Russia proposes higher wheat export tax formula if prices reach $375/t

MOSCOW: Russia’s wheat export tax formula will have a higher multiplier if prices rise to $375/t and the multiplier will rise further if prices reach $400/t, a proposal on the state website for laws and regulations showed on Friday. Moscow launched formula-based taxes for grain exports from June as part of measures the government hopes will help to stabilise domestic food inflation.

The agriculture ministry determines the size of the duty on a weekly basis, based on price indicators reported by traders. Russia, the world’s largest wheat exporter, has also said that the mechanism for its formula-based grain export tax would be fine-tuned to further protect the domestic market in case of sharp global price increases.

“This is currently a low-probability scenario, which plays the role of an additional safety net,” said a source, familiar with discussions among officials which led to the proposal on the higher multiplier. Russian wheat with 12.5% protein loading from Black Sea ports was at $334 a tonne last week. The country’s wheat export tax is set at $94.0 per tonne for Dec. 22-28. The proposed changes to the tax formula come along with Russian government plans to approve grain export quotas at 11 million tonnes of grain, including 8 million tonnes of wheat, for Feb. 15 to June 30, 2022 - something disclosed by the economy ministry earlier on Friday.