Russia might raise base price for wheat export duty to 17,000 rubles/tonne - paper

MOSCOW. April 10 (Interfax) - Russia might raise the base price, or so-called cut-off price used to calculate the export duty on wheat to 17,000 rubles per tonne from the current 15,000 rubles, business daily Vedomosti reported, citing sources at exporting companies.

The Agriculture Ministry is considering such an increase, the sources said. The decision might be made starting with the new agricultural year, which begins July 1, 2023. The ministry did not respond to questions.

Vedomosti said United Grain Company (UGC), a stake of 50% plus one share in which is owned by the state, confirmed that the ministry is considering raising the base price in light of rising grain production costs. A spokesman for UGC said that such a change would reduce the export duty.

Grain exporters TD Rif and Aston did not respond to questions, while Demetra Holding declined to comment.

First Deputy Agriculture Minister Oksana Lut told reporters earlier that the ministry might review the base price for calculating the duty. The decision to revise the cut-off price in the duty formula might be made after all elements are assessed, including costs, the forecast harvest, world prices and the exchange rate, she said.

"And we plan, just like last year on June 30 [when calculation of the duty was switched to rubles], to take a look at what we have this year. The most important thing is production cost, everyone's worried about production cost, because it is objectively going up. So here, accordingly, we will make a decision when we get the figures," Lut said, adding that this only refers to revising the cut-off price.

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 duty is calculated weekly based on price indicators, which in turn are based on the prices of export contracts registered on the Moscow Exchange.

The duties have been set in rubles since July 2022. 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.