In a significant policy shift aimed at revitalizing its grain market, Russia has set its export duty on wheat to zero. This decision marks the first time the duty has been eliminated since it was initially introduced in June 2021.
The move comes in direct response to a substantial decline in Russian grain exports. Recent monitoring data indicates that wheat exports in June totaled just 1.1 million tons, representing a four-fold decrease compared to the volume exported during the same month of the previous year.
The abolition of the export duty is anticipated to provide crucial support for domestic grain producers who have been contending with challenging economic and environmental conditions. Farmers are facing escalating costs for essential agricultural inputs, such as fertilizers, fuel, and plant protection products. Furthermore, many regions, including Rostov Oblast, have experienced severe drought, potentially leading to reduced harvests.
Alexey Zhdanov, chairman of the Council of the Association of Peasant Farms and Agricultural Cooperatives of the Rostov Region and head of a farming enterprise, commented on the situation. He noted that low profitability has impacted farmers` ability to purchase necessary equipment and supplies. The zero duty, he suggested, would allow farmers to retain “some pennies” from their sales. While acknowledging the significant impact of the drought on yields, he emphasized the importance of keeping the revenue that would otherwise have gone to the duty.
The policy change is also expected to influence the internal grain market. Zhdanov predicted that the removal of the export duty would likely stimulate a modest increase in domestic purchasing prices for wheat, which are currently at low levels despite the reduced harvest in some areas.
In related agricultural policy decisions, Russia has also permitted the export of rice groats for the first time in three years, establishing a quota of 50,000 tons valid until December 31st. The zero export duty on barley has been maintained. Conversely, the export duty on corn is scheduled to increase to 961 rubles per ton.
Overall, the elimination of the wheat export duty is a calculated governmental measure designed to boost export volumes and improve the financial viability of the Russian agricultural sector in the face of export challenges and domestic pressures.
