Mr. Vjaceslavs Dombrovskis:

We find some elements of it to be distortional. For example, Latvia is the country that receives the smallest direct payments, which are abysmal. According to the Commission, they are just 53% of the EU average. Therefore, we are out sync with the other countries when they are discussing the CAP. For us, the main concern is that the very small direct payment is due to an historical anomaly. The direct payments are tied to productivity, which depends on economies of scale - the larger the farm, the higher the level of productivity. Very small farms, therefore, have very low levels of productivity. The Baltic states spent some time under the control of the Soviet Union, when farms were collectivised. In the early 1990s they were broken up. Therefore, in a period of a few years in the early 1990s we went from having about 300 large collective farms to having 50,000 or 60,000 small, fragmented farms, with the resulting effect on productivity levels which were used in the calculations for direct payments. In a sense, we are being punished for being occupied by the Soviet Union and taking part in collectivisation experiments. This is not exactly fair and our major concern is to have our level of direct payments at least at the same level as that of Romania and preferably 80% of the average.