Russia increases wheat export tariffs

By Charlotte Eyre

- Last updated on GMT

Related tags: International trade

The Russian government has set wheat export tariffs at 10 per
cent of customs value, over fears that rising global prices could
affect the domestic supply.

With demand for wheat being at an all time high, the legislation will put an even greater strain on global wheat supplies, adding to the upward pressure on the price of wheat. Resolution 660 will come into force on 12 November and will last through to 30 April 2008, and the tariffs can not fall below less than 22 euros per metric ton, according to a report from the US Department of Agriculture (USDA). "The Euro minimum is an additional restriction on exports, and this minimum tariff will not allow exporters to beat the tariff by not declaring export prices,"​ the USDA said. The resolution also covers the other member countries of the Customs Union Agreement - Belarus, Kazakhstan, Uzbekistan, Kyrgyzstan and Tajikistan - which could cause "prove problematic"​ due to policy coordination, the USDA added. The Russian government is also considering reviewing rail tariffs for grain, as it does not want the profits of Siberia's harvest to be eaten up in transporting to goods to populous areas of Russia. According to news agency Reuters, the new tariff was set after original plans for a 30 per cent export tariff on grains were deemed unnecessary by trade minister Elvira Nabiullina. However, the tariffs are still high enough to keep domestic supply within the country, especially during the forthcoming sale of government grain stocks, she added. Rising prices for basic foods could push inflation into double figures, an eventuality President Putin will want to avoid with elections due to take place later this year. However, the move could cause "havoc" on the European stock market, Reuters said, as other grain markets could soon be experiencing rapid demand.

Related topics: Markets

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