Farmers in Montenegro often pay more tax on agricultural land than they can receive from state subsidies for cultivating that land. The state collected four times more money from new excise taxes on wine in eight months than was proposed for the entire year in the budget to support winegrowers and winemakers. Montenegrin farmers are the only ones in Europe who do not have the right to a refund of value added tax, and the only ones who pay excise taxes on fuel.
This was stated, among other things, in an analysis of the legal and tax treatment of agriculture conducted by a group of farmers, which "Vijesti" had access to.
It was concluded that these are some of the causes of the increase in prices of domestic agricultural products, the lack of competitiveness of domestic products compared to imported ones, the decline in domestic agricultural production, and the increasing import of food and other agricultural products.
Expansion of demands, protests in front of the Government
This group of farmers, also gathered in the Agriculture Cluster, organized a protest in Nikšić this week demanding greater subsidies for agriculture from the state budget, and they announced the next gathering in front of the Government. According to information, the farmers will expand their demands to include the complete abolition of the tax on agricultural land and real estate used in agriculture, which already exists in EU countries, or to a certain high percentage reduction, as well as exemption from paying duties on fuel used in production, which also exists in the EU, as well as the right to a VAT refund on materials, goods and other products used in agriculture because they are part of the costs in the price of the final agricultural product.
Negotiations are underway between the spending units of the state budget, including the Ministry of Agriculture, and the Ministry of Finance on budget items for next year. The Ministry of Agriculture did not respond to the question of whether the farmers' requests for increased subsidies are justified, whether they will request more money for the agricultural budget than this year, and, if so, how much.
A farmer for decades, who was briefly the Minister of Agriculture in the interim government in 2016, Budimir Mugoša He told "Vijesti" that it is true that farmers pay higher taxes to the state than they receive in subsidies and that this is a unique case in Europe.
"Younger farmers often come to me for advice or to help them with their business plans. Now I have started advising them not to get into this business. The government, as well as decision-makers at all levels, seem to be trying to discourage farmers from getting into this business," Mugoša said.
Food imports are increasing due to weak support
He states that livestock farming, as the largest branch of agriculture, is in a major decline.
"The number of cattle, according to census data, is 40 percent lower than ten years ago. Milk purchases continue to decline and are down another four percent this year, while at the same time imports of milk and dairy products are growing significantly," said Mugoša.
According to Monstat data, food imports alone for the period January - August amounted to 555 million euros, which was 44 million euros higher than the same period last year. In August alone, food imports were worth 70 million.
Imports of meat and meat products for eight months amounted to 117,5 million, an increase of four million, while imports of milk and dairy products amounted to 72,4 million, or 6,2 million more.
Mugoša says that imports of food, as well as other agricultural products, amounted to 711 million euros in eight months, which is ten percent higher than in the same period last year.
The agricultural budget for this year amounts to 77 million euros, but Mugoša says that direct subsidies to farmers are worth around 25 million, and that there are various other items left.
The total state budget revenues for this year are planned to be 2,88 million euros, which means that the total agro-budget amounts to 2,6 percent. However, the agro-budget contains various items that are not found in other countries, such as old-age benefits of 14 million, so farmers believe that the real value of the agro-budget, which could be compared with other countries in the region and the EU, is significantly lower. The agro-budget also includes donations from the EU of 11 million euros.
From excise taxes on still wines, which were introduced this year, the state generated 1,33 million euros in revenue by September, while the budget for the entire year provides support for winegrowers and winemakers of 295 thousand euros.
Agriculture 0,8% of the budget, in Serbia 5%
It was announced at the farmers' protest in Nikšić that they are demanding that the agro-budget in Montenegro, real support for agriculture, amount to at least five percent of the state budget, as is the practice in EU countries.
"The share of the agricultural budget (excluding EU donations) in the total state budget is about 1,65 percent. And direct national support, what the state actually gives to producers to work and survive, is less than 0,8 percent of the total state budget. I leave it to you, the citizens, to think about: what does the number 0,8% mean? A number that shows how little the state really invests in those who feed the nation," the president of the Agricultural Cluster of Montenegro said at the protest. Boško Miličić.
His opinion, as he said at the time, is that, with this kind of agro-budget, Montenegrin agriculture does not have a long future.
"And now I want to say what we all know, but rarely say out loud: agriculture is not an expense, agriculture is an investment. It is an investment in safe food for our families. An investment in the future of our villages and young people who want to stay here and engage in agriculture. An investment in an economy that does not depend on imports and food trucks from abroad, but on domestic production," added Miličić, asking how the state plans to reduce the trade deficit, where food imports last year were 772 million euros.
The farmers' protests were also supported by the president of the Food and Agricultural Industry Committee at the Chamber of Commerce. Milutin Đuranović, stating that this year, food and beverage imports will exceed one billion euros.
"In Serbia, the law stipulates that subsidies to farmers should be five percent of the state budget. Therefore, these 0,8 percent cannot ensure the competitiveness of domestic production, the competitiveness of farmers, and that is why we have a situation now that in the first half of the year, imports of food and beverages in Montenegro increased by 11,5 percent, which is incredible," said Đuranović.
Mugoša said that when the total area of agricultural land in Montenegro is divided by state subsidies, the result is five euros per hectare, while in the EU, using the same methodology, the result is 182 euros.
"With such a relationship, how can our agriculture progress and how can we expect a reduction in the trade deficit?" Mugoša told "Vijesti".
He cited the example that when a farmer imports a cow for milk production, he must pay VAT upon import, but is not entitled to a VAT refund even though it is a cost in milk production.
Parliament to discuss agricultural land tax again on Monday
On Monday, the Parliament will again decide on amendments to the Real Estate Tax Law, which envisage the abolition of the 70 percent guaranteed tax deduction on agricultural land and property.
These amendments, which abolish the benefit for farmers and introduce a provision that taxes may or may not be reduced at all, were proposed by a group of deputies from Albanian national parties.
The Parliament adopted them with 51 votes in favor at the end of July, but the President of the Republic, Jakov Milatović, refused to sign it and used the legal possibility to return it to the Parliament for reconsideration. Milatović said that the law is contrary to the Constitution because it also provides for retroactive effect, for tax decisions that have been challenged by the court, and that it is contrary to the existing norms from the Law on Tax Administration and the Law on Protection of Competition, because it puts farmers in an unequal position and uncertainty about the amount of tax. The Ministry of Finance also gave a negative opinion on these amendments to the law.
Mugoša told "Vijesti" that it is true that farmers are still paying a tax on agricultural land that is higher than the state subsidies for its cultivation, and that something like this does not exist anywhere in Europe.
"Agricultural land is used only for agricultural production, for example planting peppers, and the income from those peppers is the same regardless of whether you grow them in Donja Gorica or Mataguži. The value of agricultural land cannot be calculated as if it were construction land, because you cannot cover that cost from the peppers," Mugoša said.
"Vijesti" previously wrote that a group of Albanian party deputies passed this law with retroactive effect to prevent "Plantaže" from winning court cases against the Municipality of Tuzi, which, according to first-instance judgments, had been illegally calculating and freezing accounts for years to collect increased amounts of taxes, as well as to prevent those who wrote such tax decisions from being held criminally liable.
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