State delays wheat cuts

Not enough: The tariff on imported wheat acts as a buffer to protect local farmers when international wheat prices are lower and makes the domestic market competitive. (Mike Hutchings/Reuters)

Not enough: The tariff on imported wheat acts as a buffer to protect local farmers when international wheat prices are lower and makes the domestic market competitive. (Mike Hutchings/Reuters)

Government stands accused of not timeously implementing tariff cuts on imported wheat, which could result in consumers paying more for wheat products such as flour and bread.

Millers are meanwhile holding imports, waiting for government to gazette the new, lower tariffs of R664 a tonne. This is 30% cheaper than the present R958.

The wheat tariff is calculated using a formula by the industry which depends on the international price. The formula is to ensure local wheat prices are supported when international prices are low.

A miller, who asked to remain anonymous, told the Mail & Guardian that bulk imports of wheat usually happen at this time of the year because the local wheat supply runs out around July.

“Government is taking its time to implement the new tariff,” the source said, explaining that imports were being kept in ports waiting for the lower tariffs and the cost savings of R293 a tonne are not being passed on to consumers.

“Why do they not implement it like any other duty, on time?” he asked.

For this tariff to be gazetted, three departments — trade and industry (DTI), the South African Revenue Service (Sars) and national treasury — need to give the green light.

The DTI minister, Ebrahim Patel, signed the new tariff on August 23, according to an email seen by the M&G.

In an email response from Sars, spokesperson Sandile Memela said the department had not delayed the process of drafting the request for the tariff and that it is currently in the “signature chain for approval”.

“The minister of finance gives effect to any request by the minister of the DTI.
The duty in question is administered by Sars, which drafts the amendments for sign-off by the minister of finance,” said Memela.

Treasury did not reply to emailed questions from the M&G.

The International Trade Administration Commission (Itac), which oversees tariffs and trade, said that the process of implementing a tariff usually runs smoothly, but that there have been “hiccups” in the process in the changeover from the fifth to the sixth administration.

Itac spokesperson Thalukanyo Nangammbi said: “As with any transition, the new incumbents need time to familiarise themselves with their new roles, work and systems.”

South Africa depends on wheat imports because they usually account for between 40% and 50% of local consumption.

Grain SA, which provides commodity strategic support and services to South African grain producers, says the tariff acts as a buffer to protect local farmers when international wheat prices are lower and makes the domestic market competitive.

Agricultural economist Wandile Sihlobo posted a video on his Twitter page commenting on good rainfalls in the Western Cape where winter crops such as wheat are harvested.

He said, however, that more rain is needed and despite good rainfall, the country will continue to be a net importer of wheat.

Sihlobo says the global market for wheat has improved and production is up.

The increase in wheat supply means the global price of wheat will remain “soft” over the next year, which will be beneficial to importers such as South Africa, he said.

Tshegofatso Mathe is an Adamela Trust business reporter at the Mail & Guardian

Tshegofatso Mathe

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