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Full impact of Russian grain duties to come next season

  • Market: Agriculture
  • 15/02/21

The full effect of export duties on Russian grains is unlikely to be felt until the next marketing year, when shipments out of the country could fall significantly, experts told participants of an online conference in Moscow last week.

The Russian government's export duties for the grains sector were launched today, starting with a €25/t ($30.33/t) levy on wheat shipments, which will be raised to €50/t from 1 March. Similar duties for corn and barley exports are due to follow from mid-March.

But these fixed duties are set to be replaced by floating tariffs from 2 June and into the new 2021-22 marketing year from July. And with the launch of the floating duties coinciding with tighter regulatory measures on grain quality, it is then that the full impact of the new levies for exports are likely to be properly felt by the market, guests were told at the conference held by Russia's Institute for Agricultural Market Studies.

The measures will have a restrictive impact not only on Russia's export potential, but also the development of the country's agricultural sector overall, with small and medium-sized farmers likely to struggle the most with the new compliance procedures for grain quality checks, the general director of Agrozan Commodites, Sabina Sodikova, said.

The imminent export duties will begin to disincentivise production of the crops most affected by the measures from next season, Russian Grain Union vice-president Alexander Korbut said. This could lead to a long-term reduction in wheat planted area particularly and have a knock-on effect on other Russian markets as producers' profit margins narrow, he said.

Russia is expected to export about 39mn t of wheat during the continuing 2020-21 marketing year to 30 June, according to the latest projections from the US Department of Agriculture, up from 34.5mn in 2019-20 and 35.9mn in 2018-19. This comes after the country's production this season is estimated to have turned out its second-highest level on record, at 85.3mn t.


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