London — Russia's government has decided to compensate farmers for the hike inprices of gasoline and diesel by using its reserve fund, Russia's agriculturalminister Dmitry Patrushev said in comments published on the Kremlin's website.
The government indicated previously it was looking to "develop acomplex of measures" that would offset losses incurred by farmers fromincreasing fuel prices during spring agricultural works.
The compensation is estimated at around Rb12 billion ($190.5 million),Patrushev said during a meeting with Russian President Vladimir Putin.
Patrushev has said previously that 1.7 million mt of fuel was used duringthe spring sowing season and another 3.7 million mt is expected to be usedduring the autumn harvest.
But with fuel accounting for around 10% of agricultural sector costs, thefuel price hikes especially in May were jeopardizing the progress of theagricultural works, especially as Russia expects a large harvest.
Last year's harvest was a record 135.4 million mt, with 100 million mtgrain expected to be harvested this year, Patrushev said in the commentspublished on the Kremlin's website.
The country expects to export around 44 million mt grain, similar to lastyear.
To mitigate the downside pressure on domestic grain prices resulting fromthe healthy harvest, the government has extended the zero export duty on wheatuntil July 1, 2019. The country canceled the export duty on grain on September26, 2016 to be effective until July 1, 2018.
Meanwhile fuel prices had taken a downturn, Patrushev also said.
Russia's diesel prices typically rise during the spring and autumnmonths, partly boosted by growing agricultural demand. This year both gasolineand diesel were recording significant gains, partly on the back of the Januaryand planned for July excise duty increase.
But as spot prices eventually started pushing up prices at the pump,which are carefully monitored by the authorities, the government decided toreduce the gasoline and diesel excise retroactively from June 1 and to forgothe planned July rise.
The draft law stipulating the June excise duty cut is awaiting a thirdreading by the State Duma before being approved by the Council of theFederation and the President.
