May 3, 2013

South Africa increased the dollar-based reference price for locally produced wheat by 37%, increasing the level at which duties on imported grain have to be paid.

From April 25, the price is US$294 per tonne, up from US$215, the Pretoria-based International Trade Administration Commission of South Africa said in an e-mailed statement.

Local wheat prices climbed 27% in 2012 and are down 0.5% to ZAR3,476 (US$387) per tonne this year on the South African Futures Exchange.

Grain South Africa, the nation's biggest representative of commercial growers, in April 2012 asked the commission to raise the reference price for wheat to US$326 per tonne to encourage output, according to ITAC.

Farmers last year planted the smallest area of wheat since the start of record-keeping in 1931, and are expected to sow 516,600 hectares this season, 1.1% more than last year, the Crop Estimates Committee said on April 25.

"Should prices fall below US$294 per tonne, a duty will be triggered to offset the effect of lower-priced imports," ITAC said in the statement.

South Africa is a net importer of wheat and is sub-Saharan Africa's largest producer of the grain after Ethiopia, according to USDA data. The country will reap 1.92 million tonnes of wheat this season, less than the 2.01 million tonnes produced a year earlier, the committee said on February 26.

The commission found that there is no correlation between higher local wheat prices through additional price support and expansion of output, it said.

"The ultimate cost of such support will be borne by the consumer," the commission said.