Russia plans to introduce a permanent floating-rate tax on wheat exports starting June 2. Both the new levy, and Russia’s temporary fixed-rate export tax that takes effect Feb. 15, are intended to help control domestic food prices.
Russia’s export curbs are contributing to a global rally in wheat prices and stirring concerns about food inflation worldwide. Protectionist measures have also been enacted in Ukraine and are being considered in Argentina.
In December, the Russian government announced temporary trade restrictions for certain grains and oilseed products, despite record 2020 production. Russia imposed an export quota of 17.5 million tonnes on a combination of grains for the period Feb. 15 to June 30, 2021. It also imposed an export tax for wheat of 25 euros per tonne, which rises to 50 euro/tonne on March 1.
The rate for the permanent floating-rate tax will be 70% of the difference between the base price of wheat per tonne and $200.
Imposing a permanent tax represents a major change in Russia’s export policy. Here at Gro we are concerned that the new tax could impact trade flows for Russia’s new winter wheat crop and place a greater burden on competing nations such as the EU, Ukraine, Australia, and possibly the United States to make up any supply shortfalls. The new tax also could reduce Russian planting of a new spring wheat crop.
In Gro’s webinar, “Will Trade Restrictions and Crop Prospects Curtail Wheat Supplies?” we explored the impact of trade restrictions on global wheat supply and demand balances, and assessed the outlook for new Northern Hemisphere wheat crops.
You can watch a recording of the webinar here.
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