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 tonne imported, should the benchmark corn price in Chicago fall below $110 (1,700 rand) a tonne, 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 US, 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 tonne. 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 a country that is traditionally a net exporter. The white corn 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 Tiger Brands Ltd, Premier Foods Ltd and RCL Foods Ltd.
The ITAC received Grain SA’s application in December, it said in an emailed response to questions.
"Almost all the big maize-exporting countries’ governments are subsidising their farmers, it is common knowledge," Grain SA’s De Villiers said in an emailed response to questions, using a local 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, as the global El Niño weather pattern curbed rains.
Local prices for white corn rose to a record on 21 January and closed at 4,850 rand a tonne on 19 February. South Africa will probably need to import about 970,000 tonnes of corn in the year to April, and a further 3.8 million tonnes in the following 12 months, Wandile Sihlobo, an economist, said on 28 January.
News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.