                                              168
usual practice,                                                   scheme, Lt/pig


Consolidated version as of 5th March, 2008                                                                                             300
Lt/pig                                                      (P2=T4-T3)
(P1=T2-T1)
                                                            Income forgone, Lt/pig                                                        225
                                                            Income forgone, (P1-P2) EUR/pig                                               65
                                                            Income forgone, EUR/livestock unit                                            186
                                                            2,86 pig=1 livestock unit
                                                            (2,86*65=186 EUR/livestock unit)

Agronomic and economic assumptions
Animal net                                                               Animal net
Salary                           Salary was calculated taking into       Salary                            Salary was calculated taking into
                                 account average wages per hour 3,36                                       account average wages per hour
                                 Lt./ hour;                                                                3,36 Lt./ hour;
                                 11,7 hour/pig;                                                            11,7 hour/pig;
                                 39,27 Lt/pig; 6,14 %.                                                     39,27 Lt/pig; 6,14 %.
Electrical energy                2,96 Lt/pig;                            Electrical energy                 2,96 Lt/pig;
                                 0,29 Lt/kwh;                                                              0,29 Lt/kwh;
                                 10,2 kwh/pig; 0,46 %.                                                     10,2 kwh/pig; 0,46 %.
Forage                           Total feeding for pig per annum 1103    Forage                            Total feeding for pig per annum
                                 forage unit/animal;                                                       1103 forage unit/animal;
                                 0,43 Lt/forage unit;                                                      0,43 Lt/forage unit;
                                 479,78 Lt/pig;                                                            479,78 Lt/pig;
                                 75,06 %.                                                                  75,06 %.
Pharmaceutical                   31,96 Lt/pig                            Pharmaceutical                    31,96 Lt/pig
                                 5%                                                                        5%
Depreciation                     21,31 Lt/pig;                           Depreciation                      21,31 Lt/pig
                                 3,33 %                                                                    3,33 %
Other costs (Other costs consist 63,92 Lt/pig                            Other costs (Other costs          63,92 Lt/pig
veterinary costs: blood test,    10 %                                    consist veterinary costs: blood   10 %
vaccination, vitamin)                                                    test, vaccination, vitamin)
Total                            639,2 Lt/pig                            Total                             639,2 Lt/pig
Calculation for salary                                                   Calculation for salary
Medium salary                     430 Lt                                 Medium salary                      430 Lt
Number of workdays                21,3                                   Number of workdays                 21,3
Number of working hours           170,4                                  Number of working hours            170,4

Consolidated version as of 5th March, 2008                                                                                      301
Wage per hour                        3,4                                       Wage per hour                          3,4
Depreciation                                                                   Depreciation
Barn                                 6000 Lt                                   Barn                                6000 Lt
Standard of depreciation             1,67%                                     Standard of depreciation            1,67%
Price of equipment                   680 Lt                                    Price of equipment                  680 Lt
Standard of depreciation             16,6%                                     Standard of depreciation            16,6%
Amount of depreciation               213,08 Lt                                 Amount of depreciation              213,08 Lt
Number of pigs                       10 pigs                                   Number of pigs                      10 pigs
Depreciation for 1 tone             21,31 Lt /pig                              Depreciation for 1 tone            21,31 Lt /pig
Forage
                   Standard, cnt.       Price, Lt./cnt.     Worth, Lt                                 Standard, cnt         Price, Lt/cnt    Worth, Lt
Beetroot           6,85                 8,5                 58,23              Beetroot               6,85                  8,5              58,23
Green crop         6,25                 3,4                 21,085             Green crop             6,25                  3,4              21,085
Concentrate        8,9                  45                  400,5              Concentrate            8,9                   45               400,5
Total                                                       479,81             Total                                                         479,81
Price of feeding 0,43 Lt
unit

Table 13: Calculation of costs for keeping one specimen of rare endangered breeds of Lithuanian Weighted horses per annum
                       Usual practise                                                      Agri-environment
   Costs Lt/horse                 Income Lt/horse                        Costs Lt/horse                        Income Lt/horse

                        Meat (0,65t* 3250 Lt/t)           2112                                               Meat (0,65t* 2800 Lt/t)              1820
                        Foal(2                            169                                                Foal(2
                        foals*130kg*3.25Lt./kg)/5                                                            foals*130kg*2,8Lt./kg)/5             146
Salary            495                                            Salary                               495
Electrical energy 7                                              Electrical energy                    7
Forage            927                                            Forage                               1205,1
Pharmaceutical 201                                               Pharmaceutical                       221,1
Depreciation      175                                            Depreciation                         175
Other costs       201                                            Other costs                          201
TOTAL T1          2006 TOTAL T2                           2281   TOTAL T3                             2304,2 TOTAL T4                             1966
Profit       from                                                Profit from practice applying this
usual practice,                                                  scheme, Lt/horse
Lt/horse                                                  275    (P2=T4-T3)                                                                       -338

Consolidated version as of 5th March, 2008                                                                                                  302
(P1=T2-T1)
                                                          Income forgone, Lt/horse
                                                          (I=P1-P2)                                                                 614
                                                          Income forgone, EUR/horse                                                 178
                                                          Income forgone, EUR/livestock
                                                          unit
                                                          0,83 horse=1 livestock unit (for
                                                          horses older than 2 years)
                                                          (0,83*178=148 EUR/LU)                                                     148
Agronomic and economic assumptions
Salary                           Salary was calculated taking into     Salary                            Salary was calculated taking into
                                 account average wages per hour 7,02                                     account average wages per hour 7,02
                                 Lt./ hour;                                                              Lt./ hour;
                                 70,50 hour/horse;                                                       70,50 hour/horse;
                                 495,24 Lt/horse; 24,69 %.                                               495,24 Lt/forse; 24,69 %.
Electrical energy                7,05 Lt/horse;                        Electrical energy                 7,05 Lt/horse;
                                 0,29 Lt/kwh;                                                            0,29 Lt/kwh;
                                 24,3 kwh/horse;                                                         24,3 kwh/horse;
                                 0,35 %.                                                                 0,35 %.
Forage                           Total feeding for horse per annum     Forage                            Total feeding for horse per annum
                                 3685 forage unit/horse;                                                 3685 forage unit/horse;
                                 0,25 Lt/forage unit;                                                    0,25 Lt/forage unit;
                                 927,45 Lt/horse;                                                        927,45 Lt/horse;
                                 46,24%.                                                                 46,24%.
Pharmaceutical                   200,56 Lt/horse                       Pharmaceutical                    200,56 Lt/horse
                                 10 %                                                                    10 %
Depreciation                     174,72 Lt/horse                       Depreciation                      174,72 Lt/horse
                                 8,71 %                                                                  8,71 %
Other costs (Other costs consist 200,56 Lt/horse                       Other costs (Other costs          200,56 Lt/horse
veterinary costs: blood test,    10 %                                  consist veterinary costs: blood   10 %
vaccination, vitamin)                                                  test, vaccination, vitamin)
Total                            2005,57 Lt/horse                      Total                             2005,57 Lt/horse
Calculation for salary                                                 Calculation for salary
Medium salary                     900 Lt                               Medium salary                      900 Lt
Number of workdays                21,3                                 Number of workdays                 21,3


Consolidated version as of 5th March, 2008                                                                                    303
Number of working hours               170,4                                   Number of working hours         170,4
Wage per hour                         7                                       Wage per hour                   7
Depreciation                                                                  Depreciation
Barn                                  14688 Lt                                Barn                            14688 Lt
Standard of depreciation              1,67%                                   Standard of depreciation        1,67%
Price of equipment                    680 Lt                                  Price of equipment              680 Lt
Standard of depreciation              16,6%                                   Standard of depreciation        16,6%
Amount of depreciation                524,1696 Lt                             Amount of depreciation          524,1696 Lt
Number of horses                      3 horses                                Number of horses                3 horses
Depreciation for 1 tone              174,72 Lt /horse                         Depreciation for 1 tone        174,72 Lt /horse
Forage
                      Standard, cnt.     Price,    Worth, Lt                                      Standard, cnt.   Price, Lt./cnt.    Worth, Lt
                                         Lt./cnt.
 Hay                  18,5               15,3      283,05               Hay                       18,5             15,3               390,1
 Green crop           65                 3,4       221                  Green crop                65               3,4                360
 Oat                  14,6               29        423,4                Oat                       14,6             29                 455
 Total                                             927,45               Total                                                         1205,1
 Price of feeding     0,25 Lt
 unit


Table 14: Calculation of costs for keeping one specimen of rare endangered breeds of Žemaitukai horses per annum
                     Usual practise                                                     Agri-environment
     Costs Lt/horse               Income Lt/horse                       Costs Lt/horse                         Income Lt/horse

                           Meat (0,65t* 3250 Lt/t) 2112                                                   Meat (0,4t* 2800 Lt/t)       1120
                           Foal                    169
                           (2*130kg*3.25Lt./kg)/5                                                        Foal (2*120kg*2.8Lt./kg)/5 134
Salary              495                                   Salary                                 495
Electrical energy   7                                     Electrical energy                      7
Forage              927                                   Forage                                 695,25
Pharmaceutical      201                                   Pharmaceutical                         201
Depreciation        175                                   Depreciation                           175
Other costs         201                                   Other costs                            201
TOTAL T1            2006   TOTAL T2               2281    TOTAL T3                               1774,25 TOTAL T4                   1254

Consolidated version as of 5th March, 2008                                                                                           304
Profit from usual                                      Profit from practice applying this
practice, Lt/horse                                     scheme, Lt/horse
(P1=T2-T1)                                      275    (P2=T4-T3)                                                                -520,25
                                                       Income forgone, Lt/horse                                                  795
                                                       (I=P1-P2)
                                                       Income forgone, EUR/horse                                                 230
                                                       Income forgone, EUR/livestock unit                                        191
                                                       0,83 horse=1 livestock unit (for
                                                       horses older than 2 years)
                                                       (0,83*230=191 EUR/livestock unit)
Agronomic and economic assumptions
Salary                           Salary was calculated taking into     Salary                            Salary was calculated taking into
                                 account average wages per hour 7,02                                     account average wages per hour 7,02
                                 Lt./ hour;                                                              Lt./ hour;
                                 70,50 hour/horse;                                                       70,50 hour/horse;
                                 495,24 Lt/horse; 24,69 %.                                               495,24 Lt/forse; 24,69 %.
Electrical energy                7,05 Lt/horse;                        Electrical energy                 7,05 Lt/horse;
                                 0,29 Lt/kwh;                                                            0,29 Lt/kwh;
                                 24,3 kwh/horse;                                                         24,3 kwh/horse;
                                 0,35 %.                                                                 0,35 %.
Forage                           Total feeding for horse per annum     Forage                            Total feeding for horse per annum
                                 3685 forage unit/horse;                                                 3685 forage unit/horse;
                                 0,25 Lt/forage unit;                                                    0,25 Lt/forage unit;
                                 927,45 Lt/horse;                                                        927,45 Lt/horse;
                                 46,24%.                                                                 46,24%.
Pharmaceutical                   200,56 Lt/horse                       Pharmaceutical                    200,56 Lt/horse
                                 10 %                                                                    10 %
Depreciation                     174,72 Lt/horse                       Depreciation                      174,72 Lt/horse
                                 8,71 %                                                                  8,71 %
Other costs (Other costs consist 200,56 Lt/horse                       Other costs (Other costs          200,56 Lt/horse
veterinary costs: blood test,    10 %                                  consist veterinary costs: blood   10 %
vaccination, vitamin)                                                  test, vaccination, vitamin)
Total                            2005,57 Lt/horse                      Total                             2005,57 Lt/horse
Calculation for salary                                                 Calculation for salary
Medium salary                     900 Lt                               Medium salary                      900 Lt
Number of workdays                21,3                                 Number of workdays                 21,3

Consolidated version as of 5th March, 2008                                                                                    305
Number of working hours               170,4                                  Number of working hours         170,4
Wage per hour                         7                                      Wage per hour                   7
Depreciation                                                                 Depreciation
Barn                                  14688 Lt                               Barn                            14688 Lt
Standard of depreciation              1,67%                                  Standard of depreciation        1,67%
Price of equipment                    680 Lt                                 Price of equipment              680 Lt
Standard of depreciation              16,6%                                  Standard of depreciation        16,6%
Amount of depreciation                524,1696 Lt                            Amount of depreciation          524,1696 Lt
Number of horses                      3 horses                               Number of horses                3 horses
Depreciation for 1 tone              174,72 Lt /horse                        Depreciation for 1 tone        174,72 Lt /horse
Forage
                      Standard, cnt.     Price,    Worth, Lt                                     Standard, cnt.   Price, Lt./cnt.    Worth, Lt
                                         Lt./cnt.
 Hay                  18,5               15,3      283,05              Hay                       18,5             15,3               213,25
 Green crop           65                 3,4       221                 Green crop                65               3,4                165
 Oat                  14,6               29        423,4               Oat                       14,6             29                 317
 Total                                             927,45              Total                                                         695,25
 Price of feeding     0,25 Lt
 unit


Table 15: Calculation of costs for keeping one specimen of rare endangered breeds of big Žemaitukai horses per annum
                     Usual practise                                                       Agri-environment
    Costs Lt/horse               Income Lt/horse                        Costs Lt/horse                          Income Lt/horse

                        Meat (0,65t* 3250 Lt/t)     2112                                                 Meat (0,5* 2800 Lt/t)        1400
                        Foal                        169                                                  Foal
                        (2foals*130kg*3.25Lt./kg)/5                                                      (2foals*130kg*2,8:t/kg)/5    146
Salary              495                                  Salary                                 495
Electrical energy   7                                    Electrical energy                      7
Forage              927                                  Forage                                 1010,43
Pharmaceutical      201                                  Pharmaceutical                         201
Depreciation        175                                  Depreciation                           175
Other costs         201                                  Other costs                            201
TOTAL T1            2006 TOTAL T2                   2281 TOTAL T3                               2089,43 TOTAL T4                      1546

Consolidated version as of 5th March, 2008                                                                                          306
Profit from usual                                     Profit from practice applying this
practice, Lt/horse                                    scheme, Lt/horse
(P1=T2-T1)                                        275 (P2=T4-T3)                                                                  -543
                                                      Income forgone, Lt/horse                                                    818
                                                      (I=P1-P2)
                                                      Income forgone, EUR/horse                                                   237
                                                      Income forgone, EUR/livestock unit                                          197
                                                      0,83 horse=1 livestock unit (for
                                                      horses older than 2 years)
                                                      (0,83*237=197 EUR/livestock unit)
Agronomic and economic assumptions
Salary                           Salary was calculated taking into     Salary                            Salary was calculated taking into
                                 account average wages per hour 7,02                                     account average wages per hour
                                 Lt./ hour;                                                              7,02 Lt./ hour;
                                 70,50 hour/horse;                                                       70,50 hour/horse;
                                 495,24 Lt/horse; 24,69 %.                                               495,24 Lt/forse; 24,69 %.
Electrical energy                7,05 Lt/horse;                        Electrical energy                 7,05 Lt/horse;
                                 0,29 Lt/kwh;                                                            0,29 Lt/kwh;
                                 24,3 kwh/horse;                                                         24,3 kwh/horse;
                                 0,35 %.                                                                 0,35 %.
Forage                           Total feeding for horse per annum     Forage                            Total feeding for horse per annum
                                 3685 forage unit/horse;                                                 3685 forage unit/horse;
                                 0,25 Lt/forage unit;                                                    0,25 Lt/forage unit;
                                 927,45 Lt/horse;                                                        927,45 Lt/horse;
                                 46,24%.                                                                 46,24%.
Pharmaceutical                   200,56 Lt/horse                       Pharmaceutical                    200,56 Lt/horse
                                 10 %                                                                    10 %
Depreciation                     174,72 Lt/horse                       Depreciation                      174,72 Lt/horse
                                 8,71 %                                                                  8,71 %
Other costs (Other costs consist 200,56 Lt/horse                       Other costs (Other costs          200,56 Lt/horse
veterinary costs: blood test,    10 %                                  consist veterinary costs: blood   10 %
vaccination, vitamin)                                                  test, vaccination, vitamin)
Total                            2005,57 Lt/horse                      Total                             2005,57 Lt/horse
Calculation for salary                                                 Calculation for salary
Medium salary                     900 Lt                               Medium salary                      900 Lt
Number of workdays                21,3                                 Number of workdays                 21,3

Consolidated version as of 5th March, 2008                                                                                    307
Number of working hours               170,4                                 Number of working hours          170,4
Wage per hour                         7                                     Wage per hour                    7
Depreciation                                                                Depreciation
Barn                                  14688 Lt                              Barn                             14688 Lt
Standard of depreciation              1,67%                                 Standard of depreciation         1,67%
Price of equipment                    680 Lt                                Price of equipment               680 Lt
Standard of depreciation              16,6%                                 Standard of depreciation         16,6%
Amount of depreciation                524,1696 Lt                           Amount of depreciation           524,1696 Lt
Number of horses                      3 horses                              Number of horses                 3 horses
Depreciation for 1 tone              174,72 Lt /horse                       Depreciation for 1 tone         174,72 Lt /horse
Forage
                      Standard, cnt.     Price,    Worth, Lt                                    Standard, cnt.    Price, Lt./cnt.    Worth, Lt
                                         Lt./cnt.
 Hay                  18,5               15,3      283,05                Hay                    18,5              15,3               325,43
 Green crop           65                 3,4       221                   Green crop             65                3,4                240
 Oat                  14,6               29        423,4                 Oat                    14,6              29                 445
 Total                                             927,45                Total                                                       1010,43
 Price of feeding     0,25 Lt
 unit


Table 16: Calculation of costs for keeping one specimen of rare endangered breeds of Lithuanian Coarse-wooled sheep per annum
                       Usual practise                                                      Agri-environment
   Costs Lt/sheep                 Income Lt/sheep                        Costs Lt/sheep                        Income Lt/sheep

                        Meat (0,05 t*7000Lt/t)        350                                                 Meat (0,04 t*7000Lt/t)        280
                        Lamb (2 lambs*25kg* 7 Lt./kg) 350                                                 Lamb (2 lambs * 23kg *7Lt/kg) 322
Salary            39                                           Salary                                  39
Electrical energy 10                                           Electrical energy                       10
Forage            168                                          Forage                                  168
Pharmaceutical 31                                              Pharmaceutical                          31
Depreciation      31                                           Depreciation                            31
Other costs       31                                           Other costs                             31
TOTAL T1          311   TOTAL T2                      700      TOTAL T3                                311 TOTAL T4                       602
Costs, Lt/sheep                                       389      Income, Lt/sheep                                                           291

Consolidated version as of 5th March, 2008                                                                                          308
(P2=T2-T1)                                                 (P1=T4-T3)
                                                           Income forgone, Lt/sheep                                                 98
                                                           (I=P1-P2)
                                                           Income forgone, EUR/sheep                                                28
                                                           Income forgone, EUR/livestock unit                                       200
                                                           7,14 sheep= 1 livestock unit
                                                           (7,14*28=200 EUR/livestock unit)



Agronomic and economic assumptions
 Animal net                                                           Animal net
 Salary                           Salary was calculated taking into   Salary                             Salary was calculated taking into
                                  account average wages per hour                                         account average wages per hour 3,36
                                  3,36 Lt./ hour;                                                        Lt./ hour;
                                  11,7 hour/sheep;                                                       11,7 hour/sheep;
                                  39,27 Lt/sheep; 12,58 %.                                               39,27 Lt/sheep; 12,58 %.
 Electrical energy                10,44 Lt/sheep;                     Electrical energy                  10,44 Lt/sheep;
                                  0,29 Lt/kwh;                                                           0,29 Lt/kwh;
                                  36 kwh/sheep; 3,34 %.                                                  36 kwh/sheep; 3,34 %.
 Forage                           Total feeding for sheep per annum   Forage                             Total feeding for sheep per annum
                                  575 forage unit/animal;                                                648 forage unit/sheep;
                                  0,29 Lt/forage unit;                                                   0,29 Lt/forage unit;
                                  168,52 Lt/sheep;                                                       188 Lt/sheep;
                                  53,99 %.                                                               53,99 %.
 Pharmaceutical                   31,21 Lt/sheep                      Pharmaceutical                     40Lt/sheep
                                  10,09 %                                                                10,09 %
 Depreciation                     31,49 Lt/sheep                      Depreciation                       31,49 Lt/sheep
                                  10,09%                                                                 10,09%
 Other costs (Other costs consist 31,21 Lt/sheep                      Other costs (Other costs consist   31,21 Lt/sheep
 veterinary costs: blood test,    10 %                                veterinary costs: blood test,      10 %
 vaccination, vitamin)                                                vaccination, vitamin)
 Total                            312,15 Lt/sheep                     Total                              312,15 Lt/sheep
 Calculation for salary                                               Calculation for salary
 Medium salary                     430 Lt                             Medium salary                       430 Lt


Consolidated version as of 5th March, 2008                                                                                    309
 Number of workdays                    21,3                                 Number of workdays                  21,3
 Number of working hours               170,4                                Number of working hours             170,4
 Wage per hour                         3,4                                  Wage per hour                       3,4
 Depreciation                                                               Depreciation
 Barn                                  6000 Lt                              Barn                                6000 Lt
 Standard of depreciation              1,67%                                Standard of depreciation            1,67%
 Price of equipment                    3450 Lt                              Price of equipment                  3450 Lt
 Standard of depreciation              16,6%                                Standard of depreciation            16,6%
 Amount of depreciation                1574,7 Lt                            Amount of depreciation              1574,7 Lt
 Number of sheep                       50 units                             Number of sheep                     50 units
 Depreciation for 1 tone              31,49 Lt /sheep                       Depreciation for 1 tone            31,49 Lt /sheep
Forage
                   Standard, cnt.     Price, Lt./cnt. Worth, Lt                                        Standard,        Price, Lt./cnt. Worth, Lt
                                                                                                       cnt.
 Hay               3,42               15,3              52,33               Hay                        3,42             15,3           52,33
 Beetroot          2,4                8,6               20,64               Beetroot                   2,4              8,6            20,64
 Green crop        12,9               3,4               43,86               Green crop                 12,9             3,4            43,86
 Concentrate       1,15               45                51,75               Concentrate                1,15             45             51,75
 Total                                                  168,58              Total                                                      168,58
 Price of          0, 29Lt
 feeding unit


Table 17: Calculation of costs for keeping one specimen of rare endangered breeds of Lithuanian blackhead sheep (local type) per
annum
                       Usual practise                                                      Agri-environment
   Costs Lt/sheep                 Income Lt/sheep                        Costs Lt/sheep                        Income Lt/sheep

                          Meat (0,05 t*7000Lt/t)        350                                                  Meat (0,04 t*7000Lt/t)        280
                          Lamb (2 lambs*25kg* 7 Lt./kg) 350                                                  Lamb (2 lambs * 23kg *7Lt/kg) 322
Salary            39                                              Salary                               39
Electrical energy 10                                              Electrical energy                    10
Forage            168                                             Forage                               168
Pharmaceutical 31                                                 Pharmaceutical                       31
Depreciation      31                                              Depreciation                         31

Consolidated version as of 5th March, 2008                                                                                          310
Other costs     31                                          Other costs                        31
TOTAL T1        311   TOTAL T2                      700     TOTAL T3                           311 TOTAL T4                         602
Costs, Lt/sheep                                             Income, Lt/sheep
(P2=T2-T1)                                          389     (P1=T4-T3)                                                              291
                                                            Income forgone, Lt/sheep                                                98
                                                            (I=P1-P2)
                                                            Income forgone, EUR/sheep                                               28
                                                            Income forgone, EUR/livestock unit                                      200
                                                            7,14 sheep = 1 livestock unit
                                                            (7,14*28=200 EUR/livestock unit)

Agronomic and economic assumptions
 Animal net                                                           Animal net
 Salary                           Salary was calculated taking into   Salary                             Salary was calculated taking into
                                  account average wages per hour                                         account average wages per hour 3,36
                                  3,36 Lt./ hour;                                                        Lt./ hour;
                                  11,7 hour/sheep;                                                       11,7 hour/sheep;
                                  39,27 Lt/sheep; 12,58 %.                                               39,27 Lt/sheep; 12,58 %.
 Electrical energy                10,44 Lt/sheep;                     Electrical energy                  10,44 Lt/sheep;
                                  0,29 Lt/kwh;                                                           0,29 Lt/kwh;
                                  36 kwh/sheep; 3,34 %.                                                  36 kwh/sheep; 3,34 %.
 Forage                           Total feeding for sheep per annum   Forage                             Total feeding for sheep per annum
                                  575 forage unit/animal;                                                648 forage unit/sheep;
                                  0,29 Lt/forage unit;                                                   0,29 Lt/forage unit;
                                  168,52 Lt/sheep;                                                       188 Lt/sheep;
                                  53,99 %.                                                               53,99 %.
 Pharmaceutical                   31,21 Lt/sheep                      Pharmaceutical                     40Lt/sheep
                                  10,09 %                                                                10,09 %
 Depreciation                     31,49 Lt/sheep                      Depreciation                       31,49 Lt/sheep
                                  10,09%                                                                 10,09%
 Other costs (Other costs consist 31,21 Lt/sheep                      Other costs (Other costs consist   31,21 Lt/sheep
 veterinary costs: blood test,    10 %                                veterinary costs: blood test,      10 %
 vaccination, vitamin)                                                vaccination, vitamin)
 Total                            312,15 Lt/sheep                     Total                              312,15 Lt/sheep
 Calculation for salary                                               Calculation for salary

Consolidated version as of 5th March, 2008                                                                                    311
   Medium salary                          430 Lt                           Medium salary                        430 Lt
   Number of workdays                     21,3                             Number of workdays                   21,3
   Number of working hours                170,4                            Number of working hours              170,4
   Wage per hour                          3,4                              Wage per hour                        3,4
   Depreciation                                                            Depreciation
   Barn                                   6000 Lt                          Barn                                6000 Lt
   Standard of depreciation               1,67%                            Standard of depreciation            1,67%
   Price of equipment                     3450 Lt                          Price of equipment                  3450 Lt
   Standard of depreciation               16,6%                            Standard of depreciation            16,6%
   Amount of depreciation                 1574,7 Lt                        Amount of depreciation              1574,7 Lt
   Number of sheep                        50 units                         Number of sheep                     50 units
   Depreciation for 1 tone               31,49 Lt /sheep                   Depreciation for 1 tone            31,49 Lt /sheep
  Forage
                     Standard, cnt.      Price, Lt./cnt. Worth, Lt                                       Standard,       Price, Lt./cnt. Worth, Lt
                                                                                                         cnt.
    Hay              3,42                15,3              52,33           Hay                           3,42            15,3           52,33
    Beetroot         2,4                 8,6               20,64           Beetroot                      2,4             8,6            20,64
    Green crop       12,9                3,4               43,86           Green crop                    12,9            3,4            43,86
    Concentrate      1,15                45                51,75           Concentrate                   1,15            45             51,75
    Total                                                  168,58          Total                                                        168,58
    Price of         0, 29Lt
    feeding unit


Organic farming scheme
Table 18: Calculation of premium per ha for organic farming – cereal (including legumes and protein crops)
                               Usual practise                                                          Agri-environment
               Costs Lt/ha                           Income Lt/ha                        Costs Lt/ha                          Income Lt/ ha
Winter wheat                                 Wheat (4t* 400Lt/t)     1600 Winter wheat                               Wheat (2,8t*440Lt/t)   1232
                                             Straw (6t*30Lt/t)        180                                            Straw (4,2 t*30Lt/t)   126
                                                                          Seed                             300
Mechanised work                  762,4                                    Mechanised work                  1039,5
Seed                             152,0                                    Organic fertilisers              1000
Fertilises (NPK)                 311,3                                    Allowed plant protection         225

  Consolidated version as of 5th March, 2008                                                                                         312
                                                                       products
Allowed         plant       protection                                 Certification fee                 19,6
products                                 345,5

TOTAL (T1)                               1571,2      TOTAL(T2)   1780 TOTAL(T3)                          2584,1 TOTAL(T4)                  1358

                                                                       Profit from practice applying
                                                                       the scheme, Lt/ha
P1=T2-T1                                                         208,8 (P2=T4-T3)                                                          - 1226,1

                                                                       Income forgone, Lt/ha
                                                                       (I=P1-P2)                                                           1435

                                                                       Income forgone, EUR/ha                                              416
Agronomic and economic assumptions


Mechanised work                              762,4               Mechanised work                             1039,5
(453,2+87,3+221,9 = Lt/ha);
Depreciation of machinery, maintenance –
453.2 Lt/ha; salary – 87,3 Lt/ha; diesel –
221,9 Lt/ha)
Tillage                                      132,6
Cultivation, ploughing, discing              192,7                                                                    Manure handling with penac
                                                                 Tillage                                     132,6    for 1 tone – 40 g.
Harrow                                       35,3                Cultivation (3 times), ploughing, discing   227,8    Usable for handling of crop
                                                                                                                      biological preparation-fitoverm
                                                                                                                       0,3 l/ha
Rolling                                      16,7                Harrow                                      35,3
Sowing                                       54,4                Spreading of organic fertilisers            228,8
Harvesting, crushing of straw                364,9               Sowing                                      54,4
Spreading of mineral fertilisers             41.8                Rolling                                     16,7
Crop spraying                                26,0                Harvesting, crushing of straw               343,9
Seed                                         152




   Consolidated version as of 5th March, 2008                                                                                     313
Fertilisers (NPK)                            311,3                            Seed                                       300
(83,6+151,2+76,5=311,3 Lt)
Ammonium nitrate 220 kg
(220kg x 0,38 Lt=83,6 Lt);
Superphosphate 280 kg
(280 kg x 0,54 Lt = 151.2 Lt);
Kalium chloride 150 kg
(150 kgx 0,51 Lt=76,5 Lt);
Allowed plant protection products 1 345,5                                     Organic fertilisers (40t*25Lt/t)           1000
ha (21+98+69+157,5=345.5)
Beices 0,3 kg;
(0.3 kgx70 Lt=21 Lt); Herbicides-dialen 21
(2x49 Lt=98 Lt); Fungicides-sportac 1l
(1x 69 Lt= 69 Lt); Tango super 1,5 l
(1.5 x 105 Lt=157,5 Lt);
                                                                 Allowed plant protection products :
                                                                 Penac (0,3 l x110 Lt/l)                                 33
                                                                 Fitoverm (1,6 kg x 120 Lt/ kg)                          192
                                                                 Certification fee                                       19,6
Table 19: Calculation of premium per ha for organic farming – perennial grass
                                    Usual practise                                                                 Agri-environment
                  Costs Lt/ha                                  Income Lt/ha                          Costs Lt/ha                           Income Lt/ ha
                                                     Milk                                                                       Milk
                                                      (4,2t*1,2               1792,                                             (4,2t*0,56cow*0,65*597L
                                                     cow*0,65*597Lt/t)        8                                                 t/t)                     912,69

                                                                                      Haymaking (198x1,3=257,4)       257,4
Fertilisers (NPK)                        332,00                                       Grass mowing                    72,2
                                                                                      Tedding and racking             35,5
Haymaking (2 times)                      418,4                                        Pick-up, transport              90,0
Grass moving                             75,5
Tedding and raking                       38,9
Pick-up, transport                       93,0                                         Certification fee               19,1

                                                                              1792,
TOTAL (T1)                               750,4       TOTAL(T2)                8     TOTAL(T3)                         276,5     TOTAL(T4)               912,7

   Consolidated version as of 5th March, 2008                                                                                                   314
Profit from usual practice, Lt/ha                    Profit from practice applying
(P1=T2-T1)                                     1042, the scheme, Lt/ha
                                               4     (P2=T4-T3)                            636.2

                                                     Income forgone, Lt/ha
                                                     (I=P1-P2)                             406,2

                                                     Income forgone, EUR/ha                118




  Consolidated version as of 5th March, 2008                                         315
Agronomic and economic assumptions

Fertilisers (NPK):                332,00

(76+130+84+42=332Lt/ha
);
Ammonium nitrate 200 kg
(200kg x 0,38 Lt=76 Lt/ha);
Superphosphate 240 kg
(240 kg x 0,54 Lt = 130 Lt/ha);
Kalium chloride 166 kg
(166 kgx 0,51 Lt=84 Lt/ha);
Fertilisers – 42 Lt/ha.
                                           Allowed plant protection product 1 ha:                                Costs of equipment of perennial grass
                                           Starane 1,5 l/ha                                                      distributed for 3 years.
                                                                                                                 During 3 years of use meadows are
                                                                                                                 mowing at an average 1,3 times (201
                                                                                                                 Lt/ha x 1,3 times = 261.3 Lt/ ha)
Haymaking                         207,4 For 1 ha of perennial grass keeping 1,2 cow Haymaking            197,7   Fertility 2 t hay for 1 ha of grassland
                                                                                                                 keeping 0,56 cow
Grass moving                      75,5                                              Grass mowing         72.2    Price of organic milk – 0,597Lt/kg
Tedding and raking                38,9 Price of organic milk – 0,597Lt/ kg          Tedding and raking   35,5    Produce 65% of milk from
                                                                                                                 perennial grass forage.
Pick-up, transport                93,0 Milking 4,2 t of milk                        Pick-up, transport   90.0
                                                                                                                 Price of organic milk the same as
                                                                                                                 obtained traditionally, because 2 years
                                                                                                                 production is not certified as organic.


                                                                                    Certification fee    19,1    In addition, due to low
                                                                                                                 purchasing power of
                                                                                                                 consumers demand for organic
                                                                                                                 production is low.




   Consolidated version as of 5th March, 2008                                                                                     316
Table 20: Calculation of premium per ha of organic farming – horticulture (specilisation in fruits)
                                    Usual practise                                                  Agri-environment
                Costs Lt/ha                           Income Lt/ha                       Costs Lt/ha                        Income Lt/ ha

Mechanised work              66,6    (10tx 600Lt/t)              6000     Mechanised work                   43,7 (5 tx700 Lt/t)          3500
Fertilisers (NPK)            269,00 (1tx 200Lt/t)                200      Fertilisers (300 kg kalium salin) 132,00 (0,5tx 200 Lt/t)      100
Allowed plant protection
products                     27,50                                        Handling of under trees (0,5 ha) 235,9
Handling of under trees (0,5                                              Cultivation of space in between
ha)                          273,6                                        the rows (0,5 ha)                273,6
Cultivation of space in                                                   Tree pruning                     149,3
between the rows (0,5 ha)    149,3
Tree pruning                 187,9                                        Apple picking                       1020,3
Apple picking                1227,5                                       Certification fee                   342,0


TOTAL (T1)                           2201,4    TOTAL(T2)         6200     TOTAL(T3)                           2196,8   TOTAL(T4)         3600

Profit from usual practice, Lt/ha                                         Profit from practice applying the
(P1=T2-T1)                                                                scheme, Lt/ha
                                                                 3998,6   (P2=T4-T3)                                                     1403,2

                                                                          Income forgone, Lt/ha
                                                                          (I=P1-P2)                                                      2595,4

                                                                          Income forgone, EUR/ha                                         752




   Consolidated version as of 5th March, 2008                                                                                      317
Agronomic and economic
assumptions
Mechanised work                                                               Mechanised work                        43,7
(23,9+29,5+13,2=66,6 Lt/ha)                                                   (15,6+18,8+9,3= 43,7Lt/ha)
(Depreciation of machinery-23,9 Lt/ha                                         (Depreciation of machinery-15,6
;diesel – 29.5 Lt/ha; salary –                                                Lt/ha ;diesel – 18,8 Lt/ha; salary –
13,2 Lt/ha)                             66,6                                  9,3 Lt/ha)
Fertilisers (NPK)                                                             Fertilisers                            132,00   Handling of undergrowth 2 times
                                                                              Kalium salin 300 kg/ha;
(114+54+102=269 Lt/ha);                                                       (300kg x 0,44=132 Lt/ha);
Ammonium nitrate 300 kg
(300kg x 0,38 Lt=114 Lt);
Superphosphate 100 kg
(100kg x 0,54 Lt = 54Lt);
Kalium chloride 200 kg
(200kgx 0,51 Lt=102 Lt);                269,00
Allowed plant protection
products
(Raundap -2*13,75=27,5
Lt/ha)-                                                                                                                       Haymaking mechanised of space in between the
2l/ha, 2 times                  27,50                                                                                         rows 6 times
Handling of undertrees (0,5 ha) 273,6                                         Handling of under trees (0,5 ha)       273,6    Pruning 2 workers 2,5 day
                                                                              Pick -up                               39,1
Cultivation of space in between 149,3 Haymaking of space in between the       Cultivation of space in between        149,3    1 worker picks up 0,35 t/day
the rows (0,5 ha)                                                             the rows (0,5 ha)
                                      rows 6 times
Tree pruning                    187,9                                                                                         Price of organic apples is the same as produced
                                                                                                                              traditionally because 2 years production does not
                                                 Pruning 2 workers 2,5 day    Tree pruning                           187,9    receive certificate of organic production.
Apple picking                           1227,5 1 worker picks up 0,41 t/day   Apple picking                          1020,3
                                                                                                                              In addition, due to low purchasing
                                                                                                                              power of consumers demand for
                                                                              Certification fee                      342      organic production is low.




    Consolidated version as of 5th March, 2008                                                                                                               318
Table 21: Calculation of premium per ha for organic farming – vegetables, potatoes
                              Usual practise                                                            Agri-environment
                Costs Lt/ha                        Income Lt/ha                        Costs Lt/ha                             Income Lt/ ha
                                             Vegetables
                                             (12,4 t*0,9*400                                                          Vegetables (11t*0,75*480
Vegetables                                   Lt/t)                4464 Vegetables                                     Lt/t)                    3960

Mechanised and hand works            1460                               Mechanised and hand works            2100
Seed                                 308,0                              Seed                                 380,0
                                                                        Organic fertilisers
 Mineral fertilisers (NPK))        453,2                                (45t*25Lt/t)                         1125
Allowed       plant     protection                                      Allowed plant protection
products                           430,4                                products                             240,4

                                                                        Certification fee                    205,3

TOTAL (T1)                           2651,6 TOTAL(T2)             4464 TOTAL(T3)                             4050,7   TOTAL(T4)                3960,0

Profit from usual practice, Lt/ha                                        Profit from practice applying the
(P1=T2-T1)                                                               scheme, Lt/ha
                                                                  1812,4 (P2=T4-T3)                                                            -90,7

                                                                        Income forgone, Lt/ha
                                                                        (I=P1-P2)                                                              1903,1

                                                                        Income forgone, EUR/ha                                                 551




   Consolidated version as of 5th March, 2008                                                                                            319
Agronomic and economic assumptions

                                                     1460    Fertilising   Mechanised and hand works                  2100
Mechanised and hand works
(349,7+153,5+144,3+155,4+77,7+579,4=1460Lt/ha);              kg/ 1 ha
Tillage, harrowing, rollage, discing                                                                                           Manure handling with penac
                                                     349,7                                                                     for 1 tone – 40 g.
Cultivation (3 times)                                153,5                                                                     Usable for handling of crop
                                                                                                                               biological preparation-fitoverm -
(43,5+60+50=153,5 Lt/ha)                                                                                                       0,44 l/ha
(Depreciation of machinery-43,5 Lt/ha ;diesel – 60
Lt/ha; salary – 50 Lt/ha)
                                                                                                                               Medium price of organic vegetables
Sowing                                               144,3                 Spreading of organic fertilisers           228,8    400 Lt/t
                                                                                                                               Price of organic vegetables is the
                                                                                                                               same as produced traditionally
                                                                                                                               because 2 years production does not
                                                                                                                               receive certificate of organic
Scarification                                        155,4                 Tillage, harrowing, rollage, discing       306,8    production.
Fertilising and spraying                             77,7                  Cultivation (3times)                       105,6
Harvesting                                           579,4                 Sowing                                     144,3 In addition, due to low
                                                                                                                            purchasing power of
                                                                                                                            consumers demand for
                                                                                                                            organic production is low.
                                                                           Crops spraying (2 times)
                                                                           Allowed plant protection product:
                                                                           Fitoverm 0,3 – 0,4 l/ha                    26,0
                                                                           Crop care                                  709,1    .
Propagating material                                 308                   Harvesting                                 579,4
                                                                           Seed                                       380
Fertilisers and allowed plant protections                                  Fertilisers and allowed plant protection
products                                             883,6                 products                                   1365,4
Mineral fertilisers (NPK)
N- 270 kg/ha; P-290 kg/ha; K – 210 kg/ha:
Borum-30kg/ha (30 x 2,9Lt/kg=87 Lt/ha);              453,2                 Organic fertilisers (45t*25Lt/ t)          1125




   Consolidated version as of 5th March, 2008                                                                                                   320
Allowed plant protection products                                          Allowed plant protection products:
(156+166,5+58,9+41,48+7,5 = 430,4                                          Penac (1,6 kg*120 Lt/kg)                    192
Lt/ha);                                                                    Fitoverm (0,44l*110Lt/l)                    48,4
Betanal -3,9 kg x 40 Lt/kg=156 Lt/ha;
Gezagard-3,2 kgx 52 Lt/kg=166,5 Lt/ha;
Agil-0,49l x 120 Lt/l=58,9 Lt/ha;
Decis-;0,61 l x 68Lt/l=41,48 Lt/ha;
Beices –0,15 kg x50 = 7,5 Lt/ha.                  430,4
                                                                           Certification fee                           205,3

Table 22: Calculation of premium per ha for organic farming – herbs
                             Usual practise                                                                  Agri-environment
                  Costs Lt/ha                           Income Lt/ha                           Costs Lt/ha                         Income Lt/ ha
Herbs                                             Herbs (0,6*12000) 7200    Herbs                                          Herbs (0,48*12800) 6144

Mechanised and hand works                5014,7                             Mechanised and hand works             4663,4
Seed                                     500                                Seed                                  560
Mineral fertilisers (NPK)                238                                Organic fertilisers                   1000
Allowed plant protection products        156                                Certification fee                     205,3




TOTAL (T1)                               5908,7 TOTAL(T2)          7200     TOTAL(T3)                             6428,7      TOTAL(T4)         6144,0

Profit from usual practice, Lt/ha                                         Profit from practice applying the
(P1=T2-T1)                                                                scheme, Lt/ha
                                                                   1291,3 (P2=T4-T3)                                                            -284,7

                                                                            Income forgone, Lt/ha
                                                                            (I=P1-P2)                                                           1576

                                                                            Income forgone, EUR/ha                                              456




   Consolidated version as of 5th March, 2008                                                                                             321
Agronomic and economic assumptions


Mechanised and hand works                 5014,7   Mechanised and hand works                            4663,4
Mechanised work                                    Mechanised work                                      503,3
                                                   (256,7+180+66,6= 503,3 Lt/ha);
(172,7+56+194=506,7 Lt/ha);
                                                   (Depreciation of machinery-256,7Lt/ha; diesel –180
(Depreciation of machinery-172,7 Lt/ha;            Lt/ha; salary –66,6 Lt/ha).
diesel – 56 Lt/ha; salary –194 Lt/ha).    422,7
Hand work                                 4592,0   Hand work                                            4160,1
Seed                                      500      Seed                                                 560
Mineral fertilisers                                Organic fertilisers (40t*25 Lt/t)                    1000
Fertilisers (NPK)
(76+65+97=238 Lt/ha);
Ammonium nitrate 200 kg
(200kg x 0,38 Lt=76 Lt/ha);
Superphosphate 120 kg
(120 kg x 0,54 Lt = 65 Lt/ha);
Kalium chloride 190 kg
(190kgx 0,51 Lt=97 Lt/ha);                238
Allowed plant protection                           Certification fee                                    205,3
products
Gezagard-3l x 52 Lt/l=156 Lt/ha.          156




   Consolidated version as of 5th March, 2008                                                                    322
Table 23: Calculation of premium per ha for organic farming – horticulture (specilisation in berries)
                         Usual practise                                                          Agri-environment
               Costs Lt/ha                       Income Lt/ha                           Costs Lt/ha                           Income Lt/ ha
                                            Berry
Berry                                       (10t*2500Lt)    25000 Berry                                                  Berry (7t*2900) 20300
Salary                               7488                         Salary                                          7488
Diesel                               627                          Diesel                                          627
Machinery              depreciation,
maintenance                          355                          Machinery depreciation, maintenance             355
Seed                                 2810                         Seed                                            2810
 Mineral fertilisers (NPK), allowed                               Organic fertilisers, allowed plant protection   700
plant protection products            3043                         products
Auxiliary material (foil, packing) 1760                           Auxiliary material (foil, packing)              1760
Other costs                          1608                         Other costs                                     1608
Depreciation                         509                          Depreciation                                    509
Expenditure                          2123                         Expenditure                                     2123
                                                                  Certification fee                               177
TOTAL (T1)                          20323 TOTAL(T2)         25000 TOTAL(T3)                                       18157 TOTAL(T4)         20300



Profit from usual practice, Lt/ha                                Profit from practice applying the scheme,
(P1=T2-T1)                                                  4677 Lt/ha                     (P2=T4-T3)                                     2143

                                                                  Income forgone, Lt/ha            (I=P1-P2)                              2534

                                                                  Income forgone, EUR/ha                                                  734




   Consolidated version as of 5th March, 2008                                                                                       323
Agronomic and economic assumptions

Salary                               7488       Salary                                          7488
Diesel                               627        Diesel                                          627
Machinery depreciation,              355        Machinery depreciation, maintenance             355
maintenance
Seed                                 2810       Seed                                            2810
Mineral fertilisers, allowed plant              Mineral fertilisers, allowed plant protection
protection products                  3043       products                                        700
Auxiliary material (foil, packing)   1760       Auxiliary material (foil, packing)              1760
Other costs                          1608       Other costs                                     1608
Expenditure                          2123       Expenditure                                     2123
Depreciation                         509        Depreciation                                    509
                                                Certification fee                               177




   Consolidated version as of 5th March, 2008                                                          324
Annex 12: Equipment used as basis for calculations of payments for meeting requirements of Council Directive
92/46/EEC

Number of cows in farm          10           28             40              100                   200
                                                    2x2             2x5
                                       Family       EuroHeringbone, EuroHeringbone, 2x8 Euro Paralel, Alpro,
Type of milking equipment VP 170, 20L comfort       HP 102          M400, MM25       MPC, MM25
                                                    1 (milking      1 (milking
                                                    platform of 4   platform of 10   1 (Parallel type milking
Number of units                      2 3 (Duovac)   places)         places)          platform of 16 places)
Type of cooling equipment DX/OB 400L DX/OB 1200L DX/OB 1800L DX/CE 5000L             DX/CE 9700L
Number of units                      1            1               1                1                          1

Milking equipment:

For 10 cows farm – Vacuum pump VP 170 with 20 liters can, 2 units;
For 28 cows farm – semi-automated milking system “Family comfort” with 3 Duovac milking units;
For 40 cows farm – automated milking platform 2x2 EuroHeringbone with hydro pulsator HP 102
For 100 cows farm – automated milking platform 2x5 EuroHeringbone with automatic take-off M400 and milk meter MM25;
For 200 cows farm – automated parallel type milking platform 2x8 Euro Paralel with milking point controller MPC and
DeLaval milk meter MM25 (provides functions including flow indication, flow control milking and automatic take-off) which
forms the basis of the ALPRO® milking system.




Consolidated version as of 5th March, 2008                                                                            326
Annex 13: LFA area

RDP_ RDP RDP_M COMM         COMMUNE_ WARD         LFA_1 LFA_1 LFA_20_S   VALIDITY AUTHOR AUTHOR REPORTI MS_updat EC_upd
PERI _MS S_REGI UNE_C       LABEL                 6_STA 9_STA TATUS      _DATE    ITY_COD ITY_NA NG_DAT e_status ate_statu
OD       ON_CO ODE          MUNICIPAL             TUS   TUS                       E       ME     E               s
         DE                 ITY
0406 LT LT      LT0115      DRUSKININ LEIPALINGI        T     N          20030511   LT            20030511 U       R
                            KU         O
0406   LT   LT                         VIECIUNU         T     N          20030511   LT            20030511   U     R
0406   LT   LT     LT0632   AKMENES    KRUOPIU          T     N          20030511   LT            20030511   U     R
0406   LT   LT     LT0934   ANYKSCIU ALL WARDS          T     N          20030511   LT            20030511   U     R
0406   LT   LT     LT0133   ALYTAUS    DAUGU            T     N          20030511   LT            20030511   U     R
0406   LT   LT                         RAITININKU       T     N          20030511   LT            20030511   U     R
0406   LT   LT     LT0536   BIRZU      PABIRZES         N     C          20030511   LT            20030511   U     R
0406   LT   LT                         SIRVENOS         N     C          20030511   LT            20030511   U     R
0406   LT   LT                         NEMUNELIO        N     C          20030511   LT            20030511   U     R
                                       RADVILISKI
                                       O
0406   LT   LT                         PACERIAUK        N     C          20030511   LT            20030511 U       R
                                       STES
0406   LT   LT                         PAROVEJOS        N     C          20030511   LT            20030511   U     R
0406   LT   LT     LT1042   ELEKTRENU ALL WARDS         T     N          20030511   LT            20030511   U     R
0406   LT   LT     LT0945   IGNALINOS ALL WARDS         T     N          20030511   LT            20030511   U     R
0406   LT   LT     LT0246   JONAVOS    DUMSIU           T     N          20030511   LT            20030511   U     R
0406   LT   LT                         UPNINKU          T     N          20030511   LT            20030511   U     R
0406   LT   LT     LT0794   JURBARKO VIESVILES          T     N          20030511   LT            20030511   U     R
0406   LT   LT     LT0249   KAISIADORI NEMAITONI        T     N          20030511   LT            20030511   U     R
                            U          U
0406   LT   LT                         KRUONIO          T     N          20030511   LT            20030511   U     R
0406   LT   LT                         PALOMENES        T     N          20030511   LT            20030511   U     R
0406   LT   LT                         PAPARCIU         T     N          20030511   LT            20030511   U     R
0406   LT   LT     LT0252   KAUNO      ZAPYSKIO         T     N          20030511   LT            20030511   U     R
0406   LT   LT     LT0458   KAZLU      JANKU            T     N          20030511   LT            20030511   U     R
                            RUDOS
0406   LT   LT     LT0654   KELMES     VAIGUVOS         T     N          20030511   LT            20030511   U     R
0406   LT   LT                         UZVENCIO         T     N          20030511   LT            20030511   U     R
0406   LT   LT                         KRAZIU           T     N          20030511   LT            20030511   U     R
0406   LT   LT                         SAUKENU          T     N          20030511   LT            20030511   U     R


Consolidated version as of 5th March, 2008                                                                   327
0406   LT   LT                         PAKRAZAN     T   N   20030511   LT   20030511 U       R
                                       CIO
0406   LT   LT     LT0355   KLAIPEDOS DOVILU        T   N   20030511   LT   20030511   U     R
0406   LT   LT                         PRIEKULES    T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT0557   KUPISKIO   KUPISKIO     T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT0159   LAZDIJU    ALL WARDS    T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT0861   MAZEIKIU SEDOS          T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT0962   MOLETU     ALL WARDS    T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT0763   PAGEGIU    ALL WARDS    T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT0566   PANEVEZIO KARSAKISKI    T   N   20030511   LT   20030511   U     R
                                       O
0406   LT   LT     LT0567   PASVALIO PASVALIO       N   C   20030511   LT   20030511   U     R
0406   LT   LT                         SMILGIU      N   C   20030511        20030511   U     R
0406   LT   LT                         KRINCINO     N   C   20030511   LT   20030511   U     R
0406   LT   LT     LT0868   PLUNGES    ALL WARDS    T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT0269   PRIENU     STAKLISKIU   T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT0671   RADVILISKI SIAULENU     T   N   20030511   LT   20030511   U     R
                            O
0406   LT   LT     LT0272   RASEINIU   SILUVOS      T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT0874   RIETAVO    ALL WARDS    T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT0573   ROKISKIO   ALL WARDS    T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT0484   SAKIU      LEKECIU      T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT1085   SALCININK ALL WARDS     T   N   20030511   LT   20030511   U     R
                            U
0406   LT   LT     LT0787   SILALES    BIJOTU       T   N   20030511   LT   20030511   U     R
0406   LT   LT                         KALTINENU    T   N   20030511   LT   20030511   U     R
0406   LT   LT                         UPYNOS       T   N   20030511   LT   20030511   U     R
0406   LT   LT                         LAUKUVOS     T   N   20030511   LT   20030511   U     R
0406   LT   LT                         BILIONYS     T   N   20030511   LT   20030511   U     R
0406   LT   LT                         TENENIU      T   N   20030511   LT   20030511   U     R
0406   LT   LT                         TRAKSEDZI    T   N   20030511   LT   20030511   U     R
                                       O
0406   LT   LT                         SILALES      T   N   20030511   LT   20030511 U       R
                                       RURAL
0406   LT   LT                         KVEDARNO     T   N   20030511   LT   20030511 U       R
                                       S
0406   LT   LT                         PALENTINIO   T   N   20030511   LT   20030511 U       R
0406   LT   LT                         ZADEIKIU     T   N   20030511   LT   20030511 U       R
0406   LT   LT     LT0388   SILUTES    ALL WARDS    T   N   20030511   LT   20030511 U       R

Consolidated version as of 5th March, 2008                                             328
0406   LT   LT     LT1089   SIRVINTU     ALL WARDS   T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT0375   SKUODO       BARSTYCIU   T   N   20030511   LT   20030511   U     R
0406   LT   LT                           NOTENU      T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT1086   SVENCIONI    ALL WARDS   T   N   20030511   LT   20030511   U     R
                            U
0406   LT   LT     LT0777   TAURAGES   GAURES        T   N   20030511   LT   20030511 U       R
0406   LT   LT                         BATAKIU       T   N   20030511   LT   20030511 U       R
0406   LT   LT                         LAUKSARGI     T   N   20030511   LT   20030511 U       R
                                       U
0406   LT   LT                         ZYGAICIU      T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT0878   TELSIU     ALL WARDS     T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT1079   TRAKU      ALL WARDS     T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT1081   UKMERGES ALL WARDS       T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT0982   UTENOS     ALL WARDS     T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT0138   VARENOS    ALL WARDS     T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT0439   VILKAVISKI VISTYCIO      T   N   20030511   LT   20030511   U     R
                            O
0406   LT   LT                         GRAZISKIU     T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT1041   VILNIAUS   BUIVYDZIU     T   N   20030511   LT   20030511   U     R
0406   LT   LT                         DUKSTU        T   N   20030511   LT   20030511   U     R
0406   LT   LT                         MEDININKU     T   N   20030511   LT   20030511   U     R
0406   LT   LT                         SUZIONIU      T   N   20030511   LT   20030511   U     R
0406   LT   LT     LT0943   ZARASU     ALL WARDS     T   N   20030511   LT   20030511   U     R




Consolidated version as of 5th March, 2008                                              329

				
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