MINISTRY OF AGRICULTURE PROVIDED INFORMATION ON THE STATE OF COMPETITION IN THE AGRO-INDUSTRIAL COMPLEX
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Integrated measures to support the agrarian sector are designed to increase supplies of agricultural products, raw materials and food products on the agricultural-and-food market as well as support cost-effectiveness of agricultural producers and increase the export growth rate for agro-industrial products.
The report contains information about simulating investment activity in the agro-industrial complex, adjusting customs-and-tariff regulation, procurements and goods interventions on the markets of agricultural products, raw materials and food products.
The text of the report is given below:
Report “On the state of competition in the agro-industrial complex”
One of the basic principles of the state agrarian policy under No.264-FZ Federal Law “On developing agriculture” of 29 December 2006 is the unity of the markets of agricultural products, raw materials and food products and providing equal competitive conditions on the market. The recent measures to provide state support to agriculture and organize government regulation of the markets of agricultural products, raw materials and food products are also aimed at developing competitive environment on the domestic market.
The fundamental document for developing the agro-industrial complex is the State Programme for Developing Agriculture and Regulating the Markets of Agricultural Products, Raw Materials and Food Products in 2013-2020 (further on referred to as the State Programme), which includes measures aimed at increasing competitiveness of Russian agricultural products on the domestic and external markets.
The objective of the integrated measures for support of the agrarian sector is, first of all, to increase supply of agricultural products, raw materials and food products on the agro-industrial market, as well as to support profitability of agricultural producers and increase the export growth rate for agro-industrial products.
To fulfill No. Pr-817 GS List of orders issued by the President of the Russian Federation of 15 May 2018, issued following the State Council of the Russian Federation of 5 April 2018 (Sub-Clause “a” Clause 2), and in accord with the Guidelines for calculating the key competition development indicators in sectors of the economy and in the subjects of the Russian Federation (regions), approved by No.1232/18 Order of the Federal Antimonopoly Service of 29 August 2018 (further on referred to as the Guidelines), the Russian Ministry of Agriculture undertook efforts to consider the key competition development indicators in the agro-industrial and fishery sectors in 20 regions of Russia.
After consideration, the key competition development indicators were approved for 5 regions, other 5 regions must refine the lists of indicators, and indicators submitted by the remaining 10 regions of the Russian Federation were not approved since they had failed to present baseline data in line with the Guidelines.
Stimulating investment operations in the agro-industrial complex
No. 204 Order of the President of the Russian Federation “On the national goals and strategic objectives for developing the Russian Federation until 2024” of 7 May 2018 states that one of the national goals for developing the Russian Federation until 2024 is to create and modernize the export-oriented commodity-distribution infrastructure, including construction of wholesale-distribution centres (further on referred to as WDC). Establishing and developing modern logistic infrastructure is one of the essential measures designed to stimulate trading operations and increase sales of domestic products, and improve their competitiveness.
According to the data of obtained through monitoring conducted by the Ministry, as of 1 January 2019, Russia has 3 413 potato and vegetables storage facilities with the total storage capacity – 7,888,000 tons (2 110 potato storage facilities with the total capacity – 4,612,500 tons, 803 vegetable storage facilities with the total capacity – 1,630,000 tons, and 500 mixed potato- and vegetable storage facilities with the total capacity - 1,645,500 tons) as well as 282 fruit storages with the total capacity - 668,000 tons. The overall capacities commissioned in 2015 - 2018 reached 2,701,600 tons of potato- and vegetable storage facilities and 339,700 tons of fruit storages.
The marketable value of the sold agricultural products increased. According to Rosstat [Russian State Statistical Service] data, merchantability of cattle and poultry in 2018 was 101.1% in comparison with 100.7% in 2017, pigs – 100.5% and 100.2%, poultry – 99,8% and 99,0%, chicken egg– 89.9% and 90.3% accordingly.
Agricultural companies increased shipments of agricultural products
|
|
Production, K tons |
Shipped, K tons |
||||
|
|
2017 |
2018 |
2018 in % to 2017 |
2017 |
2018 |
2018 in % to 2017 |
|
Grain and grain legumes crops |
94968.7 |
79539.5 |
83.8 |
632547 |
67921.1 |
107.4 |
|
Sunflower |
7132.6 |
8466.2 |
118.7 |
6118.6 |
6756.9 |
110.4 |
|
Sugar beetroot |
45790.5 |
37503.3 |
81.9 |
40489.4 |
35389.6 |
87.4 |
|
Potatoes |
4232.8 |
4316.5 |
102.0 |
2607.0 |
2528.4 |
97.0 |
|
Vegetables |
3479.3 |
3581 |
102.9 |
2484.4 |
2861.3 |
115.2 |
|
Livestock (live weight basis) - total |
10821.2 |
11256.2 |
104.0 |
10891.8 |
11374.6 |
104.4 |
|
including cattle |
932.7 |
986.7 |
105.8 |
1035.8 |
1089.9 |
105.2 |
|
Pigs |
3735.1 |
4061.3 |
108.7 |
3741.4 |
4079.9 |
109.0 |
|
Poultry |
6096.5 |
6150.2 |
100.9 |
6038.4 |
6135.7 |
101.6 |
|
Milk |
15609.5 |
16204,6 |
103.8 |
14834.4 |
15357.5 |
103.5 |
|
Chicken egg (million units) |
35.4 |
35.8 |
101.0 |
31.8 |
32.3 |
101.5 |
Adjusting customs-and-tariff regulation measures
Customs-and-tariff regulation is performed in accord with the obligations of the Russian Federation in accord with the requirements of the World Trade Organization (further on referred to as WTO). Decisions on adjusting the rates of import customs duties are made by the Eurasian Economic Commission (EEC) in compliance with the Treaty on the Eurasian Economic Union (EAEU) of 29 May 2014.
No. 94 decision of EEC Collegium of 5 June 2018 and No.66 decision of EEC Council of 13 July 2018 made changes to EAEU Unified Customs Tariff, which came into effect on 1 September 2018, for particular types of goods under the obligations of the Russian Federation to WTO.
The rates of import customs duties are reduced for some kinds of goods such as fish, cocoa semi-finished products, fruits, products of processing fish and fruits.
No. 1484 Decree of the Government of the Russian Federation “On allocating tariff quotas for milk whey in 2018” of 7 December 2017 and No. 1498 Decree of the Government of the Russian Federation “On allocating tariff quotas for cattle meat, pork and poultry in 2018” approved tariff quotas set for 2018 by No.97 decision of EEC Collegium of 18 August 2017.
According to No. 96 decision of EEC Collegium “On setting tariff quotas in 2018 for particular types of long-grain rice originated from the Socialist Republic of Vietnam and imported to the member-states of the Eurasian Economic Union” of 18 August 2017, the tariff quota for Russia is set at 9 039 tons (No. 1470 Decree of the Government of the Russian Federation “On allocating 2018 tariff quotas for particular types of long-grain rice originated from the Socialist Republic of Vietnam” of 5 December 2017). The rates of import customs duties are 0% with quota, 10% without quota, but no less than 0.03 euro per 1 kg.
Currently, the rates of import customs duties are applied to particular types of fish products (other blue-finned tuna; code - FEANC EAEU 0302 35 190 0, other fish bypass from blue-finned tuna, code - FEANC EAEU 0302 99 000 9), rape seeds (code - FEANC EAEU 1205), sunflower seeds (code - FEANC EAEU 1206), skins of cattle, sheep, lamb and other untreated skins (codes - FEANC EAEU 4101 and 4102) and confirm to the final level of tying according to Russia’s obligations to WTO.
Under No. 966 Decree of the Government of the Russian Federation “On amendments to the rates of import customs duties for the goods exported from the Russian Federation out of bounds of the members-states to the Agreements on the Customs Union” of 26 September 2016, the rate of import customs duties was 0 RUB for the 1001 99 000 0 position (wheat and other meslin) from 23 September 2016 to 1 July 2018. No. 737 Decree of the Government of the Russian Federation of 27 June 2018 extended it till 1 July 2019.
On state procurement and commodity interventions in the markets of agricultural products, raw materials and food products
The total grain volume in the federal interventions fund at the end of 2018 accounted to 3,005,700 tons with 29 121.9 million RUB value.
Data from the Federal Customs Service show that at the end of 2018, 28.2 million tons of grain crops were exported in the 2018/2019 agricultural year, which is 5% higher than in the similar period of the last season (26.9 million RUB).
Wheat exports since the beginning of the season was 23.8 million RUB, which is 14% higher than in the similar period of the 2017/2018 agricultural year (20.9 million RUB), barley – 3 million RUB, which is 15% lower than in the similar period of the 2017/2018 agricultural year (3.5 million RUB), maize – 1.1 million RUB, which is 49% less than the level in the similar period of the past season (2.2 million RUB), other cultures – 0.3 million RUB, which is 1.6 times higher that in the similar period of the past year (0.19 million RUB).
The main five countries that exported grain crops in the 2018/2019 season include Egypt (4.9 million tons, 17%), Turkey (3.1 million tons, 11%), Vietnam (1.2 million tons, 4%), Nigeria (1.2 million tons, 4%) and Saudi Arabia (1.2 million tons, 4%).
In 2018, the Ministry of Agriculture of Russia carried out pin-pointed regulation of the grain market by selling grain from the stocks of the federal intervention fund of the agricultural products (further on referred to the intervention fund) under particular decrees of the Government of the Russian Federation.
To free grain storage capacities and reduce the expenses from the federal budget for servicing the grain stock of the intervention fund of the Ministry of Agriculture to execute No. 2921-r Decree of the Government of the Russian Federation of 23 December 2017, 499,100 tons of grain from the intervention fund were sold for export with the total value – 4 598 million RUB.
128,100 tons of grain (No.1051-r order of the Government of the Russian Federation of 30 May 2018) and 43,400 tons of grain (No. 2133-r order of the Government of the Russian Federation of 4 October 2018) were sold to support consumers in the Krasnoyarsk region and the Republic of Crimea accordingly due to decreased gross grain production caused by unfavourable weather conditions.
Also, to execute No. 2134-r order of the Government of the Russian Federation of 4 October 2018, the Ministry of Agriculture sold 436,900 tons of vegetables on-exchange with the total value 4 329.5 million RUB, which increased grain supply on the domestic market.
To level profitability of agricultural producers in the regions of Russia, where a considerable increase of grain production was observed against the record grain yield in 2017/2018 (135.4 million tons), the Government of the Russian Federation passed No.1595 order “On approving the Rules for granting subsidies in 2017 and 2018 from the federal budget to “Russian Railways” OJSC to compensate income losses emerged due to preferential tariffs for grain transportation” of 20 December 2017 (further on referred to as No. 1595 Rules, subsidies).
No. 1595 Rules provided for subsidies to “Russian Railways” OJSC until 30 June 2018 to compensate income losses emerged due to preferential tariffs for grain transportation from stations located within the boundaries of 13 regions (Voronezh, Kursk, Lipetsk, Orel, Tambov, Orenburg, Penza, Samara, Saratov, Ulyanovsk, Kurgan, Novosibirsk, and Omsk regions) to railway stations in the Far East, Northwestern and Southern Federal Districts without charging consignors for freight, compensating the revenue losses of “Russian Railways” OJSC, emerged as a result of such transportation, from the federal budget.
In January - July 2018, the volume of shipped grain crops reached 1,782,580 tons, particularly, 398,970 tons from the Siberian Federal District under No. 1595 Rules. According to the Federal Railway Agency, the subsidies to “Russian Railways” OJSC constitute 1 721.6 million RUB.
In 2017/2018, state support in the form of preferential tariffs for grain transportation was positively evaluated by grain producers, processors and exporters, which enhances competitiveness of agricultural producers.
To execute Sub-Clause “d” Clause 2 of the List of Orders of the President of the Russian Federation Vladimir Putin of 15 March 2018, the Ministry of Agriculture issued No. Pr-436 Order devising a draft Decree of the Government of the Russian Federation “On approving the Rules for granting subsidies to “Russian Railways” OJSC from the federal budget to compensate revenue losses emerged due to preferential tariffs for grain transportation” for an unlimited period of time (further on referred to as the draft Decree). The Russian Ministry of Agriculture is getting ready to submit the draft Decree to the Government in accord with the established procedure **.
Adopting the draft Decree will help compensate some costs of grain transportation to the regions that are the largest consumers of grain crops as well as compensate shipments from the regions of the Urals, Volga and Siberian Federal Districts that possess considerable stocks.
To reduce the level of administrative barriers preventing competition development in the agro-industrial sector and to improve antimonopoly and tariff regulation, on 14 December 2018 the Ministry of Agriculture and the Federal Antimonopoly Service concluded an Agreement on Cooperation in establishing and implementing the state policy in the field of the agro-industrial complex and control over compliance with the antimonopoly law.
* Under Part 5 Sub-Clause “c” Clause 2 of the National Plan for Developing Competition in the Russian Federation in 2018 - 2020, approved by No.618 Order of the President of the Russian Federation “On the main directions of the state policy for competition development” of 21 December 2017.
** The Government of the Russian Federation passed No.406 Decree “On approving the Rules for granting subsidies to “Russian Railways” OJSC from the federal budget to compensate revenue losses emerged as a result of preferential tariffs for grain transportation” on 6 April 2019