State probes effect of wheat import parity on bread price

Agriculture Minister Lulu Xingwana made the announcement during a parliamentary debate on rising bread prices requested by African Christian Democratic Party (ACDP) MP Cherilyn Dudley.

Xingwana said SA was a net importer of wheat and was exposed to the international supply and demand forces “owing to the fact that we have to import wheat at import parity prices”.

Wheat prices had increased almost 200% in the past year. International and local supply and demand pressures provided some justification for the increase in bread prices, the minister said, but these had been magnified by price fixing scandals.

She said firmer measures and sanctions should be introduced to discourage these practices, especially as the poor were most affected by rising bread prices.

The minister said the low stocks of wheat worldwide were likely to put upward pressure on wheat prices in the near future.

Dudley called on the government to seriously look at scrapping VAT on white bread — brown bread is exempt from VAT — and abolishing the 2% tariff on wheat imports.

High bread prices had a devastating effect on the poor, she said.

The call comes a day after the price of wheat on the JSE futures exchange broke through R4000 a ton to a new record on supply concerns, giving impetus to further increases in the price of bread.

Xingwana said the two departments were looking at wheat tariffs to ensure they did not have a negative effect on bread prices.

Other measures being pursued, Xingwana said, were the promotion of wheat production, particularly in Eastern Cape and Free State, to ensure food security and achieve price stability in the long term.

The government would also help rural co-operatives to embark on bread-baking projects and establish small baking businesses.

She said that role players in the wheat-to-bread value chain — including agriculture, milling, baking, retailing and consumers — had met earlier this year. They had agreed that an investigation into the whole value chain was needed to ensure there was no unreasonable profit making at the expense of the poor.

The national agricultural marketing council was then asked to establish a committee to investigate the entire value chain, and make recommendations to the departments.

The Democratic Alliance's Pierre Rabie urged the government to consider the possibility of a subsidy on bread and to reduce VAT on bread to make it more affordable.

Source: Business Day

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