Russia’s Trade-distorting Farm Support Hits New Low, Figures Indicate

9 February 2017

Russia’s trade-distorting farm support fell in 2015 for the fourth year running, new figures from the government suggest.

Data notified to the WTO on 27 January and released publicly this week show overall trade-distorting support fell sharply to US$3.3 billion (₽200 billion), one-third less than the US$5 billion reported the previous year, and also far below the US$7.2 billion ceiling that Moscow agreed to respect when it joined the global trade body in August 2012. (See Bridges Weekly, 25 July 2012)

However, the figures also show that a steep decline in the value of the rouble played an important role in the fall-off in trade-distorting support. Despite the sharp fall in US$ terms, support measured in roubles actually increased slightly over the same period, rising to ₽200 billion from ₽190 billion the previous year.

Similarly, support classified as “green box” – or only minimally trade-distorting under WTO rules – fell to US$2 billion (₽123 billion), which again represented a small increase in rouble terms. (See Bridges Weekly, 4 May 2016)

Green box subsidies are not subject to any cap or reduction commitments under the WTO’s Agreement on Agriculture. 

Exempt support

The vast majority of Russia’s trade-distorting agricultural support was classified by the government as “de minimis” support, meaning that it fell below a minimal threshold of five percent of the value of production.

De minimis payments are exempt from counting towards the agreed ceiling on highly trade-distorting “amber box” subsidies under the WTO’s agriculture rules.

At US$50 million, amber box payments amounted to only 1.5 percent of Moscow’s overall trade-distorting support in 2015, the notification indicates.

Product-specific payments amounted to just over one-fifth of total de minimis support, the new data shows, with the remainder represented by trade-distorting payments such as subsidised credit that were not linked to the production of particular products. 

 

Sharp increase in research, infrastructure spending

Outlays on certain green box categories increased sharply in 2015, the new figures show.

Research spending almost tripled in US$ terms, growing from US$54 million to US$156 million (or from ₽2 billion to ₽9 billion). Infrastructure spending grew from US$202 million to US$232 million – or nearly doubling in size in rouble terms.

Other important subcategories of green box support included spending on pest and disease control and on training services, with the two categories together representing about one-third of all green box support.

Decoupled income support to producers accounted for another quarter of green box spending, according to the government’s figures. In trade jargon, “decoupling” refers to removing the link between payments to farmers and agricultural production.

Comparing major economies

Moscow’s new farm subsidy notification comes shortly after a similar report to the WTO that was submitted by Washington a few weeks ago. (See Bridges Weekly, 26 January 2017)

That latter report shows that trade-distorting US farm support is considerably greater than the level provided by Russia.

While delays in reporting current data hamper meaningful cross-country comparisons, the latest available figures show that both the US provided around US$14 billion in 2014, while Japan provided ¥1140 billion in 2012, a comparable amount in US$ terms. (See Bridges Weekly, 10 April 2014)

Meanwhile, China reported that it made available ¥123 billion (US$18 billion) in 2010 in trade-distorting support. Lower levels were provided by the EU, India, and Brazil.

Brussels has reported that the EU’s trade-distorting subsidies amounted to €10 billion (US$7.7 billion) in the 2012-13 marketing year. India has indicated it provided US$2 billion in 2010-11, a figure which excludes input and investment subsidies for low-income farmers amounting to US$21 billion and which are not subject to any limit under current WTO rules. (See Bridges Weekly, 12 November 2015 and 18 September 2014)

Finally, agricultural powerhouse Brazil has said it also provided just US$2 billion in trade-distorting subsidies in the 2014-15 marketing year. (See Bridges Weekly, 3 November 2016)

WTO officials have repeatedly urged countries to notify up-to-date figures, in part to help facilitate ongoing negotiations on farm subsidy reform at the global trade body.

ICTSD reporting.

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