Russia plans to raise wheat export tax from March 1, global prices jump

Russia, one of the world's largest wheat exporters, plans to impose a higher export tax on wheat from March 1, its economy minister said on Friday, in another push to curb a rise in domestic food prices amid the COVID-19 crisis.

Wheat prices in Chicago and Paris jumped after the proposal, which is yet to be signed by the Russian government, on expectations the higher Russian tax could make wheat from other countries more attractive to buyers.

Russia plans to raise its wheat export tax to 50 euros ($60.68) per tonne from March 1 to June 30, from the 25 euro-per-tonne tax set for Feb. 15 to March 1, economy minister Maxim Reshetnikov said, citing recommendations by a tariff subcommittee.

"The decision is primarily aimed at protecting the interests of the domestic market, ensuring domestic needs and preventing the risks of new price hikes," the minister added in a statement.

The proposal is a toughening of measures approved by the government in December after President Vladimir Putin criticised domestic food price growth amid the COVID-19 pandemic, which has hit the income of many Russians.

Turkey, Egypt and Bangladesh are the largest importers of Russian wheat.

Russia also plans to set a barley and corn export tax at 10 euros per tonne and 25 euros per tonne, respectively, starting from March 15, the minister said.

"There is a need to prevent further pressure on domestic prices," Reshetnikov said, adding the government planned to use proceeds from the export tariffs for state support of farmers.

Russia will also continue taxing wheat exports in the new marketing season which starts on July 1 and will prepare a formula for that, instead of the current fixed tariff, the minister said.

Russia has used a similar taxation system in previous years.