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Import tariff, export taxes on the cards for SA

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HIGHER food import tariffs aimed at protecting local producers — and new export taxes on primary produce aimed at boosting local manufacture — are on the cards, judging by a confidential Department of Trade and Industry (DTI) document.

The document, which has been circulated to government and other stakeholders, says the DTI will fight for the agricultural sector to compete on a level playing field with the world’s biggest agricultural producers.

Though import tariffs might lead to higher food prices in the short term, the report says, “consumers will generally benefit from sustainable production and lower prices in the long term”.

South African farmers have complained bitterly that they are forced to compete without any trade policy assistance against foreign governments that heavily subsidise their agriculture sectors.

The document states that SA will no longer “agree to perpetuate the historic injustice” of previous international trade regimes. It says in Uruguay “SA was obliged to undertake developed-country tariff cuts”, and in Doha it was forced to make “the deepest and widest tariff cuts compared to any other World Trade Organisation member.

The document notes SA has cut tariffs significantly since 1994, making it “open” compared with other similar_sized economies. This has, however, proven “insufficient as an instrument to restructure the industrial economy”.

This echoes agriculture minister Tina Joemat_Pettersson, who recently said that “job creation and poverty eradication” were the main drivers of agricultural policy.

The report says agriculture has a “strong indirect role in the economy”, with linkages to other sectors contributing about 14% to GDP and accounting for about 8% of formal employment. It also contributes to the livelihoods of 3m_4m households, carries responsibility for food security and is the basis of economic activity in rural areas.

Opposition DA shadow agriculture spokesman Lourie Bosman says raising import tariffs is “long overdue because our government has been slow to adapt to circumstances”. For example, SA’s local wheat production has been reduced by a third because government offered tariff protection of just 2%, though it was entitled to go as high as 72%, he says.

However, the proposal to tax exports of primary agricultural produce to encourage local manufacture and value_added exports has drawn criticism. Bosman supports the idea of developing local manufacturing industries, but says taxes on exports might make local producers less competitive internationally.

“There is a danger that export restrictions will depress or even collapse prices of primary crops like maize, by creating an artificial surplus, and depress returns to the farmer at the very point they need to be encouraged to produce more food.”

Agricultural Business Chamber CEO John Purchase, too, is concerned by the recommendation to tax exports. But he welcomes the shift in thinking and would like to see the issues being debated thoroughly so the “long overdue” policy can be implemented quickly.

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