How much does a braai really cost?
I was invited by the United States ambassador to “the mother of all braais” (his words) to celebrate the renewal of the African Growth and Opportunity Act.
Unfortunately, I can’t attend, but the invitation got me thinking.
It runs from 3pm to 5pm on Monday, making me think that this is going to be quite a lightweight affair. In South Africa, the first two hours of a braai are spent warming up with a few drinks and the fire is only lit at the two-hour mark.
Have a beer while you mingle? The excise duties on beer moved up to 14c for every 340ml can of beer you swallow, if it’s local.
Show off to the Americans and drink imported American beer? Add another 5% customs duty. And that aluminium can the beer is in? That duty nearly went up to 15% following Hulamin’s application for a duty increase on rolled aluminium, but that request was only just declined, so no duty there.
I have no doubt the embassy will be braaing US chicken (1 770 tonnes have been imported up to February 2016), at a price of R9.55 a kg. This is 24% lower than from Hungary, the cheapest European exporter, and 36% cheaper than Holland, the largest European exporter.
If it’s a proper braai, there will be rolls and salad (made by the women and eaten only by the women), while the men drink Klippies and Coke by the fire. The excise on Klippies has been increased to R45 on a 750ml bottle and you soon will be facing fat tax on sugary drinks such as Coke.
The price of rolls is about to increase with the duty on wheat moving up to an eye-watering R1.83 a kg on Monday just past. Given that rolls are 99% flour and flour is about 50% wheat (about half the wheat is lost in the milling process), the effect of the duty increase on the price of bread at the braai will not be insignificant.
Butter on those rolls? Tim Noakes got South Africans to eat so much of it, we imported 100 000 tonnes in 2015 (75% from New Zealand, paying R5 a kg in duty).
Pasta salad, another staple of South African braais, will no doubt be present and this too will be hard hit by the duty increase on wheat; more so than the bread rolls in fact.
You see, there is a rebate that other Southern African Customs Union members have that allow them a duty-free quota on wheat that they can resell duty-free into South Africa – as long as they convert the wheat into something else first.
The wily Namibians caught on to this and so they import the wheat, turn it into pasta and send the pasta into South Africa duty-free. Pasta is about 75% wheat, so every time the duties go up on wheat, the South African pasta producers lose market share to Namibia.
South Africans love baked beans (more than one billion cans sold in 2015), but the duty on the steel used to produce the cans nearly went up to 10% in the last steel duty increase. ArcelorMittal came to an agreement with the downstream can producers and the duty was not imposed, but it was a close thing.
Smoked mussels on Salticrax while you wait for the meat? The duty on mussels dropped from 25% to zero. There is an awful lot of flour in Salticrax and so this, too, will become more expensive. But overall your smoked mussels on the Salticrax will probably end up costing roughly the same.
Buffalo wings? It’s not going to come from the US, because the Yanks eat so much of the stuff they are a net importer.
We could turn to the European Union for wings, but the domestic industry has brought a trade agreement safeguard action against the EU, which, if successful, would push the duties up on wings (and other bone-in chicken) to 37%. There is a shortage of wings in the domestic market, so it’s fortunate the braai is in April, while there are still wings to be had.
Struggling to stomach how much of the braai is actually duties?
Calm your nerves with a man-sized, proper South African pot-stilled brandy. The excise duties have just been completely rebated. Cheers!
Donald MacKay is a director of XA International Trade Advisors and Stratalyze.
This article originally incorrectly stated that 177 000 tonnes of chicken have been imported. It has been corrected to reflect the right amount: 1 770.