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6 Feb, 2021 06:11

Russia needs regulations for grain exports to control rising food prices – Putin

Russia needs regulations for grain exports to control rising food prices – Putin

Russian President Vladimir Putin has called for the creation of a mechanism for regulating grain exports, to help domestic agriculture and curb rising food prices on the domestic market.

“Russia is one of the largest exporters of commodities,” he said, during a meeting with Minister of Economic Development Maxim Reshetnikov this week, mentioning energy and agriculture as examples.

“We focus on the exchanges located outside the country, with grain as an example. The situation in the global food market is worsening,” Putin said, stressing that there is a need to establish a mechanism to help domestic agriculture.

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According to Reshetnikov, his ministry will launch a permanent grain export instrument as soon as April 1. A formula-based export tax for grains, which the Kremlin had previously planned to switch to from fixed-value tariffs that had been imposed on grain exports, will come into effect from February 15.

The minister added that the new mechanism would become a permanent “price damper” aimed at “preventing global price fluctuations and high global prices from affecting Russia’s domestic market.”

Starting April 1, Russian grain exporters will have to register their contracts at one of Russia’s bourses, which would then calculate a price indicator for the formula, according to Reshetnikov.

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Last year, Russia introduced an export limit of 17.5 million tons for grains such as wheat, rye, barley and corn, for the remainder of the marketing year in order to curb rising domestic food prices. The step also includes an export tax on wheat of $30.40 per ton. Later, the export duty for wheat was raised to $60.59 per ton, effective from February 15.

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