The tax will come into effect on March 1
By Diego Flammini
U.S. wheat farmers could be among the beneficiaries of a Russian export tax.
Beginning March 1 until June 30, the Russian government will be placing a tax of 50 euro (US$61 per tonne) of exported wheat. This is in addition to barley and corn exports being taxed at rates of 10 euro (US$12) per tonne and 25 euro (US$30) per tonne, respectively, Reuters reported.
This move by the Russian government is designed with multiple outcomes in mind, said Moe Agostino, chief commodity strategist with Farms.com Risk Management.
“This tax is to help curb exports of wheat or corn, to help bring down inflation and to make sure that the country has enough food for local consumption,” he said.
Other buyers may look to the U.S. or other countries to fill any gaps in the wheat market left by the Russian tax.
Japan, for example, recently booked 87,050 mt of American and Canadian wheat. Other buyers need wheat too, Agostino said.
“Egypt, the world’s largest wheat buyer, is looking to other countries for supplies,” he said. “The U.S., Canada and other countries should benefit with higher prices.”
The implementation of the export tax isn’t the first time Russia has taken similar action.
“Russia has a history of disrupting the wheat market through restrictions or taxes,” Agostino said. "When Russia is hit by a drought they ban exports and prices soar."
In 2010, Russia outright banned grain exports after a drought wiped out millions of acres of wheat.
This led to increased prices as countries like Pakistan, for example, experienced a 16 percent increase in its wheat prices, a 2011 Oxfam International report says.
Other countries implemented ag export bans or restrictions throughout 2020 to ensure enough domestic supply.
In December 2020, for example, Argentina announced it will only sell 30,000 tonnes of corn to foreign markets per day.
In April, Cambodia announced a ban of rice exports and Egypt put a three-month ban on legume exports.