Russian Pig Farmers, Bakers, Call for Change to Wheat Duty

Russia’s wheat exports fell by 53% in July to 1.28 million tons - their lowest point for the month since 2009, after the implementation of an export duty designed to protect the country’s livestock and bakery sectors from climbing wheat prices amid soaring food inflation.

However, the Russian Union of Bread Baking Industry and the National Pig Farmers Union have joined to call for a change to the duty designed to help them, claiming concerns that the country’s wheat farmers will cut back on production if shipments continue to fall.

"If they have problems because of the tax, we might win in terms of prices during one season,” said Yuri Kovalev, president of the pig farmers group. “But we may run into problems ourselves in the following seasons if wheat supply is down and prices shoot up.”

Although the groups support regulating exports, they say that the tax should equal a percentage of the customs value of a shipment or be a fixed amount instead of the current complex method, allowing for a more predictable market for exporters.

The National Pig Farmers Union is in favor of limiting wheat exports based on supply and demand estimates, meaning only when exports surpass a certain level should a prohibitive export tax be applied. Meanwhile, Glencore Plc’s Russian unit has added that a possible solution would be for the enactment of an export cap, but Deputy Prime Minister, Arkady Dvorkovich announced that the government was not considering such a measure.

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