On 29 September, import duties on wheat and wheaten flour were increased. This is the third adjustment to import duties since June 2017. The increases are as below:
|Tariff code||Description||23 June|
|1101.00.10||Brown wheaten meal produced by the milling of whole grains (the|
bran, germ and endosperm) (excluding separated wheat bran,
separated wheat germ or separated wheat semolina or endosperm)
Understanding the manner in which import duties on wheat are calculated and tracking global price movements of wheat is important in predicting when the next duty change may occur. It is quite possible that there may be at least one more duty change before end of year. Below is a quick explanation of how the duties are calculated.
The Dollar Based Reference Price (DBRP)
Wheat import duties are calculated using a DBRP formula. It is important to understand how this works in practice to ensure your shipments do not suddenly incur unplanned large import duties should they be increased.
The DBRP formula sets an artificial floor price on imported wheat. The reference price on wheat is currently set at $279 per ton of wheat, which is the level that is deemed breakeven for local farmers. If importers bring wheat into South Africa below this floor price, say at $200 per ton, then a duty of $79 per ton is levied to bring the imported price up to a level where the domestic industry can compete and encourage local farmers to plant wheat. In contrast if importers purchase the wheat at a level above the reference price of $279 per ton, then no duty is triggered. It usually takes about 20 days for the duty to be implemented from the date the adjustment is triggered.