Grain Millers Oppose South African Corn-Import Tariff Review

  • Farmers' lobby group says tariff will help protect producers
  • Chamber of Milling says duty would drive up cost of food

South Africa’s grain-milling body is opposing a request by the nation’s biggest corn-farmers’ lobby to review a tariff on imports of the country’s staple food as this will lead to higher prices that will burden consumers.

Grain SA asked the country’s International Trade Administration Commission, or ITAC, in August to revise the current formula for the duty that gives local farmers protection, Chief Executive Officer Jannie de Villiers said. With the current calculation, the tariff would be applied to each ton imported should the benchmark corn price in Chicago fall below $110 (1,700 rand) a ton, which last happened in October 2006. If a new duty comes in, it would raise local milling and production costs, National Chamber of Milling Executive Director Boikanyo Mokgatle said.

The price of corn in the U.S., the biggest producer, has more than halved from records in 2012 because of a glut in supply to a current price that’s equivalent to $145 a ton. In South Africa, it has more than doubled since the start of last year to an all-time high equal to $348 last month as the worst drought since records began damages the harvest, driving the cost of food higher and prompting the need for imports by the country that is traditionally a net exporter. The white variety is used to make a staple porridge known as pap while the yellow type is fed to animals.

“We are vehemently opposed to instituting any attempt to put in a tariff,” Mokgatle said in an interview at Bloomberg’s Johannesburg office. “Why do we need protection with a commodity that we are so self-sufficient with? We cannot shy away from the fact that it could actually end up being a cost to the consumer.”

The chamber represents small and big milling companies, including Tiger Brands Ltd., Premier Foods Ltd. and RCL Foods Ltd.

The ITAC received Grain SA’s application in December, it said in an e-mailed response to questions.


Subsidies Common

“Almost all the big maize-exporting countries’ governments are subsidizing their farmers, it is common knowledge,” Grain SA’s De Villiers said in an e-mailed response to questions, using another term for corn. “South African farmers get almost no assistance from government and we have requested that we get protection against these governments.”

The nation will probably reap the smallest harvest since 2007 this year the global El Nino weather pattern curbed rains.

"It remains government’s responsibility to balance the interest of consumers and producers, all of us are just subjective," De Viliers said.

Local prices for white corn rose to a record Jan. 21. The contract for July delivery climbed 1.7 percent to 4,930 rand a ton by midday in Johannesburg. South Africa will probably need to import about 970,000 tons of corn in the year to April and a further 3.8 million tons in the following 12 months, Wandile Sihlobo, an economist Grain SA, said Jan. 28.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE