"Lack of state support will cause Russian flower growers’ bankruptcy," claimed Aleksei Sitnikov, the State Duma Deputy and the president of the Greenhouse association of Russia.
“Without state support in the matters of preferential tax and customs treatment as well as without accessible loans, local flower growers will be on the edge of bankruptcy. Apart from the general agricultural tax of 6%, VAT of 20% has been applied since January 2019. This change has significantly increased the flower own cost as well as selling price. As a result, the produce of Russian growers is becoming less competitive and foreign growers establish pricing policy," noted Mr. Sitnikov.
One of the reasons for the complicated financial state of the sphere is the decreasing of customs duties on imported flowers from 15% to 5% as well as changes in tax legislation in accordance with which flower growing greenhouses have become VAT payers with 20% rate.
Impressive tax burden has decreased the profitability of Russian greenhouse complexes by 10-12%. With that, Russian producers cannot compensate the decrease in profitability by increasing prices on produce as they will become incompatible with the dominating imported flowers, underlined Mr. Sitnikov.
Imported flowers comprise up to 85% of the Russian flower market. With that, the main supplier of the cut flower is the Republic of Belarus, taking the share of 49.5% of the whole import.
"Supplies from Belarus are mainly reexported flowers with the lowered customs value. Products from other countries, such as Italy, Kenia, Ecuador, Israel and others are passed off as the Belarusian enterprises’ ones," says Mr. Sitnikov. In 2018, Belarus supplied 683.2 million pieces of cut flowers, which is 122.6 times more than in 2014.
The budget of the Russian Federation is losing 98.7 million euro per year because of the alleged Belarusian flower import scheme, note the representative of the Greenhouses of Russia.