Russian government in its latest release stated that there were plans afoot to abolish the export tariffs on certain mineral fertilisers that they imposed last year. The decision to levy duties on export of fertilisers was taken to revive the domestic farmers who were under tremendous pressure owing to global financial crisis. However, the Wednesday’s government statement did not mention whether farmers would be again affected by the withdrawal of the tariffs as an end to the global crisis is nowhere in sight.
Currently, nitrogen fertilisers and the fertilisers containing nitrogen, potassium and phosphorus in any one of the three compositions in packages not exceeding 10kgs invited export tariffs of 8.5 percent which will be in force till April 30 2009 as per last year’s promulgation. A 5 percent tariff was charged on exports of potassium fertilisers as well when it was imposed last year; and earlier Nitrogen fertilisers also had 5 percent tariff before it was increased to 8.5 percent. By this April, the country is expecting to collect a minimum of $300mn through the tariffs to buy fertilisers for the local farmers.
There is no confirmation yet when it will come to effect, and according to sources, usually the declaration of the date happens a month later to the publication of a government order in the gazette. The statement said, the total sales of the domestic producers witnessed a drop of 36 percent in 2008 season. Similarly, exports of the fertilisers during the same period have reduced by more than 16 percent. Nonetheless, the waiver of fertiliser export tariff should not be construed as a measure of regulation of external trade, rather as a form of direct financial support from the government to the industry, it further added.
The shortfall in demand has prompted major fertiliser producers to cut their production. Russia exports 12 percent of global fertilisers and once the tariffs are removed global prices for the same is likely to stabilize.