Lithuania Really Does Not Have Independence: Farmers say that the new tax introduced by the EU takes away all profits, we will not last long. We will be left without agriculture

 

“Lithuania, as an EU member, is currently implementing the Carbon Border Adjustment Mechanism (CBAM) – a “carbon tax” on goods imported from non-EU countries that apply less stringent environmental standards.

 

Grain growers calculate that it will “eat up” all their profits, because last year, when it was a difficult year, profitability per hectare reached only 50 euros, and due to the tax, fertilizers will “eat up” this income. Metals imported from third countries are also becoming more expensive, and it is likely that this will also affect cement. This tax is intended to curb the import of cheap products from third countries, such as Russia and China.

 

However, industrialists say that although CBAM will hit agriculture hard, when viewed on a national scale, it may be beneficial. For example, Achema, which has had difficulty competing with cheap Russian fertilizers (sanctions do not apply to them), will be able to recover as prices will rise.

 

Audrius Vanagas, chairman of the Lithuanian Grain Growers Association, and Rimas Varkulevičius, secretary general of the Kaunas Chamber of Commerce, Industry and Crafts, discuss the benefits and harms of CMAB on the show “Business Attitude”.

 

“A new reality, a new madness. Since autumn, prices have already risen by 60 euros per ton of nitrogen fertilizers and this is not the end. It is likely that they will rise by the same amount in March. We all know very well that only 50-60 percent of those who have secured them for spring fertilization. Fertilizers from third-party fertilizers are practically not imported, because there is chaos with the calculation methodology itself. Local manufacturers are using this. Our politicians are silent,” explains A. Vanagas and says that this year it will cost Lithuanian farmers an additional 60-100 million euros. The amount will continue to increase until 2034. The problem is big, because it is unclear how the tax itself will be calculated, because two options can be used: based on actual or assumed emissions.

 

According to A. Vanagas, accredited assessors who will inspect factories in third countries have not even been verified yet. The tax is extremely confusing and very difficult for an ordinary farmer to understand. Ammonium nitrate itself may not cost anything, you will have to pay 300 euros for taxes alone.

 

According to the association's calculations, the price per hectare will increase by 50-60 euros. Last year, when the year was bad, there was a full profit. On average, the profitability of grain crops in normal years is about 300 euros per hectare.

 

"Farmers joke that money has decarbonized and we have reached zero balance sheet values. If the price of grain continues to remain at eight-year lows, we will not last long," says A. Vanagas, who does not lose optimism.

 

R. Varkulevičius says that this should sound like honey to some industries, but there is concern. Products, especially those consumed on the local market, are becoming more expensive due to the tax and the market is disappearing. There must be compensation and support mechanisms.

 

“Industry is not only about fertilizer production. For a sheet of metal that costs 700 euros, you have to pay an additional 150 euros in this tax. This eats up all the profits of companies. In addition, there are problems with competitiveness,” R. Varkulevičius argues, and says that it is strange to talk about clean air when we spend money on weapons. It is also strange that no one is talking about preserving the industrial and agricultural sectors, although it is clear that this will require huge financial resources. Support must be provided now, not in 2034, because by that time there will be neither farmers nor the chemical industry.

 

“We have repeatedly expressed our opinion on green policy issues to our MEPs and suggested that they wake up. This is not 2010, when we joined the prosperous EU. We need to take into account the USA, free trade agreements with South America or India,” R. Varkulevičius argues and says that he tried to explain to metal importers how to calculate CBAM, but there was no clarity.

 

A. Vanagas says that farmers are the primary link that absorbs everything in the local market. The cost of construction, implements, and machinery is increasing. For example, one turnip, which is used for a plow, has become 30 percent more expensive because taxes have increased. This will automatically increase inflation.

 

“This is a slow death,” A. Vanagas assures.

 

R. Varkulevičius says that a signal has been sent to the industry that it can recover because it will have protection, but in the long run, consumption will fall. Another question is where the increased VAT collection and increased cash flows from this tax will go, as will the increased prices. There must be compensation mechanisms so that the consumer does not suffer.”