The Secretary for Agriculture in the Freedom Party and former minister Edmond Panariti reacted on Wednesday following the farmers' protest, raising the alarm about a deep crisis in agriculture that, according to him, threatens the closure of many farms in the country. In a statement to the media, Panariti says the current subsidy scheme is insufficient and excludes the majority of farmers, and calls for an emergency funding package of at least 100 million euros to keep the sector afloat.
According to him, high production costs, the 20% VAT, and the lack of real support are driving agriculture towards decline, which is also reflected in the decrease of exports and increase of imports. Panariti proposes reducing VAT to 5% and reinstating tax-free diesel for farmers as urgent measures to stop the worsening situation.
Full statement of Edmond Panariti:
The reason for this communication with you today is the farmers' protest, their association, in front of the Ministry of Agriculture yesterday, which for me was evidence of their existential crisis, namely the risk of definitive closure of their business due to lack of funding. They have understood very well that the national agricultural subsidy scheme with the allocated fund of 52 million euros is insufficient to meet their needs, meaning there simply isn't money to meet the many requests for farmer funding. The arithmetic is simple, the money is missing. To keep them afloat, an additional emergency package is needed that should be no less than 100 million euros, just as neighboring countries have acted, North Macedonia, or as Kosovo is preparing to act to face precisely this major production crisis from the unbearable increase in costs.
The national scheme itself, if we examine it in detail, is built in such a way as to be exclusionary, meaning some absurd discriminatory thresholds have been set, for example the limit of 3 hectares of area to benefit from the fund of 100,000 old lek per hectare, when you know very well that the dominant part of plots in Albania do not exceed 1.2 or 1.3 hectares. This means that 94% of plot owners are excluded from the national scheme. Similarly, although there is a reduction in the threshold for supporting livestock, again 55% of livestock farms remain outside funding. What is even more concerning is the fact that national production, our agricultural and livestock products, are burdened with an asphyxiating VAT, 20%, which is claimed to be reimbursed at a rate of 10%. First, if this reimbursement happens, it happens at the end of the fiscal year, accompanied naturally by the submission of tax invoices.
The issue must be simplified, we must act as the European Union acts, as the neighboring state, North Macedonia, is acting, by setting a reduced VAT and our proposal in the agricultural program has been very clear, to reduce VAT by 4 times, to bring it to 5% to give a breath of life to agricultural and livestock production. This is how the European Union acts, which on average has 6%, North Macedonia which has more or less at the level of 5%. By acting this way we give a breath of life to national production, we make it more competitive. And on the other hand we have a frightening increase in the costs of agricultural inputs, starting from diesel. Today in the market the price of diesel, despite the recent decrease in its price in global exchanges, is still at the level of 230 lek per liter. This is reflected in an increase in the cost of agricultural production, because it penalizes work in agriculture, for plowing, for harrowing, for disking, a lot of money is needed, which the farmer does not have. Similarly, we have an extraordinary increase in the cost of nitrogen and phosphate fertilizers.
What is required? To restart the diesel reimbursement according to the scheme that existed before. If with great zeal tax-free diesel supply for yachts begins, let this be done for agriculture too. With two tankers of diesel for yachts it ends and the needs of agriculture are met. Therefore, if it is truly required to keep agricultural production afloat, to powerfully reinstate the tax-free diesel scheme, which is emergency because diesel accounts for 70% of agricultural production cost, as it is used not only for work with agricultural machinery, but also for greenhouse heating. The same for plastic. What is alarming and this was also shown by INSTAT figures for the first two months of this year, is that domestic agricultural production is in sharp decline. According to INSTAT, just these first two months we have a 33% decrease in agricultural exports and a 23% increase in agricultural imports, deepening once again the trade deficit.
This is reflected in the extraordinary increase in market prices of agricultural products. Tomatoes have exceeded 4,000 old lek per kg, precisely from the decrease in domestic production supply and since the market is already controlled by a few hands, by oligopolies, they also set prices. If we go out to the markets of Tirana, and all of Albania, we will see a dominance of imported fruit and vegetable products and this happens in a country that has all the conditions for year-round production of these items. So a country that has 300 days of sun, that has water, has fertile land, it is an injustice not to be able to provide these products for feeding the population and not even for export. Therefore, a review of the scheme is required and that thresholds be removed, we have said and emphasized strongly. It is also unconstitutional to set discriminatory thresholds for persons and individuals who have the means to manage their agricultural and livestock farms.
And what is most important, urgently either through a normative act or through a draft law in Parliament, an additional agricultural funding package should be approved, which should be no less than 100 million euros and a reduced VAT at 5%. Only with these measures can the decline of agriculture be stopped and its recovery projected in the future. Thank you!