SUB-COMMISSION ON CUSTOMS AND TARIFF REGULATION SUPPORTED DUTIES INCREASE ON CEREALS

At a meeting on Friday, January 15 the Sub-Commission on customs tariff and non-tariff regulation, protective measures in foreign trade of the Government Commission for Economic Development and Integration supported the increase in in-quota rates of export duties on cereals as an additional measure to protect consumers in the Russian Federation and the domestic market.

In particular, the Sub-Commission proposed to adjust earlier decisions and set for the period from March 1 to June 30, 2021 in-quota rates of export customs duties on wheat and meslin – 50 euros per 1 ton; from March 15 on corn - 25 euros per 1 ton; on barley - 10 euros per 1 ton, Maxim Reshetnikov, Minister of Economic Development of the Russian Federation said. There are no plans to impose a duty on rye supplies.

“The decision is primarily aimed at protecting the interests of the domestic market, ensuring domestic needs and preventing the risks of new price spikes, the minister emphasized. - We understand that grain is the basis of the feed base, it is also the prices in animal husbandry with a certain lag. We need to prevent further pressure on domestic prices”.

At the same time, sales to the domestic grain market at the current price level are profitable, he confirmed.

“It is also important to understand that the increase in customs duty rates is not of a fiscal nature. The funds received will be returned to agriculture through state support,” Maxim Reshetnikov said.

As recalled by the Minister, at the end of last year, there was growth of prices for socially important goods, which was the result of three causes – the weakening of the ruble, the yield reductions for some crops and increase the cost of food on world markets. The Government has taken a number of operational measures: agreements with producers and retail chains have been concluded and are already being implemented, subsidy programs have been introduced, and certain foreign trade measures have been implemented.

“The main thing in these decisions was to ensure a balance of interests – first of all, consumers, manufacturers, retail chains, exporters,” Maxim Reshetnikov stressed.

He noted that the Ministry of Economic Development monitors the situation in the consumer market, receives daily data from cash registers from the Federal Tax Service, weekly-from Rosstat and the Ministry of Agriculture – both on prices in networks and on the execution of agreements, that is, on prices from manufacturers.

“In late December - early January, we managed to reduce sugar prices and stabilize prices for sunflower oil,” the Minister said.

“At the same time, we see a number of risks, the head of the Ministry stated. Prices in global markets continue to rise”.

The greatest concern now is the growth of export contracts for cereals, in particular, for wheat: the growth only for the last month was 10%.

Among the key factors of the increase in world prices, Maxim Reshetnikov called the deterioration of stock and crop forecasts in a number of major producing countries, as well as the continued increased demand and volume of purchases.

“All this puts pressure on world prices. We understand that it will continue in the first months of 2021,” he added.

In view of this situation, the interdepartmental working group, on the eve of the meeting of the sub-commission, proposed to take additional measures and adjust the decisions already taken.

In this context, the Minister separately pointed out the need to work out and introduce from July 1 an automatic and long-term mechanism for calculating export duties, taking into account the current levels of world prices.

"It is important to form an understanding of the market that from July 1, there will be no zeroing of export duties, it makes no sense to keep grain and wait with a view that the domestic market will be blowing in the wind. We will continue to protect our customers. But it is very important that manufacturers understand what the strategic model will be and plan further investments. This model will definitely ensure the normal development of production within the country,” he concluded.

Oksana Lut, Deputy Minister of Agriculture of the Russian Federation, supported the decision to increase duties on wheat from March 1 and duties on barley and corn from March 15.

“Together with the Ministry of Economic Development, we will develop a procedure for a "floating" export duty to create a permanent mechanism, and make the market, exporters and plant growers, understanding it and calculating the prospects for themselves,” she said.

At the meeting of the Sub-Commission, the FAS Russia supported the position of the Ministry of Agriculture on the application of customs and tariff regulation measures for certain types of grain crops.

“At present, it is important to find a more subtle and tuned to the current situation mechanism for reliable tariff regulation of grain crops. Raising in-quota rates is a timely and necessary decision. Its undoubted advantage is to ensure a balance of interests between domestic consumption and exports. In addition, related sectors of the Russian economy, primarily pastoralism and, in particular, production of beef will be sufficiently provided with a feed base, and not in detriment to exports," Andrey Tsyganov, Deputy Head of the FAS Russia said.

A representative of the Federal Customs Service also supported the decision.

Ali Alkhanov, Deputy Minister of Justice of the Russian Federation, Alexey Gruzdev, Deputy Minister of Industry and Trade of the Russian Federation, Andrey Tsyganov, Deputy Head of the FAS Russia, Andrey Kosourov, Deputy Head of the Department of International Economic Cooperation of the FAS Russia, Elena Yagodkina, Deputy Head of the Federal Customs Service, representatives of the Government of the Russian Federation participated in the meeting of the Sub-Commission.