Economic and financial section > Agricultural crisis > Volume 1

221 —
Latvia not only produces more butter than the home market can absorb, but also
exports other agricultural products such as flax and bacon, and, to a smaller extent,
clover-seed and linseed. During the three years preceding 1928, Latvia exported flax
and linseed to the value of about 300 million lats.
In 1927, more than 60,000 pigs were slaughtered for the exportation of bacon. But
there was soon a drop in the price of bacon on the world market and exports decreased.
They are at present increasing, though very slowly, and yield only a small profit to the
farmer; the price of bacon has dropped 45 per cent since the beginning of 1930.
The price of butter has also dropped. In 1929, nearly 4 lats per kilogramme were
paid for the butter exported; in 1930, the price fell to an average of 3.20 lats per kilo¬
gramme. This enormous difference is causing heavy losses, since, if the 18 million kilo¬
grammes exported in 1930 had been sold at the 1929 price, this quantity would have
produced 72 million lats, whereas it was in fact sold for 57 million lats. The deficit of
15 million lats in the receipts of the dairy industry places the producers in a catastrophic
position. The drop is in reality more disastrous than is shown by the above figures,
as the price has recently suffered a fresh drop.
Price per kg.
in lats
January 1929 4.33
January 1930 3.60
December 1930 2.90
It will be seen that in the last two years the price of butter has dropped 1.43 lat,
which represents 50 per cent of the present price or a loss of 30 per cent on the prices of
January 1929.
While Latvia is essentially an agricultural country and an exporter of agricultural
produce, she was obliged, even before 1930, to import fairly considerable quantities of
rye and wheat. But these imports have now almost ceased, as the last rye harvest was
so abundant as to represent more than one year’s consumption. The demand for rye
in Latvia is 300,000 tons, while the crop was 360,000 tons. The wheat crop in 1930 also
exceeded the usual demand. On account, however, of the preference of certain consumers
for foreign wheat, which yields whiter flour, a certain quantity of wheat will have to be
imported.
While it was impossible to stop the superfluous imports of rye and wheat on account
of insufficient protection, the Latvian farmers suffered great losses through the absence
of markets for their own grain. The gap thereby created in the budget of the Latvian
farmers was, in fact, one of the causes for the increase in the depression.
Another cause was the drop in prices of Latvian export products, such as flax, butter
and bacon, on the world market. The price of flax has now dropped to below the level
of 1913. Latvia alone is incapable of struggling against the collapse in the prices of
agricultural products on the world market, and the co-operation of many, if not of all,
Governments and nations is required.
Although this drop in prices is the principal cause of the present agricultural
depression, there are, in addition to this general factor, other causes which are particularly
characteristic for Latvia. The results of the war devastations have already been
mentioned. In addition, there was the rainy summer of 1928, with its disastrous floods
which destroyed almost half the crops. The farmers were obliged to reduce their live-stock
and to contract new debts.
The absence of protection for the cultivation of grain has also favoured the depression.
Finally, one of the causes of the agricultural depression is that the farmer only
obtains a small part of the sum paid for his products by the consumer. Middlemen’s