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Johannesburg -
Within the next four months wheat farmers can find out whether increases in wheat importation duties, which are regarded as necessary to save the local industry from ruin, will be approved.
The formula currently used to determine the tariff on wheat dates back to the 1990s, and offers virtually no protection to local farmers who have to compete with subsidised products from Western Europe, in particular.
The result is that South Africa's wheat production has plummeted by a third over the past 10 years to current production levels of about two million tons a year. Whereas in the past this country even managed to export wheat in a good year, at least a third of the country's requirement now needs to be imported.
Grain SA has applied to the International Trade Administration Commission (Itac) for the current reference price of $157/ton used in the formula to be increased to $260 to ensure the long-term continued existence of the local industry. Current international market prices run between $210 and $215/ton.
Grain SA general manager Dr Kobus Laubscher says that the purpose of the application for increased protection is not to make profits for farmers but to re-instil confidence in the industry. The industry is simply looking for an even playing field.
The recent decline in wheat farming means that South Africa is also falling behind technologically.
This affects other players as well - such as the seed, tractor and fertiliser merchants.
Should the application be approved, it would have far-reaching consequences for the economy as a whole. It will also have a positive impact on farmers in the Western Cape, especially in areas where no favourable alternative to wheat farming exists, Laubscher observes.
However, higher import protection could result in more expensive bread for consumers. Grain SA's expectation is that it would push the price of an R8 loaf up to R8.20.
Only 20% of the bread price goes to the farmer and the rest is added by millers, bakers and supermarkets.
- Sake24.com
For more business news in Afrikaans, go to Sake24.com.
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