Productivity of Latvian and Lithuanian rural farms and main factors influencing it

The aim of the paper is the assessment of the changes in productivity expressed as the share of production costs in total output and its breakdown by major cost types of Latvian and Lithuanian farms over the period of the implementation of Rural Development Programme (RDP 2007 – 2013). The country’s agricultural productivity is determined by comparison of the total agricultural output value (in producer prices) and total inputs which include intermediate consumption expenditure, depreciation, labor costs and other external costs. The information for the analysis was sourced from the standardized Farm Accountancy Data Network (FADN) data. The results show that productivity level is higher in Lithuanian farms, although the tendency is that the share of costs in production value is increasing in Lithuania, so the difference between two countries is reducing. The changes of productivity in both countries infer the relative growth in the productivity in crop farming both in Latvia and Lithuania respective to dairy farming, as well as the productivity of large farms respective to small and medium farms. The comparisons of major cost items reveal an especially high level of energy costs in Latvia, as well as a high and soaring level of depreciation in Lithuania, especially in dairy farms. In the future policy making, it is worthwhile to design the measures targeting the confinement of risks and negative trends identified in the study