Agriculture minister: Russian embargo can reduce Lithuania's economic growth more than estimated
Tuesday, August 12, 2014
A failure to compensate the losses suffered by the dairy and meat sectors due to Russia’s restrictions on the imports of food and farm products may shave more than 0.2 percentage points off the Lithuanian GDP growth, Agriculture Minister has said.
After Russia has imposed an embargo on Lithuanian agricultural production, the government is considering not only subsidies for food products but also a reduced 5-percent value-added tax (VAT) rate for vegetable and meat producers.
Due to Russia's ban on import of food products, there is now overproduction of dairy products, while procurement prices for milk are falling and many Lithuanian dairy companies have terminated their contracts with Latvian dairy farms, therefore the state should provide support for not only specific companies, but also for dairy farms, experts told the business portal Nozare.lv.
With Russia having closed its market to most European food products, the first month will be the most difficult for Lithuanian producers, the director of the Lithuanian State Food and Veterinary Service said on Monday.