Government Support of Agriculture in Russia

The state has been actively assisting agricultural producers by financing them from various sources, such as the federal budget or the regional programs aimed at developing the agrarian sector. If the farm becomes involved in the program of developing the agro-industrial complex (AIC), the state provides a loan for business expansion. Just the proper set of documents will be required for this. It is possible to receive subsidies for starting one’s own business in the agricultural sector.

You can leave all the legal aspects of doing paperwork and obtaining subsidies to our company. We have the lawyers specialized in the farmland law in Russia.

But government support is not limited to this.

What Federal Programs are Available for the Owners of Agricultural Enterprises?

Russian agricultural complex includes about 13% of production capacity. Up to 14% of labor resources are involved here, and this area produces about 6% of GDP. These are quite low indicators of GDP in comparison with Canada, the United States or Brazil, but they will constitute the future growth driver for Russian agricultural producers with the implementation of new technologies for tillage and the usage of modern equipment. The agricultural complex is developing every year in order to ensure the country's food security and to create the basis for stability.

Taking such significance into account, many beneficial programs and sub-programs for investors as well as business representatives are being developed. They will cover all the spheres of the agro-industrial complex of Russia both in plant growing and livestock production. The government is developing new programs for the advancement of winemaking, horticulture, and an increase in food resources for expanding the livestock (goats and sheep) production in the southern regions of Russia.

  • Plant growing is developing. The products grown are better sold and more efficiently processed;
  • Livestock production has been supported. Processing and marketing of raw materials are carried out very carefully;
  • Beef production rates are increasing and ameliorative development of territories is expanding;
  • Production processes are being modernized and the innovative technologies are being introduced;
  • Government subsidizes small-scale producers (peasant and ordinary farms).

It is worth mentioning the state program for the development of agriculture, which was introduced in 2013. It includes the most effective mechanisms of regulating markets for products and raw materials. As a result, the production index in this area exceeded in 2018 constituting 119.6%.

Dozens of people in the country receive free financial help from the federal budget for the development of infrastructure, logistics, and the industry as a whole. By 2020, new farmers will receive more than 1.5 billion U.S. dollars converted from rubles. Such farms include family livestock enterprises as well. In addition to subsidies, beneficial credit terms and tax breaks are provided.

What Benefits do Agricultural Producers Receive?

In many industries, income tax is 20%. However, the representatives of the agricultural sector belong to the preferential category. Therefore, a reduced tax rate of 6% is provided for them. In addition, business owners in the agro-industrial complex are exempt from transport tax as well as some other fees. Farmers are partially compensated for the cost of seeds, fuel, and fertilizers. There are no other industries like this in Russia where tax conditions would be as favorable as in the agricultural sector.

Over the past few years, agriculture has overtaken the arms exports and has become the third sector of economy after gas and oil industries. Food expenses in Russia constitute nearly 35-40% of all the expenses of an average family. Therefore, the return on investment is almost guaranteed. In addition, it is worth remembering that the prices for agricultural lands significantly differ in Russia and Europe, and at the moment, Russian lands are several times cheaper. Over the last 5-7 years, with the growth of production in the agro-industrial sector, there has been an influx of foreign investors in this area, who already own from 15 to 18% of agricultural enterprises and lands in Russia. Due to this, the prices for Russian land began to grow annually by about 12-15%.

Our experts will find and our lawyers will help you to deal with the legal aspects of purchasing land in Russia, which will definitely bring benefits to its investors.