These days, farms all over the country are in the height of the busy season. In one week, it will be time to thresh winter barley, after that – winter rapeseed, and the first days of August is when the true harvest time starts, when all other types of grain are reaped.
Looking at sky
So far, nature has been benevolent to farmers – winter crops survived the cold season well, covered under thick layers of snow, and spring brought enough humidity.
“Right now we are most concerned about what the last third of July and August is going to be like, since we are uneasy about showers of hail that have already swept through Šalčininkai and other regions. If hail and rainstorms caught us in mid-harvesting, we would yield less grain and of poorer quality,” Stirna says.
The farmer mulls over the possibility that this year is going to be rich in feeding crop, since it was a rainy summer, while high-quality wheat requires a lot of sun.
Despite changing climate and increasingly common quirks of nature, Stirna says he has not insured his crop, even though he advises everyone else that it might be a good idea.
“I've had insurance for several years, but then I realized that current terms of insurance are not what I need, since insurers failed to listen to farmers' suggestions when they were drafting insurance models,” Stirna comments.
Besides, he says, banks have lately been willing to lend money for both longer periods and to cover operational costs, so farmers feel more confident. Stirna uses bank loans to buy fertilizers, since it is cheaper that way than to ask for credit from sellers.
Profitable if capricious
Stirna has been farming in Elektrėnai district since 1997. He uses his 700 hectares of land – most of it he rents – to grow wheat, rapeseed, triticale, barley.
The most profitable variety, according to the farmer, is rapeseed, followed by wheat. However, the more return a crop yields, the more risk it involves – including lower resistance to cold and pests.
“The Lithuanian seed farming has yet to nurture Lithuanian breeds that would be resistant to our climate. Therefore, for many years now, the Lithuanian soil is sown with seeds brought from the West and one has to choose between good cold resistance and high yields,” Stirna says. He says that during previous winters that were rather mild, French grain varieties yielded much crop.
5 or 6 years ago, he also cultivated maize that is currently “in vogue” in Lithuania. But he decided to give it up, since “it is a late culture and drying it costs great money.” “I see only one way for maize in Lithuania – to can the grain and use it for feeding animals,” the farmer thinks.
His big farm provides enough work for his entire family and 5 hired hands. Stirna himself shows calluses on his hands and says that if you want the hired help to do a decent job, you have to work full-heartedly yourself.
In grain farms, the busy season lasts from early spring until late autumn, while wintertime is the period of rest. But not for Stirna – he also has a 400-sheep farm. He chose rearing sheep because they require less care than other breeds, yet their meet is expensive – you won't see people queuing to buy lamb.
“You could say that today, lamb is a luxury item in Lithuania, so when I'm asked to whom I sell it, I say – to whomever can afford it, Stirna smiles. He thinks all farmers should keep livestock so they have things to do in winter.
“No need to hide it, the current EU agriculture policy is encouraging to work less rather than more, so there is a great deal of disorder in farms,” says the farmer, adding that his daily schedule is arranged by the hour.
Two million
In Lithuania, growing grain is one of the most profitable sectors of agriculture and economy in general. The price of grain – which then influences food prices – is determined in international markets and kept up by the finance sector that keeps investing into food. Some already call grain the oil of the Western world.
“This year, grain prices in global markets are high. It is due to draughts in Russia, the US, while cold winter killed crops in Western and Central Europe. In Lithuania, winter crops lived through the season splendidly – even though temperatures were low, a sufficiently thick layer of snow kept them from freezing, so we are expecting good yields,” says Vladas Bagdavičius of Agrowill Group, one of the largest players on the Lithuanian grain market.
The Ministry of Agriculture predicts that the country could crop record-breaking 4 million tons of grain, much of which, around 2.5 million tons, is intended for export.
Commenting on trends in the grain market, Bagdavičius stresses that it is one of only a few sectors in agriculture where prices respond to global markets. Competing for grain are buyers that wish to sell them for export as well as local processing companies, like flourmills and animal food manufacturers.
Stirna thinks that Lithuania, with its 2 million tons of crop, has little if any impact on export prices. The big players in the sector are the US, Brazil, Argentina, Ukraine. The latter had previously announced it would be exporting 26 million tons this year, but severe summer draughts made Ukraine lower the forecast to 17 million tons. After this was announced, prices in grain markets jumped up instantly.
While Stirna is discussing grain prices with 15min, he receives a text message to his phone. The farmer presses a few buttons, skim-reads the message and announces in an uplifted tone: he just received the latest grain prices and they show that farmers who have pre-signed deals on, say, wheat sales, have already lost 20 percent of potential earnings. In early contracts, wheat sells for 650 litas per ton, while the market offers 740 litas (on 10 July).
Stirna, too, sells about 20 to 25 percent of his crop in advance – in order to ensure some income that would enable him to keep the rest stored up until the price is better. His main clients are pig farms and grain processing plants.
“We constantly receive updates on grain prices in global markets, yet we treat them with caution, since the price constantly fluctuates,” the farmer warns.
“This year, as compared to last year, the markets offer 20 percent higher prices for wheat, rapeseed, barley. In my opinion, we're witnessing a sort of a price bubble and it's only a matter of time before it explodes,” Stirna says.
In the hands of nature
According to Agrowill Group board chairman Bagavičius, growing crops is much more profitable this year than, say, dairy farming.
The latter has lost its appeal due to dropping global dairy prices that also have a bearing in Lithuania. Last year, however, things were the other way round. Therefore, Bagavičius thinks, it makes economic sense for farmers to diversify and spread their income through different areas of agriculture.
Agrowill Group, for example, receives 60 percent of its revenue from cereals, 35 percent from dairy farming, and the rest from land management services and other kinds of agricultural proceedings. Depending on the markets, the proportions change from one year to another.
Grain farmers want their crops to be of the highest quality possible – grain for food is more expensive than for fodder, which means bigger revenues. However, the main factor is still nature,” according to Bagavičius.
Changes in climate determine the quality of crop – if it livea up to food standards or is only suitable for fodder.
“We're expecting record crops this year, but everything is still in the fields, anything could happen. When the grain is ripe, a few rainy days is all it takes for us to have a lot of feeding crop and very little grain for food,” president of the Grain Growers' Association Romas Majauskas also warns against premature celebration.
EU inequality
Starting in 2014, Lithuanian growers are promised better financial conditions, since the EU is increasing payments for Lithuanian farmers. It is still early to tell the exact effect for their books, since an agreement is still to be reached on how big an increase would be justified and politically possible.
“The amount of EU subsidies we get per hectare of crops was calculated at the time when Lithuanian agriculture was undergoing a land reform and its productivity, except for crops, was, in a manner of speaking, hitting rock bottom. So now we have a situation where, say, Dutch farmers receive 457 euros per hectare, while in 2013, after transitional period is expired, Lithuanians will be getting 144 and Latvians – mere 97 euros in subsidies,” says Mindaugas Maciulevičius of European Economic and Social Committee.
He claims that such a gap prompts emigration from rural areas and, moreover, creates unequal conditions for competition – farmers from other countries get more revenue while everyone has to work in the same market.
Compared to other EU farmers, Lithuanians pay relatively more for hiring tractors and buying fertilizers and less for their workers. The latter therefore hit the road towards German, Irish, or Dutch farms. Even masters of small or medium-sized farms follow the suite – they hang a lock on their properties and leave. One suggested way out of the situation is expanding Lithuanian farms.
According to president of the Grain Growers' Association Majauskas, the trend of farms becoming bigger is already discernible: the size of an average farm has grown from 8 hectares to 14 hectares, while in Kaunas district, an average farm is already 19-hectare-big. A lot of this has to do with investments from some big companies, like Linas agro, Agrokoncernas, Agrowill, Šiaurės vilkas.
Experts believe that investment into agriculture is a safe deal. Many Lithuanians already complain that food prices are unbearably high in the country; moreover, due to growing demand from Chinese and Indian markets, putting food on a table might get even more expensive.
“Unless we grow enough agriculture production ourselves, food might soon become a luxury item, while ten years from now, overtake oil as number one good in the markets,” Maciulevičius forecasts.
Wheat dominating the fields
Land in crop in the country currently extends over million hectares that yield between 3 and 3.8 million tons of grain annually.
According to data from Statistics Lithuania, last year, the country's farmers harvested 3.3 million tons. They normally grow up to 2 million tons of wheat, about 0.5 million tons of barley, 0.5 million tons of rapeseed, and another half a million tons of other cereals. Crops generate revenue of up to 2.5 billion litas (725 million euros).
In addition to this, farmers can get direct subsidy payments for their crops. In 2011, these amounted to 370 litas per hectare, while this year subsidies are even bigger – 413 litas per hectare.
Buckwheat prices have gone up over the last several years. Since it can grow in arid soil, the total area expanded from 19 to 28 thousand hectares.
The biggest grain farms are concentrated in central regions of Lithuania which boast fertile soil. The districts of Kaunas, Marijampolė, Panevėžys, and Šiauliai account for 80 percent of Lithuania's total crops.
Lithuania is a grain-exporting country. About 1 to 1.5 million tons of grain is taken out of the country each year. This accounts for 30-40 percent of total yield.
