SA wheat tariff hike won�t impact on local market
Isaac Pinielo | Thursday April 14, 2016 18:00
Speaking to the Mmegi Business in an interview, Nkosi Mwaba the association’s chairman said the 34 percent increase in the import duty on wheat announced by the South African government last week will have no direct impact on the local market.
“We trade on Safex (South African Futures Exchange) and as of today there has not been any movement of prices of bread and food,” he said.
Safex is the futures exchange subsidiary of the Johannesburg Stock Exchange (JSE Limited), which has an agricultural markets division for trading of agricultural derivatives.
Although the increase of the import duty on wheat in South Africa is expected to hit on bread prices in that country by at least 10 percent, Mwaba said local consumers should not be concerned, noting that there will be no significant reaction on local bread and food prices.
“What we would rather worry about is other factors like the exchange rate, but as for bread and food here, the prices have already been cushioned since the drought and tariff adjustment was long anticipated,” he said.
South Africa is a net importer of wheat, mostly the hard kind used to make bread, from Russia, Germany and Ukraine, and Botswana is one of South Africa’s biggest export markets.
Last week, the South Africa’s finance ministry approved a 34 percent increase in the tariff on wheat imports to R1,224.31 (P904.98) per tonne from R911.20 (P673.54) per tonne.
The country had expressed concern about the impact of the higher import duty on wheat on the price of bread and other staple food. It was reported that food prices especially for the staple maize crop have been accelerating because of a severe drought, pushing inflation higher, but analysts said the impact of the tariff hike on consumers would be minimal.
Meanwhile, with the drought persisting in South Africa, its average maize yield has been the lowest since 2008, leading to the country failing to produce enough maize to export to its neighbours such as Botswana and Swaziland. That has not only caused prices to rise in South Africa alone, but it was asserted that if the drought persisted, it could become a regional disaster.