The import duty on sugar was amended downwards on Friday to R4 148.50 a ton from R5 277.50 a ton, but sugar importers have questioned the selective use of the duty formula. Photo: File
The import duty on sugar was amended downwards on Friday to R4 148.50 a ton from R5 277.50 a ton, but sugar importers have questioned the selective use of the duty formula. Photo: File

Sugar importers question the timing of lower import tariffs

By Edward West Time of article published Mar 8, 2021

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CAPE TOWN - THE IMPORT duty on sugar was amended downwards on Friday to R4 148.50 a ton from R5 277.50 a ton, but sugar importers have questioned the selective use of the duty formula.

The Association of South African Sugar Importers (Asasi) said on Friday that the organisation was briefing its legal team against the government departments overseeing the tariffs, because the formula had not been implemented in the past 34 weeks, as it should have.

“Normally a change of duty takes four to six weeks from the triggering of the formula that is implemented by the SA Revenue Services (Sars),” Asasi chairperson Chris Engelbrecht said in a statement on Friday.

“It gets approved by ITAC, then signed off by the Minister of Trade and Industry, then passed on to the Minister of Finance for approval and implementation by Sars,” he said.

The first trigger in the formula was 34 weeks ago, at R3 646 and the formula was triggered again a R4 148 on week 14.

Three weeks ago the formula was triggered at R3 371.

“So the lower duty was totally ignored and the higher duty of R4 148.50 per ton was implemented,” Engelbrecht said. He said exactly the same happened last year, the lower duty was not applied, but bypassed to apply the higher duties.

On February 1, 2021, Asasi had a meeting with the office of the Minister of Trade and Industry and requested the duty to be implemented. “Little did we know that they bypassed the requested duty illegally and applied for the next higher duty. We are very disappointed in the system,” he said.

The duty was based on the world price of sugar, which is about $462 a ton currently. Added to the final price for consumers are freight at $60 (about R921.86), clearing charges at R400 a ton, which bring the port price to R8 355 a ton at an exchange rate of R15.24 to the dollar.

“On top of this the importer has to pay R4148 import duty to give us a landed price or R12504. Should you add R200 handling and R300 profit margin, that means the selling price is R13 003,” said Engelbrecht. He questioned why the industry needed more protection if they were selling sugar for R1 000 and more below that price?

“The sugar industry should improve their efficiency, our consumers are paying R12 000 per ton instead of R7 000 per ton like the average price is all over the world,” he said.

Engelbrecht said any imported sugar selling for below R12 800 per ton was most probably because duty was not paid, sometimes by declaring it as rice when importing.

Some importers also falsely exported the sugar by sending only the documents through the border. Others import through Namibia, which was also illegal as Namibia was part of the Southern African Customs Union and have the same custom duties.

The sugar import tariff is administered by the Sars.

The South African Sugar Industry Association executive director Trix Trikam said they were not in a position to speculate whether the decline in tariffs would result in consumers paying a lower price for sugar.

He said a combination of supply and demand dynamics, as well as speculator activity was driving international sugar prices upwards, which had led to the reduction in tariffs.

Sars had not replied to Business Report queries by the time of publication.

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BUSINESS REPORT

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