Russia imposes an export tax on sunflower oil as domestic prices increase

Published Aug 12, 2021

The price of sunflower oil in Russia has increased by 71.4% in the last year. Russia imposed an export tax on sunflower seeds and oil to manage the inflation levels in domestic markets. The new tax sets an export duty on sunflower seeds of 50%, up from 30% compared to the previous tax forms, and is likely to run from July 1, 2021, to August 2022.

Sunflower seeds are widely grown and consumed across Russia, and it is a major oilseed in the country. It alone accounts for 75% of the planting area of all oilseeds and represents 80% of produced vegetable oils available in the country. Thus, sunflower oil has become one of the most effective drivers of development in the agriculture sector of Russia. By the end of 2020, the export value of sunflower oil from Russia had increased by 5% compared to the previous year despite the COVID-19 pandemic. Russia is the biggest exporter of crude and refined sunflower oil, recording 2.4 million tonnes of export volume in 2020. During the last ten years, Russian exports have increased and grew at an average annual rate of 38%. Export volume started picking up pace in 2010 and increased from 0.24 million tonnes in 2010 to 1.01 million tonnes in 2015. In 2020, the country exported 2.49 million tonnes of sunflower oil to the world. Russia’s exports were driven by growing sunflower seed production and increasing demand for sunflower oil in main importing countries like India and China.

Source:ITC Trademap.

Russia dominates the global market for sunflower oil and ample produce for making the oil, but recently, the prices for sunflower oil in Russia are increasing. Last year, 1 kg of sunflower oil increased from USD 0.7 to USD 1.2, showing a 71.4% increase. Furthermore, to battle against domestic food inflation, Russia imposed an export tax on sunflower seeds and oil. The new trade-restrictive measure will cause inflation of vegetable oil prices in the global market. Russia’s new tax sets an export duty on sunflower seeds of 50%, up from 30% compared to the previous tax norms, with a minimum of USD 320 per tonne. The inflated tax will run from July 1, 2021, to August 2022. In addition, it has decided on an export tax for sunflower oil at USD 169.9 per tonne from 1st September 2021.

Source:Tridge.

Export tax is likely to reduce the volume of sunflower exports from Russia and increase pressure on supplies from Ukraine, the biggest producer of sunflower seeds and the largest exporter of sunflower seed oil. Furthermore, the trade-restrictive measure will fuel further price gains for vegetable oils worldwide but control high domestic food prices as the stock of oil within the country will increase.