Russia is accelerating plans to switch to a formula-based tax on wheat exports, the economy minister said on Thursday, as Moscow strives to curb food inflation in the Covid-19 pandemic.
The switch to a formula, which will now take place on June 2, a month earlier than previously planned, will mean the tax will automatically rise in response to any increase in prices.
The move to combat domestic food inflation in Russia comes alongside measures taken by some other governments, as global prices rise. An index issued by the United Nations Food and Agriculture Organization hit a 6-1/2 year high earlier on Thursday.
Russia previously imposed a series of fixed tariffs on exports, which will start from February 15 and will be in place until the flexible formula is implemented.
The tax is designed to cut domestic prices as it curbs exports and therefore increases the amount of wheat available within the country.
"We expect these measures to be sufficient to stabilise, to contain the rise in wheat prices," Economy Minister Maxim Reshetnikov told reporters.
The formula will be set at 70% of the difference between a base price of wheat per tonne and $200, he said.
The move is the third round of toughening of measures to slow down Russian wheat exports. The government previously approved a fixed E25 ($29.92) per tonne tax on wheat exports from February 15 rising to E50 from March 1.
From April 1, Russian grain exporters will have to report the price of their contracts to the Moscow Exchange, which would then calculate a price indicator for the formula, he added.
The duty will be recalculated and published weekly on the last working day of the week, and applied from the third working day after publication, the economy ministry told Reuters.
It will also become a permanent grain export mechanism in Russia, the minister told a meeting with President Vladimir Putin earlier on Thursday.
"The situation in the global food market is unfortunately worsening," Putin said, adding there was also a need to prepare a mechanism to support grain producers.
Exports of barley and corn will also be subject to this formula-based tax. The formula will be similar to wheat, but will use $185 instead of $200 for calculations, the minister said.