Industry bodies Grain SA and the South African Cereals and Oilseeds Trade Association (Sacota) have taken formal legal steps following continued delays in the implementation of the revised wheat tariff.

This follows an application submitted to the International Trade Administration Commission of South Africa (Itac) in June 2024 to amend the current tariff-based reference price and automate the tariff publication process.

The Grain SA and Sacota application to Itac requested an increase in the domestic dollar-based reference price for wheat, as well as improvements to the implementation methodology of wheat import tariffs to ensure more responsive and transparent adjustments.

Almost two years later, the industry bodies say, they are still awaiting finality, while South African wheat producers continue to operate under severe financial and market pressure – given that they compete against heavily subsidised producers in major wheat-producing countries around the world.

The wheat tariff mechanism remains one of the only available tools to protect South African wheat producers against distorted global market conditions and subsidised imports, making an effective and responsive tariff system critical for the sustainability of the local wheat industry, the industry bodies say.

In fact, while the industry has been awaiting final implementation of the requested tariff increase almost two years after the application to Itac, global wheat prices have declined while costs for local producers have escalated.

In a formal letter of demand dated May 22, legal representatives acting on behalf of Grain SA and Sacota gave Itac, Trade, Industry and Competition Minister Parks Tau and Finance Minister Enoch Godongwana until 16:00 on June 1, to provide a final status report on the implementation of the revised tariff.

Grain SA and Sacota emphasise that legal action was not taken lightly.

“For months we have repeatedly followed up with Itac to obtain even basic information on the progress of the application, but the industry has received no meaningful response,” Grain SA and Sacota state.

The letter of demand further highlights that the wheat industry is in distress and that continued administrative silence has left the sector with no choice but to pursue legal steps.

“Producers cannot absorb endless delays while competing against countries that actively protect their agricultural sectors. Policy delays in volatile markets have real economic consequences for food security and rural employment,” says Grain SA chairperson Richard Krige.

Grain SA and Sacota affirm the industry remains committed to fair and rules-based trade, but warns the current administrative silence is causing measurable prejudice to South African wheat production.

MORE CONTEXT

Grain SA and Sacota’s renewed request for urgency on Tau, Itac and Godongwana’s part follows the South African wheat import tariff having triggered to a tariff-free rate of R0/t on May 12, owing to continued increases in international wheat prices.

This trigger followed only eight weeks after the prior trigger on March 17, which resulted in a tariff of R153/t. This tariff was only published in the Government Gazette on May 15, resulting in a delay of about 40 working days between the tariff trigger and its implementation.

At the time, Sacota said the 40-day implementation marks a significant improvement on the previous delays of up to six months; however, the timing and uncertainty of tariff implementation remained a concern.

Should international wheat prices remain high throughout the season, the R0 tariff could remain in place, meaning imports enter South Africa duty free.