COMPETITIVENESS OF LATVIAN DAIRY SECTOR: PRODUCTIVITY AND EXPORT

The objective of the research paper is to explore the competitiveness of Latvian dairy sector from the aspect of productivity and export indicators, as well as to examine some of the possibilities to improve the sector competitiveness. The authors explore the productivity and export indicators of Latvian dairy sector, and the link between productivity and export (within the EU context), as well as analyze the impact of farm investment support within RDP 2007 - 2013. Value added per labour unit has been chosen as the productivity indicator; suitable qualitative and quantitative research methods have been applied to the studies. Based on the introduced indices of relative position of dairy industry productivity and exports, dairy processing in Latvia has strong inter-branch position in the domestic food industry. However, the inter-country comparison shows that Latvian dairy processing is behind the EU average level, when its productivity and export volume are considered. It has been found that productivity and export of dairy processing are positively related; rather strong positive correlation also exists between productivity in dairy farming and dairy processing. Therefore, the development of Latvian dairy sector, which mainly depends on the development of exports, can be more successfully achieved by the increase in its productivity; and relatively the largest productivity gap to close is in the dairy farming in Latvia. The direct investment support effect on NVA/AWU of dairy farms is found to be significant and positive, indicating that farm modernisation support of RDP 2007 - 2013 has facilitated the improvement of overall dairy farm productivity in Latvia.