Cancellation of the import duty on grains to become an important factor for stabilization of wheat prices in Russia – V.Petrichenko
To date in Russia there is an import duty for grain at the level of 5%. However the government plans to cancel it. Why did it decide to change the measure and what changes to expect on the grain market of the Russian Federation in the shortest time we asked to tell the Director of ProZerno, Vladimir Petrichenko.
- Vladimir Victorovich, on February 11 the Vice-Premier of the Russian Federation Arkadiy Dvorkovich stated about the possible imposition of the zero duty for wheat imports in the first quarter of 2013. What is the main reason of the measure?
As you know since the beginning of 2012/13 in Russia there is wheat prices growth. The first measure of the tendency change is the commodities intervention. The next one is grain imports increase by duties cancellation.
- Will it change the geography of the grain exporters to Russia?
There is no decision if the measure to be applied for grains or for wheat only. It is obvious wheat is the key crop in grains imports. Wheat prices increase in Russia faced the maximum rates so the geography has to be changed. Note the measure is for grain commodities of far abroad. According to my data as of the end of January since the beginning of the current MY Kazakh wheat supplies to Russia totaled 250.1 thsd tonnes from the totaled imported of 251.6 thsd tonnes. Thus, since 2012 there is no customs clearance for Kazakh commodities so there are no any board limitations.
As for conjuncture factors imports, those are ineffective to the South of Russia and through the Black Sea ports and on the side of Ukraine, but it is possible to supply it on the North-West of the Russian Federation. Large-scale parties (25-35 thsd tonnes) are possibly to be supplied from America, Germany, France, throughout St.Petersburgh, and probably Kaliningrad and Riga.
If there is the zero duty for maize imports, the stated measure efficiency on the case of wheat is too small. The maize domestic prices in Russia (9000-9400 RUR/t EXW elevator) are not the best one in order to increase imports. On the contrary, in the nearest prospect Russia to become a maize exporter.
In total grain imports in season 2012/13 in Russia including imports from Kazakhstan, I forecast at the level of 1.5*1.6 mln tonnes of grain (excluding rice), including 1 mln tonnes of wheat, 0.4-0.5 mln tonnes of barley (malting one mostly), 34-45 thsd tonnes of maize and 30-40 thsd tonnes of other grains.
- They plan to impose duty cancellation to August 2013. Do you plan to prolong it?
Despite the grain season finishes in June, milling enterprises of Russia work with the old grain till August. So the terms are in order to let the processors to finish all the production plans on the old grain. I consider the measure prolongation is impossible because there is no any benefit of it and after the new crop grain enters the market the imports need to be out.
- Are there any negative sides of the measure presentation?
The stated measure has no any negative sides, almost. On some way it may hurt the rights of the Russian producer of grains. But considering the high level of grain prices in the regions it would be wrong to state the duties cancellation for grain imports hurts any interests of the agricultural producer.
- Will the main aim of the duties cancellation reach?
If we suggest the task of the presented measure is the prices growth limitation and stoppage, then it can be reached. Of course it is not the main factor for prices stabilization, but we talk about imports at the level of 100-150 thsd tonnes. Note the domestic consumption of the processing complex of Russia totals nearly 150 thsd tonnes of grain daily. There is no reason to state the volume will impact on the grain industry, but as the factor of the prices stabilization in the certain regions – of course it is.
- Import duties cancellation is one of the ways of the prices growth limitation on the domestic market. What else measures are able to do that?
First is an increase of the various kinds of the state support of the agricultural producers in the eve of the spring crops planting campaign. The second one is the activation of the commodities interventions, i.e. selling grain volumes increase. The government would not sell all the intervention fund, so by the end of the season the end stocks to total 300-500 thsd tonnes. Considering the stated level and good forecasts of the future crop I see no reason to leave anything in the intervention fund.
Interviewed by Evgenia Zaitseva
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