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. Last Updated: 07/27/2016

Grain Export Limit May Be Extended

Itar-TassA truck unloading grain at a mill in the Krasnoyarsk region. Grain export tariffs are part of an effort to limit inflation.
Agriculture Minister Alexei Gordeyev said Wednesday that the government might extend restrictions on grain exports from January as the authorities struggle to rein in inflation.

But the government's policy of limiting wheat and barley exports drew criticism from a European Commission trade official, who said it could harm firms relying on raw material supplies from Russia.

"The government does have plans to limit grain exports," Gordeyev said, Interfax reported. "[Grain] prices are still high on global markets, while exports remain healthy."

He did not provide details on what form the limitations might take.

Under a new export regime that took effect on Nov. 12, a 10 percent export duty was placed on wheat shipments, while barley was hit with a 30 percent tariff.

The move is a part of a government effort to stem price rises in basic foodstuffs, which have been identified as one of the key drivers of spiraling inflation in the country.

Prior to the implementation of the new tariffs, farmers rushed to export their grain to take advantage of higher international prices, pushing up the ministry's targeted export figures for the year to as high as 14 million tons.

"We see normal export volumes from 12 million tons to 14 million tons, and the government will be guided by this criterion in restricting exports," Gordeyev said. The ministry will monitor the effect of the new duties for two weeks, he added.

Peter Balas, deputy director with the European Commission's Directorate-General for Trade, criticized the move to raise export tariffs beyond the levels agreed in a 2004 agreement on WTO accession between the European Union and Russia.

Speaking at a conference on EU-Russian economic relations in Moscow on Wednesday, Balas said the recent "change in Russia's economic priorities" would have a negative impact on European companies who rely on supplies from Russia.

Russian and EC officials met last week, where the issue was raised, Balas said.

"We hope to find a solution," he said.

Speaking at the same event, State Duma Deputy Andrei Klimov, who heads the Duma's subcommittee on European cooperation, hit back by saying it was Europe's decision to cut subsidies that had helped drive up food prices in Russia, as many of the goods on the country's supermarket shelves were imported.

The Economic Development and Trade Ministry has noted a slight slowing in the growth of weekly inflation, but analysts say many of the measures taken by the government have been largely cosmetic.

Moreover, anti-inflationary measures counter the government's commitment to priority areas, such as the support of agriculture and diversification of its exports, said Yaroslav Lisovolik, chief economist at Deutsche Bank.

"I do think that measures that are restrictive in character are not all that efficient as an economic tool," Lisovolik said.

"What you have is a conflict between the short-term pressures to reduce inflation and the longer-term priorities that would be hampered by the imposition of such restrictive measures," he said.