January 24, 2013

Russia will maintain its grain import duty at the moment, according to the country's Deputy Prime Minister, Arkady Dvorkovich.

Dvorkovich, a free trade advocate who took responsibility for the agricultural sector in government changes last year, is seen by the market as the deciding voice on the duty issue.

The government has held preliminary talks on a possible decision to remove the 5% import duty to help ensure adequate supplies after a drought and heavy export sales, an agriculture ministry spokesman said.

Moscow has surprised markets by keeping Russia's export channel open despite last year's poor crop. That was in contrast to its imposition of a one-year export ban in 2010 that, officials now concede, stoked inflation.

This season, the decision to let exports flow has meant that Russia could face a domestic shortfall of grain, as the country has already shipped more than its nominal exportable surplus.

Analysts and industry leaders say Russia could require 1.5-2.5 million tonnes of grain imports to close the gap but are still debating whether Russia's domestic prices have rose high enough to allow profitable imports.

Elimination of the duty would make it profitable to import grain into Russia and cool domestic prices, which have continued to rise in the new year despite government efforts to mitigate gains by intervening on regional markets with sales of state stocks.