Russia to Abolish Wheat Export Tax, Stability Expected

Head of the Flour Producers Association, Levan Silagava, has claimed that Moscow is planning to abolish or significantly reduce export tax on wheat. The Russian government’s decision may provide flour and bread price stability in Georgia.

Silagava said that this is a very positive decision, not only for Georgia but for the world markets, too. The wheat harvest is quite good throughout the world, including in Russia, and this is the reason for the recent decision.

“The wheat harvest was good this year and Russia found it difficult to export their products because it had an export tax. Accordingly, in order to sell wheat on the world market at competitive prices, tax reductions would be necessary,” said Silagava.

From February 1st, 2015, Russia set export tax on wheat at 15% +7.5 euros of the value. Additionally, Russia reinforced processing factories and decided to support flour export in order to create a domestic product and employ a local workforce.

According to Silagava, when a company imports flour from other countries, it takes benefits from the state. Therefore, it is difficult to compete with other countries. This is why, he says, there is USD 40 difference on 1 ton between milled flour prices in Russia and in Georgia.

“Russian flour takes 90% of the wheat market in Georgia. As a result, if this trend continues, local production will be replaced by imports, and therefore the state budget will suffer, jobs will be cut and so on,” said Silagava.

Ana Akhalaia