IS ESTONIA’S LIBERAL FARM POLICY COMING TO AN END?

Prime Minister Mart Siimann’s government took another step away from Estonia’s laissez-faire agricultural policy regime on March 31, when a report issued by the government’s agricultural committee presented a broadened support program for Estonian farmers. (BNS, ETA, March 31) However, Siimann that same day told a farmers’ meeting in Tartu that Estonia’s liberal farm policies must be continued in order to promote competition and restructuring.

Estonia is unique among post-Communist economies in that its government has successfully resisted calls by domestic farm lobbies for the introduction of tariff and non-tariff barriers on farm imports, as well as price support schemes for Estonian producers. However, the two coalition governments that have been in power since last fall’s parliamentary elections have been noticeably cooler toward such liberalism than were previous governments, and the government of Prime Minister Tiit Vahi, Siimann’s predecessor, removed the ban on food import tariffs. But regardless of whether the introduction of farm tariffs is now imminent, Estonian farmers are already receiving various forms of state support. In 1997, these include interest rate subsidies and capital support to the tune of 97 million kroons ($8 million), as well as 60 million kroons in fuel subsidies. Likewise, individual farmers are exempted from paying personal income tax.

While free marketeers may rue the passing of Estonia’s quintessentially liberal farm policies, Estonia can still boast one of the world’s most liberalized economies. In any case, the worst of Estonia’s agricultural crisis now seems to be over: gross agricultural output is reported to have increased by 19 percent in 1996, while farm incomes apparently rose as much as 30 percent. It is unclear, however, whether this growth can be attributed to Estonia’s liberalism, to movement away from the liberal standard, or to a different set of causes altogether.

Mass Protest in Minsk.