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Russia is about to double its controversial wheat export tax, a decision tipped to have positive ramifications for Australian farmers.
Key points:
- On March 1, Russia will double its export tax on wheat to €50 per tonne
- The tax in Russia is set to increase demand and prices for Australian wheat farmers
- Australia has just harvested its biggest wheat crop on record
The tax was introduced on February 15 by the Russian government in a bid to reduce rising domestic food prices.
The tax will double next week, on March 1, to 50 euro per tonne ($A76/t) before moving to a permanent floating tax in June.
Russia is the world's largest exporter of wheat and has reportedly hit a record pace this month as exporters scramble to load as much wheat as possible to avoid paying the higher tax.
With plans to enforce similar taxes on corn and barley, the global grain trade is watching very closely to see what happens next.
LoadingWhat does it mean for Australia?
Grains analyst Andrew Whitelaw has spent this week in Naracoote, South Australia, holding workshops for farmers about what is driving grain prices at the moment.
He said the export tax in Russia is a major headline.
"I reckon this is a very big one because all of a sudden it makes Russia less competitive when it comes to wheat exports," he told ABC Rural.
"They're the largest exporter of wheat in the world, our biggest competitor, so by having this export tax it makes them uncompetitive, which in turn is good for us.
Head of ANZ's Agribusiness Insights, Michael Whitehead, said Australian wheat is now likely to attract further demand from markets that would have traditionally looked to Russia.
"With Russian wheat now more expensive than comparable Australian varieties for the first time, importers will increasingly seek the Australian product," he said.
"And if Russia does this to their growers, it's likely next year Russian farmers will produce less wheat … and there's no signs of when this tax will come off.
"So for the short, medium, and potentially longer term this could be good news for Australian farmers."
Russian influence on Australian plantings
Mr Whitehead said Russia's export tax could influence what farmers do next in Australia.
"One of the really interesting things is what it's going to mean to the planting intentions for Australian farmers for next year," he said.
"A lot of farmers coming off the back of this great harvest would have been thinking about crop rotations next year, or some may have been thinking about putting some cropping country towards cattle or sheep to cash in on high stock prices, but that thinking might now change.
He said the outlook for Australian agriculture was looking very bright in 2021.
"With Australian cattle [prices] going well, and sheep prices going well, and now with wheat going well, for those running big, mixed farming operations this presents a good problem in terms of what the decisions are going to be."