Russia prepares multiple policy measures to combat food inflation

Russia’s economy ministry is proposing a number of measures like retail price cuts and restrictive export taxes on grain and sunflower seeds to tackle rising food inflation during the COVID-19 pandemic. Russian poultry products could be next on the list.
calendar icon 26 March 2021
clock icon 4 minute read

Reuters reports that Russia's economy ministry will soon propose that the government impose an export tax on sunflower seeds from 1 July and a formula-based export tax on sunflower oil from 1 September, the minister said on Thursday.

Russia has imposed several export taxes for grain, sunseeds among other measures since December in its battle to tame rising food inflation amid the coronavirus pandemic. Russia’s annual inflation spiked to 5.8% mid-March, which compares to a central bank target of 4.0%.

Details about the size of both taxes will be disclosed on Friday, Maxim Reshetnikov told reporters.

"The duty on sunflower seeds will be in effect restrictive. Given the fact that ... the capacity of sunflower oil plants is significantly greater than that of the seeds, we are interested in processing it all inside the country," Reshetnikov said.

The export tax for sunflower oil will be based on a formula, similar to one the government has said it would launch for wheat starting from 2 June. The formula will be set at 70% of the difference between a base price per tonne and a cut-off price not yet disclosed.

The tax for sunflower seeds may be set at 50%, with a minimum level of €320 ($378) per tonne, Interfax news agency reported, citing its sources. The cut-off price for a formula-based tax for sunflower oil may be set at $1,000 per tonne, it added.

In December, Russian producers of sunflower oil and sugar agreed to reduce prices for retail chains until the end of March. The government said this week that it would extend these agreements for a couple of months.

Reshetnikov said on Thursday that no price-fixing agreements were planned for other parts of the food sector, though the government is keeping a close eye on some products.

"As to chicken meat and eggs, the agriculture ministry regulates (the situation) in a soft negotiation mode and through voluntary commitments with poultry producers. Everyone understands that we can apply such mechanisms in the form of agreements, so all the industry players understand everything and meet them halfway," Reshetnikov said.

($1 = 0.8472 euros)

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