Source: Oleoscope (Russia)
The export duty on Russian wheat will be recalculated to its lowest possible level starting July 2nd. This change aims to improve market competitiveness. Currently, high duties impact export activity.
New Calculation Method for Wheat Export Duty
A new methodology will be used for calculating the Russian Wheat Export Duty. The duty will be determined based on a new formula. In fact, this formula is tied to the exchange rate. Specifically, the rate is set by the Central Bank of Russia. Furthermore, it considers the price of wheat on the global market.
The base price for the calculation remains 15,000 rubles. Moreover, if the market price exceeds this level, a duty will be applied. The specific formula will be: 70% of the difference between the market price and the base price. However, the minimum duty threshold is set at 0 rubles per ton.
Previously, the duty was calculated weekly. Consequently, it caused uncertainty for exporters. Now, the new method is designed to provide more predictability. Also, it allows businesses to plan their export strategies more effectively. The government hopes to stimulate export activity.
Expected Impact on Wheat Exports
The reduction to a minimum level should increase the attractiveness of Russian wheat. Moreover, this change makes it more competitive on the international market. This will encourage traders to increase their export volumes. The new rules come into effect on July 2nd.
For example, current duty levels have significantly affected profitability. Indeed, many exporters have faced challenges due to the high costs. Therefore, the updated Russian Wheat Export Duty should alleviate some of this pressure.
The Ministry of Agriculture anticipates a positive impact on grain exports. In addition to wheat, the changes could influence the export of other grains. Ultimately, this could benefit the Russian agricultural sector. It is expected that the stable and predictable duty levels will encourage investment. It’s hoped this measure will contribute to the country’s economic growth.