Owing to the falling international cost of wheat, the price of bread should not increase and instead should be reduced, Grain South Africa said on Monday.
Grain South Africa CEO Jannie de Villiers said that following the lower international price of wheat, the price of bread should have decreased since December 2015.
De Villiers made his assertions in the wake of National Treasury’s delayed announcement of a possible increase in import duty on wheat. The new duty was supposed to be announced in December.
As increased wheat tariffs loom, De Villiers noted that wheat importers, during this period, befitted from the R313 tariff per ton on 608,126 tons of wheat.
He said once the import duty was announced, while it would “remove” the benefit the importers enjoyed. It should, however, not increase the price of bread because the wheat price is only 18 percent of the bread price.
De Villiers said tariff hikes were sometimes used as an “excuse” to increase the price of bread”.
“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,” said De Villiers.
“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.”