Russian wheat exports have been constrained by the tax, which has prevented exporters from fully benefitting from the weaker rouble and a large grain crop.

The current duty formula is set at 50 per cent of the customs price minus 5,500 roubles (C$110) per tonne but not less than 50 roubles per tonne.

The government is proposing changing that to 50 per cent of the customs price minus 6,500 roubles (C$130) per tonne but not less than 10 roubles per tonne, Deputy Prime Minister Arkady Dvorkovich said on Thursday in Semikarakorsk in Russia’s southern grain-growing Rostov region.

“The (tax) easing is for 1,000 roubles,” Dvorkovich, who is in overall charge of agriculture, told reporters on Thursday.

He did not say when the proposal would be approved by Russia’s Prime Minister Dmitry Medvedev.

“This is broadly in line with what market had expected,” said Dmitry Rylko, the head of the IKAR agriculture consultancy.

The agriculture ministry had proposed the changes, but according to industry sources the decision was delayed due to Economy Ministry opposition.

The new tax would also exclude more expensive “hard wheat” and seeds, Dvorkovich said.

Two agriculture consultancies told Reuters the hard wheat Dvorkovich was referring to was durum, of which Russia is a small supplier, and all types of wheat seeds.

Dvorkovich did not say whether the government also planned to raise prices for the state restocking programme, which the agriculture ministry had also proposed.

Russia exported 7.7 million tonnes of grain, including six million tonnes of wheat, between July 1 and Sept. 18, according to official customs data, down 23 percent from a year earlier.

The agriculture ministry currently expects grain exports of 30 million tonnes this marketing year and a harvest of 100-101 million tonnes.

— Reporting for Reuters by Darya Korsunskaya; writing by Polina Devitt.

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Russia, one of the main key wheat exporters to North Africa and the Middle East, needs a good crop after a sharp drop in the rouble has boosted domestic food prices.

“In general there are reasons to consider the situation as satisfactory,” Agriculture Minister Nikolai Fyodorov told President Vladimir Putin during a meeting of senior government officials.

Russia’s 2015 grain crop may come in at up to 100 million tonnes, the high end of a previous forecast range and down from a near-record crop of 104 million tonnes a year ago, after winter left plantings in a better condition, Fyodorov said.

“The area of winter grains, which were hit during the autumn, is being reduced,” the minister added.

Last autumn, amid cold weather and a lack of rain, Russian farmers sowed 16.8 million hectares for winter grains, up five per cent year-on-year.

Previously the ministry had said that about 21 per cent of winter grains were in bad condition and expected the 2015 grain crop to range from 85 million to 100 million tonnes.

However, the latest data showed an improved condition of winter grains on 400,000 hectares of land in Russia’s Southern Federal District, where the main wheat-exporting regions are, Fyodorov said.

“This adds more than two million tonnes of grains,” he said.

In total, about 19.7 per cent of winter grains are in poor condition, the agriculture ministry said in a separate statement.

Winter grains usually have higher yields than spring grains and contribute the bulk of the wheat crop that Russia exports. They are also more weather-resistant.

The ministry also said farmers have started the spring sowing campaign in Russia’s Krasnodar and Stavropol regions a few days ago. Under the current plan, spring grains and pulses will be sown on 31 million hectares in total, down more than two per cent year-on-year.

The rouble’s fall by 47 per cent against the dollar since early 2014 has inflated farmers’ costs for imported seeds, fertilisers and for borrowing. Russia’s Grain Union, a farmers’ lobby group, has said that costs rose 40 per cent, year-on-year.

In an effort to ease that pressure, officials have agreed with fertilisers producers to cut domestic prices by a third. The government is also compensating for part of interest rates to farmers, Fyodorov said.

— Reporting for Reuters by Darya Korsunskaya and Polina Devitt in Moscow.

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A newly formed commission on food security is due to meet on Wednesday under the chairmanship of Deputy Prime Minister Arkady Dvorkovich, in charge of industry and commodity producers in the new government of Prime Minister Dmitry Medvedev.

"There will be a meeting on the grain market," Dvorkovich told Reuters on Tuesday. "I see no basis for limiting exports."

Russia banned exports in 2010 to restrain prices and ensure domestic supply in response to a catastrophic drought that destroyed a third of the crop.

The ban shook the trust of longtime consumers and Russia has since sought to assure markets that a repeat is unlikely.

But a spring drought in the key export regions of on the Black Sea slashed yields, and later spread to parts of the Volga River valley and Siberia, renewing questions about export restrictions. Market sources cited a Goldman Sachs report as saying they appeared possible this year.

"The state’s opportunities to regulate the domestic market through export limits look rather limited," Andrei Sizov Sr., chief executive of Russia’s SovEcon consultancy, said. "After joining the World Trade Organization, rapid imposition of export duties, especially ‘floating’ ones, is practically impossible, and a ban on exports is politically unacceptable."

Sizov slashed his harvest forecast by several million tonnes to 78.5-81.5 million tonnes, down from 94 million tonnes last year, and said Russia may export just 10 million tonnes of wheat this year as grain exports fall by half from last year’s record 28 million tonnes, which included over 21 million tonnes of wheat.

"At forecast production levels, with a reduction in carryover stocks, and an insignificant increase in domestic consumption, Russian grain exports in the 2012-13 agricultural year could fall by half to 13-14 million tonnes, including 10 million tonnes of wheat," Sizov said.

"These volumes would be achieved through a significant increase in external prices, which will support export, regardless of rising domestic prices."

Exports have been off to a slow start this year as Russian grain prices have shot up with world prices, and traders are waiting for prices to drop.

— Darya Korsunskaya and Melissa Akin are Reuters correspondents in Moscow.

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