Georgia extends duty on imports of flour, barley and bran from Russia

The duty effectively balances floating tariffs on imported wheat and puts mills in a competitive environment, experts say

The Georgian government has extended the temporary duty on imports of flour, barley and bran from Russia until March 1, 2025.

In order to support Georgian farmers who have problems with the realization of grain harvest due to lack of demand for it, a temporary duty on imports of flour, barley and bran has been introduced in Georgia since summer 2023. Initially it was valid until November 1, 2023. The term was extended twice – first until March 1, and the second time until September 1, 2024.

The issue of extending the duty was raised by the Association of Grain and Flour Producers of Georgia, according to which the duty effectively balances the floating tariffs on imported wheat and puts mills in a competitive environment.

In their opinion, this will make it easier in the long term, including for those who store wheat to be able to consider supplying mills in a stable manner after September.

According to a government decree, imports of more than 200 kilograms of wheat flour were taxed at GEL 0.2 per kilogram. In October 2023, it was increased by 25%, i.e. to GEL 0.25 per kilogram, while import of more than 200 kilograms of barley and bran is taxed at the rate of GEL 0.1 per kilogram.

Georgia consumes about 800 thousand tons of flour per year. Most of the wheat flour consumed (about 78%) comes from Russia, which is the largest supplier, including grain.

With the increase in export duty on wheat from Russia and the resulting increase in imports of flour for which no export duty was levied, all mills in Georgia suspended production in the first quarter of 2023, as they did in 2021. As a result, barns were overflowing with wheat and farmers simply had nowhere to put their harvest.

Difficult times for Georgian flour millers came in the summer of 2021 after Russia introduced a floating duty on grain exports. Therefore, Georgia increased its flour imports from russia several times, accordingly reducing wheat imports by more than 30% in 2022. As a result, almost all mills in the country stopped working.

Mills started importing wheat again and increased production only by the end of 2022, when the floating export duty rate on wheat decreased.

The mills faced a second production crisis in March 2023 due to increased flour imports and higher export duty on wheat from Russia.

Tags: Russia, Georgia, restrictions