At the time of Latvia’s accession to the OECD in 2016, agricultural innovation was one of the areas identified where an OECD review was likely to benefit the sector’s future. Innovation, agricultural productivity and sustainability in Latvia was prepared for this purpose. It is part of the OECD Food and Agricultural Reviews series and builds on analyses of policies that facilitate productivity growth and sustainability in food and agriculture carried out at the OECD. It uses the framework developed to assess the wide range of policies that influence the performance of the sector. The framework identifies policy incentives and disincentives to innovation, structural change, natural resource use, and climate change. This framework, which has been applied in 12 country reviews to date, is undergoing revisions in light of analyses and experience gained.

In the past 25 years, Latvia has transitioned from central planning to a market economy. It joined the European Union in 2004 and the euro area in 2014. Latvia has been a member of the OECD since 2016. Today, as a small, dynamic and open economy, Latvia deploys a broad range of reform initiatives that have driven progress, although generally from low levels, in many of the areas that would nurture future innovation‑based economic‑growth. However, progress has been slower in agriculture and more needs to be done to equip this sector with a well-functioning innovation system, and a policy environment facilitating productivity and sustainability improvements.

This chapter introduces the framework used to analyse the extent to which Latvian policies foster productivity and sustainability in the food and agriculture sector and presents an overview of findings for a wide range of policies. It also includes specific policy recommendations for each policy area reviewed.

This chapter describes the general geographic, economic, social and environmental context in which the food and agriculture sector in Latvia operates. It also gives an overview of the natural resource base upon which it relies. The chapter outlines the share of food and agriculture in the economy and portrays the sector’s main structural characteristics, its main outputs and markets, and analyses the main trends in agricultural productivity and sustainability.

This chapter gives an overview of the performance of the overall economy, macroeconomic developments and challenges, and the governance and institutions. Macroeconomic policy environment

This chapter reviews general incentives for firm-level investments, stemming from regulations governing entrepreneurship, access to natural resources and products and processes, and policies related to trade, investment, finance and taxation.

Capacity building, including the provision of essential public services, is one of the main channels or incentive areas to support innovation and sustainable development. This chapter concerns three relevant policy areas: infrastructure and rural development policy; labour market policy; and education and skills policy.

This chapter provides an overview of the agricultural policy framework and instruments. It gives an account of the EU Common Agricultural Policy (CAP) measures and their implementation in Latvia and also of Latvia’s national policies and budget expenditure for agriculture. The chapter then reports trends on the level and composition of payments to producers and expenditure on general services to the sector. Finally, it discusses the likely policy impact on structural change, innovation, productivity growth and sustainability performance.

This chapter describes the Latvian Agricultural Innovation System and outlines recent changes. It first provides an overview of the general innovation system; describes agricultural innovation actors and their roles in the system; outlines changes in roles and changes in themes; presents main policy instruments and monitoring mechanisms; and discusses views in the general public on agri-food innovations. It then describes main trends in public and private investments in R&D, mechanisms of funding and mechanisms to foster knowledge markets and networks. The next section presents an overview of policy incentives for the adaption of innovation, outlines the role of training and advisory services at farm level, and provides some information on adoption rates in primary agriculture and food processing. Finally, the last section outlines the participation of agricultural R&D actors in regional and international co-operation.