The beginning of 2021 was a turbulent year for Russian agriculture. Price fluctuations and numerous regulatory changes such as quotas and higher export duties on grains and oilseeds have already negatively affected market participants' expectations for 2021.
On January 19, 2021, farmers learned about the initiative to increase the utilization fee for agricultural machinery two or more times. According to the new initiative, the utilization fee per tractor in the 281-340 hp category. will grow from the current 862 rubles. up to 500 rubles, for a grain harvester in the category 3-001 hp from the current 500 to 256 rubles, and for a self-propelled sprayer in the 325-1 hp category. from the current 121 to 250 rubles.
Such an unprecedented increase in the rates of the utilization fee threatens to disrupt the supply of already contracted equipment in the current season and will lead to an increase in prices along the entire chain from the equipment itself to food prices.
This issue was discussed by the participants of the online conference "Factors of the competitiveness of the Russian agro-industrial complex in 2021", which took place on February 3, 2021. The conference was organized by the Association of agricultural machinery dealers "ASHOD" with the participation of manufacturers and dealers of agricultural machinery, as well as leading industry unions of the agro-industrial complex: Russian Grain Union, National Union of Milk Producers, Potato Union, Delovaya Rossiya, Association of Producers and Suppliers of Food Products “Rusprodsoyuz”.
So, according to the Vice-President of the Russian Grain Union Alexander Korbut, initially, the purpose of introducing the utilization fee was to squeeze imported used agricultural equipment from the Russian market, but this did not solve the problems of mechanical engineering. As a result, the utilization fee for self-propelled sprayers will increase by 2 million rubles, for tractors of the PTZ type by 2 million rubles, and for combines - 1.4 million rubles. This is an addition to the already increased prices for equipment. In conditions when the incomes of farmers are limited, the opportunity to buy this equipment decreases accordingly, and this will entail a decrease in the profitability of production and a shortage of money for development.
“Our common position is as follows: do not do something that will worsen the situation on the market and complicate the activities of agricultural producers, as well as reduce their access to resources. Therefore, the issue of adjusting or canceling the utilization fee for this year, from my point of view, is very relevant, ”says Alexander Korbut.
Speaking at the conference, President of the ASHOD Association Pavel Repnikov said that the initiative to increase the utilization fee is absolutely not economically justified and limits agricultural producers' access to advanced technologies.
“Today, equipment manufactured in Russia does not have the functionality that foreign vehicles have. A whole segment of self-propelled vehicles in Russia is not produced at all or is produced with limited functionality. In our country, now, basically, large tractors with a capacity of 300 hp and more are produced. with. Equipment of lower power - from 150 to 300 liters. with. - Russian machine builders practically do not produce, although they are now one of the most popular tractors. As a result, deferred demand will grow: enterprises will wait for the utilization fee to decrease, or when their incomes increase, "Repnikov believes.
The conference participants drew attention to the fact that the initiative to increase the waste collection is taken in a short time without properly informing the main market participants - agricultural producers, as well as without financial and methodological justification. “A small agricultural producer may simply not find the money to buy more expensive equipment and simply refuse to buy it. And large agricultural holdings are likely to cancel tenders for the purchase of equipment, since the machines that have risen in price will not fit into the budget, which is usually planned for six months. The estimated time frame for increasing the utilization rate does not provide an opportunity for either equipment suppliers or an agricultural producer to respond, ”said Dmitry Vostrikov, executive director of the Rusprodsoyuz association of food producers and suppliers. He also added that an increase in waste collection will inevitably affect the growth of the cost of agricultural production and ultimately lead to an increase in food prices.
How will the utilization fee affect the agricultural machinery market? This question was raised at the conference to business representatives.
Sergey Didenko, the head of the John Deere representative office in Russia, is extremely concerned about what is happening at the moment with the issue of recycling fees. In his opinion, in the end, all costs will be passed on to the agricultural producer in terms of the purchase of equipment. That is, those people who have already contracted the equipment, and there are many of them, will have to get additional money in April and pay.
“You shouldn't make such hasty decisions. Business consultation and clear rules of the game are needed. If the draft resolution remains unchanged, the company will have to adjust its plans. We will have to raise prices for agricultural producers, that is, the final effect of this legislative initiative will entail a negative nature, ”Didenko said.
“The introduction of waste collection will undoubtedly lead to an increase in the cost of equipment and self-propelled vehicles by 10-20%,” believes Tatyana Fadeeva, General Director of AGCO-RM, “the sale of imported equipment is part of the agricultural machine building system and an important link not only in replenishing waste collection, but also in import duties. and even VAT. In order to achieve the expected result of increasing the budget from utilization payments with such a multiple increase, it is important to maintain the volume of imports, which have been unstable recently and did not exceed 15% of the total volume of agricultural products. Any amount of waste collection multiplied by zero imports is zero. Such a significant increase in collection upsets the balance and will definitely lead to a drop in imports. And this will of course have an impact on the entire agricultural sector. "
Thus, this initiative runs counter to the strategy of the Government of the Russian Federation to curb the rise in food prices and may deprive the agricultural sector of financial resources for further development.
During the conference, a survey was conducted on the attitude of the agricultural and dealer communities to the increase in the utilization fee and the possible consequences for the industry. 91% of respondents were categorically against increasing the collection in 2021. 85% answered that an increase in utilization will not contribute to the development of domestic machine building, and 88% of participants expect a strong or moderate decrease in the profitability of agricultural production in 2021.