Russia mulls scrapping grain import duty

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Russia’s agriculture and economy ministries voiced support on Thursday for a proposal to remove a five per cent import duty on grain, which could help cool soaring domestic grain prices following a severe drought.

Ministry officials spoke a day before a government meeting on the issue.

The drought has slashed Russia’s harvest and transformed it from a large wheat exporter to an importer.

Deputy Economy Minister Andrei Klepach said that removing the duty was possible, because it would help cool domestic price rises.

"My opinion as a person in charge of the agriculture sector in the ministry, this should be done," Klepach told reporters on the sidelines of a grain conference in Moscow.

Russia’s agriculture minister also said the move was possible.

"It won’t have a significant impact on the market. In my opinion it may be lifted," Nikolai Fyodorov told reporters. Russia is now importing grain mainly from neighbouring Kazakhstan, which does not have to pay the duty.

Fyodorov also did not rule out lowering rather than scrapping the duty, adding that Russian Deputy Prime Minister Arkady Dvorkovich would discuss the duty on Friday.

Russian government officials have held preliminary talks on a possible decision to remove the duty but have decided against the move after Dvorkovich, who is in charge of the agriculture sector, said the country was not yet ready for such a move.

Dvorkovich declined to say whether he had changed his mind about the tariff. "I will tell you tomorrow," he told reporters on Thursday.

A decision would require regulatory approval that the move is in line with the customs union of Russia, Belarus and Kazakhstan.

Dvorkovich and other government officials also plan to discuss whether to step up intervention sales of grain from stocks, two sources familiar with the matter said.

Russia plans to sell up to three million tonnes of grain on the domestic market this year from government stocks.

Russia aims to harvest 95 million tonnes of grain in 2013-14, targeting an exportable surplus of about 15 million tonnes, Fyodorov added.

– Reporting for Reuters by Dasha Korsunskaya, Polina Devitt and Melissa Akin.