The grain damper as a tool for minimizing imported inflation

A key element of this strategy is the grain damper mechanism introduced in June 2021. According to the latest data from the Ministry of Agriculture, export duties on wheat, barley, and corn have been temporarily reduced to zero from April 29 through May 5 inclusive, due to the specifics of indicative price calculations and the holiday schedule.

The functioning of the damper mechanism is based on the synergy of two processes:

1. The application of a “floating” duty: the export levy is calculated weekly based on price indicators from the Moscow Exchange. The formula предусматривает the withdrawal of 70% of the difference between the current indicative price and the established base price (cut-off price).
2. Targeted subsidies: funds accumulated through duties are returned to the sector in the form of direct subsidies to agricultural producers, which in theory should compensate costs and stimulate investment.

According to current data, base prices are set at 18,000 rubles per ton for wheat and 17,875 rubles per ton for barley and corn. A slight change in indicative prices ($234.7 for wheat versus $234.4 in the previous period), combined with exchange rate fluctuations, has led to a temporary elimination of the fiscal burden on exporters.

The introduction of a floating duty is a justified step to minimize imported inflation. Since wheat accounts for up to 75–80% of Russia’s total grain exports, domestic prices show high elasticity relative to external quotations. Without government intervention, the correlation between global shortages and domestic food prices would be critical.

However, several problematic aspects should be highlighted:

• reduced profitability: despite the return of funds through subsidies, exporters and producers face cash gaps and a decline in the sector’s long-term investment attractiveness.
• predictability: the weekly revision of rates creates uncertainty for participants in foreign economic activity when concluding long-term contracts.

Therefore, the current zeroing of duties is of a technical nature; however, it demonstrates the system’s flexibility during a holiday-related slowdown in business activity. Going forward, the effectiveness of the damper will directly depend on how promptly subsidies reach end farmers, so that the mechanism performs not only a fiscal but also a stimulative function.

Author:Candidate of Economic Sciences, Associate Professor of the Department of World Economy and World Finance, Financial University under the Government of the Russian Federation Natalia Ivanovna Chovgan.