Experts did not appreciate the idea of the Ministry of Economic Development on the calculation of grain duties
The Ministry of Agriculture of the Russian Federation did not comment on these proposals. Industry experts interviewed by RIA Novosti believe that world markets in the current agricultural year (started on July 1, 2021) will not face such high prices for cereals, in particular wheat, but by another season the probability of such a risk is growing.
"This is rather a precautionary measure, because prices on the world market are still in a downward trend. Now a ton of wheat (12.5% protein, FOB) is quoted significantly lower, at 330-335 dollars. There is no need to talk about a significant increase in prices against the background of a record harvest in the Southern Hemisphere. Of course, there is always a risk of natural disasters, but the probability that these price levels can be realized in the coming months is not great," said Igor Pavensky, Director of the Strategic Marketing Department of Rusagrotrans JSC.
"If we talk about this season, everything is within our expectations; prices for Black Sea wheat have been declining for three weeks in a row, although it is unclear whether this is a trend or not. If something like this does not happen this season, for example, an escalation of the Russian-Ukrainian conflict, we will see a further decline in wheat prices, and the proposed levels ($ 375 and $ 400 — ed.) will remain irrelevant," said Andrey Sizov, director of the Sovecon analytical center.
"But given that the duty is indefinite, sooner or later we may see such prices. Annual inflation, food inflation is extremely high, so sooner or later the issue of regulation will become relevant again. This will mean that unprecedented restrictive measures (for the farmer's business — ed.) will become even more unprecedented," he added.
INADEQUATE MEASURES
Export duties on cereals have become one of the measures that the Russian authorities have introduced to ensure stable prices in the domestic market. Experts pointed to the short-term effect of such regulation and the risks in the medium term, fearing that due to rising costs, farmers will reduce the acreage under grain, primarily wheat, and switch to other, more marginal crops, thereby reducing its supply.
"The three formulas proposed by the Ministry of Economic Development for calculating the export duty on grain, in fact, is insurance in case the price breaks through ultra-high levels. But in the current season, all this looks like a rather speculative exercise — for more than three weeks, world prices have been on downward trends," said Dmitry Rylko, Director General of the Institute of Agricultural Markets Conjuncture.
"We believe that the logic embedded in such regulation was initially inadequate, and the scale itself was quite dangerous for domestic crop production: the level of 70% (of the difference between the indicative and the cut-off price) embedded in it, and the cut-off price itself ($ 200 for wheat, 185 for barley and corn) are too rigid values," he added.
"This is rather a precautionary measure, because prices on the world market are still in a downward trend. Now a ton of wheat (12.5% protein, FOB) is quoted significantly lower, at 330-335 dollars. There is no need to talk about a significant increase in prices against the background of a record harvest in the Southern Hemisphere. Of course, there is always a risk of natural disasters, but the probability that these price levels can be realized in the coming months is not great," said Igor Pavensky, Director of the Strategic Marketing Department of Rusagrotrans JSC.
"If we talk about this season, everything is within our expectations; prices for Black Sea wheat have been declining for three weeks in a row, although it is unclear whether this is a trend or not. If something like this does not happen this season, for example, an escalation of the Russian-Ukrainian conflict, we will see a further decline in wheat prices, and the proposed levels ($ 375 and $ 400 — ed.) will remain irrelevant," said Andrey Sizov, director of the Sovecon analytical center.
"But given that the duty is indefinite, sooner or later we may see such prices. Annual inflation, food inflation is extremely high, so sooner or later the issue of regulation will become relevant again. This will mean that unprecedented restrictive measures (for the farmer's business — ed.) will become even more unprecedented," he added.
INADEQUATE MEASURES
Export duties on cereals have become one of the measures that the Russian authorities have introduced to ensure stable prices in the domestic market. Experts pointed to the short-term effect of such regulation and the risks in the medium term, fearing that due to rising costs, farmers will reduce the acreage under grain, primarily wheat, and switch to other, more marginal crops, thereby reducing its supply.
"The three formulas proposed by the Ministry of Economic Development for calculating the export duty on grain, in fact, is insurance in case the price breaks through ultra-high levels. But in the current season, all this looks like a rather speculative exercise — for more than three weeks, world prices have been on downward trends," said Dmitry Rylko, Director General of the Institute of Agricultural Markets Conjuncture.
"We believe that the logic embedded in such regulation was initially inadequate, and the scale itself was quite dangerous for domestic crop production: the level of 70% (of the difference between the indicative and the cut-off price) embedded in it, and the cut-off price itself ($ 200 for wheat, 185 for barley and corn) are too rigid values," he added.
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