""

Required Report - public distribution

**Date:** 11/26/2003

**GAIN Report Number:** LH3004

LH3004

**Lithuania**

**Food Processing Ingredients Sector**

**Report**

**2003**

**Approved by:**

![](media/image1.wmf)Charles L. Rush, Agricultural Attaché

#### U.S. Embassy

**Prepared by:**

International Business Network

**Report Highlights:**

Lithuania is an attractive market for food and agricultural products
exporters; however, business relationships with U.S. suppliers are
underdeveloped. Only 11% of the raw materials processed in the food
industry are currently being imported. This report provides an overview
of Lithuania\'s food processing sector.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Warsaw \[PL1\]

\[LH\]

Table of Contents

[**Processing Industry In Lithuania
3**](#processing-industry-in-lithuania)

[Road Map For Market Entry 6](#road-map-for-market-entry)

[Company And Sectors In The Food Processing Industry
8](#company-and-sectors-in-the-food-processing-industry)

[Dairy Industry 9](#dairy-industry)

[Meat Industry 10](#number-range-chaptermeat-industry)

[Beverage Industry 10](#beverage-industry)

[Baked Goods Industry 11](#baked-goods-industry)

[Grain Industry 11](#grain-industry)

[Fish Products Industry 11](#fish-products-industry)

[Food Active and Spice industry 12](#food-active-and-spice-industry)

[Sector Trends 12](#sector-trends)

[Competition 13](#competition)

[Best Product Prospects 17](#best-product-prospects)

[Impact of Integration Into The EU On The Food Processing Industry
18](#impact-of-integration-into-the-eu-on-the-food-processing-industry)

[Benefits of Lithuania's integration into the EU:
18](#number-range-chapterbenefits-of-lithuanias-integration-into-the-eu)

[Post Contact And Further Information
19](#post-contact-and-further-information)

[Appendix 19](#number-range-chapterappendix)

[Table 4*.* Foreign Direct Investment in the Processing and Food
Industry
19](#table-4.-foreign-direct-investment-in-the-processing-and-food-industry)

[Table 5*.* Investment by Country and Sector Activities, April 1, 2002,
(million \$)
19](#table-5.-investment-by-country-and-sector-activities-april-1-2002-million)

[Table 6. Industrial Production Sales and Markets
20](#table-6.-industrial-production-sales-and-markets)

[Table 7*.* Average Food Prices in the Baltic states ( 2002, \$)
20](#table-7.-average-food-prices-in-the-baltic-states-2002)

[Table 8*.* Food and Beverage Products by Trade Organizations
21](#table-8.-food-and-beverage-products-by-trade-organizations)

[Export 21](#export)

[Import 21](#import)

[Table 9*.* Free Trade Partners 21](#table-9.-free-trade-partners)

[Table 10. Share of Food and Beverage Production in Total Industry
Exports
22](#table-10.-share-of-food-and-beverage-production-in-total-industry-exports)

[Table 11*.* Agricultural and Food Quotas for Lithuania
23](#table-11.-agricultural-and-food-quotas-for-lithuania)

[Table 12*.* Comprehensive Commodity List Explanation by Combines
Nomenclature (CN)
23](#table-12.-comprehensive-commodity-list-explanation-by-combines-nomenclature-cn)

[Table 13*.* Importing Countries and Commodities
24](#table-13.-importing-countries-and-commodities)

[Figure 9. Food and Beverage Industry Enterprises Grouped by Number of
Employees in 2001
26](#figure-9.-food-and-beverage-industry-enterprises-grouped-by-number-of-employees-in-2001)

[Figure 10. Sources of Raw Materials and Sales Methods in Lithuania's
Food and Beverage Processing Industry
26](#figure-10.-sources-of-raw-materials-and-sales-methods-in-lithuanias-food-and-beverage-processing-industry)

# Processing Industry In Lithuania

Over the past few years several events have occurred in Lithuania's food
production and beverage industry:

1.  Mergers of various beer and meat industry companies; mergers are
    also likely in other sectors of the industry;

2.  Application of ISO (International Organization for Standardization)
    standards, improved production, and the use of new technologies to
    enhance production quality and to bring it in line with European
    Union (EU) requirements;

3.  Growth of Lithuanian food and beverage exports with a corresponding
    growth in raw material and finished product imports.

In 2002, Lithuania's food industry, second only to the tobacco industry,
accounted for 42 percent of the total direct investments in Lithuania's
processing industry (For more, see Table 4 in the Appendix). At the end
of 2002 direct foreign investments in food industries alone were about
\$[^1]353 million (11.4 percent of the aggregate investments in
Lithuania's economic activities. The annual yield on investments
amounted to 7 percent during the 9 month period of 2002).

Lithuania's food and beverage industry is one of the leading sectors in
Lithuania's processing industry. In 2001 this sector of the industry
accounted for 21.5 percent of the total output produced by the
extraction and processing industry and in 2002 approximately 23 percent.
In 2001, the processing industry accounted for more than 21 percent of
Lithuania's gross domestic product. According to current data, in 2002
the output of Lithuania's food and beverage industry was valued at
approximately \$1.6 million or 10.3 percent of the GDP and in 2000 10.7
percent of GDP. The food and beverage industry's sales grew 4 percent in
2000 (\$1,465 million) and in 2001 and 2002, 6 percent and 1.4 percent
respectively (including tentative data of the last quarter) over the
previous year.

**Figure 1. Total sales and foreign food and beverage industry sales
1998-2002 (million \$)**

![](media/image2.wmf)

Comprised by the financial brokerage company Finasta data; (\*)
Preliminary

The gross profits of food producers increased in 2001 to \$42.1 million.
Return on equity (ROE) increased 3.0 percent to 4.9 percent. There were
631 companies in the food and beverage industry in 2001 (compared to 546
in 2000). Lithuania's food and beverage industry is composed of the
following key production sectors: *dairy, baked goods, meat, grain,
fish, beer, beverage, and food additive and spices.* The 48 largest
companies in this sector are responsible for the bulk of the production
in Lithuania's food and beverage industry. In 2002, 195 companies
produced baked goods while 88 processed meat. Milk and dairy sector
sales amounted to 26 percent of total food industry sales.

**Figure 2. Salesof Lithuania's food and beverage industry by sector in
2002**

![](media/image3.wmf)

Number range CHAPTERComprised by Lithuanian food industry association

Number range CHAPTERSince 1999, exports of food industry products have
increased 27.2 percent (For more, see Table 6 in the Appendix). The
export volume during the first 9 months of 2002 fell to 25 percent of
the food industry\'s total output, the result of more intense
competition on the domestic market and decreased exports to markets
where the U.S. dollar is dominant.

In 2001, exports of Lithuanian food products to the EU, CIS[^2], and
Baltic countries increased, while exports to the U.S. decreased
slightly. During 2001, the bulk of food exports consisted of cheese,
butter, milk powder, and other dairy products, which accounted for
approximately 20 percent of the sector's exports. Milk and dairy
products, eggs, and honey products comprised a major share (34 percent
in 2000, 29.4 percent in 2001). [Milk product exports during the first 9
months of 2002 were also significant at \$104 million.]{.mark}

[]{.mark}

[During the first 9 months of 2002, the following products had the most
significant increase in exports: Lithuanian beer 9.7 percent,
non-alcoholic beverage 62.9 percent, meat 55.9 percent, meat and fish
products 41.2 percent, and chocolate confectionery products 21.3
percent. This export growth testifies to the successful activities of
individual companies in expanding the exports.]{.mark}

[]{.mark}

[Increased domestic food consumption over the first 9 months of 2002
stimulated]{.mark} higher imports of these products:

-   Production of edible vegetables and certain roots and tubers grew
    \$4.1 million, or 27.4 percent compared to the same period in the
    previous year.

-   Animal and vegetable fats and oils grew \$9.5 million or 30.7
    percent.

-   Animal forage grew \$3 million or 8.7 percent.

Growing domestic consumption resulted in an increase in the average
consumer price index for foodstuffs and non-alcoholic beverages in 2001
(3.6 percent compared to the previous period). Meanwhile growing
competition between domestic producers and importers triggered a
decrease in the price index for foodstuffs in 2002 (2.5 percent on
average compared to 2001). On the other hand, alcoholic beverage prices
rose 1.5 percent on average compared to the same period of the previous
year.

####### **THE MAIN CHARACTERISTICS OF LITHUANIA'S FOOD INDUSTRY**

+----------------------------------+-----------------------------------+
| Strengths, Advantages and        | ***Weaknesses, Shortcomings and   |
| Opportunities                    | Threats***                        |
+----------------------------------+-----------------------------------+
| The companies of Lithuania\'s    | Companies are maintaining an      |
| food industry are increasing     | exlusive relationship with        |
| their export volumes to EU       | suppliers.                        |
| countries. As a result, such     |                                   |
| producers consciously choose     | Over the past few years, the      |
| quality foodstuffs and           | network of local producers of     |
| additives.                       | foodstuffs and additives has been |
|                                  | growing stronger and is aiming to |
| The foodstuffs produced contain  | increase the services of the food |
| 11 percent imported foodstuffs,  | and beverage industry.            |
| additives and spices.            |                                   |
|                                  | Lithuania has no tradition of     |
| The developed transport          | working with suppliers from U.S.  |
| infrastructure and favorable     |                                   |
| geographical position have       | Information technology skills are |
| created advantageous supply      | not developed in Lithuania\'s     |
| conditions for the domestic and  | food industry; consequently,      |
| international markets: in 2001,  | local food industry specialists   |
| export sales were \$692 million  | often have no information about   |
| and imports \$706 million.       | U.S. achievements in the food     |
|                                  | industry.                         |
| Due to growing foreign           |                                   |
| investments, production          | At present the state regulates    |
| efficiency is increasing in      | quotas and customs duties on a    |
| several food industries.         | number of imported foodstuffs.    |
|                                  |                                   |
| Labour costs in the food sector  | Upon Lithuania's accession to the |
| are lower than in the EU.        | EU, the import procedure will     |
|                                  | have to be brought in line with   |
| Domestic consumption of          | the EU import procedure, hence,   |
| foodstuffs increased slightly.   | importers of food products and    |
|                                  | raw materials from countries      |
| Penetration of Lithuanian retail | other than EU member states, such |
| chains into neighbouring         | as the U.S., will be subject to   |
| countries is helping local       | import barriers in Lithuania.     |
| producers sell in foreign        |                                   |
| markets.                         | During the negotiations with the  |
|                                  | EU, output quotas were            |
| Lithuanian investment in         | established for Lithuanian        |
| companies in Latvia, Estonia,    | agricultural production however,  |
| and Belarus.                     | many facilities can produce above |
|                                  | quota.                            |
+----------------------------------+-----------------------------------+

# Road Map For Market Entry

Investments in Lithuania\'s food and beverage industry have increased
from \$297 million in 2000 to \$353 million in 2002. Industry experts
suggest that this trend will continue for the next several years.
Lithuania's accession into the EU will facilitate greater access to a
vast market with medium to high income earners. Industry experts expect
the years leading to EU accession and those immediately following it
will be great for new investors and suppliers of additives. Food
processing companies have good relations with their suppliers; however,
they are willing to change to new suppliers for a better product or
price. There is very little internet commerce in Lithuania, although,
many companies do maintain websites. There are logistical and price
concerns among Lithuanian producers regarding importing products from
the U.S. Generally, Lithuanians purchase locally produced products or
buy from distributors or wholesalers.

Imported products enter Lithuania via:

Imported products enter Lithuania via:

-   supermarket chains (VP Market, IKI, RIMI, Norfos retail trade),

-   distributors (Sanitex, Trojina, Eugesta, Saldva, Mineraliniai
    Vandenys, Benetton distributors),

-   multinational companies (Carlsberg Breweries A/S, Coca-Cola, Kraft
    Food International

    Espersen, Mars).

    Trade offices in Lithuania market products through brochures,
    catalogues, product samples, and meetings with potential clients.
    These trade offices also assist with technical and technological
    problems. Foreign companies interested in exporting products to
    Lithuania may exhibit samples at the AgroBalt food and packaging
    exhibition from May 6-9, 2003 in Vilnius.

MARKET STRUCTURE

Data from the Lithuanian Department of Statistics indicates that
production increased in the following sectors during January - September
2002 compared to the same period of 2001:

-   beer (24.7 percent),

-   confectionery products (8 percent),

-   vodka and liqueurs (5.1 percent),

-   non-alcoholic beverages (23.4 percent)

    Food exports (including re-exports) grew from \$545 million in 2001
    to \$690 million in 2000. Exports increased 21 percent, imports 10
    percent (For more, see Table 8 in the Appendix). Animal and
    vegetable fat exports grew 88 percent, vegetable exports 68 percent,
    convenience foodstuffs 31 percent.

Figure 3. Lithuanian food and beverage industry export and import
indexes 2000-2001

![](media/image4.wmf)

**Number range CHAPTER**Based on data from the Lithuanian Department of
Statistics

During the first three quarters of 2002, foodstuffs were mostly exported
to the Baltic region (28 percent or \$98 million) and to the EU (35.5
percent or \$124 million) . Lithuanian foods and beverages were also
exported to the CIS (19 percent or \$66 million). The biggest export\'
partners were Latvia (\$70 million), Russia (\$42 million), and Germany
(\$43.4 million).

**Figure 4. Food export markets by country during the first three
quarters of 2002 (percent)**

![](media/image5.wmf)

Based on data from the Lithuanian Department of Statistics

Number range CHAPTERNearly 89 percent of the raw materials used by the
food and beverage industry is purchased locally and 11 percent is
imported. About 40 percent of imports are ready-to-eat and another 36
percent are vegetables. Approximately 60 percent of the food and
beverage industry's production is sold to retailers, another 14 percent
via intermediaries, and the remaining 25 percent is exported.

The major distributors in Lithuania are:

1\. Sanitex*,* the largest wholesaler in Lithuania with sales revenue of
\$268 million in 2001 (the most recent data available), represents over
600 different companies in the region, including such famous trademarks
as Mars, Procter & Gamble, Kellogg, Tchibo, etc.

2\. Trojina, one of several smaller wholesalers in Lithuania, had sales
revenue of \$22 million during the first half of 2002 (43 percent more
than the same period in 2001).

3\. Eugesta primarily imports, distributes and sells products throughout
Lithuania, representing such trademarks as Warsteiner, Merrild, Kinder,
Raffaello, Nestle, Nesquick, etc.

4.  Mineraliniai Vandenys with sales revenue of \$55 million and Benet
    *Distributors* with \$49 million in 2001 are the largest importers
    of alcoholic beverages.

# Company And Sectors In The Food Processing Industry 

In 2001, there were 631 companies in the food and beverage industry
(compared to 546 in 2000). Lithuania's food and beverage industry sector
includes: dairy, baked goods, meat, grain, fish, beer, beverages, and
food additives and spices.

Table 1. **Food and Beverage Sector Industry Sales By Largest Companies
in 2001**

Number range CHAPTER

+----------------------------------------+-------------+---------------+
| **Food and Beverage industry sector**  | **Number of | **Total       |
|                                        | largest     | sales**       |
|                                        | co          |               |
|                                        | mpanies\*** | **(million    |
|                                        |             | \$)**         |
+----------------------------------------+-------------+---------------+
| Dairy industry                         | 12          | 368           |
+----------------------------------------+-------------+---------------+
| Baked goods industry                   | 5           | 164           |
+----------------------------------------+-------------+---------------+
| Meat industry                          | 5           | 217           |
+----------------------------------------+-------------+---------------+
| Grain industry                         | 4           | 185           |
+----------------------------------------+-------------+---------------+
| Beverage industry                      | 9           | 255           |
+----------------------------------------+-------------+---------------+
| Fish products industry                 | 5           | 126           |
+----------------------------------------+-------------+---------------+
| Food additive and spice industry       | 1           | 61            |
+----------------------------------------+-------------+---------------+

> \- Companies with over 200 employees and annual revenues of \$3
> million

Number range CHAPTERAccording to Lithuanian Department of Statistics
data, about 8 percent of companies were considered large (200 or more
employees), 24 percent medium (up to 200 employees), and the remaining
68 percent small companies (up to 50 employees). (For more see figure 9
in the Appendix).

**Table 2. Major manufacturers in the food and beverage industry 2001**

+------------------------+--------+-------------+---------+-----------+
| Name of enterprises    | Sales  | End-Use     | Pro     | Procarent |
| and product types      | in     | Channels    | duction |           |
|                        | 2001   |             | L       | Channels  |
|                        |        |             | ocation |           |
|                        | (m     |             |         |           |
|                        | illion |             |         |           |
|                        | \$)    |             |         |           |
+------------------------+--------+-------------+---------+-----------+
| ##### Rokiskio suris   | \$107  | Retail,     | Li      | Local,    |
|                        |        | HRI, export | thuania | importers |
| (dairy goods)          |        |             |         |           |
+------------------------+--------+-------------+---------+-----------+
| ##### Pieno zvaigzds   | \$102  | Retail,     | Li      | Local,    |
|                        |        | HRI, export | thuania | importers |
| (dairy goods)          |        |             |         |           |
+------------------------+--------+-------------+---------+-----------+
| ##                     | \$65   | Retail,     | Li      | Local,    |
| ### Zemaitijos pienas  |        | HRI, export | thuania | importers |
|                        |        |             |         |           |
| (dairy goods)          |        |             |         |           |
+------------------------+--------+-------------+---------+-----------+
| ####                   | \$75   | Wholesale,  | Li      | Local,    |
| # Kraft Foods Lietuva  |        | Retail,     | thuania | importers |
|                        |        | HRI, export |         |           |
| (confectionery)        |        |             |         |           |
+------------------------+--------+-------------+---------+-----------+
| #####                  | \$72   | Retail, HRI | Li      | Local,    |
|  Svyturys-Utenos alus  |        |             | thuania | importers |
|                        |        |             |         |           |
| (brewery)              |        |             |         |           |
+------------------------+--------+-------------+---------+-----------+
| #                      | \$38   | Wholesale,  | Li      | Local     |
| #### Kretingos grudai  |        | retail      | thuania |           |
|                        |        |             |         |           |
| (grain storage and     |        |             |         |           |
| processing)            |        |             |         |           |
+------------------------+--------+-------------+---------+-----------+

## Dairy Industry

Over the past 5-7 years there have been several mergers in the dairy
sector resulting in four major competitors. The main performance indices
of these companies are as follows:

• Rokiskio suris. Sales in 2001 -- \$107 million, profits -- \$5.3
million, 64 percent of production was exported to (U.S., Japan, Canada,
CIS, EU);

• Pieno zvaigzdes. Sales in 2001 - \$102 million (a 58 percent over
2000), profits - \$4 million, 35 percent of production was exported,;

• Zemaitijos pienas. Sales in 2001 - \$65 million, profits - \$3.3
million, 39 percent (\$25 million) of production was exported;

• Vilkyskiu pienine. Sales in 2001 -- \$19 million, production worth
\$12 million was exported;

These 4 companies comprise market in the dairy products industry. Sales
of Lithuania's dairy industry in 2002 accounted for 26 percent (\$368
million) of total food industry sales. In early 2001,15 milk processing
companies had veterinary certificates authorizing exports to the
European Union. Dairy production exceeds domestic consumption;
therefore, foreign markets are vital for the survival of Lithuania's
dairy industry. In 2000 -- 2001, Lithuanian dairy companies exported
half the aggregate volume of the over 2/3 of the processed dairy
products.

The most pressing problems facing Lithuania's dairy industry are:

-   Slumped prices in export markets;

-   Price war in Lithuania among dairy products competitors;

-   Instability of the dollar exchange rate. In 2002, the slumping
    dollar exchange rate weakened the competitiveness of Lithuanian
    dairy products in Dollar markets. Because of this situation, exports
    of cheese and butter dropped during the first three quarters of
    2002, the most remarkable drop, 65 percent compared to the same
    period in 2001 for low-fat milk powder.

    In spite of this, Lithuania's milk processors have been successfully
    penetrating new markets. For example, the volume of exports to
    Latvia has increased from \$0.31 million to \$0.64 million in 2001.

## Number range CHAPTERMeat Industry 

There are a larger number of small meat producers in Lithuania. In 2001
half of the sales for the small and medium-sized companies were
domestic. According to the Lithuanian State Food and Veterinary Service,
as of September 2002, 234 animal slaughterhouses and 212 meat processing
companies were registered in Lithuania.

The most successful companies in this sector in 2001 were Biovela with
sales revenues of \$19 million, Vilniaus Mesos Kombinatas with \$16
million, and Samsonas with \$15 million in sales. Krekenavos Agrofirma
experienced the most significant sales gains in 2001 with \$14.3 million
(a 64% increase over the previous year). The leading companies in the
poultry sector in 2001 were Vilniaus Paukstynas with sales revenue of
\$24 million, Vievio Paukstynas with \$23 million, and Kaisadoriu
Paukstynas with \$15.3 million. Pork remains the most popular meat,
accounting for 55% of all the meat consumed in Lithuania, followed by
beef at 24% and poultry at 22%.

According to the State Food and Veterinary Service, export volumes for
meat processing companies doubled during the first 9 months of 2002
compared to the same period of 2001 with 2,300 tons of beef being
exported, a 89 percent increase over the previous year. The export
volume for pork during the same nine-month period was 1,400 tons (up
from 129 tons for the same period of the previous year). Poultry exports
were 1,500 tons (a 2.4% increase). Exports of sausage and other meat
products also increased. These products were successfully exported to
Russia, the CIS and the EU.

In 2002, Mazeikiu Mesine AB successfully exported its products to
Ireland.

According to experts, the small number of EU veterinary certificates
will limit sales to the domestic market and to neighboring countries.
Lithuanian meat processors will operate in foreign markets under foreign
trademarks. Since 2000, Lithuanian meat processing companies have been
following EU standard technology and upgrading their technology. Several
processing companies including Vilke, Skinija, Mazeikiu mesine and
Rovisa have been EU certified. In addition, Biovela, a meat processing
company, has been EU certified. Other slaughterhouses and meat
processing facilities are awaiting EU approval of their facilities.

## Beverage Industry

####### BEER INDUSTRY

Between 2000 and 2002, several mergers occurred in the beer industry.
The major beer firms in 2002 were Kalnapilis-Vilniaus Tauras and
Svyturys-Utenos alus with 50 percent and 26 percent of the market
respectively. Brewers Gubernija (9.1%) and Ragutis (8%) round out the
market. The most current statistics available for the malt producer
Litmalt are from 2001, when production was valued at \$2.2 million.

The beer industry has been one of the most promising in the Lithuanian
economy. In 2002, the growth of the beer industry exceeded the projected
15 percent by nearly 3 percent according to the Brewers Association.
Beer sales in 2002 were valued at nearly \$26 million compared to \$22
million in 2001. During the first half of 2002, Lithuania exported
\$445,000 in beer products, about 10 percent more than for the same
period during the previous year. Latvia is the primary export
destination representing about 90 percent of total beer exports. Other
markets include Germany, Israel, the U.S., and the U.K.

Average beer consumption in Lithuania in 2002 was 75 liters per person
compared to 67 liters in Estonia and 43 liters in Latvia. In Germany and
Ireland, by comparison, the average per person consumption rate is 123
and 152 liters respectively. Lithuanian beer has received very high
marks in world competition.

###### 

###### OTHER DRINKS

There are nine non-alcoholic beer producers and 17 non-alcoholic
beverage producers in Lithuania. The product variety available has
increased in the past two years. In 2001, 54,853 thousand liters of
strong alcoholic beverages were sold in Lithuania.

Stumbras (sales revenue \$32.6 million in 2001) controls about
two-thirds of the strong alcoholic beverage market in Lithuania.
Stumbras exports to the U.S., Western and Central Europe, and the Baltic
States. Lithuania exported 51 percent (31,750 liters) more non-alcoholic
beverages (mineral and carbonated water) in 2002 than last year.

Industry sources indicate that there are plans to privatize all the
alcoholic beverage producers by July 2003. Industry experts suggest that
after the alcoholic beverage industry is completely privatized, 5 or 6
more producers could emerge on the market.

Non-alcoholic beverage producers in Lithuania do not generate the same
level of revenue as alcoholic beverage producers. The major
non-alcoholic beverage producers in Lithuania are Svencioneliu
Vaisvandeniai UAB, Vaisiu Sultys, Selita, and Birsiono Mineraliniai
Vandenys. The largest, Svencioneliu Vaisvandeniai, had sales of \$2.8
million in 2001.

## Baked Goods Industry 

There are about 150 baked goods companies and about 70 confectionary
companies.

Kraft Foods Lietuva, the industry leader with estimated sales of \$74
million and estimated profits of \$4.7 million in 2001 successfully
implemented EU production standards and offers a wide range of products,
which make it very competitive domestically and throughout the Baltic
region. Vilniaus Pergale and Klaipedos Konditerija also produce of
confectionary products but their market presence is not as significant
as that of Kraft Foods Lietuva.

The baked goods industry is comprised primarily of small and
medium-sized enterprises. The most active companies in this industry are
Vilniaus Duona-Plius with sales of \$31 million and Javine with \$3
million in sales in 2001. There are several smaller companies in this
industry.

## 

## Grain Industry

The grain industry is composed of milling and feed companies. In 2002,
there were 120 milling companies in Lithuania, the most active being
Kretingos Grudai, Kauno Grudai and Malsena. The largest growth in 2001
was reported by *Siauliu Malunas*, which reported an increase of \$13
million (100 percent growth). During the first nine months of 2002,
flour production was almost 7 percent higher than during the same period
of the previous year. However, the production of grits fell during the
same period.

## Fish Products Industry

In 2002, 45 companies produced fish products. In addition, during 2002,
11 fish processing facilities and 10 fishing boats received EU export
certificates. Kraitene is the largest fish processing company in
Lithuania with sales of \$32 million in 2001. P&P Provit Industrija,
with sales of \$4.3 million in 2001, breeds eels and plans to purchase a
Finnish processing plant for its fish canning operation, which will
begin operation in autumn. The majority of the fresh water fish
processed at this facility will be exported to the U.S. In recent years,
canned fish processors have primary exported to Russia and the CIS. Most
of these products were finished or canned fish. During 2002, nearly
14,000 tons were exported (a 16% increase over the previous year).

## 

## Food Active and Spice industry

There are 53 food additive and spice companies in Lithuania. These
companies produce sugar, spices, oils and mayonnaise. The largest
companies in this sector are Saldva, Vesiga, Samsonas, Aliejus (oil,
vinegar, ketchup, and mayonnaise), Suslavicius-Felix, Kedainiu Konservu
Fabrikas, Gerove (jam) and Saldoga, and Vaiskona (marmalades). Over the
past several years consumer demand for spices has steadily increased.
Consistent with this increase, companies have increased the availability
of different spices. There has been a noticeable increase in the number
of new companies producing spices and condiments.

*Vesiga* had earnings of \$6.8 million in 2001 and \$7.9 million in
2002. Most of its production is sold to HRI companies and the general
food industry. In 2001, Vesiga produced 5,498 tons (a 34% increase
compared to 2000) of sauces, mayonnaise, etc. Vesiga exports throughout
the Baltics as well as to the U.S. and the Netherlands. *Saldva,*
another significant player in this sector had sales of \$11 million in
2001, produces and packs several different spices, spice mixes,
condiments, raw materials for confectionery as well as tea and cocoa.
This is the largest spice processing company in Lithuania. Most of its
products are exported to the Baltic region and the CIS.

# Sector Trends

Although Russia and the neighboring countries are expected to remain
quite important export partners in the food and drink industry, the EU
will become the main trade partner in the future. This trend has been
discernible for several years since the Russian crisis. The growth
prospects of the food industry depend on the ability of companies to
adapt to EU requirements. According to the State Veterinary Service's
interview with representatives of milk, meat and fish processing
companies nearly 50 percent are trying to meet EU requirements by early
2004. To date 38 companies including 19 milk processing, 10 fish
processing, 5 meat-processing companies as well as 4 slaughterhouses
have already met EU standards.

There are high expectations for Lithuania's largest breweries, which
have been modernized and have received international awards for quality.
Lithuania's beer industry is highly competitive domestically. The
prospects for the beer industry are very optimistic, with growing export
possibilities and high domestic consumption. The ability to compete in
export markets outside of the EU will also be key to success,
particularly in the dairy sector, which exports most of its production
to the U.S. and the CIS. However, production quotas, higher productivity
of EU raw milk suppliers, and new requirements for exports to non-EU
countries are threats to Lithuania's dairy industry. Moreover, the
instability of the dollar compared to the euro and unadjusted customs
tariff reduce export volumes of dairy products to the U.S.

The contraction in the meat industry that began in 2000 will continue,
particularly when the EU allows the entry of meat products from
Lithuania. Lithuania reached an agreement with the EU during accession
negotiations to allow Lithuanian meat processing facilities to meet EU
veterinary standards by 2006. Lithuanian meat processing companies that
have not been approved by the EU will not be allowed to export
production to the EU. Many of the existing meat processing companies
will not survive because many are not financially able to meet EU
requirements. Currently, only five meat processing companies, an
intestine processing company, and a game company have veterinary
certificates and are approved to export products to the EU.

In 2002, the trade between Lithuania and the EU in fish and fish
products was liberalized. As a result, exports to the EU are expected to
increase in 2003 and into the future. The construction of a fishing port
and the modernization of fish processing facilities in accordance with
EU standards are reasons for optimism about Lithuania's fish industry.

As a result of the expansion of the retail networks in Lithuania and
neighboring countries, food producers have opportunities to sell their
products domestically, in the Baltic region, and the EU. Organic farms
have good sales prospects in Lithuania. The demand for ecologically
sound raw materials for the food industry and for the final product is
high in the EU. Upon Lithuania's accession to the EU, there will be
opportunities for these farms to boost their production and sales.
Currently, there are 450 farms certified as organic in Lithuania.

Experts expect a 12 to 14 percent annual increase in investments in the
food and drink industry. Lithuania's economic growth was among the
highest in Central and Eastern Europe in 2002.

The following are some of the many successful foreign investments in the
Lithuanian food industry:

+----------------------+--------+--------------+---------------+-----+
| Investor             | C      | Invested to: | Activity      | mi  |
|                      | ountry |              |               | ll. |
|                      |        |              |               | \$  |
+----------------------+--------+--------------+---------------+-----+
| Carlsberg Breweries  | S      | Svy          | Brewery       | 83  |
| A/S Baltic Beverage  | weden, | turys-Utenos |               |     |
| Holding              |        | alus         | Brewery       | 54  |
|                      | D      |              |               |     |
| The Danish Brewery   | enmark | Kalnapilis   | Sugar         | 41  |
| Group                | F      | -- Vilniaus  | production    |     |
|                      | inland | Tauras       |               | 39  |
| Danisco Sugar A/S    |        |              | Non-alcoholic |     |
|                      | D      | Sugar        | beverage      | 38  |
| The Coca--Cola       | enmark | factories    |               |     |
| Company              |        |              | Confectionary | 34  |
|                      | D      | Coca--Cola   | products      |     |
| Kraft Food           | enmark | Bootlers     |               | 4   |
| International        |        | Lietuva      | Cat and dog   |     |
|                      | USA    |              | food          |     |
| Mars, Inc.           |        | Kraft Foods  |               |     |
|                      | USA    | Lietuva      | Fish          |     |
| Espersen             |        |              | processing    |     |
|                      | USA    | Masterfoods  |               |     |
|                      |        | Lietuva      |               |     |
|                      | D      |              |               |     |
|                      | enmark | Espersen     |               |     |
+----------------------+--------+--------------+---------------+-----+

Number range CHAPTER

# Competition

According to industry experts, about 11 percent of the raw materials
used by Lithuania's food-processing sector in 2002 were imported. After
the Russian crisis, imports of raw materials for the food and drink
industry increased 51 percent in 2000 and 6 percent in 2001, compared to
the year of the Russian crisis. In 1999, imports of raw and processed
food products for further processing by the food industry were 48
percent lower than in 1997.

**Figure 5. Imports of raw and processed food products and beverages for
further processing and consumption by BEC classification, (1997-2001)**

![](media/image6.wmf)

Number range CHAPTER Based on data from the Lithuanian Department of
Statistics

Number range CHAPTERAn analysis of the changes in the import volume of
the processed foods from 1997 - 2001 indicates that imports of meat,
fish, crustaceans, and mollusks remained stable at 4 or 5 percent.
During this period, sugar and confectionery imports dropped from 12
percent in 1997 to 7 percent in 2001. Cocoa, cocoa products, and
chocolate imports also declined during this period from 12 percent in
1997 to 5 percent in 2001.

**Figure 6. The composition of imports of processed foods 2001**

![](media/image7.wmf)

Number range CHAPTER Based on data from the Lithuanian Department of
Statistics

Number range CHAPTERImports of concentrates and sauces increased from 30
percent in 1997 to 34 percent in 2001. Similar trends were recorded for
alcoholic beverages, non-alcoholic beverages, and vinegar products (an
increase from 21 percent in 1997 to 24 percent in 2001).

In 2001, total imports from the U.S. were valued at \$235 million with
imports of raw materials and finished products for the food and drink
industry valued at \$28 million. Of Lithuania's imports from the U.S.,
37 percent were various shellfish, fish and mollusks, 15 percent were
bean curd and soy milk, 8 percent residue from soybean oil extraction,
and 6 percent edible fruit and nuts, maize, and sunflower seeds. Other
Lithuanian imports include hops, flour confectionary products,
non-fermented fruit juice, coffee, tea and mate, extracts, essences and
concentrates, concentrated milk, cream, and feed for livestock.

Number range CHAPTER**Figure 7. Structure of food product imports from
the U.S. (2001)**

![](media/image8.wmf)

Based on data from the Lithuanian Department of Statistics

**Figure 8. Structure of raw material and finished food product imports
(first half of 2002)**

![](media/image9.wmf)

Based on data from the Lithuanian Department of Statistics

Number range CHAPTERFor more information about commodity/country imports
see Table 13 in the Appendix.

**The largest importers of food products and raw materials into
Lithuania are:**

-   Kraitene -- frozen and canned fish for processing;

-   VP Market -- miscellaneous food products;

-   Sanitex , Eugesta, Trojina -- miscellaneous products and beverages;

-   Kraft Foods Lietuva-- coffee and other products from coffee;

-   Mineraliniai vandenys, Benetton distributors -- alcoholic beverages;

-   Saldva -- various food additives and spices.

Number range CHAPTER

# Best Product Prospects

**A Products present in the market and in high demand**

The growth of the Lithuania's food industry has been a catalyst for
increased demand for raw materials over the past few years:

-   Fish and shellfish, mollusks, edible fruit (bananas, citrus, etc.),
    nuts, cocoa, coffee, mate, grain, rapeseed, hops;

-   Spices, crocus, turmeric, curry powder, mustard, mace, caraway
    seeds, cinnamon bark, sweet pepper, pepper, nutmegs, cardamom,
    vanilla, ginger, juniper berries, coriander, marjoram, ornamental
    spices, flavorings, stabilizers, extracts, essences, emulsifiers,
    colorings, yeast, bran, jams, pulp, ferments, amino acids, protein
    concentrates, microelements, starch, and fructose;

-   Soy meal, various meat offal, wheat gluten, malt, and inulin;

-   Wine and cognac.

    **B Products not present in significant quantities but which have
    good sales potential**

    More than one major retailer has expressed interest in purchasing
    various U.S. products. Their interests range from dried fruits and
    nuts to clothing.

    **C Products not present because they face signficant barriers**

    Lithuania applies various import tariffs on imported products in
    order to protect local producers. Because the U.S. and Lithuania
    have signed a trade agreement customs tariffs are applied to
    products imported from the U.S. The agreement's customs tariffs can
    vary based upon international agreements. There are powerful lobbies
    in Lithuania protecting the domestic poultry industry. Imports of
    grain are highly restricted by different duties and quotas, whereas
    imports of finished grain products such as grits and pasta are not
    subject to any restrictions. In the meat industry, soy protein and
    meal imports are restricted. The Hygiene and National Nutrition
    Centre of Lithuania restricts the import of these products. Strict
    sanitary and quality restrictions are applied to imported poultry,
    pork, and beef products. Pursuant to a resolution of Lithuanian
    Government, all additives imported to Lithuania must be registered
    in Lithuania. When Lithuania formally becomes an EU member in May
    2004, it will adopt all import regulations applicable in the EU.

    ***Table 3*. Import tariffs on certain food products and principle
    raw materials**

  ------------------------------------------------------- ---------------
  **Food products**                                       **Import
                                                          tariffs**

  Fresh or frozen tomatoes                                25-55 percent

  Cucumbers                                               20-55 percent

  Fresh or frozen beef                                    38.7-45 percent

  Pork                                                    32.5-40 percent

  Milk concentrate, condensed milk and cream              30-35 percent

  Cheese and curd                                         40.5-50 percent

  Poultry (fresh and frozen)                              50 percent

  Turkey                                                  20-28 percent

  Poultry (refrigerated)                                  30 percent

  Yogurt                                                  30 percent

  Pork                                                    32.5 percent

  Milk fats                                               54 percent

  Cheese                                                  36.5-40.5
                                                          percent

  Butter                                                  54-65 percent

  Sugar confectionery products                            32.5-45
                                                          percent.
  ------------------------------------------------------- ---------------

# Impact of Integration Into The EU On The Food Processing Industry

The EU common agricultural policy might change or limit local production
of certain agricultural products. Upon accession to the EU, salaries are
expected to increase, consistent will the demand for qualified
specialists.

Although membership in the EU will open new markets, the quality of
products needs to be improved in order to compete successfully.
Competition might be hard for Lithuanian producers due to a lack of
knowledge of the specifics of the new markets. On the other hand,
several producers are already successfully selling their products in EU
markets. Lithuania's markets will be open to food products from the EU;
therefore, certain domestic competition conditions that favor domestic
industries (sugar, grain, etc.) will no longer exist).

There is a great need for human and financial resources to implement the
EU veterinary, hygiene and sanitary requirements. The inevitable
consolidation of farms, disappearance of small subsistence farms, will
result in a decline in the number of people engaged in agriculture.

Lithuania's adoption of EU rules and regulations will result in a demand
for greater industrial production, improved quality but also higher
costs. Many food industry companies will need assistance from the
government to successfully implement new production packaging and
environmental standards, and other technologies to meet the EU
standards.

Upon EU accession, dairy farmers will maintain quotas for cheese exports
to the U.S. or will consolidate their quota into the overall EU cheese
quota. All indications are that Lithuanian exports to the U.S. will
decrease upon accession, forcing dairy farmers to reconsider their
production. Grain producers will loose their preference over grain
imported from the EU upon accession. Customs duties will be established
on cheaper grain from CIS countries. Farmers in general will benefit
from the wider choice of raw material suppliers than is currently
available. Indications are that certain products such as bread, poultry,
flour products and other grain related products will be cheaper post
accession.

Because of low production output at slaughterhouses, high product
prices, and the costs associated with meeting EU standards, experts
suggest that nearly half of the existing slaughterhouses will have to
close. Some slaughterhouses are being modernized and renovated with the
aid of EU funds. The Lithuanian State Food and Veterinary Service will
gradually impose restrictions on facilities that do not meet EU
requirements. The system used to determine the value of cattle is being
revised to focus on weight and quality. Lithuanian farmers will have
access to EU subsidies for promotion of their products.

## Number range CHAPTERBenefits of Lithuania's integration into the EU:

1.  Free trade of Lithuanian agricultural and food products on the EU's
    large internal market offers new opportunities.

2.  Large financial support to agriculture (EURO 725 million) and rural
    development (EURO 434 million) in 2004-2006.

3.  Higher requirements for consumer protection and food quality
    control.

4.  Agricultural processing companies will be restructured and the
    efficiency of the production process and of the distribution chain
    for food products will be enhanced.

# 

# Post Contact And Further Information 

If you have any questions or comments regarding this report or need
assistance exporting to Lithuania, please contact these institutions at
the following addresses:

Office of Agricultural Affairs

American Embassy

Al. Ujazdowskie 29/31

00-540 Warsaw

Poland

Ph: 4822-504.2336

Fax: 4822-504.2320

e-mail: <agwarsaw@usda.gov> or <agwarsaw@wp.pl>

homepage: <http://www.usaemb.pl/usfas.htm>

# 

# Number range CHAPTERAppendix 

## Table 4*.* Foreign Direct Investment in the Processing and Food Industry 

> (million \$)

+-------------------------------+--------+---------+--------+--------+
|                               | **[2   | *       | **     | **[2   |
|                               | 000]{. | *[2001] | 2002** | 002]{. |
|                               | smallc | {.small |        | smallc |
|                               | aps}** | caps}** |        | aps}** |
+-------------------------------+--------+---------+--------+--------+
| #### Total investment         | **[2   | *       | **[3   | *      |
|                               | 516]{. | *[2847] | 076]{. | *[\-\- |
|                               | smallc | {.small | smallc | \-\-\- |
|                               | aps}** | caps}** | aps}** | \-\-\- |
|                               |        |         |        | \-\-\- |
|                               |        |         |        | \--]{. |
|                               |        |         |        | smallc |
|                               |        |         |        | aps}** |
+-------------------------------+--------+---------+--------+--------+
| **                            | **[    | **[819] | **[    | **[100 |
| [Manufacturing]{.smallcaps}** | 800]{. | {.small | 832]{. | %]{.   |
|                               | smallc | caps}** | smallc | smallc |
|                               | aps}** |         | aps}** | aps}** |
+-------------------------------+--------+---------+--------+--------+
| **[Food products, beverages,  | **[    | **[328] | **[    | **[42  |
| and tobacco]{.smallcaps}**    | 297]{. | {.small | 353]{. | %]{.   |
|                               | smallc | caps}** | smallc | smallc |
|                               | aps}** |         | aps}** | aps}** |
+-------------------------------+--------+---------+--------+--------+

Based on data from the Lithuanian Department of Statistics

## Table 5*.* Investment by Country and Sector Activities, April 1, 2002, (million \$)

  ---------------------------------------- --------------------------- -------------------------- ---------------------------
                                           **[DENMARK]{.smallcaps}**   **[SWEDEN]{.smallcaps}**   **[ESTONIA]{.smallcaps}**

  Total investments in manufacturing       151                         [71]{.smallcaps}           [25]{.smallcaps}
  industry                                                                                        

  Manufacture of foodstuffs, beverages,    275                         34                         19
  and tobacco                                                                                     

  **Total investment in the food           **50 [%]{.smallcaps}**      **48 [%]{.smallcaps}**     **76** [%]{.smallcaps}
  industry**                                                                                      
  ---------------------------------------- --------------------------- -------------------------- ---------------------------

Based on data from the Lithuanian Department of Statistics

## Table 6. Industrial Production Sales and Markets

+--------------+------+------------+-----------+-----------+--------+
| Activity     | Year | Structure  | P         | > Sales   | Sales  |
|              |      | of         | roduction | > in the  | in     |
|              |      | production | Sales     | >         | f      |
|              |      | sales of   |           |  domestic | oreign |
|              |      | all        |           | > market  | m      |
|              |      | industries |           |           | arkets |
+--------------+------+------------+-----------+-----------+--------+
| M            | 1996 | 100        | 100       | 50.6      | 49.4   |
| anufacturing |      | [%]{.      | [%]{.s    | [%]{.s    | [%]    |
|              | 1997 | smallcaps} | mallcaps} | mallcaps} | {.smal |
|              |      |            |           |           | lcaps} |
|              | 1998 | 100        | 100       | 48.2      |        |
|              |      | [%]{.      | [%]{.s    | [%]{.s    | 51.8   |
|              | 1999 | smallcaps} | mallcaps} | mallcaps} | [%]    |
|              |      |            |           |           | {.smal |
|              | 2000 | 100        | 100       | 48.3      | lcaps} |
|              |      | [%]{.      | [%]{.s    | [%]{.s    |        |
|              | 2001 | smallcaps} | mallcaps} | mallcaps} | 51.7   |
|              |      |            |           |           | [%]    |
|              |      | 100        | 100       | 47.9      | {.smal |
|              |      | [%]{.      | [%]{.s    | [%]{.s    | lcaps} |
|              |      | smallcaps} | mallcaps} | mallcaps} |        |
|              |      |            |           |           | 52.1   |
|              |      | 100        | 100       | 44.5      | [%]    |
|              |      | [%]{.      | [%]{.s    | [%]{.s    | {.smal |
|              |      | smallcaps} | mallcaps} | mallcaps} | lcaps} |
|              |      |            |           |           |        |
|              |      | 100        | 100       | 38.7      | 55.5   |
|              |      | [%]{.      | [%]{.s    | [%]{.s    | [%]    |
|              |      | smallcaps} | mallcaps} | mallcaps} | {.smal |
|              |      |            |           |           | lcaps} |
|              |      |            |           |           |        |
|              |      |            |           |           | 61.3   |
|              |      |            |           |           | [%]    |
|              |      |            |           |           | {.smal |
|              |      |            |           |           | lcaps} |
+--------------+------+------------+-----------+-----------+--------+
| Manufacture  | 1996 | 31.0       | 100       | 77.8      | 22.2   |
| of           |      | [%]{.      | [%]{.s    | [%]{.s    | [%]    |
| foodstuffs   | 1997 | smallcaps} | mallcaps} | mallcaps} | {.smal |
| and          |      |            |           |           | lcaps} |
| beverages    | 1998 | 29.4       | 100       | 72.7      |        |
|              |      | [%]{.      | [%]{.s    | [%]{.s    | 27.3   |
|              | 1999 | smallcaps} | mallcaps} | mallcaps} | [%]    |
|              |      |            |           |           | {.smal |
|              | 2000 | 27.7       | 100       | 75.5      | lcaps} |
|              |      | [%]{.      | [%]{.s    | [%]{.s    |        |
|              | 2001 | smallcaps} | mallcaps} | mallcaps} | 24.5   |
|              |      |            |           |           | [%]    |
|              | 2002 | 26.8       | 100       | 81.0      | {.smal |
|              |      | [%]{.      | [%]{.s    | [%]{.s    | lcaps} |
|              |      | smallcaps} | mallcaps} | mallcaps} |        |
|              |      |            |           |           | 19.0   |
|              |      | 23.0       | 100       | 77.0      | [%]    |
|              |      | [%]{.      | [%]{.s    | [%]{.s    | {.smal |
|              |      | smallcaps} | mallcaps} | mallcaps} | lcaps} |
|              |      |            |           |           |        |
|              |      | 21.0       | 100       | 72.8      | 23.0   |
|              |      | [%]{.      | [%]{.s    | [%]{.s    | [%]    |
|              |      | smallcaps} | mallcaps} | mallcaps} | {.smal |
|              |      |            |           |           | lcaps} |
|              |      | 21.9       | 100       | 75.4      |        |
|              |      | [%]{.      | [%]{.s    | [%]{.s    | 27.2   |
|              |      | smallcaps} | mallcaps} | mallcaps} | [%]    |
|              |      |            |           |           | {.smal |
|              |      |            |           |           | lcaps} |
|              |      |            |           |           |        |
|              |      |            |           |           | 24.6   |
|              |      |            |           |           | [%]    |
|              |      |            |           |           | {.smal |
|              |      |            |           |           | lcaps} |
+--------------+------+------------+-----------+-----------+--------+

Based on data from the Lithuanian Department of Statistics

## Table 7*.* Average Food Prices in the Baltic states (2002 \$)

##  

+----------------------------------------+---------+--------+---------+
| **Commodity list**                     | #####   | **La   | **Es    |
|                                        | #### Li | tvia** | tonia** |
|                                        | thuania |        |         |
+----------------------------------------+---------+--------+---------+
| Category I beef on the bone, 1 kilo    | 250     | 269    | 249     |
+----------------------------------------+---------+--------+---------+
| Category I pork on the bone, 1 kilo    | 276     | 279    | 311     |
+----------------------------------------+---------+--------+---------+
| Disembowel chicken, 1 kilo             | 229     | 234    | 227     |
+----------------------------------------+---------+--------+---------+
| Boiled sausage, 1 kilo                 | 313     | 309    | 264     |
+----------------------------------------+---------+--------+---------+
| Butter,1 kilo                          | 291     | 276    | 242     |
+----------------------------------------+---------+--------+---------+
| Milk with 2,5 percent butterfat, 1     | 29      | 40     | 38      |
| liter                                  |         |        |         |
+----------------------------------------+---------+--------+---------+
| Cream with 25 percent butterfat, 1     | 140     | 133    | 99      |
| kilo                                   |         |        |         |
+----------------------------------------+---------+--------+---------+
| Curd with 9 percent butterfat, kilo    | 229     | 190    | 221     |
+----------------------------------------+---------+--------+---------+
| Eggs, 10 unit                          | 67      | 92     | 95      |
+----------------------------------------+---------+--------+---------+
| Rye bread, 1 kilo                      | 60      | 69     | 76      |
+----------------------------------------+---------+--------+---------+
| Loaf made of high quality wheat flour, | 78      | 84     | 100     |
| 1 kilo                                 |         |        |         |
+----------------------------------------+---------+--------+---------+
| Sugar, kilo                            | 93      | 97     | 47      |
+----------------------------------------+---------+--------+---------+
| Potatoes, kilo                         | 19      | 20     | 24      |
+----------------------------------------+---------+--------+---------+
| Vodka produced domestically, liter     | 690     | 855    | 699     |
+----------------------------------------+---------+--------+---------+

Based on data from the Lithuanian Department of Statistics

## Table 8*.* Food and Beverage Products by Trade Organizations 

**(2001, mill. \$)**

+-----------------+------+-----+------+-----+-----+-----+-----+------+
|                 |      |     | **   | **E | *   | *   | **C | *    |
|                 |      |     | EU** | U** | *CI | *CI | EFT | *CEF |
|                 |      |     |      |     | S** | S** | A** | TA** |
+-----------------+------+-----+------+-----+-----+-----+-----+------+
| **CN**          | ##   | #   | **   | *   | *   | *   | *   | **   |
|                 |  Exp | # I | Expo | *Ix | *Ex | *Im | *Ex | Impo |
|                 | ort  | mpo | rt** | por | por | por | por | rt** |
|                 |      | rt  |      | t** | t** | t** | t** |      |
+-----------------+------+-----+------+-----+-----+-----+-----+------+
| **Total         |      |     | **26 | **  | **  | **  | *   | **6  |
| Lithuanian      |      |     | 70** | 340 | 110 | 227 | *42 | 16** |
| foreign         |      |     |      | 7** | 2** | 7** | 0** |      |
| trades**        |      |     |      |     |     |     |     |      |
+-----------------+------+-----+------+-----+-----+-----+-----+------+
| Animal products | **2  | *   | **   | **5 | **6 | **3 | **1 | *    |
|                 | 60** | *18 | 77** | 3** | 4** | 8** | 1** | *5** |
|                 |      | 6** |      |     |     |     |     |      |
+-----------------+------+-----+------+-----+-----+-----+-----+------+
| Vegetable       | **1  | *   | **   | **8 | **6 | **2 | **  | **   |
| products        | 52** | *21 | 52** | 7** | 0** | 9** | 2** | 19** |
|                 |      | 2** |      |     |     |     |     |      |
+-----------------+------+-----+------+-----+-----+-----+-----+------+
| Animal or       | **   | **5 | **0, | **3 | **  | **  | **  | *    |
| vegetable fats  | 10** | 0** | 06** | 7** | 5** | 2** | 3** | *2** |
| and oils and    |      |     |      |     |     |     |     |      |
| their cleavage  |      |     |      |     |     |     |     |      |
| products;       |      |     |      |     |     |     |     |      |
| prepared edible |      |     |      |     |     |     |     |      |
| fats; animal or |      |     |      |     |     |     |     |      |
| vegetable waxes |      |     |      |     |     |     |     |      |
+-----------------+------+-----+------+-----+-----+-----+-----+------+
| Prepared        | **2  | *   | **   | *   | **7 | **1 | **1 | **   |
| foodstuffs;     | 70** | *30 | 93** | *12 | 5** | 4** | 0** | 55** |
| beverage,       |      | 2** |      | 5** |     |     |     |      |
| spirits and     |      |     |      |     |     |     |     |      |
| vinegar;        |      |     |      |     |     |     |     |      |
| tobacco and     |      |     |      |     |     |     |     |      |
| manufactured    |      |     |      |     |     |     |     |      |
| tobacco         |      |     |      |     |     |     |     |      |
| substitutes     |      |     |      |     |     |     |     |      |
+-----------------+------+-----+------+-----+-----+-----+-----+------+

Based on data from the Lithuanian Department of Statistics

## Table 9*.* Free Trade Partners

  ------------------------------- --------- ------------------------------
  **Country**                     Code name **Date the international
                                            agreement Came into force**

  **European Union:**             **EU**    **1995 01 01**

  Ireland                         IE        

  Austria                         AT        

  Belgium                         BE        

  Denmark                         DK        

  Greece                          GR        

  Spain                           ES        

  Italy                           IT        

  United Kingdom                  GB        

  Luxemburg                       LU        

  Netherlands                     NL        

  Portugal                        PT        

  France                          FR        

  Finland                         FI        

  Sweden                          SE        

  Germany                         DE        

  **EFTA**                                  **1997 01 01**

  Iceland                         IS        

  Liechtenstein                   LI        

  Norway                          NO        

  Switzerland                     CH        

  Others countries                          

  Czech                           CZ        1997 07 01

  Estonia                         EE        1994 04 01

  Latvia                          LV        1994 04 01

  Poland                          PL        1997 01 01

  Slovakia                        SK        1997 07 01

  Slovenia                        SI        1997 03 01

  Turkey                          TR        1998 03 01

  Ukraine                         UA        1995 11 21

  Hungary                         HU        2000 03 01

  Bugaria                         BG        2001 03 01

  Romania                         RO        2002 07 01

  Croatia                         CR        2003 01 01
  ------------------------------- --------- ------------------------------

Based on data from the Lithuanian Department of Statistics

## Table 10. Share of Food and Beverage Production in Total Industry Exports

+-----+-------------------------------+--------+-------+-------------+
|     |                               | Total  | Total | Increase    |
|     |                               | export | i     | and         |
|     |                               | of     | mport | decrease of |
|     |                               | period | of    | export in   |
|     |                               |        | p     | first 9     |
|     |                               |        | eriod | months of   |
|     |                               |        |       | 2002 by     |
|     |                               |        |       | comparison  |
|     |                               |        |       | with first  |
|     |                               |        |       | 9 months of |
|     |                               |        |       | 2001        |
+=====+===============================+========+=======+=============+
| CN  |                               | 9      | 9     | Increase    |
|     |                               | month  | month | /decrease,% |
|     |                               | of     | of    |             |
|     |                               | 2001   | 2002  |             |
+-----+-------------------------------+--------+-------+-------------+
| 01  | ######## Total                | **100  | **100 | **0**       |
| -98 |                               | %**    | %**   |             |
+-----+-------------------------------+--------+-------+-------------+
|     | Total (except refined         |        |       | **66**      |
|     | rock-oil products)            |        |       |             |
+-----+-------------------------------+--------+-------+-------------+
| 01  | **Production of food and      | **11.4 | *     | **-52**     |
| -24 | agriculture**                 | %**    | *10.8 |             |
|     |                               |        | %**   |             |
+-----+-------------------------------+--------+-------+-------------+
|     | Of which:                     |        |       |             |
+-----+-------------------------------+--------+-------+-------------+
| 02  | Meat and edible meat offal    | 0.18 % | 0.28  | 559         |
|     |                               |        | %     |             |
+-----+-------------------------------+--------+-------+-------------+
| 03  | Fish and crustaceans,         | 0.40 % | 0.44  | 111         |
|     | molluscs and other aquatic    |        | %     |             |
|     | invertebrates                 |        |       |             |
+-----+-------------------------------+--------+-------+-------------+
| 04  | Milk and milk products        | 3.37 % | 3.13  | -70         |
|     |                               |        | %     |             |
+-----+-------------------------------+--------+-------+-------------+
| 16  | Preparations of meat, of fish | 0.63 % | 0.89  | 412         |
|     | or of crustaceans, molluscs   |        | %     |             |
|     | or other aquatic              |        |       |             |
|     | invertebrates                 |        |       |             |
+-----+-------------------------------+--------+-------+-------------+
| 17  | Sugar and sugar confectionery | 0.52 % | 0.17  | -673        |
|     |                               |        | %     |             |
+-----+-------------------------------+--------+-------+-------------+
| 18  | Cocoa and cocoa preparations  | 0.26 % | 0.31  | 213         |
|     |                               |        | %     |             |
+-----+-------------------------------+--------+-------+-------------+
| 23  | Residues and waste from the   | 1.98 % | 2.11  | 63          |
|     | food industries; prepared     |        | %     |             |
|     | animal fodder                 |        |       |             |
+-----+-------------------------------+--------+-------+-------------+
| 24  | Tobacco and manufactured      | 0.74 % | 0.84  | 142         |
|     | tobacco substitutes           |        | %     |             |
+-----+-------------------------------+--------+-------+-------------+

Based on data from the Lithuanian Department of Statistics

## Table 11*.* Agricultural and Food Quotas for Lithuania

+--------------------------------------+---------------+---------------+
| Chapter of negotiations              | Negotiations  | Lithuania     |
|                                      | result        | production in |
|                                      |               | 2001          |
+--------------------------------------+---------------+---------------+
| [1.]{.smallcaps} Basic crop          | 270           | [2.70 t/ha    |
| fecundity, t/ha                      |               | (2002         |
|                                      |               | )             |
|                                      |               | ]{.smallcaps} |
+--------------------------------------+---------------+---------------+
| [2.]{.smallcaps} Basic crop area, ha | [1,146,633    | [1,025,100    |
|                                      | ]{.smallcaps} | ]{.smallcaps} |
+--------------------------------------+---------------+---------------+
| [3.]{.smallcaps} Total grain         | [3,310,000    |               |
| production, t:                       | ]{.smallcaps} |               |
+--------------------------------------+---------------+---------------+
| [4.]{.smallcaps} Milk production     | 1,646,939     | 1,476,000     |
| quotas, t:                           |               |               |
|                                      | 1,256,440     | 981,000       |
| sales for industry                   |               |               |
|                                      | 390,499       | 495,000       |
| direct sales                         |               |               |
|                                      | 57,900        |               |
| reserve in 2006                      |               |               |
+--------------------------------------+---------------+---------------+
| [5.]{.smallcaps} Payment per cow,    | 47,232        | [2,461        |
| unit                                 |               | ]{.smallcaps} |
+--------------------------------------+---------------+---------------+
| [6.]{.smallcaps} Beef production     | [58           |               |
| (unit)                               | ]{.smallcaps} |               |
+--------------------------------------+---------------+---------------+
| [7.]{.smallcaps} Intensity of swine  | [3,2          |               |
| slaughter (unit/1 day)               | ]{.smallcaps} |               |
+--------------------------------------+---------------+---------------+
| [8.]{.smallcaps} Intensity of        | [1,47         |               |
| livestock slaughter (unit/1 day)     | ]{.smallcaps} |               |
+--------------------------------------+---------------+---------------+
| [9.]{.smallcaps} Payment per bull or | 150           | 72,7          |
| cow                                  |               |               |
+--------------------------------------+---------------+---------------+
| [10.]{.smallcaps} Payment per        | 367,484       | [361,5        |
| slaughter animal, livestock          |               | ]{.smallcaps} |
+--------------------------------------+---------------+---------------+
| [11.]{.smallcaps} Payment per        | 244,2         | 47,5          |
| slaughter calves, livestock          |               |               |
+--------------------------------------+---------------+---------------+
| [12.]{.smallcaps} Payment per ewe    | 17,304        | 7,5           |
| with lamb, livestock                 |               |               |
+--------------------------------------+---------------+---------------+
| [13.]{.smallcaps} Livestock          | 4,942,267     | 0             |
| supplementary payment fund, EUR      |               |               |
+--------------------------------------+---------------+---------------+
| [14.]{.smallcaps} Ewe with lamb      | 18            | 0             |
| supplementary payment fund, EUR      |               |               |
+--------------------------------------+---------------+---------------+
| [15.]{.smallcaps} Sugar production   | A- 103,000    | 108,6         |
| quota, ton                           |               |               |
+--------------------------------------+---------------+---------------+
| 16. Flax production quota, TON:      |               | [             |
|                                      |               | ]{.smallcaps} |
| long                                 | [2,263        |               |
|                                      | ]{.smallcaps} | [1,100        |
| short                                |               | ]{.smallcaps} |
|                                      | [3,463        |               |
|                                      | ]{.smallcaps} | [2,900        |
|                                      |               | ]{.smallcaps} |
+--------------------------------------+---------------+---------------+
| 17. Potato starch production payment | 1,211         | 501           |
| quotas, TON                          |               |               |
+--------------------------------------+---------------+---------------+
| 18. Dry feedstuffs production quota, | [650          | [300          |
| TON                                  | ]{.smallcaps} | ]{.smallcaps} |
+--------------------------------------+---------------+---------------+

Based on data from the Lithuanian Department of Statistics

## Table 12*.* Comprehensive Commodity List Explanation by Combines Nomenclature (CN) 

  -----------------------------------------------------------------------
  **CN**
  -----------------------------------------------------------------------
    **Animals products**

      Live animals

      Meat and edible meat offal

      Fish and crustaceans, mollusks and other aquatic invertebrates

      Dairy produce; birds' eggs; natural honey; edible products of
  animal origin; not elsewhere specified or included

      Products of animal origin, not elsewhere specified or included

  **Vegetable products**

      Edible vegetables and certain roots and tubers

      Edible fruit and nuts; peel of citrus fruit or melons

      Coffee, tea, mate and spices

      Cereals

      Products of the milling industry; malt starches; inulin; wheat
  gluten

      Oil seeds and oleaginous fruits; miscellaneous grains, seeds and
  fruit; industrial or medicinal plants; straw and fodder

     Lac; gums, resins and other vegetable saps and extracts

      Vegetable plaiting materials, vegetable products not elsewhere
  specified or included

    **Animal or vegetable fats and oils and their cleavage products;
  prepared edible fats; animal or vegetable waxes**

    **Prepared foodstuffs; beverage, spirits and vinegar; tobacco and
  manufactured tobacco substitutes**

      Preparation of meat, of fish or of crustaceans, mollusks or other
  aquatic invertebrates

      Sugar and sugar confectionery

      Cocoa and cocoa preparations

      Preparations of cereals, flour, starch or milk; pastrycooks'
  products

      Preparations of vegetables, fruit, nuts or other parts of plants

      Miscellaneous edible preparations

      Beverage, spirits and vinegar

      Residues and waste from the food industries; prepared animal fodder
  -----------------------------------------------------------------------

Based on data from the Lithuanian Department of Statistics

## Table 13*.* Importing Countries and Commodities

+-------------------------------------+--------------------------------+
| **Commodity**                       | **Country/Percent**            |
+-------------------------------------+--------------------------------+
| Bean curd, soy milk, and other      | USA (19 percent), Belgium (32  |
| soybean oil extraction              | percent), Brazil (17 percent). |
+-------------------------------------+--------------------------------+
| Maize                               | USA (40 percent), Ukraine (27  |
|                                     | percent), Hungary.             |
+-------------------------------------+--------------------------------+
| Rice                                | USA (4 percent), Vietnam (64   |
|                                     | percent), Thailand (25         |
|                                     | percent).                      |
+-------------------------------------+--------------------------------+
| Barley                              | Denmark (73 percent)           |
+-------------------------------------+--------------------------------+
| Pork fat                            | Germany (54 percent)           |
+-------------------------------------+--------------------------------+
| Pork                                | Estonia (98 percent)           |
+-------------------------------------+--------------------------------+
| Poultry                             | Denmark (72 percent), Finland  |
|                                     | (15 percent).                  |
+-------------------------------------+--------------------------------+
| Butter                              | Uruguay (91 percent)           |
+-------------------------------------+--------------------------------+
| Milk powder and granules, dry goods | Ukraine (39 percent), Russia   |
|                                     | (26 percent), USA.             |
+-------------------------------------+--------------------------------+
| Non-concentrated milk and cream     | Germany (87 percent), France   |
|                                     | (10 percent), USA.             |
+-------------------------------------+--------------------------------+
| Cod                                 | Latvia (94 percent).           |
+-------------------------------------+--------------------------------+
| Salmon                              | USA (3 percent), Norway (96    |
|                                     | percent).                      |
+-------------------------------------+--------------------------------+
| Herring, Mackerel                   | Norway                         |
+-------------------------------------+--------------------------------+
| Mushrooms                           | Russia (63 percent), Belarus   |
|                                     | (13 percent), Ukraine (11      |
|                                     | percent).                      |
+-------------------------------------+--------------------------------+
| Hake, American burbot and other     | USA                            |
| fish and fillet                     |                                |
+-------------------------------------+--------------------------------+
| Dried vegetables                    | Poland (73 percent)            |
+-------------------------------------+--------------------------------+
| **Commodity**                       | **Country/Percent**            |
+-------------------------------------+--------------------------------+
| Tomatoes                            | France (74 percent)            |
+-------------------------------------+--------------------------------+
| Malt                                | Denmark (33 percent), Sweden   |
|                                     | (32 percent).                  |
+-------------------------------------+--------------------------------+
| Fructose                            | Belgium (51 percent), Hungary  |
|                                     | (36 percent).                  |
+-------------------------------------+--------------------------------+
| Yeast                               | Great Britain (37 percent).    |
+-------------------------------------+--------------------------------+
| Beer extract and starch             | Finland                        |
+-------------------------------------+--------------------------------+
| Concentrates and sauces             | Poland (57 percent)            |
+-------------------------------------+--------------------------------+
| Coffee                              | Germany (37 percent), Poland   |
|                                     | (13 percent), Denmark (12      |
|                                     | percent).                      |
+-------------------------------------+--------------------------------+
| Cocoa beans                         | Ivory Coast (90 percent)       |
+-------------------------------------+--------------------------------+
| Chocolate                           | Germany (26 percent), Italy (8 |
|                                     | percent),                      |
|                                     |                                |
|                                     | Poland (26 percent).           |
+-------------------------------------+--------------------------------+
| Black tea                           | Sri Lanka (59 percent),        |
+-------------------------------------+--------------------------------+
| Pepper                              | Vietnam (42 percent),          |
|                                     | Indonesia (18 percent), India  |
|                                     | (16 percent);                  |
+-------------------------------------+--------------------------------+
| Other spices                        | Germany (78 percent), Poland   |
|                                     | (13 percent), India;           |
+-------------------------------------+--------------------------------+
| Grape wine                          | France (21 percent), Bulgaria  |
|                                     | (35 percent), Moldova (10      |
|                                     | percent);                      |
+-------------------------------------+--------------------------------+
| Vermouth                            | Italy (50 percent),            |
|                                     | Netherlands (25 percent);      |
+-------------------------------------+--------------------------------+
| Oil                                 | Germany, Holland, France       |
+-------------------------------------+--------------------------------+

Based on data from the Lithuanian Department of Statistics

## Figure 9. Food and Beverage Industry Enterprises Grouped by Number of Employees in 2001

> ![](media/image10.wmf)
>
> Based on data from the Lithuanian Department of Statistics

## 

## Figure 10. Sources of Raw Materials and Sales Methods in Lithuania's Food and Beverage Processing Industry 

> ![](media/image11.wmf){width="2.755511811023622in"
> height="2.630708661417323in"}![](media/image12.wmf){width="2.755511811023622in"
> height="2.5070866141732284in"}![](media/image13.wmf){width="2.350787401574803in"
> height="1.3645669291338582in"}![](media/image14.wmf){width="1.689763779527559in"
> height="2.2098425196850395in"}![](media/image15.wmf){width="1.7874015748031495in"
> height="2.383464566929134in"}![](media/image16.wmf){width="2.7401574803149606in"
> height="1.8192913385826772in"}![](media/image17.wmf){width="2.1228346456692915in"
> height="1.3645669291338582in"}![](media/image18.wmf){width="1.7397637795275591in"
> height="2.3645669291338582in"}![](media/image19.wmf){width="0.8956692913385826in"
> height="0.6665354330708662in"}![](media/image20.wmf){width="0.8854330708661418in"
> height="0.6665354330708662in"}![](media/image21.wmf){width="1.4897637795275591in"
> height="2.010236220472441in"}![](media/image22.wmf){width="0.8854330708661418in"
> height="0.6665354330708662in"}![](media/image23.wmf){width="0.8956692913385826in"
> height="0.6665354330708662in"}![](media/image24.wmf){width="1.6456692913385826in"
> height="0.7811023622047244in"}
>
> ![](media/image25.wmf){width="1.41875in"
> height="3.3256944444444443in"}

[^1]: Under the official exchange rate as of 10 January 2003 fixed by
    the Lithuanian central bank \$1=3.28 Lt. As of February 2, 2002
    Lithuanian currency was pegged to Euro and the fixed exchange rate
    is 3.4528 LTL = 1 Euro.

[^2]: Confederation Independent States (Armenia, Azerbaijan, Belarus,
    Georgia, Kyrgyz Republic, Moldova, Russia, Tajikistan, Turkmenistan,
    Ukraine, Uzbekistan)