NATALIA SHAGAIDA: “A POSSIBILITY FOR THE SELF-EMPLOYED TO RECEIVE A PREFERENTIAL LOAN IS A “CARROT” MOTIVATING PRODUCERS TO OBTAIN AN OFFICIAL STATUS”
Natalia Shagaida, Head of the Agricultural Policy Department of the Gaidar Institute commented to the Izvestia daily on the news that private subsidiary farms may receive preferential loans
Viktoria Abramchenko, Deputy Chairman of the RF Government said that the RF Government was going to supplement the experiment aimed at supporting private subsidiary farms with preferential loans. According to the RF Government website, individuals engaged in private subsidiary farming may apply for preferential loans. It is specified that to receive preferential short-term or investment loans owners of private subsidiary farms have to obtain the status of the self-employed and, consequently, apply “the self-employment tax”, a special tax treatment.
“Tying a preferential loan to the status of the self-employed is a “carrot” motivating the largest farmers fr om among small producers to gain an official status. There are farmers mimicking private subsidiary farms because the costs of relations with the government authorities have always been higher for them than benefits. It is easier to be a self-employed: you receive income, you pay a tax. I do not expect an upturn in demand for loans: it is necessary to do something to simplify the loan-granting procedure for people. Farmers live in rural areas (visits to a bank are time-consuming), they are required to show stable incomes and other. So, it would be better to think how to make the loan-granting procedure simpler. But, overall, this move is a good one and in the right direction,” notes Natalia Shagaida.
In Natalia Shagaida’s view, to motivate private subsidiary farms it would be appropriate to support backbone entrepreneurs and farmers who could on the basis of long-term agreements render services related with land plots cultivation and sales and storage of products.
“Such an experience has been amassed, for example, in the Krasnodar Territory wh ere small farmers who were producing grapes in compliance with the same technology and a well-experienced farmer who was supported by the regional government within the frameworks of regional support programs combined their efforts. It is a good scheme: if an active young man lives in a village, they can support him by buying him a tractor, but in return he should take an obligation to render services to his neighboring private subsidiary farmers. It will help producers form larger batches of products of a uniform quality. At present, it is quite a problem: chain stores are not very interested in small producers because they need a guaranteed volume of products to be delivered on time,” Natalia Shagaida summed it up.
“Tying a preferential loan to the status of the self-employed is a “carrot” motivating the largest farmers fr om among small producers to gain an official status. There are farmers mimicking private subsidiary farms because the costs of relations with the government authorities have always been higher for them than benefits. It is easier to be a self-employed: you receive income, you pay a tax. I do not expect an upturn in demand for loans: it is necessary to do something to simplify the loan-granting procedure for people. Farmers live in rural areas (visits to a bank are time-consuming), they are required to show stable incomes and other. So, it would be better to think how to make the loan-granting procedure simpler. But, overall, this move is a good one and in the right direction,” notes Natalia Shagaida.
In Natalia Shagaida’s view, to motivate private subsidiary farms it would be appropriate to support backbone entrepreneurs and farmers who could on the basis of long-term agreements render services related with land plots cultivation and sales and storage of products.
“Such an experience has been amassed, for example, in the Krasnodar Territory wh ere small farmers who were producing grapes in compliance with the same technology and a well-experienced farmer who was supported by the regional government within the frameworks of regional support programs combined their efforts. It is a good scheme: if an active young man lives in a village, they can support him by buying him a tractor, but in return he should take an obligation to render services to his neighboring private subsidiary farmers. It will help producers form larger batches of products of a uniform quality. At present, it is quite a problem: chain stores are not very interested in small producers because they need a guaranteed volume of products to be delivered on time,” Natalia Shagaida summed it up.