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Regular readers of this blog might remember that I’ve recently discussed the uncertainty caused by the delays in tariff gazetting in the South African wheat market. Coincidentally, after publishing that post on August 17, the tariff swiftly published on the government gazette four days after.

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South African wheat import tariff
Source: SAGIS, Agbiz Research

But, this ‘drag’ is far from over. By the time of the publication of the wheat tariff to R640.60 per tonne, another rate had already triggered to R281.74 per tonne due to then higher global wheat prices on the back of unfavourable weather conditions in parts of the EU and the Black Sea wheat producing regions. Disappointingly, this has not yet been published in the government gazette to make it official, which means South Africa’s wheat import tariff is effectively still R640.60 per tonne, despite the changes in the global market.

The story does not end there. Over the past few weeks, global wheat prices have declined somewhat from levels seen at the beginning of August. This was after speculations that Russia would cap wheat exports due to lower domestic wheat harvest proved to be wrong. 

Subsequent to this, on 11 September 2018, South Africa’s wheat import tariff triggered to R490.72 per tonne. This is 64 percent higher than the previous trigger of R298.45 per tonne (which has not yet been published). This newly calculated rate will also be effective only after publication in a government gazette, of which the timeframe is unclear – only the National Treasury knows.

Due to the delays in tariff gazetting, there is now an overlap between the decline to R298.45 per tonne and the increase to R490.72 per tonne, which defeats the whole point of having the tariffs in the first place. 

Global market conditions are very dynamic, as such, we need an agile tariff management system that gazettes tariff adjustments in real time. It is only fair for the wheat industry that has to contend with a myriad of other challenges, to at least have a functional tariff management system in their corner.

The adjustments in the wheat import tariff are satisfied when the global wheat price (US No.2 HRW) deviates from the base price by more than US$10 per tonne for three consecutive weeks.

Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za

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