Rural areas in Lithuania: significance, development and aid Dr. Angele Kedaitiene Lithuanian Ministry of Agriculture, Department of European Union affairs and international relations Division of coordination of implementation of common agriculture policy, and Lithuanian Agricultural University, Faculty of Economics and Management, Department of Business Management Email: [email protected], [email protected] Rasa Martinavičiene Lithuanian Ministry of Agriculture, Department of rural development Division of rural development and coordination of structural support Email: [email protected] Paper prepared for presentation at the 99th seminar of the EAAE (European Association of Agricultural Economists), The future of rural Europe in global agri-food system, Copenhagen, Denmark, August 24-27, 2005 Copyright 2005 by Angele Kedaitiene and Rasa Martinaviciene. All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies 1 Abstract. Paper aims analysing the situation of rural areas of Lithuania as well as support got from the budget of European Union facilitating the development of rural areas. Paper comprises three chapters. 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. In 2003, the rural population was estimated at 1,145 million inhabitants. 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. Since Lithuania has joined the European Union in May 2004, population of rural areas starting to receive significant financial aid from the European budget. Largest share of EU financiers is going to be redistributed as the direct payments constituting in 2004 55 per cent of EU level. Programmes and finances, targeted directly to support the rural development, are considered in the so-called programming documents, prepared by the Government and approved by the European Commission. Key words: rural areas, rural development, EU financial aid, Lithuania Jel 18 1. Context: rural areas in Lithuania 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. 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 2 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. 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. Table 1. Rural areas in Lithuania - population and area, February 2002 Area Per- Population Population ('000) Per-centage (sq. km'000) centage Density in 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 Source: Lithuanian Ministry of Agriculture, Rural Development Plan (2004 – 2006), 2004 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. Table 2 . Rural settlements, 2000 Number of inhabitants Number of rural settlements Percentage of rural 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 Ministry of Agriculture, Rural Development Plan (2004 – 2006), 2004 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. 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 of the Total population Rural population % of rural population year (‘000) (‘000) 1995 3 643 1 183 32.4 1996 3 615 1 183 32.7 1997 3 588 1 159 32.3 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 3 2002 3 475 1 149 33 06 2003 3 463 1 145 33.06 Source: : Lithuanian Ministry of Agriculture, Rural Development Plan (2004 – 2006), 2004 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. Table 4. Age structure of population, February 2002 Total population Population under 15 Population between Population above 64 years 15-64 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: Lithuanian Ministry of Agriculture, Rural Development Plan (2004 – 2006), 2004 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. 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 5. Employment in agriculture, hunting and forestry and fishing, 1990-2001, % Economic activity 1990 1995 1996 1997 1998 1999 2000 2001 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 Source: Lithuanian Ministry of Agriculture, Rural Development Plan (2004 – 2006), 2004 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 4 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.