EU wheat imports ‘no threat to local producers’

21.10.2016

The New Economic Partnership Agreement (EPA), which allows tariff free imports of 300 000 tons a year of EU wheat to be implemented at the beginning of November, is not a threat to the local wheat producers.

The EPA replaces the trade chapter in the Trade, Development and Co-operation Agreement between South Africa and the EU. Under the EPA, South Africa also gains improved access into the EU for wine, sugar, ethanol, flowers, some dairy products, fresh fruit, canned fruit, fruit juice and yeast.

Agbiz in a grain update released yesterday said wheat deliveries were recorded at 3 240 tons, well above the previous week’s deliveries of 226 tons.

This brought the 2016/17 total wheat deliveries for two weeks to 3 466 tons. It said the wheat crop was still in good condition throughout South Africa, with harvest processes set to start around early November.

It said this year’s crop was estimated at 1.7 million tons, up by 21 percent from the previous season, owing to a 5 percent year-on-year increase in the area planted, as well as expected higher yields.

Wessel Lemmer, a senior agricultural economist at Absa, said yesterday that South Africa was a net importer of wheat and 50 percent of our demand was imported.

“The 300 000 tons of imports coming from the EU represents a very small percentage of the overall imports. South Africa as a net importer of wheat and requires more than the number that will be coming from the EU,” Lemmer said.

Agreement

South Africa is not the only country that has entered into this agreement with the EU. The countries under the Southern African Development Community (SADC) such as Botswana, Lesotho, Mozambique, Namibia and Swaziland were part of the agreement that was signed on October 10 and to be implemented on November 1.

Angola is not part of the agreement, but was expected to join at a later stage.

Tinashe Kabuya, the head of international trade and investment intelligence at Agbiz, said the EPA agreement was going to have a minimal impact on the domestic market for the simple reason that 60 percent of local wheat imports come from the Black Sea region such as Russia, Ukraine and Lithuania.

Kabuya said over the past two seasons, EU imports had averaged 232 000 tons a year, which was an average of 17 percent of South Africa’s total import share.

“Average imports this season were 2 million tons, and we expect that in the next season we will see a decline of 25 percent in wheat imports as South Africa returns to its long run average of 1.5 million tons of wheat imports.

“If we take that as our baseline, then it means that the EPA quota is 20 percent of import requirements, which is 3 percent over and above what we have seen in the last two seasons.

“The EPA quota will therefore not be a game-changer in any meaningful way,” Kabuya added.


iol

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