On Monday Minister of Agriculture Virginija Baltraitiene met with representatives of meat, dairy and vegetable producers too discuss restrictions introduced by Russia on agriculture and food product imports from the European Union as well as possible measures to regulate the market.
According to the minister, in dairy sector the embargo has affected four companies that used to export to Russia and have gathered 1,400 tonnes of surplus milk per day. The companies ask to subsidize these losses, which later will be recovered by Lithuania from the European Commission. It is estimated that subsidies may require approximately LTL 20 million (EUR 5.8 million) per month. This is the sum the dairy companies lose due to export restrictions to Russia.
Representatives of meat sector also ask to subsidize a share of losses, in the short run it should turn out what amount of subsidies are necessary for meat producers.
"And, of course, all of them raised the question regarding VAT, both vegetable and meat producers want a reduced rate of VAT to become competitive with the meat of other countries, more precisely, so that the market-place would not become a rival as it is happening at present," said Baltraitiene.
When asked, how much could be the rate of VAT reduced, the minister could not provide exact figures; according to her, it should be calculated; however, meat and vegetable producers were interested in reducing the rate of VAT up to 5%.
"Yet this decision should be made at the political level. Whether such decision is made or not – I do not know, but we will inform about the request of our processors and producers," underlined Baltraitiene.
It is estimated that the Lithuanian dairy sector will sustain a loss of LTL 20 million (EUR 5.8 million) due to the Russian sector, meat producers are still calculating losses.
Gintaras Bertasius, Director of dairy producer Vilkyskiu Pienine, said that it is possible to process the entire milk; however, the question concerning its buying-in price arises. According to him, that is why the assistance of the state is necessary at present.
"Today it is necessary to buy in dairy products, to organize intervention buying or subsidise dairy production, as four companies processed 1,400 tonnes of milk everyday into products reserved for Russia. For us it is not important to receive the assistance today, but it is of utmost importance to know if there will be any assistance," said Bertasius.
He agreed that a reduced rate of VAT could help dairy producers as well, as it would encourage a higher domestic consumption.
Meanwhile, Zofija Cironkiene, Head of the Lithuanian Association of Vegetable Producers, fears that if the state does not provide assistance, some of the vegetable farms will go bankrupt. There are not many vegetable farms that export their production to Russia, however, not only these producers but also smaller producers will sustain losses as the most competitive production used to be imported to Russia, which now will remain in the country.
"It means that for smaller farms it will become more difficult to sell their production," said Cironkiene.
Virginijus Kantauskas, General Director at meat manufacturer Biovela Group, admitted that Russia's ban was unexpected.
The company exports its production to 30 countries and so far does not plan to cut production; however, Kantauskas did not rule out the possibility of redundancies in the future.
According to him, the support of the state should be provided not to concrete companies, but to the market itself; it could include such measures as subsidies and VAT relief.
