Farmers Oppose VAT Hike to 12%: “This Will Lead to a Wave of Bankruptcies”

The Farmers’ Power Association strongly rejects the Ministry of Finance’s proposal to raise the VAT rate on cereals and oilseeds from 8 to 12 per cent, warning that the move could trigger a wave of bankruptcies among small and medium-sized farmers. Representatives of the organisation say the agricultural sector is already facing an extremely difficult period. According to them, diesel prices have risen by around 70% since March 2026, while fertiliser prices have increased by 35-40% since May. At the same time, wheat prices have fallen, while rapeseed prices have plunged under pressure from the Ukrainian market, reports bani.md. Farmers also point to the lack of subsidies for crop producers this year. They note that the Strategic Programme for Agricultural Policy does not provide for direct payments to cereal and oilseed producers in 2027 either. The organisation also says that the impact of natural disasters over the past five years has pushed around a quarter of micro, small and medium-sized farmers to the brink of bankruptcy, while most of the rest are struggling with heavy debt and a lack of funds for investment. According to the association’s calculations, raising VAT to 12% would add around 500 lei per hectare to farmers’ tax burden, or approximately 750 million lei across the cereals and oilseeds sector as a whole. Farmers’ Power considers the measure discriminatory against cereal and oilseed producers. The organisation points out that in EU member states in Southern and South-Eastern Europe, VAT on agricultural products does not exceed 11%, while in France, Italy, Germany and Poland it ranges from 4 to 7%. At the same time, farmers in these countries receive direct payments of between €200 and €500 per hectare. “In the current difficult circumstances, a 50% increase in VAT could be the final straw, triggering mass bankruptcies among micro, small and medium-sized farmers or driving more businesses into the shadow economy,” the Farmers’ Power Association warns. The organisation says it will use all legal means to keep the VAT rate at 8%. It is also calling for an urgent meeting with the Minister of Finance, which would also include the chair of the parliamentary committee on agriculture and the food industry, as well as representatives of the Ministry of Agriculture and the Food Industry.