Moscow to regulate prices for ‘socially important products’
After President Vladimir Putin paid attention to rising food prices last week, the Russian government developed a plan to keep them under control. The measures include additional taxes on food exports and subsidies for local producers.
Russia plans to impose a set of measures to slow the rise of domestic food prices, reports Reuters. On Monday, the government announced a list of actions intended to stabilise the prices. Among other measures, the authorities plan to approve their right to regulate domestic prices for such “socially important products” as bread and other food staples if their monthly price growth exceeds 10% excluding seasonal factors.
Another measure is introducing a grain export quota for overseas shipments of grain. Russia aims to export no more than 17,5 million tonnes of wheat, rye, barley and maize between 15 February and 30 June 2021. Within that quota, wheat exports will be taxed at 25 euros ($30,4) per tonne. If wheat supplies exceed the quota, the tax for wheat will be raised to 50% of the customs price but no less than 100 euros per tonne. As for rye, barley and maize, export duty within the quota is planned at zero. At the same time, local producers of flour and bread will get state subsidies to reimburse part of their production costs. The government is set to allocate 7,2 billion rubles ($99 million) for their support.
As a result of these measures, Moscow expects domestic prices for milling wheat in European Russia to decline to 14,000 rubles ($192) per tonne excluding taxes by the end of the year and to 13,000 rubles per tonne in the first two months of 2021. Last week, domestic prices for third-class wheat fell by 225 rubles to 15,725 rubles per tonne, according to SovEcon agriculture consultancy.
A set of measures is also developed to cut prices for sugar and sunflower oil. Russian producers of these goods are expected to agree on price reductions with retail chains by 20 December. The agreement will be valid until the end of March 2021. If this measure does not work, Russia may impose an export tax on sunflower oil and cut import duty for sugar cane, says Reuters. Export duty for sunflower seeds will total 30% but not less than 165 euros per tonne between 9 January and 30 June 2021.
The government also plans to spend 2 billion rubles on subsidised short-term loans with a rate of 1-5% for local producers of sugar so they can purchase sugar beet for refining. In addition, Russian farmers will increase sugar beet sowing area in 2021.