Seeds are fertilized with duties – Newspaper Kommersant No. 167 (7368) of 09/12/2022

While the Ministry of Agriculture is trying to start the process of quoting the import of seeds from abroad, the Ministry of Economy is considering the possibility of a six-month installment plan for customs duties on the import of these products and plant protection products (PPPs). According to officials, the measure should stabilize prices for final products. But manufacturers doubt that this goal will be achieved only through a delay, and they offer to give VAT exemptions.

At a meeting held on September 8 at the Ministry of Agriculture, it became known that the ministry, together with the Ministry of Economy, is considering the issue of granting a deferral of customs duties to importers of seeds and plant protection products. Several participants of the meeting told Kommersant about this. According to them, the initiators of this idea believe that this measure should help stabilize prices for seeds and plant protection products. The Ministry of Economy expects that users of benefits will assume obligations to contain prices, another participant in the meeting told Kommersant.

The Ministry of Economy confirmed to Kommersant that work in this direction is underway, adding that it is too early to comment on the details. The Ministry of Agriculture did not answer Kommersant’s questions.

The amount of customs duty is 5-10% of the value of imported goods. The Customs Code of the EAEU even now allows you to postpone the payment of these fees for six months, but this measure does not work, one of Kommersant’s interlocutors explains. The reason is the absence of a specific list of seeds and plant protection products approved at the EAEU level for preferential treatment. Just the Ministry of Economy and the Ministry of Agriculture intend to initiate the creation of this list, clarifies the interlocutor of Kommersant. Meanwhile, the press service of the Eurasian Economic Commission told Kommersant that they were not aware of the plans of the Russian side.

Not all PPP market participants support the proposed relaxations. The Russian Union of Producers of Chemical Plant Protection Products calls the initiative “unacceptable and completely contrary to the state policy on import substitution and the doctrine of the country’s food security.” The volume of production of plant protection products within the country is 380 thousand tons per year, while consumption does not exceed 220 thousand tons, the representative of the union notes. “This means that full security has been achieved in Russia, and this measure is direct support for foreign companies,” he insists. The National Union of Breeders and Seed Growers is ready to publish a common position after collecting the opinions of all its members.

With seeds, the situation is different. Now the Ministry of Agriculture is discussing quotas for seed imports (see Kommersant of August 5). “For some crops, this can lead to a catastrophic shortage of seeds in the domestic market,” predicts one of Kommersant’s interlocutors. Dependence on foreign seeds for sugar beet reaches 97%, sunflower – up to 77%, corn – up to 50%. If quotas are accepted, Kommersant’s interlocutor believes, exemption from duties and fees is unlikely to help farmers.

Kommersant’s source in the crop market explains that the deferment of customs duties payments is unlikely to affect the reduction in the cost of plant protection products and seeds, since importers will still have to pay fees in six months. In addition, he continues, the share of plant protection products and seeds in the cost of the final product does not exceed 15% and 10%, respectively, so one should not count on a decrease in its final cost.

Another difficulty will be the need to obtain a bank guarantee necessary for the postponement, another source of Kommersant believes. Banks issue such guarantees at 10%, which makes the customs duty relief meaningless, he explains. It should be borne in mind that if a decision is made to defer payments, their payment is postponed to the spring of 2023 – the period when farmers finance the sowing season, a representative of another large agricultural holding notes.

At a meeting in the Ministry of Agriculture on September 8, the head of Soyuzsahar, Andrey Bodin, proposed deferring not only duties, but also VAT on imported goods, which is 20%. Representatives of the Ministry of Economy said at the meeting that they intend to work on this issue with the Ministry of Finance.

Alexey Polukhin