A major East London wheat miller has entered the fray of spiking food prices, saying state taxes eat up half the price of a 12.5kg bag of flour on shop shelves.
Jobs in East London are on the line, warned Bruce Spanjaard, CEO of Paramount Mills.
This month’s 34% increase in the duty tax government charges international wheat importers has left “the poorest communities in the Eastern Cape reeling”, said Spanjaard.
He said the operation of their Rayon Street mill on the West Bank, which employed 600 people, had taken a bad hit.
Their cash flow had been “seriously constrained” and, in an ominous comment, he warned: “The knock-on effect of this (increase) ultimately leads to large-scale unemployment.”
Paramount’s directors were holding urgent talks with the government, calling on it to review the variable tariff.
The tariff is based on a financial formula set up in 1999 by government in a bid to protect SA wheat farmers from having the price they earned at the market undercut by international wheat imports.
Spanjaard said this month’s duty tariff increase was immediately passed on to consumers, who must “foot this bill which is having a negative impact in local communities”.
Business Day reported this month that the complicated protectionist tariff had to undergo a rethink. Other ways of supporting local farmers had to be found.
Spanjaard said that every year South Africans consumed 1.7 million tons of local wheat and two million tons of imported wheat, all of which earned the state R4.5-billion in import duties and value-added tax (VAT) paid by end-consumers, most of whom had low incomes.
SA wheat is sold at “parity” (the same price) as imported wheat, which means local farmers are bound to the price of imported wheat.
A further hammer blow for Paramount was that while South African millers had to pay the high import duties and parity price for raw wheat, confectioners were allowed to import wheat-based products from Europe duty free to South Africa.
Spanjaard said Paramount Mills was lobbying hard “in the interests of the entire (SA) milling sector”.
Earlier this month, National Treasury announced that the government, deeply concerned about the impact of the increase in the duty, was talking and thinking hard to find a solution.
Treasury noted that Finance Minister Pravin Gordhan had proposed a review of the duty to Trade and Industry Minister Rob Davies.
Gordhan was “particularly concerned about the impact of the higher import duty on wheat on the price of bread and other staple food, but also mindful of the need to ensure policy certainty, food security and the financial health of the farming industry”.
Treasury stated that once the wheat import duties had been reviewed, Gordhan wanted the formulas for sugar and maize imports to be reviewed as well.
However, while national stakeholders gathered by the Department of Trade and Industry to review the taxes chatted on about the weakening rand and better incentives for wheat farmers, Spanjaard said they should keep the urgency of the Eastern Cape in mind where price hikes were battering food security, jobs, businesses and communities. — mikel@dispatch.co.za
State takes half price of wheat flour
Jobs in East London are on the line, warned Bruce Spanjaard, CEO of Paramount Mills.
This month’s 34% increase in the duty tax government charges international wheat importers has left “the poorest communities in the Eastern Cape reeling”, said Spanjaard.
He said the operation of their Rayon Street mill on the West Bank, which employed 600 people, had taken a bad hit.
Their cash flow had been “seriously constrained” and, in an ominous comment, he warned: “The knock-on effect of this (increase) ultimately leads to large-scale unemployment.”
Paramount’s directors were holding urgent talks with the government, calling on it to review the variable tariff.
The tariff is based on a financial formula set up in 1999 by government in a bid to protect SA wheat farmers from having the price they earned at the market undercut by international wheat imports.
Spanjaard said this month’s duty tariff increase was immediately passed on to consumers, who must “foot this bill which is having a negative impact in local communities”.
Business Day reported this month that the complicated protectionist tariff had to undergo a rethink. Other ways of supporting local farmers had to be found.
Spanjaard said that every year South Africans consumed 1.7 million tons of local wheat and two million tons of imported wheat, all of which earned the state R4.5-billion in import duties and value-added tax (VAT) paid by end-consumers, most of whom had low incomes.
SA wheat is sold at “parity” (the same price) as imported wheat, which means local farmers are bound to the price of imported wheat.
A further hammer blow for Paramount was that while South African millers had to pay the high import duties and parity price for raw wheat, confectioners were allowed to import wheat-based products from Europe duty free to South Africa.
Spanjaard said Paramount Mills was lobbying hard “in the interests of the entire (SA) milling sector”.
Earlier this month, National Treasury announced that the government, deeply concerned about the impact of the increase in the duty, was talking and thinking hard to find a solution.
Treasury noted that Finance Minister Pravin Gordhan had proposed a review of the duty to Trade and Industry Minister Rob Davies.
Gordhan was “particularly concerned about the impact of the higher import duty on wheat on the price of bread and other staple food, but also mindful of the need to ensure policy certainty, food security and the financial health of the farming industry”.
Treasury stated that once the wheat import duties had been reviewed, Gordhan wanted the formulas for sugar and maize imports to be reviewed as well.
However, while national stakeholders gathered by the Department of Trade and Industry to review the taxes chatted on about the weakening rand and better incentives for wheat farmers, Spanjaard said they should keep the urgency of the Eastern Cape in mind where price hikes were battering food security, jobs, businesses and communities. — mikel@dispatch.co.za
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