The Chamber of Agriculture and Commerce, a non-profit organization uniting Estonian agricultural producers and processors, submitted an appeal to the government and the Ministry of Agriculture on Sept. 8 to compensate farmers for the rising prices of diesel fuel.
"In Britain and France, we saw the protests against gasoline prices rising in relation to the world market. In our case, the Estonian government has introduced the fuel supply to the agricultural producers," said Alar Oppar, chairman of the board.
The farmers say the government should not have stopped the old program under which farmers were compensated with a lump sum by a tax that had to be paid when they bought fuel for 3 kroons per liter.
Instead, the government halted compensation and introduced alternative lower grades of fuel - so-called "dyed fuels" - in red, white and blue varieties, which are subsidized with a 50-cent excise tax on each. But farmers say that the fuel prices are too high, infringing on their ability to make profits from their goods.
"Our problem is that the old model for the compensation of fuel is not being substituted by the new one," Oppar said.
He acknowledged that the problem is heavily linked with the constant strengthening of the U.S. dollar.
The farmers' proposal to the government and Agriculture Ministry asked that the government pay back the lost money from the excise tax, which they estimate to be about 50 million kroons ($2.8 million), though Oppar admitted he was skeptical of the amount.
Oppar said the Agriculture Ministry will make a proposal to the Finance Ministry regarding the proposal, but he said he does not expect the government to change its strategy. He added that the present system is inefficient, because distribution of the subsidies is unclear and loopholes abound. "It will be more effective, if the government adds compensation," he said.
Idar Padar, an expert in the Agriculture Ministry, said the agriculture and finance ministries will try to find a way to reverse the negative consequences of the present situation, but he did not confirm any changes.
"The Ministry of Agriculture does not consider it necessary to restore the compensation for fuel. As far as the ministry knows, many farmers use a low- octane 'red' fuel at a low price," Padar said. Farmers should be able to cope with the excise tax on fuel, he added. He attributed the problem to the overall rise in the price of fuel, and not to a single excise tax.