S. African Wheat Producers May Seek Higher Import Tariff

Grain South Africa, an industry body, will decide “soon” whether to seek an increase in the import tariff on wheat, General Manager Jannie de Villiers said today by phone from Pretoria.

A higher duty would provide more certainty for wheat farmers that they would be protected when prices fall, De Villiers said. “We are currently getting the numbers together to see if we would be able to apply successfully for an increase,” he said.

While South Africa raised the duty last year, the move didn’t induce farmers to plant more wheat, De Villiers said. South African farmers are expected to plant 602,000 hectares (1.49 million acres) this year, the second-smallest area ever, the government’s Crop Estimates Committee said July 26.

Grain SA has had talks with the government on an increased import duty, and “there is an understanding that it can contribute to job creation, rural development and food security,” De Villiers said.

The South African government is aiming to create 5 million new jobs by 2020 to cut the unemployment rate from 25.7 percent to 15 percent.

South Africa is expected to import about 50 percent of the wheat it consumes in the year starting Oct. 1, compared with 57 percent last year, Willie du Plessis, director of agricultural banking at Standard Bank Group Ltd., said at a presentation in Johannesburg today.

South Africans are expected to consume about 3 million metric tons of wheat during the period, according to Grain SA.

Bread Prices

There are “great opportunities” for local farmers to increase production, Du Plessis said. The government may raise the wheat import tariff “if it is serious about the agricultural sector and food security,” he said.

The impact on retail prices for bread would be “minimal,” he said. The wheat price contributes about a third to the retail price of bread in South Africa, according to De Villiers.

The current duty of 140 rand ($20.89) per ton is applied when prices for Hard Red Winter Wheat fall below $215 per ton in Kansas City. The reference price was raised from $157 per ton last year.

To contact the reporter on this story: Jana Marais in Johannesburg at jmarais@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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