Export Duties on Wheat in Russia Led to Decreased Production and Exports

Export duties on wheat in the Russian Federation, according to a study published in the journal “Economic Policy,” proved effective only in the short term. Over time, they disrupted market mechanisms and reduced the motivation for grain production.

This is reported by AgroReview

Impact of Export Duties on the Market and Producers’ Income

The authors of the study note that the introduction of a grain damper in 2021–2024 resulted in a loss of approximately 200 billion rubles in income for grain producers in Russia, while exporters’ margins decreased by nearly 370 billion rubles. At the same time, there was a decline in gross wheat yields, indicating a deterioration in the overall production potential of the sector.

The study thoroughly analyzes the relationship between export and domestic prices, as well as the impact of floating duties in the presence of a wholesale segment in the supply chain. The calculations took into account key indicators: gross yields, demand, exports, and domestic prices, allowing for a quantitative assessment of the consequences of the damper mechanism.

Decrease in Exports and Ineffectiveness of State Support

“The authors acknowledge that at the initial stage, export duties had a certain positive effect: domestic prices were 10–25% lower than potential levels without the duty, and domestic demand increased by more than 10 million tons. However, these benefits gradually disappeared, yielding to negative consequences in the form of reduced production and exports.”

Over the years of the damper’s operation, wheat exports from Russia have decreased by more than 12 million tons. The profitability and investment attractiveness of the sector have also declined. The system of refunding farmers through state subsidies proved to be insufficiently effective: over four years, direct subsidies amounted to about 40 billion rubles, while the budget received 687 billion rubles in revenue from export duties on wheat.

Another important conclusion is the gradual reduction of the impact of export duties on the domestic market due to decreasing carryover stocks. Experts believe that a phased abandonment of the grain damper and a review of grain market regulation policies would be optimal for the state.