UPDATE: Russia’s floating grain export tax to use exchange price: minister

Russia will again adjust its export tax regime and aim to have a long-term system in place by April, which would use local exchange-based reference prices to set floating export duties as the country looks to control the impact of high prices on its economy.

Economy minister Maxim Reshetnikov told President Vladimir Putin in a Thursday meeting that from April 1, exporters will have to register trades with a local exchange, with those contract figures feeding into a reference price that can then be used to calculate export taxes.

Under the current system, officials rely on customs declarations for previously struck deals, with the lag between trade and execution dates not reflecting price differences.

Later Thursday, Reshetnikov said the government will tax wheat exports at 70% of the difference between the floating level and a $200/mt floor price.

Barley and corn shipments will fall under the same floating tax regime but with a base price of $185/mt.

Full details of the new system are to be finalised by March 1.

Reshetnikov’s comments follow a meeting between the agriculture ministry and trade representatives that looked to find a long-term solution to high domestic grain prices.

A benchmark developed by the Moscow Exchange could be used as the reference point for grain export prices, Eduard Zernin, chair of industry lobby group Rusgrain Union told local press agency Interfax on Wednesday.

Inflation

Russia has been at pains to stop high global grain prices, leading to inflation in the Russian domestic market in recent months.

Meanwhile, the country’s government has introduced a series of piecemeal measures that have struggled to curb prices or the pace of overseas sales from the world’s biggest wheat exporter.

Under the current system, which runs to June 30, wheat exports fall under a 17.5 million mt grain export quota, with exports subject to a €25/mt duty from February 15-28 and €50/mt from March 1-June 30.

Corn is to be taxed at €25/mt from March 15-June 30 and barley at €10/mt.

Any grain exports beyond the 17.5 million mt quota are to be taxed at 50% of the declared value of the product with a minimum duty of €100/mt.

UPDATE: Adds later announcement of $200/mt base price, 70% export duty.