Review of system for import tariffs on key foods is nearing completion
THE International Trade Administration Commission (Itac) aims to complete its review of the system for determining import tariffs on wheat, maize and sugar before year-end, chief commissioner Siyabulela Tsengiwe said on Friday.
The current dollar-based domestic reference price and variable tariff formulae used for wheat, maize and sugar was introduced in 1999 to give price support to farmers exposed to the volatility of global market with the deregulation of the agricultural sector.
It also cushions local producers against their subsidised international counterparts.
A floor price — the domestic reference price — was used to cushion producers when global prices were at bottom. In this case, an import duty would be levied to bring the import price to the level of the floor price, at which local producers could be compete and be sustainable. As global prices fall, the tariff increases.
At $110 a ton, the floor price of maize has not been amended since 1999. The floor price for sugar was amended in 2009 and 2014 and for wheat in 2010 and 2013.
SA has for decades been self-sufficient in maize production and is a net exporter, but that is not the case with wheat, which has had to be imported.
Maize and wheat have had to be brought in large quantities, and because prices have been set at import parity this has been costly.
Tshenge said in briefing Parliament’s agriculture portfolio committee that Economic Development Minister Ebrahim Patel had directed Itac to review the dollar-based domestic reference price and varied tariff formulas for the three commodities.
"The reasons for these reviews are changed circumstances," he said. "There is a shortage of the grains due to drought, which necessitates imports. Exchange-rate fluctuations have seen the rand depreciate significantly in the past three years. There is also food inflation."
The first submission on wheat was considered on September 13, and the first submissions on sugar and maize will be considered on October 11.
Tsengiwe gave the assurance that the commission’s findings would be based on a rigorous investigation, and take industry inputs into account.
Itac would objectively assess interests in the value chain, from producers to consumers. The objective was food security and affordability of food for the poor.
Tsengiwe said the commission was likely to finalise its investigation of South African Poultry Association’s application for a 30% safeguard duty on imported frozen bone-in chicken portions by November.