ANDREY TSYGANOV: FAS DRAFT LAW SHOULD LEAD TO FULLER IMPLEMENTATION OF UNITY OF ECONOMIC SPACE IN RUSSIA

Stimulating the agro-industry complex means unifying tariff-setting, developing exchange trade and increasing accessibility of transport infrastructure, stated Deputy Head of FAS at a meeting at the Federation Council

On 2 July 2019, Deputy Head of FAS Andrey Tsyganov took part in a meeting of the Council on Agro-Industrial Complex and Use of Natural Resources at the Federation Council on “Export potential of the agro-industrial complex of the Russian Federation: the problems and development perspectives”.

Deputy Head of FAS pointed out that in August 2018 the Russian Government approved 2018 - 2020 Action Plan (Road Map) for developing competition in sectors of national economy and transition of particular segments of natural monopolies from the state of natural monopoly to the state of competitive market.

“The document has a serious section on competition development in the agro-industrial sector. It specifies 33 measures devised by FAS together with the Ministry of Agriculture. The grounds for drafting and implementing the Action Plan is the National Competition development Plan approved by an order of the President of the Russian Federation. The order sets three main objectives for developing competition in the agro-industry: increasing the merchantability level of some types of agricultural goods, expanding supply geography and the range of agricultural goods sold through on-exchange trade, and reducing dependence of the domestic market from foreign selection and genetic material and related agro-technological solutions. All these tasks are directly related to developing the export potential of the agro-industrial complex”, stated Andrey Tsyganov.

Deputy Head of FAS detailed several sections of the Action Plan concerning accessibility of transport infrastructure, on-exchange trade and tariff optimization.

“As for increasing accessibility of the main types of transport infrastructure for agricultural producers, the question is about drafting new cargo price-lists, optimizing regulation of tariffs for grain transshipment on deep-water ports and stimulating manufacturing of specialized wagons for different types of perishable goods, including fruits, potatoes and vegetables”, informed Deputy Head of FAS.

Andrey Tsyganov also discussed measures designed to stimulate exchange trade in Russia:

“Exchange is a very important tool and the work has already launched. The Government devised and approved an inter-departmental plan containing a package of stimulatory measures that facilitate on-exchange trade. The plan provides, in particular, certain measures to “tying” on-exchange contracts with a possibility for the contracted goods to easier cross the Russian border and streamlining the procedures for supplying the goods for export”.

Andrey Tsyganov emphasized that to discuss the above items, FAS has the exchange Committee formed jointly with the Central Bank and the Tax Service.

“At its regular meetings, experts consider the entire complex of issues concerning on-exchange trade with agro-industrial products, entry of new types of goods to the markets and the mechanisms of registering off-exchange deals on the exchanges by Russian law”, informed the speaker.

Deputy Head of FAS highlighted “input costs” as a serious problem for developing agricultural production in Russia:

“First of all, this is state-regulated tariffs. They should be improved. We see that in spite of the transition to long-term tariffs formed on the “inflation minus” basis, there are some issues with regard the tariffs set at the federal level. As for the tariffs set by regions, they are often so disproportionate that force business involved in production and processing of agricultural products to relocate companies and choose regions with softer tariff policy”.

We see that disproportion on heating supply tariffs that are very important for the agro-industrial complex is maintained so far. Water supply and drainage tariffs differ by regions from 10 to 50 times. This is absolutely unacceptable! To rectify the situation, FAS drafted a law several years ago on the basics of tariff regulation that unifies tariff-setting approaches at the regional level and must lead to fuller implementation of the constitutional principles of the common economic space in the Russian Federation. We very much hope that the draft federal law will be positively reviewed at both the State Duma and the Federation Council”, concluded Andrey Tsyganov.

Taking part in the discussion at the Council, Deputy Head of FAS pointed out the importance of legal support and protection of domestic brands of agricultural products and food products from unfair competition when promoting them to international markets, and outlined the issues of international competition in the agro-industrial complex.

“Russian companies face fierce competition on international markets from other players as well as from consumers who possess considerable market power – the largest national production and trading companies responsible for food security of whole states with large population. We will always remain in a dependent position if we do not actively engage diplomatic channels and do not form own value added chains, particularly, under the frame of the international public-private partnership projects”, stressed Андрей Andrey Tsyganov.