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Innovation, Agricultural Productivity and Sustainability in Estonia

image of Innovation, Agricultural Productivity and Sustainability in Estonia

Estonian agriculture has undergone significant growth and structural change since the 1990s in a policy and regulatory environment that has been mostly supportive of investment. The implementation of the Common Agricultural Policy has contributed to the modernisation of the country's agriculture, leading to high productivity growth with relatively limited environmental pressure. High educational levels and strong public research institutions have also provided a fertile environment for innovation in Estonia, although Estonian agri-food companies struggle to participate in food and agricultural research activities. Attracting and retaining people in the agriculture sector at a time of growing labour and skills shortages in rural areas is an increasing challenge. Further innovation and adaptation will be needed to sustain and expand agriculture and food in Estonia.

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Executive summary

The Estonian agricultural sector has experienced significant growth and structural change during the last 25 years, in particular since the country joined the European Union in 2004. High growth in agricultural production and productivity was achieved with relatively limited environmental pressure, taking advantage of abundant land and water resources. Agricultural production became more diverse in response to market and policy signals, as illustrated by the development of organic production. Most productivity improvements, however, occurred in larger farms, with smaller farms often lagging behind. Moreover, the food processing sector has not invested as much and adjusted as fast as primary agriculture, and is still struggling in terms of capacity and competitiveness, thus impeding the development of new markets and new products from agriculture.

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