Russia's Agriculture Ministry not planning to revise grain export duty or increase purchases for state fund - minister

MOSCOW. March 7 (Interfax) - Russia's Agriculture Ministry is not planning to revise the export duty on grain before the end of the current agricultural year, which runs to June 30, 2023, or increase grain purchases for the intervention fund.

"I think that the duty regulates itself, there's no need to make any adjustments before the end of this agricultural year. The duty should remain in effect," Agriculture Minister Dmitry Patrushev said in an interview with national daily Kommersant published on Tuesday.

He said the record harvest of last year will enable Russia to export a substantial amount of grain, about 55 million-60 million rubles for the agricultural year. "Carryover inventory will be substantial, about 30 million tonnes, more than average annual figures. We will work on selling them," Patrushev said.

Russia introduced the grain damper mechanism on June 2, 2021. It provides for floating export duties on wheat, corn and barley, with the generated revenue going back to agricultural producers in the form of subsidies. The base price for calculating the export duty is 15,000 rubles per tonne for wheat and 13,875 rubles per tonne for barley and corn. The duty amounts to 70% of the difference between the base price and indicative price.

Speaking about purchasing interventions on the grain market, the minister recalled that 3 million tonnes of grain have been purchased, "which I believe is sufficient." He said this "mechanism is needed foremost for correction of grain prices."

Commenting on farmers' view that grain prices are low, Patrushev said prices are "probably always not very acceptable for those who are selling and high for those who are buying."

"We calculated the average profitability for crop farming. For 2022, it amounts to about 20% without subsidies and about 24% with subsidies. This is a good profitability. Yes, less than figures for 2021, but then prices for wheat on world markets were also above $400 per tonne and the domestic price of grain was a little higher," Patrushev said.

Asked about a possible return to fixing sugar prices in the event of their growth, he said "such measures are not being considered right now."

"If we're talking specifically about sugar, preliminary production volumes in the season will be about 6.1 million tonnes, and domestic consumption will be 5.8 million tonnes. Accordingly, there will be enough sugar to supply the domestic market and to export to EAEU countries. Prices for this product remain fairly stable. In the past year, they rose 7.5% among producers and 6.5% in retail, and this is less than the level of inflation," Patrushev said.

The Agriculture Ministry "does not see any grounds to introduce measures of direct regulation of sugar prices," he said. "Sugar refineries have a fairly responsible price policy. We are also not considering preferences for raw sugar imports [like the duty-free quota of 300,000 tonnes in 2022]. Next season the sugar beet crop area will increase and, given normal weather conditions, its harvest and production will be no less than last year."

Patrushev also said the situation with farm machinery imports is "fairly strained."

"Almost all foreign companies have curtailed participation on the Russian market and our volumes are insufficient at this point. There are difficulties with supplies of components, spare parts. Moreover, the cost of domestic machinery has risen significantly and these prices today are not always acceptable to farmers," he said.

"It is necessary to take comprehensive measures related to both the development of domestic production and with partial accessibility of imports. Spare parts must be imported, because farmers have a lot of foreign machinery. I think that we will be able to get through this difficult period without losing energy security," Patrushev said.