Moscow - Russia, one of the world's largest wheat exporters, plans to impose a higher export tax on wheat from March 1, its economy minister said on Friday, in another push to curb a rise in domestic food prices triggered by the COVID-19 crisis. Wheat prices in Chicago and Paris jumped after the proposal, which the Russian government has yet to sign, on expectations the higher tax could make buyers prefer wheat from other countries. Traders say Russia's move will drive up the cost of wheat in importing countries when the pandemic has already reduced incomes, making the world's poorest especially vulnerable to food poverty. Wheat futures on the Chicago Board of Trade rose to a peak of $6.93 a bushel on Friday, the highest since May 2014.
Russia wants to raise its wheat export tax to 50 euros ($60.68) per tonne from March 1 to June 30, from the 25 euro-per-tonne tax set for Feb. 15 to March 1, economy minister Maxim Reshetnikov said, citing recommendations by a tariff subcommittee: "There is a need to prevent further pressure on domestic prices," the minister said in a statement. The agriculture and other ministries said they supported the idea. Russia will continue taxing wheat exports in the marketing season that starts on July 1 and will prepare a formula for that, instead of the current fixed tariff, the minister said.
WINNERS AND LOSERS
The European Union, however, has reduced supplies after a small crop in 2020 and heavy exports over recent months, while Ukraine has already shipped abroad more than 70% of this season's quota, traders said. Russia's largest importers of wheat, which include Egypt, Bangladesh and Turkey, are among those facing higher purchase costs: "The importers are set to be the losers as they will probably not receive the cheap Russian grains they had been expecting in coming months," one of the traders said. The traders asked not to be named because they are not authorised to speak to the press. Russia also plans to set a barley and corn export tax at 10 euros per tonne and 25 euros per tonne, respectively, starting from March 15, the economy minister said. The country exports barley and corn mainly to the Middle East.