RESTRICTED
WORLD TRADE WT/L/49/Add.1
27March 1995
ORGANIZATION(95-0691)
Original: English
ACCESSION OFLATVIA
Questions andReplies
totheMemorandum onForeign Trade Régime (L/7526 andAdd.1-2)
Thefollowing update onthestatus ofprivatization intheagricultural sector hasbeenreceived
from thePermanent Mission ofLatvia withtherequest thatitbecirculated tothemembers ofthe
Working Party.
_______________
LATVIA -UPDATE ONTHE STATUS OFPRIVATIZATION IN
THE AGRICULTURAL SECTOR
PRIVATIZATION OFLAND
Bytheendof1991, mostissues regarding therights offarmers tousespecific landholdings
hadbeenresolved. Asaresult, bythemiddle of1992, alarge number ofprivate farms hadbeen
established (about 45,000). On10July1992, theLawonthePrivatization ofLand inRural Areas
waspassed. Pursuant tothislaw,theprivatization oflandinruralareas wascarried outonthebasis
ofthefollowing principles:
1. Ownership rights could berenewed forprevious owners whohadowned theproperty until
21July1940, i.e.,theoccupation ofLatvia;
2. When privatizing land, thelegalinterests ofpresent owners ofbuildings andusers oftheland
would beconsidered;
3. Forests, perennial plantings andabove-ground waters would beprivatized along withtheland.
Unclaimed landwould beallotted tothecitizens ofLatvia. Thepractical implementation of
theLawonthePrivatization ofLand inRural Areas ended theexclusive ownership rights tolandby
theState andmade possible transactions inland(governed bythecivillaw).
PRIVATIZATION OFAGRICULTURAL ENTERPRISES
Thebasisfortheprivatization ofLatvia 'sagricultural enterprises istheLawonPrivatization
ofAgricultural Enterprises andFishery Farms of21June1991. According tothislaw,the613State
andcollective farms weretransformed intostatutory companies; subsequently, atleast300ofthese
companies decided toeliminate themselves. Itisanticipated that70to100ofthese agricultural
companies willcontinue theirfarming activity inthecoming years, either assingle farms orprivate
collective farms.WT/L/49/Add.1
Page2
PRIVATIZATION OFAGRICULTURAL FOOD PROCESSING ENTERPRISES
There areseveral lawswhich govern theprivatization ofagricultural processing enterprises.
Theprivatization oftheState milkprocessing enterprises isbeing implemented under theLawon
Privatization ofMilkProcessing Enterprises, ofJanuary 1993, andisbeing overseen bytheMinistry
ofAgriculture. According tothislaw,theoriginal 15State-owned milkprocessing enterprises were
transformed firstintoState-owned stock companies andthenintostock companies withcertain capital
share heldbytheState. Some shares ofthese companies wereallocated among theemployees ofthe
State milkprocessing enterprises, andproducers ofmilkandmilkproducts. Asof1January 1995,
three oftheoriginal enterprises hadbeentotally privatized (noState share holdings). Privatization
iswellunder wayfortheremaining companies andwillbecompleted onceprivate interests findthe
funds tobuytherestoftheState-owned shares. Currently, theStateholds approximately 10percent
ofalltheshares inthissector.
Theprivatization ofmeatprocessing enterprises isbeing carried outaccording totheLawon
thePrivatization ofMeatProcessing Enterprises, of18May1993, andisbeing overseen bytheMinistry
ofAgriculture. According tothislaw,theoriginal 14State-owned meatprocessing enterprises were
transformed firstintoState-owned stock companies andthenintostock companies withcertain capital
share heldbytheState. Some shares ofthese companies wereallocated among theemployees ofthe
meat-processing enterprises andmeat producers. Asof1January 1995, twooftheenterprises had
beentotally privatized (noState share holdings). Privatization iswellunder wayfortheremaining
companies andwillbecompleted onceprivate interests findthefunds tobuytherestoftheState-owned
shares. Currently, theState holds about 10percentofalltheshares inthissector.
Theprivatization ofgrain processing enterprises isbeing carried outaccording totheLaw
onPrivatization ofState Owned Bread Production Enterprises, of1June1993, andisoverseen by
theMinistry ofAgriculture. According tothelaw,theoriginal 13State-owned grain processing
enterprises were transformed firstintoState-owned stock companies andthenintostock companies
withcertain capital share heldbytheState. Some shares ofthese companies wereallocated among
theemployees oftheoriginal bread production enterprises, grain producers, andmembers ofgrain
producing cooperatives. Asof1January 1995, three ofthese enterprises hadbeentotally privatized
(noState share holdings). Theprivatization process isunder wayfortheremaining companies and
willbecompleted onceprivate interests (thelawlimits these to"cooperative associations") findthe
funds tobuytherestoftheState-owned shares.
Theprivatization ofbread production enterprises isbeing carried outaccording tothe
aforementioned LawonPrivatization ofState-Owned Bread Production Enterprises, andisoverseen
bytheMinistry ofAgriculture. According tothelaw,theoriginal 15State-owned bread production
enterprises were transformed firstintoState-owned stock companies andthenintostock companies
withcertain capital share heldbytheState. Themajority oftheshares ofthesecompanies wereallocated
totheemployees oftheoriginal bread production enterprises. Asof1January 1995, seven ofthese
companies hadbeentotally privatized (noState share holdings). Theprivatization process isunder
wayintheremainder oftheenterprises andwillbecompleted onceprivate interests findthefunds
tobuytherestoftheState-owned shares.
Privatization isalsoproceeding intheareas ofconfectionery production andfishprocessing;
thisistaking place according totheLawonPrivatization ofState andMunicipal Enterprises of
17February 1994. Thisprivatization isbeing overseen bytheLatvian Privatization Agency, which
operates asanon-profit joint-stock company. Itisenvisioned thattheseadditional sectors maybefully
privatized from within three tofiveyears.WT/L/49/Add.1
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PRIVATIZATION OFAGROSERVICE ENTERPRISES
Latvia isintheprocess ofprivatizing enterprises thatprovided acombination ofgoods and
services totheoriginal State andcollective farms. Theprivatization ofsuchenterprises isgoverned
bytheLawonPrivatization ofProperty intheEnterprises ofAgricultural Services, of30May1993.
Thislawsetsouttheprocedures forprivatizing State-owned enterprises involved intheprovision of
agricultural machinery, construction equipment, fertilizers, andother agricultural supplies. Asof
1January 1995, oftheoriginal 229State-owned enterprises inthese sectors, 122hadbeencompletely
privatized (noState share holdings) andtheprivatization process wasunder wayintheremaining
107enterprises.
PRIVATIZATION OFAGRICULTURAL TRADE ORGANIZATIONS
TheonlyState agricultural trade organization thatcurrently exists inLatvia isthetrade firm
"Turiba".Thisfirmengagesinthemarketingofagriculturalgoodsforthedomesticmarket;itsactivities
cover approximately 5percentofalldomestic salesinLatvia. Turiba alsorentssome ofitsfacilities
toprivate companies. There areanumber ofprivate firms inLatvia thatengage inforeign trade of
agricultural products; there isnoState intervention intheoperations ofthese companies.