Although, following the dialogue, she told the media of her intention to develop and present a “common position with the commodity producers’ associations,” there has been no significant progress toward a compromise so far.
During the discussion, Mircea Manole, executive director of the “Speranța Con” Association of Fruit, Vegetable, and Berry Processors, proposed a “nearly finalized” compromise solution: a single (uniform) VAT rate across the entire agri-food chain, not exceeding 11–12%. This proposal was based on the experience of introducing an 11% VAT rate in Romania.
Incidentally, several years ago, the “Lapte” Association of Milk and Dairy Product Producers, with the help of a reputable analytical organization, conducted a marketing study that included, among other things, models for introducing uniform VAT rates (for both raw materials and finished products) of 12% or 14% in Moldova’s dairy sector.
The analysis showed a positive potential impact on this segment of the country’s agri-food market in both cases.
As representatives of this and other associations—manufacturers of finished food products of animal origin—noted in comments to Logos Press, “a uniform VAT rate of 12% across the entire agri-food chain would be acceptable.”
The fact is that, at present, the reduced VAT rate of 8% does not apply to the entire range of livestock products. For example, cheese is subject to a 20% VAT. As a result, the development of production of these and certain other dairy-intensive products in Moldova is proceeding at a slow pace.
Is there a mutual willingness to compromise?
On the other hand, a representative of the “Forța Fermierilor” Association of Grain and Oilseed Producers —the main driving force behind the roadside protests and, most painfully, the border checkpoints blockades—is not particularly inclined toward compromise.
“The idea (of introducing a flat VAT rate of 11% or 12%, — ed. note by LP) has merit, but at this point, I believe we are not ready for it in terms of the financial implications,” said “Forța Fermierilor” Chairman Alexandru Slusari in a comment to Agroexpert. – VAT options similar to the Romanian or Ukrainian models require in-depth analysis and time. Now, however, a decision must be made by July 31. In our view, the most realistic option remains maintaining the VAT rate at 8%, while complex fiscal reforms can be analyzed in the coming years.”
However, this “realistic option” is running up against the Ministry of Finance’s uncompromising stance.
“At the last meeting, after an hour of discussion, we were clearly told that the VAT rate would be 20%. If we insist on 8%, there will be no further discussions. I haven’t noticed any change in their position. On other issues, such as medicines, adjustments were made, but the position on agriculture remains unchanged,” noted Oleksandr Slusar. “Under these circumstances, farmers are continuing their protests. The situation has gone too far. Farmers will not go home without a clear commitment to maintain the current reduced VAT rate.”
Farmers are pinning some hopes on a meeting with Parliament Speaker Igor Grosu, scheduled for midday today.
Yesterday’s protests involved more than 250 tractors and several hundred farmers from 21 districts across Moldova.
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