Processing will go like oilseeds // Russian sunflower is hampered by re-export

Control over the export of Russian sunflower can be tightened at the level of the EAEU. Such an initiative was put forward by the processors, who celebrate the re-export of oilseeds through other countries of the Union after the increase in duties on the export of sunflower seeds from the Russian Federation. Experts point to more significant risks of a decline in sunflower production in Russia.

Measures to prevent the re-export of Russian sunflower were discussed at the EEC on June 15, several participants in the meeting told Kommersant. One of the mechanisms could be tracking the country of origin of goods subject to duties at the level of the EAEU member states. Now this measure only works for goods, the export of which is completely prohibited. The Executive Director of the Fat and Oil Union Mikhail Maltsev explains that in this case, duties for the export of Russian sunflower will be paid regardless of the territory of which EAEU country it was exported from, even in the case of resale to counterparties.

Since January 9, the export duty on sunflower seeds in Russia has been increased from 6.5% to 30%, and since June 1, the rate should rise to 50%. The measures are designed to stabilize domestic prices and provide processors with affordable raw materials. But the regulation concerns only supplies outside the EAEU.

As Mikhail Maltsev notes, only from Kazakhstan, according to estimates, through gray schemes, 300-600 thousand tons of Russian sunflower are exported per year. And after the introduction of protective duties, this figure may grow due to increased demand from Asian countries, he said. The Efko Group of Companies (brands Sloboda, Altero) says that none of the measures of customs and tariff regulation can be effectively implemented within the borders of only one state, since there is free movement of goods on the territory of the EAEU. The proposed measures will help load the processing capacity, as well as increase the availability of products to consumers, the group said. GC “Blago” and GC “Rusagro” (brands “Dream of a hostess”, “Generous summer”) did not answer Kommersant’s questions.

The Ministry of Economy said that in order to exclude re-export, they initiated a discussion of the issue of setting export duties by all EAEU countries not lower than the minimum level or coordinated unilateral measures of non-tariff regulation. According to Kommersant’s information, representatives of Armenia and Kyrgyzstan at the meeting supported the introduction of duties, but Belarus and Kazakhstan opposed it. The representatives of these countries recalled that they themselves export oilseeds and have obligations under international treaties. The regulators of the agro-industrial complex of these countries did not answer the questions. The EEC trade block reported that they are working to bring the unilateral export measures used by the EAEU countries closer to ensure unhindered trade in the territory of the Union.

The Ministry of Agriculture confirmed to Kommersant that an agreement on a harmonized system of confirmation of the origin of goods is being discussed at the EEC site, which will minimize the risks of re-export. But the head of the economic research unit of Kulik & Partners Law Economics, Tatyana Basova, is sure that tracking products by country of origin will be complicated by different approaches to control in the EAEU countries or by the absence of labeling of commodity items and accounting at all.

Sovekon’s director Andrei Sizov says that sunflower exports, even with a 6.5% duty, rarely exceeded 1 million tons per year. After the increase in the duty, there may be those who want to use gray schemes, but it is unlikely that we are talking about volumes of more than several tens of thousands of tons, he said. According to the expert, one should worry not about the export of raw materials, but about the reduction in production. This season, Sovekon predicts a repeat of the record 2019 sunflower harvest – 15.4 million tons. But already in 2022, due to falling prices and increased costs, farmers can reduce the area under crops and investments per hectare, Mr. Sizov predicts. Sovekon forecasts prices for sunflower in the new season at 28-30 thousand rubles. per ton without VAT against 47.1 thousand rubles. per ton on June 9. Mikhail Maltsev, for his part, points out that due to high prices for oilseeds in Russia, processors work with a profitability of 5%.

Alexey Polukhin

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