The Kremlin may restrict more food exports to protect it from rising prices

Russia has warned that it is ready to expand export restrictions on major food products after recent price increases prompted the Kremlin to put an end to the domestic cost of basic commodities such as sugar and flour, Russia’s economy minister said.

Maxim Reshetnikov, Minister of Economic Development, told the Financial Times that Russia, one of the world’s largest grain exporters, was studying how best to support its food exports while protecting domestic consumers from price hikes.

The United Nations World Food Price Index has arrived Highest level in nearly a decade In May, nearly 40 percent on an annual basis. Food prices are a major political issue in the Kremlin given that 20 million people, or one in seven Russians, live below the poverty line, rationing and hyperinflation in living memory.

In December, Vladimir Putin ordered officials to impose Temporary controls on the prices of staple foods Such as sunflower oil and pasta. The wheat export quota was announced earlier this year with the addition of export duties this month. Moscow said the steps were needed to offset years of lower incomes that made basic commodities unaffordable for many.

Reshetnikov said Russia could expand export measures to include explicit restrictions on exports as well as a floating tariff of “flexible export duties” on additional goods, if prices continue to rise. As for domestic consumption, Russia has ended most price caps but will continue to subsidize some basic commodities, such as bread and flour.

“There is no guarantee that global food prices have stabilized and peaked,” Reshetnikov said. “Any news about the outlook for crops could spark . . . another rally for some food, so we are constantly paying close attention to it and taking some action when needed.”

The export restrictions, which Reshetnikov called a price “shock absorber”, are intended to encourage domestic producers to invest more. “This is one of the sources of our growth by adding new value chains – grains push animal husbandry forward, animal husbandry pushes milk forward, and so forth,” he said.

Russia did not start exporting staples such as wheat until after 2014, when it banned most Western food imports in response to US and EU sanctions, and then began to significantly develop domestic agriculture. Agricultural commodities such as wheat accounted for nearly 8 percent of Russia’s $419 billion exports in 2019, According to data from the World Trade Organization منظمة.

However, the country still lacks the infrastructure to stock food stores at the same level as the United States or Europe. This will allow it to weather price hikes by increasing supplies, hoarding and releasing additional production as needed.

However, the proposed export limits have gained support in the food retail sector, with executives claiming that the recent price increases are due to increased demand from Chinese importers willing to pay more. Sugar prices rose 65 percent in Russia last year.

By contrast, officials blamed high Russian food prices on what Prime Minister Mikhail Mishustin called “the greed of some producers and retail networks.” This raised fears of a crackdown across the Strip.

More than three-quarters of Russian businessmen said they feel insecure from groundless criminal prosecution by the state, according to a survey conducted by the presidential security services last month; Furthermore, 18 percent of prosecutors agreed with them.

The concerns are so widespread that one of the lawmakers joked at the Russia Economic Review Conference in St. Petersburg last week, “We have taken the first step.” [to an investment climate] Three days in the forum and no one was arrested.

Reshetnikov said any future trade measures would likely take the form of higher taxes.

“If you invest all your profits, even if they are very high, in new production, development, research, etc., that is one thing. If you pay dividends, that is also fine. [ . . .] Another appropriate tax level may be appropriate to stimulate business investment.”

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