July 29, 2011

South African wheat producers may seek import tariff hike

South African industry body Grain South Africa will decide "soon" whether to seek an increase in the import tariff on wheat to protect local wheat farmers from falling prices.

A higher duty would provide more certainty for wheat farmers that they would be protected when prices fall, General Manager Jannie de Villiers said.

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.

While South Africa had already raised the duty last year, the move failed to induce farmers to plant more wheat, De Villiers said.

South African farmers are expected to plant 602,000 hectares this year, the second-smallest area ever, the government's Crop Estimates Committee said July 26.

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

The government may raise the wheat import tariff "if it is serious about the agricultural sector and food security," Du Plessis said.

South Africans are expected to consume about three million tonnes of wheat during the period, according to Grain SA.

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