Even before the accession of Eastern European and Baltic countries to the European Union, Western farmers were looking eastward, seeking places to apply their skills and capital. Speaking of this, we should not forget that the farmer in the West is an almost endangered species. The agricultural products market is dominated by large agro-industrial corporations, competition with which for private farmers is becoming almost hopeless.
Moreover, there is a shortage of land in Western Europe. For example, a Dane who owns a few hectares of land in his country cannot count on a large income, and he is often unable to rent additional land at local rates. At the same time, having come to Lithuania, he can rent land from Lithuanian owners for as little as 100-200 litas ($35-70) per hectare per year, depending on land quality. Thus, for a paltry sum of $3-7 thousand, a Western farmer can rent one hundred hectares of land in Lithuania for a year.
Of course, prices for agricultural products in Lithuania are lower than in the West of Europe. But on the other hand, labor – peasants from nearby villages – is very cheap. And after the accession of the former Soviet bloc countries to the EU, the fall of customs barriers became an additional incentive for investment in their agriculture. Under the conditions of a single European market, a Western farmer gets the opportunity to produce goods in the East and sell them at home, where both population incomes and prices are much higher.
Finally, one must not forget the new incentive for winning Eastern lands with Western capital. Since last year, subsidies from European Union funds have begun to be paid to farmers of the new EU members. And many agricultural firms in Lithuania have already made use of this right.
Such favorable conditions have led to the fact that today in the West it has become fashionable to sell one's small land plots and use the proceeds to buy or lease land in countries such as Poland, Lithuania, Latvia, Estonia, Slovenia. Here, Western farmers have room to expand and turn from small farmers into large producers of agricultural products. Consulting firms that help Western farmers find land in the East are springing up like mushrooms after rain. For example, about three hundred local farmers interested in Lithuania have already approached one such firm in Denmark. A similar interest in the eastern lands of the EU is observed in Germany, France, Belgium, Switzerland, Holland...
True, foreigners in Lithuania are not yet officially allowed to directly buy land – the country has established a so-called 'transition period'. However, it is not difficult for Western investors to bypass this formality. Those who do not want to pay for land rent buy it under the names of Lithuanian citizens. And when the transition period ends, these plots will simply be transferred to the real owner. Joint ventures with Lithuanians, which are allowed to purchase Lithuanian land, are also popular.
By the way, as for the prices of these lands. If in the West a hectare of agricultural land can cost tens of thousands of euros, then in Lithuania it is currently sold for 1-2 thousand euros. And the quality and fertility of Lithuanian land is often no worse.
Today, in almost every district of Lithuania there are agricultural lands cultivated by foreigners or joint ventures with foreigners. As an example, we can cite the company Klauso ukis ('Klaus's Farm') in the village of Žarenai, Šiauliai district. This enterprise belongs to farmers from Germany, Klaus Babbe and Volker Renzow, as well as Lithuanian Kęstutis Patejunas. The territory is 2.5 thousand hectares. Mainly sugar beet is grown. About two million litas have been invested in the farm, and it brings a steady income.
The labor force is local peasants, machine operators, who receive a good salary here by the standards of the Lithuanian countryside. However, the Soviet past of agricultural workers still takes its toll – there have been attempts at theft. In response, the owners installed video cameras watching warehouses and workplaces, and hired a security company to keep order. Western capital, including farm capital, knows how to protect its interests, even if this sometimes causes complaints from local residents who feel 'under surveillance', 'like in a concentration camp'. However, no one is forcing them to go work for the Germans!
Of course, there are also examples of small farms, whose Western owners themselves live in Lithuania, renting housing and working together with hired workers on a hundred or two hundred hectares. However, they do not make a difference. The main trend is different – owners of agricultural enterprises rarely take part not only in field work, but even in the daily management of the farm.
Usually, foreign investors only set up the business in Lithuania and return home. Later they exercise general supervision, take care of product sales, and determine the main directions of investment. And all the current work is done by hired managers – from local personnel.
For example, in the Raseiniai district of Lithuania, Canadians organized the crop production company Agra Corporation, which bought and leased a total of 4.5 thousand hectares of Lithuanian land. Then the Canadians sold the company to a group of ten Irishmen and Scandinavians. So, many of these new investors had never dealt with agriculture at all, being industrialists or lawyers.
Such examples suggest that in the future, lands in the east of United Europe will be bought up by capital that does not necessarily have to be connected with agriculture. As for knowledge of the specifics of agricultural work and the agricultural products market, there are qualified hired specialists for that. In general, for serious entrepreneurs doing business on the eastern lands of the European Union, this is not a problem.
However, a certain problem is the attitude of the local population towards foreign investors. For example, if the owners of agricultural enterprises themselves live in the West, their workers often feel like exploited labor. However, they have to suppress this feeling, since foreigners provide a decent income in the conditions of, for example, a rather poor Lithuanian village.
As for local authorities, they are mostly only glad about the arrival of foreigners: lands that were empty are now cultivated, generate income, jobs are created, infrastructure is established, and the local budget is replenished. Thus, it becomes irrelevant whether the landowner has a Lithuanian or German passport.
Another question is why Lithuanian peasants themselves do not organize large-scale and modern agricultural production? Here, of course, everything comes down to a lack of funds, while Western investors have both solid experience and corresponding capital. For example, the aforementioned company Agra Corporation built a grain storage warehouse worth one million litas. It can store 6-7 thousand tons of grain. The company harvests the crop from its fields using new Jonh Deere combines, each of which costs half a million litas.
Most of the agricultural machinery of Western entrepreneurs is filled with electronics. Many Lithuanian farmers, who often still work with dilapidated combines and tractors from the Soviet era, of course, cannot afford such luxury. Accordingly, the cost of production of agricultural firms owned by Western capital is lower, and it is often simply impossible for an ordinary Lithuanian producer to compete with them.
And although Lithuania can boast of large and successful agricultural enterprises managed by Lithuanian capital, in the future, however, fertile lands in the east of the EU will increasingly belong to foreigners. Perhaps this will cause protest actions by local farmers, similar to those that already take place in Poland. However, according to the immutable laws of globalization, local patriotism will have to give way to the economic factor.