标题: Agricultral production export tax removed and its impact to the sector [打印本页] 作者: yangruoxin 时间: 2008-11-13 14:40 标题: Agricultral production export tax removed and its impact to the sector
Our conclusion: the move indicates strengthening policy support for grain farmers and aims to keep raw grain prices high in the coming two years, but would play only a limited role in pushing up domestic raw grain prices.
Some points of the four domestic demand boosting measures adopted in a State Council executive meeting presided over by Premier Wen The meeting decided to remove export tariffs on some of steel, chemical products and grains, reduce export tariffs on some of fertilizers and adjust the way of taxation, and impose or raise export tariffs on some products.
Our comments: 1) The removing of the provisional tariffs (which would have expired by the end of this year) is a policy measure aiming to deepen the protection on the interests of domestic grain farmers and support the domestic raw grain prices staying high over 2009~10. To make up for the damages to the interests of grain farmers caused by price-capping measures taken to tame inflation, and to avoid the disuse of more arable land, the government has previously unveiled several incentive policies, including an addition to the list of agricultural products enjoying the minimum purchase price protection in 2009 (adding corn and soybean) and an increase in the 2009 minimum purchase prices for rice, corn, soybean and wheat. 2) The reason for the Chinese government to remove export tax rebates and moreover, to impose a 5~25% provisional export tariff on raw grains in 2008 is to stabilize domestic prices. However, against the ongoing backdrop of the international raw grain prices having fallen sharply while the domestic prices remaining firm, the domestic prices of raw grains (rice, corn, soybean and wheat) have been 20~50% higher than in the US, making the imposing of provisional tariffs on raw grain exports meaningless. 3) Even if the international prices of agricultural products have dropped 30~50% in 2H08, their current prices remain too high compared to industrial raw materials whose prices have fallen to levels of early 2006, and thus still have a downside potential. Therefore the removing of the provisional export tariffs or a possible restoration of the export tax rebates (a 13% rebate rate) in the future would play only a limited role in pushing up domestic raw grain prices. On the other hand, the government may raise import tariffs on raw grains in order to keep the domestic prices at high levels in the next two years, or to not cut the minimum purchase prices for 2010.
GUpoFTCf.zip (36.7 KB)