Grain and oilseed production in the Baltic States is expected to grow in the near future, but the growing demand will not allow any significant exports. The outlook of the Finnish companies on the Baltic food market is still quite positive.
A recent report made at the Agrifood Research Finland MTT/Economic Research on the commission of Fingrain presents forecasts on the supply and demand of the Baltic grain and oilseed sectors until 2015. Fingrain points out that continuous follow-up of the indicators and comparison with other countries is an integral element in the implementation of Finland's National Grain Strategy.
The first report on the Baltic States commissioned by Fingrain three years ago forecast that there would be no significant flow of foodstuffs from these countries to Finland. Since then there have been no dramatic changes in the structure of food imports. Before the EU enlargement of 2004 0.9% of the Finnish food imports came from the Baltic States, and last year their share was 2.5%. The accession of the Baltic States to the EU opened new markets for the Finnish companies. The share of the Baltic States in Finnish food exports rose from 9.7% in 2003 to 12.3% in 2006.
In the Baltic grain sector the structure of farms is changing and the concentration of the production proceeds rapidly. A growing share of grain comes from large professional farms. In 2005 farms with more than 100 ha of arable land cultivated 68% of the total grain area in Estonia, 53% in Latvia and 37% in Lithuania.
In the past few years grain production has increased in the Baltic States and this trend is expected to continue in the next decade. According to the forecasts, by 2015 grain production volume will be more than 3 million tonnes in Lithuania, 1.2 million tonnes in Latvia and 0.7 million tonnes in Estonia. Because of the strong growth in the domestic demand the export volumes are expected to fall to 50,000-100,000 tonnes. The growing livestock sector needs more and more feed raw material, but the demand in the other processing sectors will increase much more. Finnish companies Kesko and Kemira GrowHow are active in grain trade and production input markets in all three Baltic countries.
Increase is expected in the cultivation of oilseed crops, mainly because of the growth in biodiesel production. In the Baltic States biodiesel has been produced since 2001. Each country is building a production unit with a capacity of 100,000 tonnes, which at least in Lithuania will be based on domestic raw material. On such large-scale plants the annual need for raw material is 300,000 tonnes of rapeseed per year. In Latvia and Estonia biodiesel production would at least partly be founded on imported oil. Estonia has the only cooking oil manufacturing plant in the Baltic States, which uses 70,000 tonnes of rapeseed a year.
The Baltic oil refineries have shown interest in mixing biofuels with other fuels. If these plans are realised and the production plants operate at their full capacity, the Baltic States could produce up to 400,000 tonnes biodiesel in 2008. This is more than these countries need, and there are plans to export the surplus, mainly to Germany.
Seppo Koivula, Commercial Counsellor, Fingrain, tel. 358 (0)40 541 8735, firstname.lastname@example.org
Csaba Jansik, Senior Scientist, MTT Economic Research, tel. 358 (0)44 091 9680, email@example.com