In February, Estonia's largest cheese producer, E-Piim, filed for bankruptcy, as the company's financial situation no longer allowed it to meet its obligations in the usual manner.

As a result, many dairy producers have found themselves in a difficult position. In addition to an already challenging economic environment, farmers' situation is further complicated by unpaid debts from E-Piim. Depending on the farmer, these sums can reach into the hundreds of thousands.

Last week, Urmas Kruuse (Reform), chairman of the Riigikogu Rural Affairs Committee, said that MES could step in to assist farmers in difficulty.

According to Meelis Annus, a member of MES management, there are three ways the foundation can help farmers.

"If there is a lack of collateral at a farmer's home bank, they can apply for a guarantee. If the conditions offered by the home bank are not very suitable, it is also possible to apply for a crisis loan, which has a repayment period of three years and lower collateral requirements compared with a bank. And the third option is agricultural land capital leasing," Annus said.

Annus explained that agricultural land capital leasing means a farmer sells mortgage-free farmland they own to MES, leases it back and undertakes an obligation to repurchase it. The repayment schedule for such an arrangement is 25 years.

But does this not appear to be a crafty arrangement for the foundation where farmers sell off their land and still have to pay rent on top of that?

"Our interest is certainly not to profit from farmers' misfortune. We must set the interest rate in accordance with regulations established by Europe so that it is comparable to market conditions and does not create unfair competition. It is definitely not our goal to acquire this land, but rather this is a financial measure that allows for additional borrowing," Annus explained.

Dairy farmers should buy E-piim

E-Piim's bankruptcy proceedings are only just beginning. According to Annus, the factory will likely be put up for sale once its assets begin to be liquidated.

Annus added that farmers should not wait for someone else to come and solve their problems for them.

"Right now, they should actively be thinking about whether farmers themselves could come together — either through a cooperative or another business entity — and take a seat at the table to acquire this factory," Annus said.

According to Annus, dairy producers had previously been shareholders in E-Piim through a cooperative and it has been claimed that this was what led to the current problems. He does not entirely agree with that assessment.

Owning a factory through a cooperative does not guarantee success, Annus said. What matters is properly overseeing management and being actively involved in decision-making.

"The point of today's message is not to go out to the fields in spring and wait in the hope that by autumn a good owner will come along who simply wants to pay off all the debts. In reality, what should be considered now is how to bring together a very large number of Estonian dairy producers under one umbrella and acquire this factory," Annus explained.

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