ANNOUNCEMENT 20 Dec 2017
On 20 December 2017, the Russian Government announced a subsidy for transporting grain via railway.
NUMBER OF INTERVENTIONS
Russian Government. 2017. Об утверждении Правил предоставления в 2017 и 2018 годах субсидий из федерального бюджета открытому акционерному обществу "Российские железные дороги" на возмещение потерь в доходах, возникающих в результате установления льготных тарифов на перевозку зерна (On approval of the Rules for the provision in 2017 and 2018 of subsidies from the federal budget to the Russian Railways open joint stock company for compensation of losses in income arising from the establishment of preferential tariffs for the transportation of grain) N1595. http://government.ru/docs/30729.
Policy background and clarifications: World Trade Organization. Minutes of the Meeting of the Committee on Agriculture. G/AG/W/170 and G/AG/W/173
On 20 December 2017, the Russian Government issued decree No. 1595 "On Approval of the Rules for the Provision of Subsidies from the Federal Budget in 2017 and 2018 to Open Joint Stock Company (OAO) "Russian Railways" for the Recovery of Revenue Losses Arising from the Establishing of Reduced Grain Transportation Rates". The measure came into force on 21st December 2017, with the budgeted amount of 3 billion rubles (ca. 51 million USD).
The subsidies apply to railway transportation of wheat, barley, and corn from 13 regions of the Central, Volga, Ural, and Siberia Federal Districts. The measure, in force through 30th June 2018, is expected to stimulate grain exports from the involved regions, stabilize domestic grain prices, and support profit margins of agricultural producers. The criteria for product eligibility is the minimal sale price set by the decree.
The explanatory note of Decree 1595 notes that it is necessary to take such measures for the stimulation of export of grain from the domestic market and to maintain the profitability of agricultural producers. Media reports quote Minister of Agriculture Tkachev as saying the subsidies were tailored for rail transport into the exporting ports of Russia's southern regions. Indeed, all the subsidized destinations are either border regions and/or have a port.
Russia has claimed in the WTO Agriculture Committee that the goal of the temporary measure is a proportional distribution of grain inside Russia and smoothing out seasonal price variations, until July 2018 and that the subsidy is disbursed to the Russian Railways, rather than the farmers. As per the Russian officials, the measure does not constitute an export subsidy due to the fact that it is not contingent upon export performance and provides equal terms for grain shipments regardless of destination.