RUSSIA – The State Duma, the lower chamber of the Russian Parliament, has passed a bill that extends state aid to producing feed additives, enzymes, and veterinary pharmaceuticals.
Previously, state aid was available only to manufacturers and processors of agricultural commodities, leaving out those involved in producing feed vitamins, amino acids, and enzymes due to their non-reliance on agricultural raw materials.
The new legislation, set to take effect on September 1, 2024, aims to enhance the financial and economic stability of the feed additive industry amid current geopolitical and logistical challenges.
According to the lawmakers, the bill will allow feed additive manufacturers to access state aid through soft loans and partial reimbursement of investment costs from federal budget funds allocated to the Russian Agricultural Ministry.
As revealed by Dmitry Patrushev, the Russian Agricultural Minister, in 2024, the Russian government plans to allocate 558 billion rubles (US$9 billion) to support agriculture.
This move is crucial, especially given the high key interest rate of 16% set by the Russian Central Bank, which has made it difficult for commercial banks to offer low-interest loans.
The high cost of borrowing has been a pervasive issue, prompting several state corporations to seek interest rate subsidies from the government.
The bill’s explanatory note highlights that the production of feed additives does not involve using agricultural raw materials, unlike traditional agricultural commodities, which had previously excluded them from state aid eligibility.
The new bill aims to close this gap, providing much-needed financial support to the feed additive sector.
The backdrop of this legislative change includes significant logistical challenges, particularly in foreign trade with China. Since early 2024, Chinese banks have closely scrutinized transactions involving Russian clients, leading to delays and occasional rejections of money transfers.
This increased scrutiny has impacted trade, with Russian trade with China dropping by 9.9% in the first quarter of 2024 compared to the same period in 2023. The decline in trade volume reached nearly 20% in March compared to the previous year.
China dominates the Russian feed additive market, accounting for approximately 85% of imports. The strained trade relations with China underscore the urgency of the new legislation to support the domestic feed additive industry.
The bill received a positive assessment from the federal government and is expected to significantly boost the industry, addressing both financial constraints and supply chain disruptions.
As the bill comes into force, it is anticipated to strengthen the feed additive sector’s resilience and support its growth in the face of ongoing economic challenges.
For all the latest grains industry news from Africa, the Middle East, and the World, subscribe to our weekly NEWSLETTERS, follow us on LinkedIn, and subscribe to our YouTube channel.