Regulation of Competition in the Agro-Industrial Complex Using Tax Policy Mechanisms

The Russian agro-industrial complex has demonstrated consistent growth in recent years. However, this growth is characterized by significant asymmetries, driven by the increasing dominance of large agricultural holdings and the persistent vulnerability of small agricultural producers. Growing holdingization and the small farms displacement impose constraints on the development of rural areas, reduce the sustainability of growth rates in agricultural production, and contribute to rapid increases in food prices. While the agro-industrial complex benefits from preferential tax policies, including a zero percent profit tax rate, these tax regimes are not differentiated between large agricultural holdings and smaller agricultural enterprises, unlike in other sectors where small businesses receive targeted fiscal support. There are opportunities to promote competition through tax policy designed to reduce industry monopolization. This study provides a quantitative analysis of concentration trends across sectors of the agro-industrial complex from 2016 to 2023, highlighting significant increases in market concentration within pork, poultry, and sugar production and prospects for further monopolization. The paper evaluates tax burden on agriculture in comparison with other industries, as well as the potential for increasing it for large agricultural holdings. According with public finance theory, the study proposes differentiated tax measures for small and large agricultural producers. On the one hand, it advocates for stricter eligibility criteria for the zero rate for profit tax and the unified agricultural tax for enterprises affiliated with agricultural holdings. On the other hand, it recommends additional tax incentives and subsidies for small and young agricultural producers, such as reduced unified agricultural tax rates and compensation for VAT payments.

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