The RDP contains a thorough overview and analysis of the situation in rural areas in general and more specifically in the agricultural, forestry and fisheries sectors as well as the food industry. An executive summary cannot adequately sum up the precise statistical information provided in the RDP, but the sections below synthesize the main development trends in rural areas in general and within the different sectors.

Socio-economic development of rural areas

The regions in Estonia are divided into both successful (major cities) and less successful regions (mainly rural areas). Peripheral areas are characterized by extensive socio-economic marginalization. In addition, poor quality of the basic educational system, the relatively low qualifications of the rural labour force, and the unsatisfactory level of infrastructure all contribute to low income in rural areas. Hence, the regional disparities justify SAPARD assistance to increase overall rural competitiveness.

The regions in Estonia are divided into both successful (major cities) and less successful regions (mainly rural areas). Peripheral areas are characterized by extensive socio-economic marginalization. In addition, poor quality of the basic educational system, the relatively low qualifications of the rural labour force, and the unsatisfactory level of infrastructure all contribute to low income in rural areas. Hence, the regional disparities justify SAPARD assistance to increase overall rural competitiveness.

The size of rural population has not changed significantly since 1995, but unemployment in rural areas has been on the rise. The number of rural jobs has been decreasing, which causes people formerly employed in rural areas to seek employment outside rural areas, i.e. in cities. The tendency towards weakening rural employment opportunities has been manifested in the primary sector employment which has decreased by 88,000 jobs. In that respect, agricultural employment has been reduced by more than half (cf. the labour market analysis above). The socio-economic development in rural areas illustrates the need to reduce dependency on agriculture and stimulate non-agricultural activities in rural areas, e.g. the service, wood processing and fisheries sectors.

The agricultural sector

Although agriculture traditionally has been one of the most important sectors in Estonia economy, the relative share of agriculture in overall economy has declined since Estonia gained its independence. Both the contribution of agricultural output to GDP and the share of agriculture to total employment has decreased significantly, but these indicators are still above EU average. On international markets, Estonian agricultural products suffer greatly due to the lack of market price support and adherence to free trade. Hence, it is anticipated that agricultural income will decrease further without investment support. Under the impression of land reform and the increasing number of farms, the priority of the agricultural sector in the years to come will therefore be to stabilize agricultural income and to avoid further falls in employment.

The forestry sector

Forest lands constitute 2,015,000 ha, i.e. 45% of Estonia's land area. Private forest account for appr. 500,000 ha (as of January 2000). The number of forest owners is 42,000. The employment share in forestry is 1,1%. The added value of the forestry sector grew by 12.4% in 1995 and its share of GDP increased to 16,4%. Exports of timber and timber products amounts to appr. 15% of total exports.

The planned volume of timber use in private forests is 4 mill. steres per year. While cutting of state forests has remained stable, cutting of private forests has sharply increased with the share of private forest holdings of total cutting volume growing from 12% to 48%. At the same time, the volume of private afforestation has remained low compared to state forests. The afforestation potential is estimated to translate into 100,000 ha of agricultural land that can be developed into valuable forests.

The food industry 

The food industry is the largest industry in Estonia, yielding 33.4% of total industrial output and employing 23,000 people. The most important branches are the dairy industry, the meat industry, and the fish industry. Total output of food industry and food product prices have been growing but was hampered by the Russian crisis in 1998. This has also resulted in a negative foreign trade balance accentuated by the non-approval by the EU of Estonian milk processing enterprises, which spinned off in a decrease in the export of dairy products.

The main problems of Estonian food industry are, inter alia, the decreasing volume of export markets; distortive export conditions; the instability of the raw material market (e.g. agriculture); and the low quality of products caused by the non-compliance with EU processing requirements. Further investments in the processing industry through SAPARD assistance are therefore of paramount importance to improve the efficiency and competitiveness of the Estonian food industry. Hence, the RDP contains a detailed analysis of the investment needs in the different food industry sectors (the meat, milk and fisheries sectors).

The fisheries sector

The entire Estonian fisheries sector is privatised. The fisheries sector employed 7,000 people in 1998. Estonian fishing activities take place in the Baltic Sea (internationally regulated), inland waters, and offshore (Atlantic Ocean). Total yield from the Baltic Sea and inland waters was 81,000 tonnes in 1998. Offshore yield was 37,000 tonnes. Fish products are mainly targeted at CIS markets.