Olesya Smirnova: Extending the zero VAT rate on breeding products is an effective measure for the dairy industry

The expert noted that this issue is very important for the Association, as its representatives, seeing that this measure of state support has had a very good effect for five years, considered it necessary to extend the benefits.

Olesya Smirnova said that there were long discussions in the dairy industry, budget calculations were made taking into account the possible termination of the tax benefit. According to her, the designed models showed that such a measure would lead to a reduction in investment in the expansion of production, according to expert estimates of Soyuzmolok, to 5.3 billion rubles (with a potential VAT rate of 20%), which in turn would create obstacles to the formation of 4 to 9 thousand cattle places annually. Accordingly, enterprises would buy less quality genetics in the form of semen and embryos, and would buy less high-quality young animals, which in any case, in 3-4 years, would lead to a decrease in the total production of raw milk. In the future, there would be a noticeable reduction in incomes of enterprises (respectively, the tax base), jobs, and, in particular, tax revenues.

The expert notes that today in the country there is a shortage of breeding young animals for replacement and breeding material having an index assessment of its breeding value. When purchasing heifers, for example, Russian suppliers cannot offer large batches of livestock (more than 300 head per batch), insurance of supplies and good logistics conditions (high-quality transport with special conditions for transporting livestock) with very rare exceptions.

- We understand that the farmer is left to himself and bears all the risks when purchasing animals in the herds of the Russian Federation. He also has to do all the work on his own today. If the farm needs to purchase 500 head of livestock, the process can be divided into 3 or 4 batches, where each delivery requires careful preparation and passing all the measures 4 times. Again, this is not a rule, but it is more of a picture. In terms of purchasing breeding material, farms understand the evaluation system of foreign countries, where a large number of indicators and complex indexes are provided for each animal, according to which farms sel ect animals. These data are also successfully used by Russian AI stations when purchasing sires abroad, - said Olesya Smirnova, noting that this is why in terms of purchasing breeding material and product of the Holstein breed, in particular, farms prefer to purchase them by import.

The expert noted that if the financial conditions for farms deteriorated, there would be potentially two ways of developing events. Either buy less breeding material and product, but not lose in genetic value; or, for example, when opening a complex or farm in order to fill the stalls for the project - buy the necessary number of head, but cheaper in price, which, of course, would indicate a decrease in the breeding value of animals.

- It is no secret that today the Holstein breed has the greatest influence in terms of productivity in the Russian Federation. The country has not achieved self-sufficiency yet in either milk or genetics. T, there will be enough work here for a decade, Olesya Smirnova said.

At the same time, she believes that in recent years there has been a positive trend in terms of productivity growth and changes in the genetic potential of herds. They began to use new tools of selection, genomic evaluation, etc. Therefore, the Association of Holstein cattle producers believes that such a tool as the extension of the zero VAT rate is extremely important in order to use it further.

- Of course, the measure is not infinite. Two years will pass very quickly. However, there is a hope that during this period it will be possible to work out the issues of identification of cattle in the dairy direction of productivity and the beginning of collecting reliable phenotypic data for each "breeding" animal. This will allow us to start evaluating our animals using new modern methods – to modernize approaches to breeding in the Russian Federation and support truly valuable animals, concluded Olesya Smirnova.

We will remind that Russian President Vladimir Putin signed a law extending the exemption from value added tax (VAT) for breeding livestock products. The document was published on Monday on the official portal of legal information. At the same time, the funds from the cancellation of the benefit in the amount of 16.6 billion rubles were previously included in the draft budget revenues for 2021-2023.

The law extends for two years - until December 31, 2022 inclusive - the exemption from VAT when selling on the territory of the Russian Federation and when importing breeding cattle, breeding pigs, sheep and rams, goats, horses, poultry or eggs, as well as semen obtained from breeding bulls. This also applies to embryos obtained fr om breeding cattle, breeding pigs, sheep, goats, and horses. We wrote about this earlier.

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