December 7, 2017 / 12:22 PM / 10 days ago

Russia will boost transport subsidies to speed grain exports in 2018

MOSCOW, Dec 7 (Reuters) - Russia will spend 2 billion roubles ($34 million) in grain transportation subsidies to help to speed exports in 2018, the Deputy Agriculture Minister said on Thursday.

Already among the world’s largest wheat exporters, Russia is trying to step up a gear after this year’s record crop, which is keeping its grain storage, railway transport and export infrastructure working at maximum capacity.

“There will be 2 billion roubles next year to stabilise (grain) prices in the domestic market,” Deputy Agriculture Minister Igor Kuzin told reporters on the sidelines of a conference in Moscow.

Russia’s domestic prices for third-class wheat are down by 20 percent since about the same time last year.

Agriculture Minister Alexander Tkachev said in September that these subsidies will cost the budget about 3 billion roubles and make exports of up to 1.7 million tonnes of grain attractive for suppliers from Siberia, Volga and Central regions of Russia.

Kuzin estimates that these measures will allow the export of up to 3 million tonnes from the same regions in 2018. Russia’s state trader United Grain Company and at least three other grain exporters have already requested subsidies, he added.

The Agriculture Ministry said the measures do not fall foul of commitments made to the World Trade Organization as part of the body’s efforts to eliminate export subsidies.

“We are not subsidising exporters, we are subsidising producers,” Kuzin said.

Russia competes with the European Union, Ukraine, the United States and other countries in the global grain markets.

In October the EU told the WTO agriculture committee that it had learned from various sources that Russia planned to offer 43.4 million euros ($51 million) in discounts on railway shipments of exported grain originating from seven Russian regions.

The EU asked how this was compatible with the commitment of WTO members to eliminate agricultural export subsidies. Russia replied that the discounts had limited geographical coverage and would have a modest effect on the agricultural sector.

The Agriculture Ministry expects Russia to export 45 million tonnes of grain in the 2017/18 marketing year, which started on July 1. It has already exported 22 million tonnes, up 30 percent year on year. ($1 = 59.1705 roubles) ($1 = 0.8491 euros) (Reporting by Olga Popova; Additional reporting by Tom Miles; Writing by Polina Devitt; Editing by David Goodman)

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