Russia’s Trade-Distorting Farm Support Falls, New Figures Suggest

4 May 2016

Russia’s trade-distorting agricultural support in 2014 fell to US$5 billion – ₽190 billion – new figures from the government suggest.

The report, released by the WTO last Thursday, shows that the country’s farm subsidies have continued to fall steadily, with Moscow reporting a drop of around 30 percent from 2013 levels. (See Bridges Weekly, 18 June 2015)

The fall in trade-distorting payments mean that Russia is well below the 2014 ceiling of US$8.1billion to which negotiators agreed when the country joined the global trade body in 2012. (See Bridges Weekly, 25 July 2012)

As in 2013, 99 percent of Moscow’s trade-distorting farm payments were exempt from this ceiling as they were classified as “de minimis” spending – meaning that they fell below a threshold of five percent of the value of farm production.

Around a quarter of the drop in trade-distorting support appears to result from a fall in fodder subsidies, which dropped from US$533 million in 2013 to US$13 million in 2014. Fodder involves dried hay or straw for livestock consumption.

Pests and diseases

Another US$2.9 billion (₽110 billion) was classified as causing no more than minimal trade distortion, known as “green box” support at the WTO. Spending in this category remained essentially unchanged from the previous year, the new figures suggest.

However, within this category Russia reported an almost eight-fold increase in spending on pest and disease control, which amounted to US$620 million in 2014.

The report also suggests that spending on environmental programmes, which is also classified as green box, increased sharply from US$5 million to US$45 million.

Rouble crash

Russia’s future farm subsidy notifications are likely to be affected by the collapse in the value of the rouble, which fell sharply towards the end of 2014. (See Bridges Weekly, 19 February 2015)

Moscow’s WTO commitments are made in US dollars, meaning that even if trade-distorting support remains constant in rouble terms, the level of subsidies is likely to drop when calculated as a dollar equivalent.

Russia’s farm subsidies appear to be significantly below those reported by some other major economies, according to the most recent reports countries have submitted to the WTO. Trade-distorting support in China amounted to US$18 billion (¥123 billion) in 2010, Beijing has said, while Japan has reported it provided ¥1140 billion (US$14 billion) in 2012, and data from the US indicates it provided US$12 billion in 2012. (See Bridges Weekly, 13 May 2015, 10 April 2014, and 16 January 2015)

The most recent domestic support notification from the EU, for the 2012-2013 marketing year, has said trade-distorting farm subsidies amounted to €6 billion (US$7.7 billion), while India has indicated it provided just US$2 billion in 2010-11. (See Bridges Weekly, 12 November 2015 and 18 September 2014)

However, delays in reporting agricultural subsidies to the WTO mean that countries’ current farm spending levels are hard to determine.

Russia’s complete domestic support notification (G/AG/N/RUS/13) is online here.

ICTSD reporting.

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