MOSCOW (Reuters) - The Russian agriculture ministry has proposed reducing a floating wheat export tax to zero until July 1, 2017, Russian news agencies reported on Friday, citing a senior official at the ministry.
The official’s comments dented the hopes of traders who had expected the ministry to propose cancelling altogether the tax mechanism, which is at a minimum level of 10 rubles ($0.16) per ton now but could rise if the rouble currency declines.
“We have sent our proposals to the government, we are still in talks about the issue,” the TASS news agency cited Vladimir Volik, head of the ministry’s regulation department, as saying.
“It is not about cancelling the duties, it is about a zero duty, until July 1, 2017.”
The duty formula is set at half of the customs price minus 6,500 rubles ($102) per ton but not less than 10 rubles per ton. Black Sea prices for Russian wheat with 12.5 percent protein content are about $168 a ton.
Some analysts and a farmers’ lobby group had hoped the government would have to review the tax and support grain exports in the 2016/17 marketing year given the record crop expected.
The ministry expects the crop to be no less than 110 million tonnes, up 2 million tonnes from the previous record set in 2008, it said in a statement. It may raise the estimate by 3-6 million tonnes if the weather remains favorable.
Russia may export up to 40 million tonnes of grain in the 2016-2017 marketing year, which started on July 1, including 25-30 million tonnes of wheat, according to the ministry.
Agencies also reported that the ministry planned to buy up to 1 million tonnes of grain on the domestic market by the end of 2016 in state interventions.
But the ministry said in the statement later on Friday that it could buy 600,000 tonnes of grain by January and an additional 1.4 million tonnes in the January-June period.
The state interventions started on Friday from Crimea, which has found it difficult to export the bulk of its grain due to legal risks after Russia annexed it from Ukraine in 2014.
The region produced 1.5 million tonnes of grain this year, while it needs only 300,000 for the domestic use, according to RIA news agency.
Reporting by Lidia Kelly, Katya Golubkova and Polina Devitt; editing by David Clarke