Floating export duty on grains to bring losses of 1.55 bln USD to Russian agriculture




A floating export duty on grains will bring losses of 1.55 bln USD to Russian agriculture next season, declares the general director of the Institute for Agricultural Market Studies (IKAR), Dmitriy Rylko.

Preliminary estimate is based on expected crop size and average prices.  

“If the prices of wheat is 250 USD/t that seems likely for the next season and the crop is 77 mln tonnes, the industry will lose about 1.33 bln USD. Price of barley at 215 USD/t and production at 19.5 mln tonnes will bring losses of 95 mln USD. For corn, price at 225 USD/t will result in 126 mln USD loss”, - the expert explains.

One and the same duty calculated basing on Black Sea (FOB) contracts will be applied for all geographical contract basises and for all types of wheat. It is disadvantage of the new mechanism Moreover, the calculation will include contracts signed for 30 days and less.

“Exporters say it will not work as the duty will be set for a week. None grain market functions like this. Most of our contracts are the contracts for remote delivery. If you win Egyptian tender, you need to deliver your grain in month and a half, but you do not know the duty” - the analyst points out.