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Russia doubles wheat export tax to stabilize domestic food prices

Russia doubles wheat export tax to stabilize domestic food prices
Export duty on Russian wheat has been doubled to €50 ($60.44) per ton from March 1. It will remain in force until a permanent floating tax is imposed in June.

The levy was introduced in February in a bid to protect domestic supply and stabilize the prices for flour and bread, and will be applied for certain grains under an export limit of 17.5 million tons for the remainder of the marketing year during the current season. The wheat tax does not apply to member countries of the Eurasian Economic Union.

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The Russian authorities have also approved the raising of export tax on corn and barley to €25 ($30.23) and €10 ($12,09) respectively. Exports of Russian rye are not subject to the tax.

“The measure will reduce exports, and will help to refocus market players from selling agricultural commodities to exporting agricultural goods with high added value,” the government said in a press release.

The current measure will expire on June 2, when the so-called floating tax will be imposed on wheat, corn, and barley. The measure will oblige sellers to register their export contracts on the Moscow Exchange.

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Under the floating tax system, the base price indicator for wheat has been fixed at $200 per ton, so it will kick in only if the calculated market benchmark price is above the $200-per-ton threshold. For corn and barley, the base price indicator is set at $185 per ton.

According to the government, the scheme will minimize the negative impact of the price fluctuations seen globally on Russia’s domestic market.

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