World meat industry news

The Association of Retail Companies asked the Federal Tax Service to reduce the tax burden on retail chains in order to keep prices for essential goods. We are talking about deferring the payment of insurance premiums and reducing VAT on socially significant categories. Supermarkets are complaining about lost profits due to the containment of prices for sugar, vegetable oil and other goods. Experts are convinced that these measures are the best way out of the current situation, which will help maintain prices and trade margins. At the same time, some experts reproach retailers for trying to bring domestic prices up to world prices.

The Russian retail trade has faced difficult challenges. A sharp rise in inflation in March, the destruction of the old supply chain, the need to look for replacements for some suppliers - all this led to a significant increase in the operational and financial burden on retail companies, Igor Karavaev, chairman of the presidium of the Association of Retail Companies (AKORT), told Izvestia. “In an effort to support consumers in the face of rising inflation, retail chains voluntarily reduced the markup on socially important goods by almost three times, from 22 to 7%, in some cases to 5%, although this does not even cover the operating costs of the chains,” he said. .

In connection with the resulting gaps in revenues, ACORT asked the Federal Tax Service and the Ministry of Finance to consider the possibility of reducing the VAT rate on socially significant food products. The Federal Tax Service received the letter, but not yet the Ministry of Finance.

“The deferral of insurance and tax payments for the third quarter of 2022 for 12 months will enable chains to free up resources for investment in supply stability and maintaining affordable prices,” explained Igor Karavaev. — Lowering the VAT rate on essential food products will continue to contain the growth of consumer prices for this category of goods on a long-term basis.

METRO and other large retail chains did not comment on the initiative. The financial director of the Slata retail chain (Irkutsk region and Transbaikalia), Elena Lyubansin, explained to Izvestia that "the proposal to reduce the VAT rate on socially significant food products is especially relevant." In her opinion, this will allow retailers to invest the savings and not increase retail prices.

“Due to rising prices, sales have decreased in quantity, logistics costs have increased,” complains Elena Lyubansin. “The reduction in the tax rate will make it possible to compensate for the increase in incoming prices from manufacturers and the increase in logistics costs. And the deferment of payment of insurance premiums allows you to remove the negative impact on cash flow from the increase in lending rates.

But reducing VAT is primarily necessary for food producers, because today they play a key role in providing food to the population and cover all the risks due to the growing cost, Dmitry Leonov, deputy chairman of the board of the Rusprodsoyuz association, is convinced.

“It is enough to analyze the data of Rosstat to see the incompatibility of the earnings of food industry enterprises and farmers in comparison with retail trade,” says the deputy chairman of the board of the Rusprodsoyuz association. - In the conditions of cash gaps and the high cost of credit resources that exceed the profitability of production, many food industry enterprises, unlike retail chains, today are balancing on the verge of profitability. The shortage of working capital due to the growth of interest rates on loans, long periods of price revision and payment of orders from the trade side lead to unprofitable food enterprises, some are already closed.

If the tax burden is not eased for them, then in the medium term we may face a series of bankruptcies, Leonov worries.

The Ministry of Industry and Trade of Russia told Izvestia that they were in favor of market methods to contain prices. For example, the agency recommended that market participants move from the practice of procurement through tenders to direct long-term supply contracts. While tenders should be an additional tool for rapid replenishment of inventories during periods when consumer demand rises sharply for them.

The proposal to abolish VAT on socially important goods is worth considering seriously, Ivan Nevolin, an economist from the GAUGN and CEMI RAS, is convinced. An analysis of statistics on the consolidated budget shows a decrease in income from personal income tax in April. And not only in relation to February or March of the current year, but also to the same period last year. This indicates a fall in the official income of the population.

- At least two indicators indicate a decrease in consumer demand, - says Ivan Nevolin. - Fresh data from Sberbank (Sberindex) show that consumer activity today is at the level of April this year. And various measures to support industries and the population can give impetus to positive dynamics, to the revival of economic activity. Therefore, it is necessary to consider the VAT proposal in this context.

Andrey Lisitsa, General Director of GoodsForecast, notes that at present the situation with essential retail is not as critical as, for example, it was in March-April, but it still requires the attention of the authorities and regulatory measures.

“Inflation expectations remain high, sanctions pressure is growing, including the risks of secondary sanctions that could lead to another wave of changes in supply chains,” Andrey Lisitsa explains the picture of difficulties. — There are a number of business processes that distributors and retail chains are still solving at their own expense. This puts pressure on the margins of the business as a whole and reduces the amount of investment not even in development, but in rebuilding the infrastructure that supports the work of companies.

Andrey Karpov, Chairman of the Board of the Russian Association of Retail Market Experts (RAERR), believes that, in addition to reducing the tax burden, retail chains can also be helped by such measures as:

direct support to manufacturers;

subsidizing the production of consumer products;

targeted support for socially unprotected segments of the population, people with low incomes.

GoodsForecast believes that now there is a need for subsidies to manufacturers and trading enterprises, regulation of selling prices, reduction of duties on the import of goods from friendly countries, preferential loans for the development of IT infrastructure, optimization of logistics and supply chains, consumption rationing and the introduction of restrictions on the sale of those or other types of goods.

“An alternative mechanism for reducing the tax burden is targeted support for the most affected strata in order, firstly, to provide them with essential goods, and secondly, to launch a mechanism to increase demand for domestic products,” says the head of the research and analytics department of the Commonwealth Partnership (CMWP) Denis Sokolov. — This would reduce the cost per unit of production in the medium term. To do this, you can use the so-called food stamps (food cards. - Ed.). It is important to understand that inflation in itself is not dangerous - the problem is that household incomes lag behind inflation and the consumer market is shrinking.

In general, there are few alternatives to reducing the tax burden, says Data Insight partner Boris Ovchinnikov: there is simply no time for systematic work to unravel inefficient, overly regulated and weakly competitive places in the entire chain from the producer of raw materials to the store - this is not something that can give quick results.

“It is possible to increase administrative pressure on retail – to a certain extent, this will give results, but then there will be massive shortages,” says Boris Ovchinnikov. - Therefore, it is more correct to gradually abandon state control over prices.

Professor of the Basic Department of Trade Policy of the Russian University of Economics G.V. Plekhanov Vyacheslav Cheglov notes that the initiative has its own pitfalls. It is clear that retail chains solve their problems by minimizing losses in a “falling” market, and AKORT is an association of very large corporations.

“Not to mention the fact that they will benefit more from the initiative, due to the scale of their activities,” notes Vyacheslav Cheglov. There are other ways, of course. Direct state support for domestic producers and importers. Or an increase in payments to the population.