The Russian grain sector is entering a long-awaited phase of liberalization of the foreign trade regime for one of the most heavily regulated agricultural crops in recent years.
The Cabinet of Ministers has officially rescinded the tariff quota for the export of unhusked rice (paddy rice) outside the Eurasian Economic Union (EAEU).
At the same time, the Ministry of Industry and Trade received a direct order to completely eliminate quantitative restrictions on exports.
The previous conservative mechanism, which temporarily limited exports to a 200,000-ton quota with a punitive 50% duty outside that quota, has been completely revoked.
The Price of a Harsh Embargo: Lost Customers and Surplus Pressure
Radical restrictive measures on rice exports have been in effect in Russia since July 1, 2022.
The state was forced to take this step after a major accident at the key Fyodorovsky hydroelectric power station in the Krasnodar Territory, in order to protect the consumer market from a shortage of raw materials.
Four years of strict isolation helped maintain retail prices, but dealt a severe blow to the export infrastructure.
During the ban, tectonic shifts occurred in the global food market, which the National Rice Union (NRU) describes with a degree of justified alarm:
Loss of contractors.
Foreign importers did not wait for the embargo to be lifted; they quickly found alternative suppliers and completely restructured their logistics routes to accommodate other countries.
Shift in demand structure.
Global retailers have massively shifted toward long-grain and large-grain rice varieties.
This is a serious challenge for Russia, as domestic breeders have traditionally focused on medium-grain varieties, and the share of long-grain rice in our fields remains extremely small.
During the lockdown, domestic rice farmers accumulated a huge unsold surplus of raw materials.
Before the restrictions were imposed, Russia consistently produced approximately 1.2 million tons of paddy rice, shipping 140,000-160,000 tons annually to foreign markets.
Exports cleared the surplus and supported mill margins. When the borders closed, the excess rice began to exert an avalanche-like pressure on the domestic market, becoming the key reason for the prolonged and deep decline in paddy prices in recent years.
By the end of the season, exports amounted to a symbolic 62,000 tons, with Turkey (30,000 tons) and Belarus (19,000 tons) being the main buyers.
Subsidies Missing the Mark: A Technical Deadlock in State Support
The process of Russian exporters returning to the global retail map is significantly complicated by an unexpected regulatory impasse.
Currently, rice-growing companies are completely ineligible for a key federal support measure—reimbursement of a portion of transportation costs for international shipments.
The reason is purely bureaucratic: the government-approved list of product codes eligible for transportation subsidies does not include TN VED item 1006 («Rice») or codes for rice grains.
The document was drafted during the period of the strict export ban, so the rice sector was excluded from the program as unnecessary.
Despite an official request from the National Rice Union to urgently correct this technical error, the Ministry of Agriculture officially refused, citing a lack of available additional budget funding.
Exporters will have to factor the full cost of logistics into the cost of goods.
Conclusions for strategic business planning
The complete abolition of export restrictions is a crucial economic lever that will act as a natural mechanism for stabilizing domestic prices and save farmers from operating below cost.
However, a quick triumphant return to global markets is not to be expected.
To withstand fierce competition from Asian suppliers, Kuban holdings will have to radically restructure their breeding efforts, promptly introducing long-grain hybrids into crop rotation to meet the demands of foreign buyers.
