The increased rate will be valid from February to August.
“The growth of the oil and fat industry is constrained by a shortage of raw materials, and the increase in duties will reduce the export of oilseeds abroad.”
– Е. Razumny
The Russian Ministry of Economic Development proposes to increase the export duty on sunflower to 20%, but not less than 80 euros per ton. Now the rate for the export of oilseeds is 6.5%, but not less than 9.75 euros. The draft resolution has been published on the portal of draft regulatory legal acts. If the document is adopted, the increased rate will be valid from February 1 to August 31, 2021.
“The oil and fat industry has the resource and technical potential to increase exports. A limiting factor is the shortage of oilseeds, associated with the reduction in 2016 of the export duty on sunflower seeds to 6.5%, but not less than 9.75 euros per tonne (before that the rate was 9.88%, but not less than 14.81 euro for 1 ton) “, – the authors of the document assert.
They also note that in 2017-2019, the level of utilization of production facilities averaged 70%, which “ultimately contributes to an increase in imports of finished fat and oil products.” The Ministry of Economic Development explains the need to introduce the duty from February to August by the fact that during this period the most active export of oilseeds is taking place.
The plans to increase the export duty became known at the end of last year. In February 2020, the executive director of the Fat and Oil Union Mikhail Maltsev said that regulatory measures in the oilseed market, and primarily in relation to sunflower, could be introduced as early as the second quarter of 2020 or even from March. But then the decision was never followed, but the union made other attempts to limit exports. For example, on August 11, it became known about plans to completely ban exports outside the EAEU.
A possible increase in the duty was again discussed in June: Interfax, citing a source in the agricultural sector, wrote that Russia plans to increase it to 20%. At the same time, it was reported that such a rate could be valid from February 1 to August 31, 2021. The corresponding draft resolution of the Ministry of Economic Development was to be submitted by September 15, the agency specified.
Many industry experts oppose the growth of rates, arguing that this measure will hit farmers hardest of all, who in the long term may reduce sunflower crops, which will ultimately have a negative impact on processors. However, the experience of Turkey shows that the introduction of restrictions on the export of sunflower, on the contrary, leads to an increase in demand for oil, and therefore prices for it, Mikhail Maltsev told Agroinvestor. As a result, sunflower prices rose, not fell. “All claims that restrictions work against producers are populism,” he said.
During the Agroinvestor conference “New challenges for the economy and the agro-industrial complex,” Vice-President of the Russian Grain Union Alexander Korbut stressed that any restrictions are a blow to agricultural producers, and the introduction of the duty will only aggravate their situation. “Now, I think, there will be silence about the introduction of the duty, although in May the subcommittee decided to introduce it. As far as I know, this decision was approved by the government, but the document will be later, – said Korbut during the conference. – If this information is confirmed, then we will see the most powerful exports in the first half of the season, which will support prices. And what will happen next is a big question: we do not know what will happen with the harvest. ” If the export ban again leads to higher oil prices, then a race for resources will begin in Russia. Korbut also drew attention to the fact that the quota will toughen competition with Ukraine for the Turkish market, and Russia can win this fight only with price dumping.