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Russian wheat policies and Georgia's strategic responses
Tuesday, 23 April, 2024

International wheat prices have emerged as a significant policy concern in recent years, notably during the Covid-19 pandemic and Russia's war in Ukraine, as Russia has been known for periodically halting its grain exports to impact global prices. Georgia heavily depends on wheat imports from Russia, with over 95% of its wheat historically sourced from there. Despite Russia's recurrent bans and restrictions on wheat exports every 2-3 years, Georgia has yet to successfully diversify its import sources. The policy brief analyzes the Impact of Russian wheat policies on Georgia's market and Georgia's response to trade restrictions. 

In June 2023, the Georgian government introduced a temporary import duty on wheat flour imported from Russia in response to requests from the Georgian Flour Producers Association. The association began advocating for an import duty after Russia, in 2021, imposed a so-called “floating tariff” on wheat which made it relatively more expensive to import wheat in comparison to wheat flour. As a result of the “floating tariff” on wheat, wheat flour imports skyrocketed and almost fully substituted wheat imports. Eventually, many Georgian mills shut down and local wheat producers struggled to sell domestically produced wheat. Such an increase in flour imports raises the risk of completely replacing domestically produced flour with flour imported from Russia.

In order to solve the aforementioned problems, the government of Georgia has established a temporary import tax on imported wheat flour. The import tax on flour came into effect from June 2023 and amounted to 50 GEL per ton. At a later stage, from 10 October 2023, this tax rose to 250 GEL (92 USD). In turn, millers agreed to purchase 1 kilogram of wheat from Georgian farmers at 0.7 GEL (0.3 USD). The tax was supposed to be in effect until 1 March 2024, however it was extended to 1 September. In addition, under a governmental decision, an import tax was imposed on barley and bran after flour and was set at 100 GEL.

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