Improving the Efficiency of State Support for Agricultural Producers: Legal Issues

Lebedeva Tat'yana Sergeevna PhD in Law Associate Professor of the Department of Economic Security and Law, Russian State Agrarian University named after K.A. Timiryazev 127434, Russia, Moscow, ul. Timiryazevskaya, 49 lebedeva.t@rgau-msha.ru

The agricultural sector of the Russian Federation has been showing intensive development rates over the past decade ^[5]. Meanwhile, in the conditions of an increasing number of economic sanctions, these rates not only cannot be reduced, but also need to be increased in order to ensure stable food independence, economic and physical availability of food.

Ensuring the sustainable development of the agricultural sector involves the application of the entire range of measures of state support for agricultural producers. Such measures should be provided by law, and the legal regulation of relations related to the provision of state support to agricultural producers should correspond to the present socio-economic state of the agricultural sector.

Restrictive measures of an economic nature applied today to the Russian Federation predetermine the study of the current legal provision of the mechanism of state support for agricultural producers, the identification of difficulties faced by farmers, agricultural organizations and the definition of directions for its improvement.

The fundamental legal act in the field of state support for the agricultural sector - Federal Law No. 264-FZ of December 29, 2006 "On the Development of Agriculture" (Federal Law of the Russian Federation. 2007. No. 1 (1 part) of Article 27.) does not contain a definition of the concept of "state support for agricultural producers". It seems that the content of the mechanism of state support is revealed through a set of directions (measures) of such support, enshrined in this Law and the State Program for the Development of Agriculture and regulation of markets for agricultural products, raw materials and food, approved by the Decree of the Government of the Russian Federation dated July 14, 2012 No. 717 (SZ RF. 2012. No. 32. St. 4549).Based on the analysis of these regulatory legal acts, the whole range of state support measures for agricultural producers can be classified as follows ^[3]:

- gratuitous provision of budgetary resources to agricultural producers directly or indirectly (subsidies);

- provision of benefits (tax, energy resources, railway transportation of grain);

- acquisition by the state from agricultural producers of agricultural products produced by them (procurement interventions, collateral operations, supply of agricultural products for state and municipal needs);

- provision of services (provision of state guarantees and guarantees, services of competence centers, information and consulting services).

The most operational effect on the financial and economic activities of agricultural producers is provided by measures related to the gratuitous transfer of budgetary resources to them - subsidies. However, there are a number of difficulties faced by farmers and agricultural organizations in obtaining such support.

The general rules for granting subsidies are set out in Article 78 of the Budget Code of the Russian Federation No. 145-FZ of July 31, 1998 (Federal Law of the Russian Federation. 1998. No. 31. St. 3823), in accordance with paragraph 1 of which subsidies are provided on a gratuitous and irrevocable basis in order to compensate for lost income and (or) financial security (reimbursement) of costs in connection with the production (sale) of certain goods, performance of works, provision of services.

With the adoption of constitutional amendments in 2020, the subjects of joint jurisdiction of the Russian Federation and its subjects (Article 72 of the Constitution of the Russian Federation) were expanded, and now the agricultural sector at the constitutional level belongs to the subjects of jurisdiction of both the federal and regional levels ^[1]. This means that the subjects of the Russian Federation have the right to independently participate in solving the needs of agriculture in the region, adopt regulatory legal acts and provide state support to agricultural producers on their own. At the same time, such regional subsidies are provided on the terms of co-financing from the federal budget. The conditions and procedure for granting subsidies to the budgets of the constituent entities of the Russian Federation are defined in the above-mentioned State Program. Municipalities also participate in the mechanism of state support by subsidizing agricultural producers ^[6].

According to the State Program , the following subsidies are provided on the terms of co-financing:

1. For the development of branches and sub-sectors of plant and animal husbandry (Appendix 7, Appendix 8): "unrelated support", support for dairy cattle breeding, support for beef cattle breeding, support for breeding cattle breeding, support for elite seed production.

2. Support for agricultural producers (Appendix No. 6, Appendix 8). In this area of state support, the following types of grants in the form of subsidies are provided to peasant (farmer) farms and agricultural consumer cooperatives (hereinafter referred to as SEC):

- "Agrostartap" for farmers (up to 6 million rubles);

- "Agroprogress" for farmers (up to 30 million rubles);

- for the development of the material and technical base for the SEC (up to 70 million rubles);

- for the development of a family farm (up to 30 million rubles).

3. Reimbursement of part of the cost of paying interest on loans (Appendix 9). To participate in the mechanism of preferential lending to agricultural producers, the Ministry of Agriculture of the Russian Federation must recognize a Russian credit institution as an authorized bank. Currently, two authorized banks are more involved in the preferential lending mechanism: JSC "Rosselkhoznadzor" and PJSC Sberbank, which issue preferential short-term (for up to one year) and preferential investment loans (for a period of two to 15 years) at a rate from 1% to 5%. The difference between the market rate and the preferential rate to the authorized bank is compensated by the state.

4. Stimulating an increase in the production of oilseeds (Appendix 11 (1)). Oilseeds in the State Program are soy beans and (or) rapeseed seeds. The subsidy is provided at rates based on 1 ton of increase in the volume of production of oilseeds to agricultural producers, scientific organizations, educational organizations that, in the process of scientific, scientific-technical and (or) educational activities, carry out the production of oilseeds, their primary and subsequent (industrial) processing.

5. Development of rural tourism (Appendix 12). The Agrotourism grant is the funds of the budget of the subject of the Russian Federation provided to the recipient of funds for financial support of his expenses related to the implementation of the rural tourism development project. The grant amount is up to 10 million rubles.

The receipt by agricultural producers of state support in the form of subsidies presupposes their compliance with a number of conditions and obligations arising in connection with the provision of such support. Legal liability measures are provided for establishing the fact of misuse of budget funds, providing false information when receiving a subsidy, in case of non-compliance with the deadlines for spending budget funds, as well as in case of violation of other obligations ^[4].

The use of budgetary funds for the intended purpose is a fundamental obligation when receiving a subsidy. The targeted nature and targeting of budget funds means that budget allocations and limits of budget obligations are communicated to specific recipients of budget funds with an indication of the purpose of their use, which is enshrined in Article 38 of the Budget Code of the Russian Federation. The purpose of the grant is indicated in the agreements concluded with the regional bodies of the Ministry of Agriculture of the Russian Federation, which, among other things, establish the obligations of farmers, agricultural organizations, SEC on the terms of use of the subsidy, on job creation, on the availability of own funds for the construction of a farm, requirements for purchased agricultural machinery and a number of others (obligations related to intended use). In accordance with Article 306.4 of the Budget Code of the Russian Federation, the misuse of budgetary funds is recognized as the direction of budget funds of the budgetary system of the Russian Federation and payment of monetary obligations for purposes that do not fully or partially correspond to the goals defined, including the contract (agreement) or the legal act that is the basis for the provision of these funds.

Improper use by an agricultural producer of state support funds entails the withdrawal of subsidies in an undisputed manner (civil liability), as well as in the presence of a crime, criminal prosecution under Article 285.1 of the Criminal Code of the Russian Federation "Misuse of budgetary funds", or under Article 159.2 of the Criminal Code of the Russian Federation "Fraud in receiving payments" (Criminal Code of the Russian Federation No. 63-FZ of June 13, 1996. Federal Law of the Russian Federation. 1996. No. 25. St. 2954).

At the same time, the regional legislation provides for the return of the subsidy not only because of its misuse, but also in case of violation of related obligations that have an indirect impact on the creation and functioning of an agricultural producer (violation of the terms of expenditure, provision of false information when receiving a grant, etc.), which leads to the termination of the activities of such farms.

For example, in the Krasnoyarsk Territory, the obligations of a farmer when receiving a grant in the form of a subsidy are (Resolution of the Government of the Krasnoyarsk Territory of May 5, 2014 No. 183-p "On approval of the Procedure for granting grants to novice farmers ...". The official Internet portal of legal information of the Krasnoyarsk Territory http://www.zakon.krskstate.ru , 07.05.2014): creation of at least two permanent jobs; spending of the grant within no more than 18 months from the date of its receipt; purchase of new machinery and equipment at the expense of the grant for no more than three years; spending of the grant from the settlement account only by cashless settlement. To receive a grant, a novice farmer must comply with such conditions as: a farmer's farm must be the only place of employment of his head during the entire period of the business plan implementation; there must be no unfulfilled obligations to pay taxes, fees, insurance premiums, penalties, fines, interest; the applicant must not have previously been a grant recipient; the presence of agricultural education or work experience in agriculture for at least three years and a number of other conditions. In cases of establishing the fact of non-compliance with the above obligations, as well as providing false information when receiving a grant (obligations accompanying the intended use), the measure of responsibility, as well as for its misuse, is the return of the grant voluntarily or in court.

The analysis of judicial practice shows (n-r, decision of the Arbitration Court of the Krasnodar Territory dated March 18, 2016 in case no.A32-34286/2015 // URL: https://ras.arbitr.ru /) that in case of breach of obligations (for example, the absence of own funds on the settlement account to finance the construction of the farm, which appeared on this account later), accompanying the intended use, the courts refuse to the regional Ministries of Agriculture of the Russian Federation to recover the grant funds, which seems quite logical and justified, since if the purpose for which the subsidy was allocated was achieved, but its achievement was accompanied by a violation of the conditions for granting the subsidy, then this should not be the basis for a refund. In this case, it is impossible to equate liability measures in the form of a refund of grant funds in the form of a subsidy in case of its misuse (which is quite natural) and in case of violation of other accompanying conditions and obligations, since such violations have an indirect impact on the creation and functioning of a peasant (farmer) economy, and the subsidy is spent for its intended purpose, the farm is created and functioning. At the same time, virtually every on-site inspection of the regional Ministry of Agriculture of the Russian Federation ends with the identification of any of the listed violations. In case of recovery of subsidy funds, the farmer will have to sell equipment and farm animals. Such material losses will destroy a functioning economy, created, among other things, at the expense of budgetary funds, will lead to the dismissal of employees.

In this connection, it seems appropriate in regional regulatory legal acts for non-compliance with the obligations associated with the intended use arising in connection with the receipt of a subsidy, to replace such a measure of responsibility as the refund of grant funds with penalties, which on the one hand will be a measure of responsibility, and on the other hand, will allow the agricultural producer to continue the actual activity and maintain jobs in your household.

The next noteworthy problem faced by agricultural producers - recipients of subsidies is the unlawful refusal of regional bodies in the field of agriculture to participate in the competitive selection for subsidies, or to grant subsidies to such farms. In this case, the restoration of violated rights is possible in two ways: appealing against the actions (omissions) of officials of the Regional Ministry of Agriculture of the Russian Federation according to the rules of Chapter 24 of the Arbitration Procedural Code of the Russian Federation No. 95-FZ of July 24, 2002 (NW RF. 2002. No. 30. St. 3012), as well as by filing a statement of claim for compensation of losses from the regional Ministry of Agriculture of the Russian Federation.

However, the second method of restoring violated rights is possible only if the non-received subsidy is recognized as losses, that is, in the case of the application of civil legislation to property, public budgetary relations ^[2]. Whereas numerous judicial practice clearly demonstrates that only non-property claims related to the appeal of unlawful decisions of the regional Ministries of Agriculture of the Russian Federation are declared in court. Such decisions, as a rule, are not enforceable (for example, the Decision of the Arbitration Court of the Nizhny Novgorod region of January 18, 2017 No. A43-19990/2016) – do not lead to a subsidy, since the winners have already been determined, and budget funds have been distributed. In this case, it is not necessary to talk about restoring the rights of agricultural producers to receive subsidies.

In order for the constitutional right of agricultural producers to judicial protection not to be violated, Article 78 of the Budget Code of the Russian Federation, which defines the procedure for granting subsidies, must be supplemented with a provision on the recognition of non-received subsidies as losses in the form of lost profits, which will allow the application of civil legislation (Articles 15, 16 of the Civil Code of the Russian Federation) by analogy with the law in terms of recovery losses when it comes to non–fulfillment of budgetary obligations to the recipient of the subsidy - an agricultural producer. In this case, it will be possible to declare in court not only non-property claims to appeal the actions (omissions) of state officials, but also property claims to recover losses in the form of lost profits. Accordingly, losses caused to a farm, agricultural organization or SEC as a result of illegal actions (inaction) of state bodies, their officials will be compensated The Russian Federation or the relevant subject of the Russian Federation in accordance with Article 16 of the Civil Code of the Russian Federation.

Thus, the solution of the identified problems faced by agricultural producers when receiving subsidies as a measure of state support will reduce administrative barriers to participation in such programs, will contribute to the development of branches and sub-sectors of agriculture, the preservation and creation of new jobs in rural areas and, in general, will have a positive impact on ensuring food security of the Russian Federation.

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