Home
/ Bioethanol
/ News
Corn and Manioc Starch Duties Increased
Prepared By: Yelena Vassilieva
Executive Summary:Starting May 22, 2009, through February 22, 2010, import duties on non-modified starches of corn and manioc will be 20 percent of customs value, as before, but the minimum tariff is raised from 0.06 Euro per kilogram to 0.15 Euro per kilogram. The import duties on all non-modified starches were kept unchanged since July 2005 (see GAIN Report RS5045 Starch Import Duties are Raised Again). In 2008 Russia's grain, including corn, crop was one of the highest since 1990 and domestic starch production increased by 6 percent to 451,000 metric tons. At the same time imports of all starches increased by 12 percent to 91,256 metric tons driven by growing demand of Russia's confectionary and other food processing industries. Given the increased value of the Euro, the new corn starch duties might effectively close Russia's market for
corn and manioc starches imports, as price of imported starches might increase 10-34 percent in Euro and by 30-59 percent in Rubles. The new duties are considered to be more protectionist than before and thus more favorable for domestic starch producers at the expense of confectionary and other domestic food processing industries. The United States does not export corn and manioc starch to Russia.
General Information: In accordance with the Russian Government Resolution #328 of April 15, 2009, published on April 21, 2009, the minimum import tariff on corn and manioc starches is raised for nine months from 0.06 Euro per kilogram to 0.15 Euro per kilogram. The ad valorem rate remains 20 percent of the customs value. The new rate comes into force in a month from the date of publication of this resolution. The import duties on all non-modified starches were kept unchanged since July 2005 (see GAIN Report RS5045 Starch Import Duties are Raised Again), except import duties on rice starch, which were raised from 0.07 Euro per kg to 0.16 Euro per kg for the period February 15, 2009 through May 15, 2009 (see GAIN Report RS9012 New Seasonal Import Duty on Rice). Unofficial Translation of the Resolution Government of the Russian Federation Resolution #328 of April 15, 2009 "On the Temporary Import Customs Tariff on Corn and Manioc Starches" The Government of the Russian Federation decrees the following: 1. To approve for a period of nine months an import customs tariff on corn and manioc starches (Russian TN VED codes 1108 12 000 0, 1108 14 000 0) that appear in the Commodity Classification of Foreign Economic Activity of the Russian Federation, approved by the resolution of the Government of the Russian Federation #718 of November 27, 2006 "On the Customs Tariffs of the Russian Federation and Commodity Codes, Used at the Implementation of Foreign Economic Activity" at 20 percent of customs value, but not less than 0.15 Euro per kilogram. For application of this tariff the commodities are defined exclusively by codes of the Customs Nomenclature of the Russia's Foreign Trade Activity (TN VED). 2. To determine that the force of paragraph 2 of the resolution of the Government of the Russian Federation #1347 of October 22, 1997 "Issues of Customs-Tariff Policy does not apply to import customs tariffs approved by paragraph 1 of the present resolution [i] . 3. The present resolution enters into force one month from the date of its official publication. Chairman of the Government Of the Russian Federation V. Putin
[i] Point 2 of the Russian Government Resolution #1347 of October 22, 1997 "Issues of Custom-Tariff Policy" stipulates the following: 2. One time change of custom tariff rate shall not exceed 10 percent points (for the ad-valorem tariffs) or
the equivalent absolute value for the special tariffs or special components of the combined import tariffs".
Trade: Trade Data Due to high grain crop in 2008, Russia's starch syrup production in CY 2008 increased by 6 percent on a year-to-year basis and reached 451,000 metric ton (Russian State Statistical data). Imports of starch also increased by 12 percent to 91,256 metric tons in CY 2008 due to increased domestic demand of confectionary and other food processing industries. Corn and manioc starches accounted for 25 percent and 34 percent of all starch imports respectively. In CY 2008 Russia imported 31,097 metric tons of manioc starch (31,608 metric tons in CY 2007), including 15,605 metric tons at an average price $350 per metric ton from Thailand and 15,492 metric tons from Vietnam at an average price $270 per metric ton. Corn starch imports increased by 21 percent in 2008 compared with 2007. China increased exports of corn starch to Russia by 255 percent to 14,092 metric tons (average price - $380 per metric ton), and became the major corn starch supplier to Russia (62 percent of corn starch imports), outstripping traditional corn starch suppliers like Ukraine (28 percent of imports, and average price is $550 per metric ton), and Moldova (6 percent of imports, average price - $640 per metric ton). Price Impact The table below provides approximate calculations of the corn and manioc price increase after custom clearance before and after minimum tariff rate is changed from 60 Euro per metric ton to 150 Euro per metric ton. Assuming that the exporter's price remains at the 2008 level, after the new tariff comes to force the price of imported manioc and corn starch (before 18% VAT is added) might increase in Euro by 10-34 percent. Given the increased Ruble/Euro exchange rate in 2009, price of imported corn and manioc starched (18% VAT is not added) in Rubles will increase by 30-59 percent, depending on the country of origin. The new duties are considered to be more protectionist than before and thus more favorable for domestic starch producers at the expense of confectionary and other domestic food processing industries. Table 1. Calculation of Possible Increase of Domestic Price of Imported Manioc and Corn Starches
Imports by countries
Average price of 1 Metric Ton in 2008
Ad valorem 20%
Average price 2008 plus tariff, but not
Price change in
Average price 2008 plus tariff,
Average price plus tariff, but
Price increase in
tariff, EURO
less than required minimum per MT
EURO, %
but not less than 60 Euro per 1 MT, in Rubles**
not less than 150 Euro, in Rubles***
Rubles, %
USD
EURO*
60 EURO
150 EURO
Manioc Starch
Thailand
350
269
54
329
419
+27.3
12,182
18,446
+51.4
Vietnam
270
208
42
268
358
+33.6
9,905
15,738
+58.9
Corn Starch
China
390
300
60
360
450
+25.0
13,320
19,800
+48.6
Ukraine
550
423
85
508
573
+12.9
18,785
25,215
+34.2
Moldova
620
477
95
572
627
+9.5
21,175
27,585
+30.3
* Approximate USD/EURO average exchange rate in 2008 is 1.3
**Approximate Ruble/USD average exchange rate in 2008 is 37
*** Approximate Ruble/USD exchange rate in April 2009 is 44
Date: 30.04.2009
Leave your comment
