What prevents retailers from giving out expired food to the poor
Every year, tons of food is sent to landfill in Russia. It is too costly for retailers to participate in foodsharing, a movement that helps people get food for free. It is many times cheaper to dispose of food than to do charity work. The problem lies in the taxes you have to pay to do so. For several years now the abolition of VAT on expired products has been discussed in the country. And now the Ministry of Finance, the main ideological opponent of tax breaks, seems ready to give up. NEWS.ru reports on whether there will be more free products for the poor in Russia.
Easier to throw away
Retail chains and catering establishments regularly discard products that have expired or are past their sell-by date. It would seem that instead of sending these products to landfill, they could be distributed to the poor. The problem is that retailers do not benefit from this charity because of the financial losses.
Today, retailers have to pay VAT (up to 20% of the cost of products) for goods that they give to charity, rather than sell, said Anna Uspenskaya, founder of the Foodshedding Moscow volunteer movement and co-founder of ANO Foodshedding. The price of recycling organic waste is several times lower, up to 1% of the cost of the product. The difference is huge, she points out. Unbelievably, but it is a fact – not only VAT had to be paid before, but also income tax on the products they gave away for free. True, it was abolished not so long ago.
Proposals to abolish VAT have been made more than once – by food producers, State Duma deputies and retailers alike. According to Anna Uspenskaya, Foodshed activists sent several appeals to the Ministry of Finance to consider these amendments, because it was the Ministry of Finance that opposed them, fearing that it would reduce budget revenues.
It seems that with the abolition of VAT on products there will be less money flowing into the state treasury. In reality, because companies are forced to pay tax on the products they give away for free, the amount of such donations is not that big on a national scale. In fact, now the budget does not receive this tax anyway, because the products are sent to landfills,” she told NEWS.ru.
And the authorities have finally heard the activists and benefactors. Anna Uspenskaya attributes this to the “cumulative effect” – there have been too many appeals and attention to the problem. At the end of November, it became known that the Ministry of Finance was working on a proposal to exempt not only producers but also retailers from VAT on products with an expiry date – from one day to four days before it expires.
If the relevant amendments are adopted, companies which have so far donated products to charity solely on the basis of verbal agreements (i.e. through informal schemes) will be able to do so freely and openly. The number of people wishing to help those in need will grow and the volume of food donations could increase several times over, Uspenskaya predicts.
It is really unprofitable nowadays to donate expired products to charity, as you have to pay value-added tax for it. Of course, it is easier just to throw it away! – notes Mark Goikhman, chief analyst at TeleTrade.
If the taxation system is changed in this respect, it could really help solve many problems without causing serious harm to the budget, he believes.
Life without waste
This is not only a matter of supporting the poor, but also of reducing environmental damage. More than 20 per cent of all municipal solid waste is food waste, which is harmful to the environment. In landfills, mixed with other types of waste (plastic, metal) and slowly decomposing, they release toxic substances into the air, thereby increasing the greenhouse effect.
In 2019, experts from the Russian Electronic Communications Association (RAEC) and the consultancy company TIAR-Centre estimated that about 17 million tonnes of products end up in landfill every year in Russia. They would be enough to feed 30 million people for a year (more than the number of Russians living below the poverty line), and obviously, without all those tonnes ending up in landfill, the environment would suffer less.
According to the UN, the global food losses amount to $750 billion annually, while in the Russian Federation, according to Russian experts, they are estimated at 1.6 trillion roubles. These figures look bleak against the background of Russian poverty, which officials at all levels of government are trying to tackle. However, with the development of food-sharing, a movement to distribute food to both the needy and those who choose to consume responsibly, this problem could be partially resolved.
According to foodsharing.ru, in the six years of the project’s existence, almost 550 tonnes of food have been saved. However, this figure could have been higher.
Shops often don’t have enough staff to reject goods in a timely manner, and they still need to collect, process and hand them over to volunteers,” notes Vyacheslav Cheglov, professor at the Plekhanov Russian Economics University’s Trade Policy Department.
According to the expert, volunteers could be invited to check expiry dates and marketability themselves and prepare goods to give them to charities. But there are too many unresolved problems, he says. Therefore, it may not be superfluous to return to the issue of creating specialised processing enterprises, which on contractual terms would help to permanently close this issue.