Wheat producers see red over Tau’s tariff snub

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Wheat producers are up in arms over trade, industry & competition minister Parks Tau’s rejection of an application by local producers to increase the domestic dollar-based reference price (DBRP) for wheat to ensure long-term sustainability of the sector.Tau this week rejected the application by GrainSA and the South African Cereals and Oilseeds Trade Association (Sacota) to hike the DBRP on wheat from $279 a tonne to $289 a tonne. The organisations had argued in the application that the existing tariff system no longer adequately protects local producers against heavily subsidised imports and volatile international market conditions.Tau determined that the current system is still fit for purpose. His decision followed a probe by the International Trade Administration Commission of South Africa (Itac), which found the current DBRP of $279 a tonne “continues to provide effective support, covering production costs and enabling reasonable profitability”.Itac said the current price offers an estimated 18% margin over average production costs, supporting sustainability in the sector.To suggest that the current framework provides adequate protection is simply not aligned with what producers are experiencing— Tobias Doyer, GrainSA CEOThe trade watchdog added that the domestic industry maintained a price advantage of approximately 16% over imported wheat.“The current tariff regime has also contributed to stabilising planted areas at between 500,000 and 550,000 hectares, supporting local production while providing protection against import competition,” Itac said in a government notice announcing the decision.“South Africa’s wheat imports have increased, with Australia remaining a key supplier. However, there is a growing shift toward Eastern European sources, including Lithuania and Poland.Wheat: feeding the nation (Nolo Moima) “Information at the commission’s disposal confirms that the current DBRP of $279 a tonne will provide adequate and proportionate tariff protection that will continue to support the domestic wheat industry, which remains profitable and held an average price advantage over the period of investigation.”Tau endorsed Itac’s recommendation, drawing the ire of the industry. GrainSA told Business Times that in the last five years the country had already lost 19,000ha, and that if wheat production stopped in the Western Cape alone, 8,500 jobs will be lost, alongside 10% of tractor sales.Tobias Doyer, CEO of GrainSA, said Tau’s decision is a severe blow to wheat producers and to the long-term sustainability of South Africa’s domestic wheat industry.“We are not satisfied with this outcome, and we do not accept the reasoning on which it is based. The decision fails to reflect the reality on wheat farms across South Africa,” Doyer said, warning that the outcome may accelerate a shift away from high-quality wheat production.“Producers are under pressure from rising input costs, volatile markets, high financing costs, logistics challenges and unfair international competition. To suggest that the current framework provides adequate protection is simply not aligned with what producers are experiencing.”It is deeply disappointing that the very value chain that benefits from local wheat quality would oppose a measure aimed at keeping that production viable— Richard Krige, GrainSA chair GrainSA said it would explore all available avenues to challenge the decision and “will continue to fight for a fair, workable and economically realistic wheat tariff dispensation”, with a possible legal challenge on the cards.“It is deeply disappointing that the very value chain that benefits from local wheat quality would oppose a measure aimed at keeping that production viable,” said GrainSA chair Richard Krige.“Millers value South African wheat quality, but producers cannot continue carrying the cost and risk of that quality if the market and policy environment refuse to reward them for it.“If quality is not valued and paid for, producers will increasingly be forced to reconsider their production strategies. South African wheat producers have been encouraged to produce quality wheat, but the market and policy environment are not rewarding them for it.”Sacota was equally unimpressed by Tau’s decision and the outcome of Itac’s two-year investigation.“Ironically, as industry receives news of the conclusion of this investigation, market participants are once again experiencing the very delays that formed part of the motivation for the review. A zero wheat import tariff was triggered on May 12 2026, yet as of June 18 2026, implementation has still not occurred,” the entity said in an e-mailed response to Business Times’s questions.“This represents a delay of 27 working days and highlights the ongoing challenges associated with the current tariff administration process. Had the automated implementation methodology been approved, the zero tariff would have been implemented after 14 working days (or on June 1 2026), and more importantly, the industry would have had certainty on when the new tariff would be effective.“This time, it will be to the detriment of the consumer who is paying more for wheat than they should. South Africa imports approximately 1.8-million tonnes of wheat, or roughly 50% of our requirement.”