Volga Baikal AGRO NEWS Update on the Grain Export !!!

RF Ministry of Agriculture can increase the grain export quota up to 17.5 million tons

Volga Baikal AGRO NEWS Update on the Grain Export !!!

The Ministry of Agriculture can increase the grain export quota up to 17.5 million tons.

Market participants and industry analysts disagree on the effectiveness of duties and quotas on grain exports. The introduction of the duty in Russia can provoke an increase in the world grain prices.

Eduard Zernin, head of the Union of Grain Exporters, appealed to the Prime Minister Mikhail Mishustin and Deputy Prime Minister Victoria Abramchenko with a request not to introduce export duties on grain, since this measure will significantly affect the financial condition of exporters and agricultural producers, and also threatens with a decrease in supply volumes and loss of sales markets, – writes “Kommersant” newspaper.

According to industry analysts, the world market will not be able to calmly accept the duty on Russian wheat, –  the newspaper specifies. As a conditional compromise, according to Kommersant sources, the option of increasing the quota from 15 million tons up to 17.5 million tons can be considered. Representatives of the agricultural department confirmed to the publication that the draft resolution on the introduction of a quota of 17.5 million tons has been sent to the interested parties. It should be considered by the working group of the Ministry of Industry and Trade and the subcommittee on customs tariff and non-tariff regulation. Earlier, the National Union of Bakery, the National Union of Poultry Farmers, the Association of Confectionery Industry Enterprises and other associations of grain consumers, who believe that such a measure unlike quotas, it would reduce the price of grain. Zernin notes that the supporters of the duty do not take into account that in most countries the news about the introduction of the duty in Russia may cause a sharp rise in quotations.

A similar opinion is shared by the general director of the AgroLand company Aleksey Chemerichko. He notes that the duty does not allow achieving the effect of lowering domestic prices, which they want to achieve. The quota mechanism is more understandable and efficient, Chemerichko told to Agroinvestor“, It allows you to take out excess grain and leave the volume necessary for domestic consumption in the country, moreover, this measure does not affect prices in any way. “The duty is akin to a ban on exports, a similar situation was in 2010. World prices then shot up only on rumors about it. But everyone is already used to the quota, they know how much will be shipped abroad, and the market looks at it adequately, – Chemerichko comments. – Last year the market survived the quota without shocks. If the quota were 3 million tonnes or 5 million tonnes, this might have influenced, and the volume of 15 million tonnes or even 17.5 million tonnes is more than sufficient for the entire foreign market. ”

The general director of Real Agro Alexander Grigoryants is also negative about the introduction of the duty. He told to Agroinvestor: ”That in the conditions when the country has the second largest harvest after the record 2017, this measure does not make sense. “It will automatically reduce export volumes or make them impossible. The domestic market will not fall quickly with the introduction of the duty, so I am not a supporter of this,” – he says. Grigoryants noted that he supports an increase in the quota from 15 million tons up to 17.5 million tons. According to him, the quota will not greatly affect world and Russian grain prices, and the duty will certainly make itself felt: some time after its introduction the domestic market will start to decline. “But I doubt that the duty mechanism will be introduced, most likely it will be a quota,” –  he adds.

General Director of the Institute for Agricultural Market Studies (IKAR) Dmitry Rylko agrees that the duty is an unnecessary measure. “The total harvest of the EU and Ukraine will be 25 million tonnes less than five years ago, and the harvest in Russia – 23 million tonnes higher, the importance of our country as a supplier has increased dramatically,” he told Kommersant.

According to the general director of the National Union of Poultry Farmers (NSP) Sergei Lakhtyukhov, the option of introducing a duty in the current conditions is more effective than a quota. He told to Agroinvestor: “That this year’s grain harvest is 130 million tons, the needs of animal husbandry, flour mills and other consumers are 80 million tons, about 50 million tons remain.” The estimated quota will come into force not now, but from February 15, and until this moment everything will be actively exported, according to the forecast, grain exports by this date will amount to about 35 million tons. That is, technically, there will be 15 million tons, on which restrictions are imposed, that is, there will be no restrictions,” – Lakhtyukov explains. He adds that world markets will surely react to this news, which will lead to higher prices. With the effect of the duty, exports will not decrease, the target indicators will remain in volume and in monetary terms, – he continues. “There will simply be a small redistribution, and part of the money will go to replenish the budget. And for us, prices will go down, ”the head of the union said.

Wheat exports from Russia from the beginning of the season up to November 19, 2020 increased by 14.3% up to 22.7 million tons. At the same time, according to the results of the season, analysts from SovEkon wait for the removal of agriculture at 40-40,8 million tonnes. The total export grain, leguminous crops and their conversion product is estimated at 51.2 million tons, which is 0.4 million tons.higher than the previous prediction.

Read more here: Agroinvestor.ru

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