As the Cabinet grapples with the effects of food price inflation, especially on poor households, red tape has snarled the introduction of new grain import tariffs that would reduce the price of bread and maize meal.
The tariffs would allow wheat and maize to be imported more cheaply, putting downward pressure on the purchase price of domestic grain.
After its meeting on Wednesday, the Cabinet announced it would consider ”concrete recommendations” to reduce food price hikes.
The urgency arose from Statistics SA’s August inflation figures, which were announced this week. Food inflation among low-income groups — principally for maize meal, milk, eggs, vegetables and meat — was given as 20%.
The government is holding close to its chest an interim report on pricing behaviour in the food and agricultural sector. Minister of Agriculture and Land Affairs Thoko Didiza tabled the report in Cabinet, but even state departments involved in the investigation know nothing of its contents.
A Cabinet statement said it was agreed measures should not include market-distorting subsidies or price controls, saying it would not ”meet short-term emergencies with short-term reactions”.
Recently, the Mail & Guardian reported agriculture director general Bongiwe Njobe as saying her department was looking at reintroducing some form of market regulation, along the lines of the now disbanded control boards.
Reduced import tariffs on food are expected to be recommended when Cabinet finalises the matter in two weeks’ time. But industry sources question why Cabinet should introduce new measures instead of improving on the existing mechanisms that are not running smoothly.
According to official formulae, in line with World Trade Organisation regulations, wheat imports to South Africa should now be zero-rated, and the maize rate cut by 70% from R137 to R43 a ton. An automatic mechanism for a tariff cut is triggered when wheat or maize prices, measured on a 21-day moving average, trade above a certain level for three weeks.
However, the cut in the wheat tariff triggered on July 23 was only gazetted on September 16.
Said the Chamber of Milling’s Hilton Zunckel: ”Given the food prices consumers are paying now, these tariffs have to be implemented faster.”
Some importers delayed offloading grain at South Africa’s harbours pending the tariff cut.
On maize imports, the formula trigger reduced the tariff from R137 a ton to R43 a ton on August 13. This has not yet taken effect.
In addition, a zero-import tariff for maize is expected to be triggered in October. The lag means it may not take effect until next year.
The delays flow from the tangled administrative process for the implementation of tariff cuts.
The Chamber of Milling must inform the Board on Tariffs and Trade a cut has been triggered, and the board informs the Department of Trade and Industry, where Minister Alec Erwin must sign a recommendation.
The recommendation goes to South African Revenue Service, which sends it to the Treasury, which authorises the gazette notice.