Russia's Ministry of Agriculture is drafting a proposal to suspend floating export duties on wheat, barley, and corn through the end of 2026. This measure is a response to significant difficulties in shipping grain through the Azov-Black Sea ports, which typically handle up to 70% of Russia's approximately 60 million tons of annual grain exports. The disruption has led to a surplus in the domestic market, causing farmgate prices in southern Russia to plummet to $106-$119 per ton, well below the estimated 2026 production cost of $143-$161 per ton. Farmers have also been contending with a 2.2-fold increase in wheat duties on August 19, despite falling internal prices.
The proposed suspension of duties is intended to alleviate the financial burden on agricultural producers and make export transactions more predictable by removing the risk of weekly changes in export duty rates. However, analysts like Andrey Sizov of Sovecon are skeptical that this alone will significantly boost exports or domestic prices, arguing that it won't alter the supply and demand balance. He, along with others, suggests that a permanent abolition of the export duty, which has been a point of contention for farmers since 2021, would be more effective.
Beyond the tax moratorium, the Russian government is considering a broader support package. This includes purchasing 1-3 million tons of grain for state reserves, allocating 10 billion rubles for railway transportation subsidies, offering loan extensions to producers, and utilizing excess grain as livestock feed. While alternative export routes via the Baltic, Caspian, and even Arctic seas are being explored, analysts warn that these options would incur additional costs, potentially adding $30 to $50 per metric ton for rerouting to the Baltic Sea, and would likely only compensate for half of the lost volumes from southern shipments. Arkady Zlochevsky of the Russian Grain Union lobby described a sustained export pause as a "catastrophe" given a relatively good harvest exceeding 100 million tons this year, compared to 141 million tons in 2025.
