Estonia is situated in the forest regions of Northern Europe. The population was 1.46 million inhabitants in 1997. The agricultural area is 1.45 million ha, which corresponds to about 30 percent of the total area of 45 230 km². Around 45 percent of the area is forest. (André, 1999). The use of the land in 1995-1997 is presented in Annex Table 8.

The uncultivated area has stabilized at around 220 000 ha (or around 20 percent) of the total arable land area. The reason seem to be that the state still owns 75 percent of the land, and that the interest to take over uncultivated land is small because of low profitability. The average quality of the already-privatized land is better than the quality on the state-owned land. André finds it a plausible hypothesis that this land will never be cultivated again (André, 1999). An alternative option is to afforest the land. The same development has been proposed by Roosma (Roosma, 1999).

Estonia has a liberal price and trade policy. It has liberalized agricultural markets almost completely. Brandt considers the transformation, which started in 1992/93, as successful in spite of material difficulties for many of the 1.46 million inhabitants (Brandt, 1998). Of all households in 1997, 30 percent earned less than DM4.14 per capita, per day. The unemployment figure for the same year was 10 percent. The farm level producer price of milk was 10-15 percent below world market price, but the lower labour cost, land rents and capital costs imply that a large part of the dairy farms are competitive in the long run. Beef production is likely not to stay competitive. The basic problem of pork and poultry production is the under-utilization of feed. Natural conditions for crop production are not very favourable and will, in the long run, probably be based on feed cereal and grass.

The dissolution of the state farms and the old co-operative farms was concluded in 1997. As a result, 854 large farms with an average area of 560 ha of arable land were established. Of these, 80 percent were co-operative (Ge. GmbH), and the remaining 20 percent were joint-stock companies (Ge. AG) or associations (Ge. EG). Family farms numbered 22 722 with an average area of 22 ha. In addition around 45 000 subsistence-type holdings with an average area of 4 ha existed. In 1997/98 the number of big farms decreased to 803. About 25 percent of them have severe financial difficulties and may go bankrupt. The number of family firms rose to 34 671 partly because of registration (Brandt, 1998).

According to Sepp, large-scale forms of agricultural production survived the transition to a new economic system, but few of them are doing well (Sepp, 1999). Enterprises were reformed legally and organizationally, and their numbers increased at the outset of the reforms when some of them were split into smaller units. After that, however, their numbers began to decrease, owing to mergers and some bankruptcies. According to the same sources, the most striking feature in the transition process of agriculture is the increase in the number of family farms, or private owner-operated farm. Sepp mentions that these farms have been re-established mainly by people who lived in the countryside and worked in farming, but also by the relatively few heirs who were legally entitled to reclaim their family’s land and arrived from towns to take up farming. A more detailed description of the land distribution in 1996 is given in Annex Table 9.

The main reason for the increase in small farm size is the transfer of land to former owners. Another factor is that the land reform policy has so far not been concerned with making viable private companies (shareholding enterprises) out of former state and collective farms. While small farms exist in all countries, and can be quite efficient in the production of fruit, vegetables and other special crops, the production of grain, milk and beef generally requires larger units, if the farm is to be viable.

In the medium to long term, Estonian agriculture will continue to have a range of farm sizes, but policy clearly needs to do more to assist both extremes of the size spectrum (i.e. enterprises and household plots) to become more economically self-sustaining (Sepp, 1999).

During the socialist era, Estonia became specialized in dairy production. Crop husbandry was directed toward producing feed. The cereal production between 1990 and 1996, however, decreased by one-fourth. The total production of cereals has decreased by a third since 1990. The area of potato cultivated has decreased somewhat during the 1990s. Private farms and household plots account for 60 percent of potato cultivation. Rapeseed production has increased. However, the climatic conditions are not very good for rapeseed production. In 1997, 56 percent of the cultivated area was used for grass and silage production. Smaller amounts of berries, fruits and vegetable were cultivated.

As the number of dairy cows decreased, the average yield decreased until 1993. Since that year, the average milk yields have increased. According to BRANDT (1998), a large part of dairy production is competitive. The producer price in 1997 was, according to him, on average 0.26-0.32 DM/kg, and in new building facilities 0.31-0.39DM/kg. The average price is lower than the corresponding milk price for cheese exports in New Zealand, i.e. 0.385 DM/kg. André reports decreasing total milk production between 1990 and 1995 (André, 1999). Milk production seems to have stabilized after this on a level of approximately 700 million kg. Beef, poultry and egg production has decreased to a large extent, and Estonia is supposed to become a net importer of pork in the long run.

In the Soviet era, Estonia was an intensive animal producer, having serious problems with the disposal of organic fertilizers. According to national investigations, 76 percent of the nitrogen load and 20 percent of the phosphorus load in water bodies originated from agriculture in the 1980s. Ground water became increasingly polluted(2).

Consumption of mineral fertilizers and pesticides increased in Estonia, as in the other Baltic countries, until 1990. In 1990 the average doses were 108 kg N/ha and 27 kg P/ha. After 1990, however, input drastically decreased. In 1994 average nitrogen doses were only 34 kg N/ha, and average phosphorus doses 5 kg P/ha. This drop was caused by the new political and economic situations. Currently, farms cannot afford the agricultural chemicals. Slurry is used and crop production relies heavily upon manure fertilization (Löfgren et al., 1999).

Roosma mentions the same trend. According to that author, in 1996 nitrate was used at an intensity of 19 kg N/ha sown area and 62 kg N/ha fertilized area (Roosma, 1999). In 1997 fertilizer intensity slightly increased. The amounts of pesticides applied decreased drastically.

Löfgren et al. have calculated nutrient balances and estimated nutrient runoff from agriculture for Estonia (as well as for Latvia and Lithuania) between 1989 and 1994 based on official statistics (Löfgren et al., 1999). The results are presented in Annex Table 10. The most pronounced changes, not regarding the smaller mineral fertilizer doses, are low import of nutrients in feed and diminished ammonia emissions, which can be explained by the fact that there are fewer animals rather than an improved manure handling. The utilization efficiency of N and P has increased 2-3 times in Estonia. These improvements are solely due to the limited use of N-mineral fertilizers and no feed imports. The authors claim that N-input would not have been enough to balance the nitrogen removals unless the soil nitrogen pool had been mineralized. Part of the crop production would, therefore, rely upon reserves and could not persist for more than a few years (Löfgren et al., 1999).

One may note that no large differences in runoff/ha has been estimated. This is somewhat unexpected. Phipps and Eliste, for instance, claimed that if an input is a polluting input (such as fertilizer or a pesticide), a price-support policy would lead to increased environmental damage (Phipps and Eliste, 1998). However, Löfgren et al. cites another study by Loigu and Vasilyev concerning a small watershed in Estonia dominated by agricultural land (68 percent) that shows a statistically significant decrease in nitrate concentration only during the warm season (May-August) for the period 1987-1995 (Löfgren et al, 1999). This study indicates that the excess of nitrate in the soil is reduced during the growing period, and that improvements due to agricultural changes might have occurred in scattered small watersheds. On the whole, the scientists did not find any obvious indication that dramatic changes within the Baltic agriculture have influenced large-scale N- and P-loads to the Baltic Sea to any marked degree. None of the agricultural systems in the region seem sufficient to reduce nutrient losses to surface waters to such an extent that the nutrient loads to the Baltic Sea could be reduced by 50 percent, as was agreed upon in an international agreement between the HELCOM states. The authors suggest that complementary measures will have to be introduced in the future to fulfil this goal. Such measures should be directed towards the increased uptake of mineralized nutrients outside the cropping season, the increased areas of plant cover in order to reduce erosion and the decreased disturbance of stream-border zones. Examples of such measures could include spring application of animal manure, widespread use of catch crops and buffer strips, stream border stabilization and construction of small dams and wetlands in ditches and streams, when measures in the cultivated fields are insufficient. These measures, according to Löfgren et al., could lead to greater sustainability in food production in the future, and make it possible to produce the same amount of food with less input of N and P.

According to estimates presented by Helcom (1999, p. 59, p.55), the total P-load that went into the Baltic sea from Estonia in 1995 was 1 290 tonnes/year. This figure represents approximately 3.4 percent of the total P-load from all countries around the Baltic sea. The corresponding total N-load from Estonia was 46 468 tonnes/year, which represents 6 percent of the total load from all watersheds around the Baltic countries. These figures do include leakages from sources other than agriculture, typically point-sources like municipal waste water.

Below are descriptions of measures that have been stipulated by the government to reduce nutrient runoff(3).

In 1994 a law on water was stipulated. The regulation reduces the nutrient leaking from agriculture through the following measures:

• Regulation on animal density. The maximum, permissible animal density varies from 1.0 livestock unit per hectare in environmentally sensitive karst areas and environmentally vulnerable islands up to 1.5 livestock units per hectare in other regions.
• Fertilizer and manure application according to quantities and timing.
• Capacity of manure storage. Storage capacity should not be less than 8 months for cattle farms and 10 months for pig and poultry farms. Manure should be stored, spread and handled in such a manner that it would not endanger surface and ground water quality.

In addition, the use and export of pesticides is regulated by the Plant Protection Law. The Ministry of Agriculture, together with the Count Environmental Departments, runs the Environmental Impact Assessment (EIA). EIA is used to evaluate the effects of proposed projects on the environment. Assessment covers the food industry and, at farm level, facilities for animal husbandry with more than 10 cows or 30 pigs and corresponding cattle sheds and poultry farms.

Since September 1997, an Estonian Approximation Strategy concerning environmental legislation has been elaborated within the PHARE programme. Legislative gap analysis, implementation analysis and investment analysis started to harmonize Estonian environmental legislation with those of the EU and to assess the necessary efforts to build up the institutional conditions for their implementation. This work also deals with directives related to agriculture and agricultural
production, like the Nitrate Directive(4).

Phipps and Eliste note that Estonia still contains a high percentage of semi-natural wetland areas in spite of three decades of agricultural pressures (Phipps and Eliste, 1998). The wetlands are disappearing at an alarming rate. The wetlands, which host an outstanding biodiversity in the Baltic Sea region, also form internationally important resting and foraging areas along the East-Atlantic migratory corridor where migratory birds stop to feed and rest before continuing to the breeding areas in the Arctic. They are also important in terms of cultural and natural heritage values as features of the traditional Estonian coastal landscape. As such they are managed ecosystems. The combined effects of the transition and elimination of price support have reduced environmental pressures along the extensive margin, as about 30 percent of the arable land was left uncultivated in 1996. The losses may become irreversible. Agriculture plays both a positive and a negative role in their preservation. The authors claim that the process of transition in the agriculture of Estonia has both positive and negative effects on wetlands. In the positive case, as transition increases the profitability and reduces the risk of agriculture, agricultural activity would be expected to recover in places like the semi-natural wetlands.

Nature conservation is based on a system of protected objects, protected species and protected areas. The total territory of protected areas is 472 000 hectares, accounting for 10 percent of the territory. The main part of the protected area consists of landscape reserves(5).

Agricultural production has decreased quickly in Estonia over the last few years. As in many other CEECs, the financial difficulties of farms create difficulties for a sustainable development of farming systems in Estonia. Bankruptcies are frequent (Sepp, 1999). Prices of inputs have increased and consumption decreased. Furthermore, Estonia has almost totally deregulated its agricultural foreign trade and has removed all trade barriers. Many obstacles for increasing production relate to the low profitability of farming.

As described in the end of the last section, wetlands in Estonia provide benefits to the citizens of Estonia in terms of recreational value and also from a biodiversity point of view. However, Phipps and Eliste claim that the current state of the economy in Estonia does not bode well for wetland retention for two reasons. First, even if the government of Estonia wished to preserve more wetlands, it does not currently have the budget to do so. The government is said to have problems maintaining the existing conservation system. Second, current low income and wealth levels in Estonia are likely to reduce people’s preferences for the environmental benefits generated by wetlands instead of marketable products that could be produced if the wetland were converted to farm or forest. As result, the Estonians’ willingness to pay for wetland retention is lower today than it will be in the future as the economy recovers.

In summary, technical and financial constraints combined with low profitability are of major concern. Many Estonian firms are dealing with severe financial constraints. Gross agricultural output in 1997 was only 56 percent of the volume in 1990.

Fertilizer inputs in 1996 had been reduced to 10 percent of the volume in 1988. The reduction of nutrient leaching is, however, not that big. Low profitability, liquidity constraint and the lack of a technical advisory service are forming clear constraints to output growth. In addition, some valuable wetlands, which are managed habitats and rich in biodiversity, are threatened.

²  (Consult http://europa.eu.int./comm/dg06/publi/peco/estonia/fullrep/ch3-7.htm.)
³ (See http://europa.eu.int./comm/dg06/publi/peco/estonia/fullrep/ch3-7.htm, and Roosma 1999).
⁴ (See: http://europa.eu.int./comm/dg06/publi/peco/estonia/full-rep/ch37.htm ).
⁵  (Consult:  http://europa.eu.int./comm/dg06/publi/peco/estonia/fullrep/ch37-.htm.).