April 11, 2012

Russian Union proposes Siberian grain railway export's 5-year tariff cut

Russia's National Grain Producer Union said in a statement Tuesday (Apr 10) of its suggestion for Siberian grain and milling products to be exported by railways to the sea ports under a tariff of 0.3 coefficient reduced from the current 0.5.

The tariff is intended to act from the first kilometre of grain transportation route.

"According to our calculations, introduction of this measure will increase the income of Siberian grain producers by about RUB1,000 (US$33.57) per tonne while exporting via Novorossiisk as well as via Vladivostok," the union quoted its President Pavel Skurikhin as saying in the statement.

He added that the reduced tariff would help Siberian farmers raise income without domestic price hikes. According to the union's data, Siberia has a grain surplus of around 1.5–2.0 million tonnes.

"The surplus grain has a strong impact on prices in the domestic markets in the regions of the Siberian Federal District, reducing the profits of agricultural producers who sell their products, giving cause for the necessity to purchasing interventions, increasing government spending to stabilise the grain market," the union said.

Siberia and the Kurgan region have received a preferential 0.5 coefficient on railway tariffs, in force from 1,100 kilometres of grain export shipments to Russian ports in order to deliver to China, Mongolia and North Korea. However, the union considered the move as insufficient.