July 22 (Reuters) – Russia might have to review its wheat export tax and reduce prices for its state restocking program to support grain exports in the 2016-17 marketing year given a record crop, SovEcon agriculture consultancy said on Friday.
Russia, a major global wheat exporter, set a record high in the 2015-16 crop season, which ended on June 30, and will have more to export in 2016-17 when it expects the largest crop in post-Soviet history.
“Russia needs to speed up grain exports,” SovEcon, a leading agriculture consultancy in Moscow, said in a report.
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According to customs data, Russia exported 34.4 million tonnes of grain in 2015-16.
Including supplies to Armenia, Belarus, Kazakhstan and Kyrgyzstan, Russia’s exports totalled 35 million tonnes, including 25 million tonnes of wheat, SovEcon said.
Its estimate includes flour.
It estimates Russia’s 2016-17 grain exportable surplus at 37 million tonnes with a record grain crop of 109 million tonnes, including 66 million tonnes of wheat.
“The government might have to cancel the wheat export tax and decrease its prices for state interventions to realise this exportable surplus,” it added.
Russian exporters have long been lobbying for the cancellation of the floating wheat export tax, which is currently at a minimum level of 10 roubles (US$0.16) per tonne but could rise if the rouble currency declines or global wheat prices rise.
Agriculture Minister Alexander Tkachev asked his deputies this week to prepare proposals on improving customs regulation on the grain market, and the state restocking program, after a meeting industry players, his ministry said on Wednesday.
The ministry’s view will then be passed to the government, it added.
Deputy Prime Minister Arkady Dvorkovich, who is in charge of agriculture, said in June that the government should keep the mechanism of its floating wheat export tax but could consider ways of making it more predictable for exporters.
Dvorkovich has not commented on the issue since then, his spokesperson Aliya Samigullina told Reuters.
The changes are needed because a firmer rouble could make it harder for Russia to increase grain exports in the 2016-17 season, SovEcon said.
The recent weakening of the Turkish lira might bring more difficulties if it leads to a decline in demand from Turkey, the second largest buyer of Russian wheat after Egypt, it added.
The Russian government buys grain on the domestic market for its stocks every year in what are known as interventions.
This year’s prices were set in March and are significantly higher than the current prices on the domestic market.
If the government starts its program with the current prices, it may temporarily inflate prices in the domestic market and thus decrease the competitiveness of exports, SovEcon added.
