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Bread price should not increase following an increase in wheat tariff

11 Apr 2016

Grain SA said today that the price of bread should have decreased since December 2015 following the lower international prices of wheat. The importers of wheat benefitted ±R313 per ton on the 608 126 tons (R190 million) following the delay in the announcement by National Treasury. According to the Stats SA bread price survey to calculate the inflation, the price of bread increased over this time. Once the import duty - which was supposed to be in place since December - is announced, it will “remove” the benefit the importers enjoyed. “It should not increase the price of bread,” Jannie de Villiers, CEO of Grain SA said.

The wheat price is only 18% of the bread price and is sometimes used as an excuse to increase the price of bread. The current import tariff system was approved in 2013 by Minister Rob Davies, Minister of Trade and Industry, following a long and very thorough investigation by ITAC. It was a system implemented to enhance wheat production and food security in the long term and not just a haphazard decision. The South African producers compete in a free market system against heavily subsidised countries. This tariff protects the local wheat industry. If producers decide not to plant anymore, it would result in higher imports and losing more foreign exchange due to staple food imports. The view that the increase in the wheat import duty to be announced will increase the bread price by 10%, is not correct. It will also be a setback to the consumer if opportunistic behaviour results in an increase in the price of bread.


Issued by:
Grain SA Communications
11 April 2016

Further enquiries:
Jannie de Villiers, CEO, Grain SA
086 004 7246 | pretoria@grainsa.co.za