A new Russian federal law signed on Oct. 2 shows government policy is moving more towards supporting farmers but still has far to go, according to RK Marketing general director Irina Koziy.

Irina Koziy

The new law has a series of incentives for agriculture including the extension of the zero tax rate on profits, exempts the heads of farmer-peasant enterprises from paying income tax, and allows consumer cooperatives of more than 100 people to use a unified tax system.

"The announced benefits of zero percent of profit tax for agricultural producers already existed since 2004, but it was a short term measure that was supposed to end in 2012," Koziy told www.freshfruitportal.com.

"The recent law will prolong the duration of the benefit and will make it permanent. The additional tax benefit of lower VAT - 10% instead of 18% - will be applied to some livestock and seeds that the farmers are purchasing for their needs. This will also decrease the expenses of the Russian farmers for the certain small share.

"Not all farmers are benefiting from this law, because the majority of smaller farming enterprises prefer to use the special tax conditions, when they pay the fixed tax or a certain percentage of the difference between their incomes and expenses, and are not a subject of the profit or VAT taxes."

She said while move meant mostly larger companies would benefit from the new regulation, it was a move in the right direction.

"From our point of view the recent implementation of such laws demonstrates that the Russian Government is moving towards the interests of the local agricultural producers, recognizes the problems that the local farmers face and is looking for the ways to support the local farmers.

"At the same time, we hear a lot of complaints from the farmers that the benefits for the agricultural producers that are implemented and supported by the Russian Government are too small to have significant impact on the rather poor overall situation in the Russian agriculture and especially in horticulture."

She says the new legislation is the very initial step of development.

"I hope that such a system of development and implementation will be able to bring the local agriculture to the position of a world-class industry."

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