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IKAR in Mass Media

Russia's projected fall in 2025 grain export revenues highlights problems in agriculture

14 мая 2025 года

MOSCOW, May 14 (Reuters) - State budget revenues from Russia's grain export duties, a major irritant for farmers, are set to fall by one-quarter this year from their planned level, while subsidies to farmers will decline by almost half, amendments to the 2025 budget showed.

The figures highlight mounting problems in the country's agriculture sector, which was been as a success story in recent years but is now affected by low global prices, high domestic interest rates, and increased costs for fuel and fertilizers.

The government introduced the floating duty for wheat, corn and barley in 2021 to control exports and ensure supplies to the domestic market, promising farmers that the money would flow back to them in the form of increased subsidies.

Farmers across Russia blame the export duty for the low profitability of growing wheat, Russia's main agricultural export. They also claim that despite promises, they receive little in return.

Dmitry Rylko, head of the Ikar consultancy, estimated that farmers were reimbursed no more than 10% of the collected duties.

SHRINKING REVENUES

The budget will now receive 26% less income from the duty than the initially planned 187 billion roubles ($2.33 billion), which accounts for 0.4% of total budget revenues. The subsidies, financed from the duty, are now cut by 45% to 29 billion roubles.

Russia is facing shrinking revenues across export-oriented sectors this year, including energy, which accounts for one-fifth of total revenues. The Finance Ministry has raised the deficit target threefold to 1.5% of the gross domestic product.

The duty is set in roubles per tonne and is linked to the global wheat price. It currently amounts to 1,755 roubles per metric ton, making up about 8.7% of the indicative export price of $250 per ton.

The government has gradually cut the duty from this year's high of 4,697 roubles based on the indicative export price of $240 per ton in January.

Arkady Zlochevsky from the lobby group Russian Grain Union estimated farmers' losses from the duty since 2022 at 1 trillion roubles. He said the duty had compounded the effects of high interest rates and increased prices for machinery, fuel and fertilizers.

ABOLISHED SOONER OR LATER

Russia's wheat exports are set to fall by almost 22% to around 43.5 million tons in the current marketing season, according to USDA estimates. They are expected to rise slightly to 45 million tons in the next marketing season.

Despite the fall in wheat exports, Russia maintains the status of the world's largest wheat exporter, but its share of the global market is set to shrink to 22% from 28% in the previous season.

Farmers have lobbied for years for the export duties to be lifted, threatening to reduce wheat sown areas and switch to more profitable crops such as oil seeds or quit the business altogether.

The government responded that the duty will remain in place but is ready to adjust it to lower the financial burden on farmers. Farmers and their lobby groups believe that abolition of the duty is long overdue.

"Sooner or later, they will be abolished. The question is when the officials will realize that this is an extremely harmful mechanism that is damaging the economy," said Zlochevsky.

($1 = 80.3000 roubles)

Source: Reuters  |  #grain   |  Comments: 0   Views: 17

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