November 18 2010, 11:44 Fruit-Inform

The Tax Code will lead to sharp growth of prices for fruits and vegetables and throw production off to several years ago, as to opinion

Adoption of the Tax Code may seriously complicate work of fruit and vegetable business of Ukraine. This opinion is expressed by experts of Fruit-Inform.

“A huge problem in fruit and vegetable business is logistics, namely movement of perishable produce from producer to consumer”, Andriy Yarmak, Head of the Projcet Fruit-Inform, tells. “Currently, this function is carried out by numerous wholesale entrepreneurs, who purchase assortment of produce from producers and importers and deliver it by their own or leased transport to wholesale and retail markets, as well as to supermarket chains. Majority of such wholesalers are subject to single tax, which main advantage is simplified taxation system considerably saving their time”, Mr. Yarmak continues.

Questioning of wholesale trade representatives showed they are ready to pay higher tax rate, but cancellation of simplified calculation system being the most important advantage now will lead to impossibility of doing business efficiently. Besides this, innovations of now proposed Tax Code will complicate interrelations of wholesale trade representatives with farmers, who will have to grant a full package of documents, and purchasers, who will face work with private entrepreneurs to become unprofitable.

At the same time, professional producers of fruits, vegetables and potatoes are not able to supply all their produce directly to consumers, as they pay the most part of their attention to growing, storage and post harvest handling of produce. And supermarket chains being able to purchase big volumes control less than 20% of sales of all fruits and vegetables (the rest is sold through markets). There are practically no large wholesale companies dealing with trade of fresh fruits and vegetables produced in Ukraine, as such development of large-scale business in this sphere requires substantial investments and, in addition, is rather risky. Most large companies are importers.

In such a way, as to Andriy Yarmak, adoption of the Tax Code, as it is proposed, will lead to the following consequences:

1. Shortage of domestic produce in retail trade and sharp growth of prices for it.

2. Sharp decrease of producers' income, as a result of decrease of number of purchasers, and respective drop of production volumes already in 2011 (and consequently, further growth of prices for it).

3. Increase of import volumes of fruit and vegetable produce.

4. Sharp decrease of state budget income.

5. Fall of consumption volumes of fruits and vegetables, as a result of their growth in price, and consequently, health deterioration of Ukraine's population.

In more details, problems of influence of new Tax Code will be covered in course of work of the seventh international conference “Vegetables and Fruit of Ukraine-2010”. This event is to take place at the National Complex “Expocenter of Ukraine”, Kiev, Ukraine, on December 1-2, 2010. On-line registration for participation in the event is available through this link.