Import tariff hike won't hit bread prices - Grain SA | Fin24
 
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Import tariff hike won't hit bread prices - Grain SA

Apr 12 2016 09:00
Edward.West

Pietermaritzburg - Grain SA said the new import tariff on wheat is not expected to result in higher bread prices.

The association, which represents a number of grain farmers, has also questioned why the price of bread has not fallen since January 2015 in line with the low international wheat prices - Statistics SA’s bread price survey shows the prices have instead increased over this period.

The Finance Ministry on Friday approved an increase of wheat import duties by 34%, the highest on record, to protect local farmers, but it asked the trade commission to review the formula due to concerns about the effect of higher tariff’s on food prices.

The tariff on wheat imports is now R1 224,31 a tonne, in line with the International Trade Administration Commission’s (Itac) current formula.

Import tariffs for sugar and maize are also expected to be probed.

De Villiers said the view that the higher wheat import duty will increase the bread price by 10%, is not correct.

“It would also be a setback to the consumer if opportunistic behaviour resulted in an increase in the price of bread,” he said in a statement yesterday.

The Finance Ministry raised the tariffs due to concerns about food security and in spite of concerns about the effect of the higher duty on wheat on the price of bread and other staple food.

The wheat price comprises about 18% of the bread price and is sometimes used as an excuse to increase the price of bread, said De Villiers.

The current import tariff system was approved in 2013 by Trade and Industry Minister Rob Davies, following a long investigation by Itac.

The tariff system was aimed at increasing wheat production and food security in the long term, said De Villiers.

South African producers compete in a free market system against other subsidised countries. The tariff protects the local wheat industry, said De Villiers.

The import duty was supposed to have been in place since December — wheat importers have benefited by around R313 per tonne on 608 126 tonnes, following the delay in the announcement by the national Treasury, he added.

Once the import duty — which was supposed to be in place since December — is announced, it will “remove” the benefit the importers enjoyed.

consumer  |  inflation  |  bread
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