No intention to temporarily remove duty on sugar imports – DTI
No consideration is currently being given to temporarily removing the current duty on imported sugar, Trade and Industry Minister Dr Rob Davies said in a parliamentary reply released on Tuesday.
The Minister arrived at this decision following a review process undertaken by the International Trade Administration Commission of South Africa (Itac) within the provisions of the Itac Act and because domestic supply had been stabilised.
This statement was in response to a question posed by G G Hill-Lewis of the Democratic Alliance on whether, “with reference to the prevailing drought in the country and the sugar industry’s own forecasts of a significant shortage in local production of sugar for 2016 and 2017”, the Minister was considering a temporary removal of duties on imported sugar to assist consumers and alleviate food price inflation.
Davies said the sugar industry had assured the Department of Trade and Industry that it had produced sufficient sugar to supply the domestic market in 2015/16 despite the severe drought in several sugar growing regions. “Thus, sufficient raw sugar is in stock at the sugar terminals with a small surplus for export,” he stated in his response.
However, owing to the unexpectedly high demand for refined sugar, especially by the soft drinks manufacturers – as a result of the hot summer period – Davies noted that the sugar industry experienced low stocks of some refined sugar grades.
As such, at the beginning of March, the sugar industry met to implement a strategy to restore the supply of refined sugar to the domestic market. This resulted in the two biggest refineries, namely Illovo Sugar’s Noodsberg and Tongaat Huletts’ Huletts, both in KwaZulu-Natal, opening up early, as well as working over the public holiday period in March. The rest of the refineries would open next month, as the new sugar season started on April 1.
According to figures from the sugar industry on the 2016/17 production estimates, current available supply and carry over stock into the new season from the 2015/16 crop, indicated sufficient future supply into the local market.
The local market consisted of South African production, Southern African Customs Union production (Swaziland), Southern African Development Community quota and duty paid imports, as well as imports from the rest of the world.
“[Therefore,] we are confident that supply will be sufficient to meet local demand. In the event of a supply shortage, the department will engage with the industry and Itac to initiate a rebate facility to counter the effects of the duty on imports, subject to statutory requirement of the process,” Davies explained.
However, any stakeholder could apply for either a rebate facility or reduction in the duty directly with Itac at any point should they deem this necessary.
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