Horticultural Association: Finnish vegetables sold cheaper due to subsidies

Approximately 30 percent of the vegetables consumed in Estonia were grown domestically last year. Raimond Strastin, CEO of the Estonian Horticultural Association (Eesti aiandusliit), says Finland has a competitive advantage due to tax breaks and subsidies and "common sense" is needed.
Data from Statistics Estonia shows 29 percent of the vegetables consumed in Estonia last year were produced in the country. Ten years ago, the figure was 60 percent.
Strastin said that a decade ago, vegetable growers predicted that self-sufficiency would remain around two-thirds, but it has now fallen to half of that.
"There is a lack of stability and a secure business environment, various tax increases in a relatively short period. If you look at neighboring countries, there have not been such major disruptions, and food production in agriculture is supported as much as each country can afford. Latvia and Lithuania have implemented various tax breaks. For example, Latvia has a reduced VAT rate for domestically grown fruits and vegetables. That's how the sector is supported there," he told ERR.
"If we look at the example of Finland, Finnish cucumbers really are cheaper thanks to the country's decision to provide square-meter-based subsidies for domestic horticultural producers using greenhouses. This support has been in place since they joined the European Union. And when Finnish cucumbers eventually make their way here – at a significantly lower price than ours — it is naturally easier to bring them to Estonia at a lower cost and a more attractive price for retailers," Strastin explained.
The value-added tax (VAT) rate on fruits and vegetables in Estonia is 22 percent, rising to 24 percent in July. In contrast, the rate is 5 percent in Latvia and 12 percent in Finland.

Strastin said that Estonia's neighboring countries also apply lower excise duties on fuel used to heat the facilities necessary for growing vegetables.
He also cited the high price of Estonian cucumbers as a result of retail chains' pricing models, which currently do not favor domestic fruits and vegetables.
"Why not apply some common sense or a bit more thoughtful logic in the pricing model itself? For instance, instead of putting a 100 percent markup on cucumbers and tomatoes, apply a 20 percent markup. And then put, say, a 200 percent markup on Fanta and Coke," he said.
Vegetable prices have jumped significantly over the past year, with the price of cucumbers rising the most. In April of last year, the average price per kilogram for locally grown long and short cucumbers was €4.07. This year, the average for the same month rose to €7.31.
CEO of Grüne Fee Kristo Eisenberg, Estonia's largest producer of cucumbers, lettuces and herbs, said the sharp price increase stems from retailers. He noted that their price for Luunja long cucumbers has gone up about 10 percent over the past year.
"The biggest improvements could come in the area of energy security. It comes back to Estonia's long-term energy policy. Let's say that the things left undone in the past now need to be addressed within the next three to five years. Even looking just at our sector, we are now seeing the most painful statistics—the drastic decline in Estonia's vegetable self-sufficiency," he said.
Eisenberg said such statistics have been ignored for a long time.
"The government should focus on what kind of tax exemptions or subsidies it could provide to the sector's key enterprises, whether through labor tax relief or VAT exemptions," the Grüne Fee CEO added.
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Editor: Mirjam Mäekivi, Helen Wright