EXCLUSIVE: Falling sugar price triggers rise in import duty
CAPE TOWN – Sugar import duty increases were triggered again last week after a falling London sugar price increased the protection for local sugar producers by 18 percent.
Import duty increases on sugar are often followed by consumer price increases for sugar.
Sugar Importers Association of South Africa director Chris Engelbrecht said in an interview that the duty increase was triggered in terms of a formula administered by the International Trade Administration Commission (Itac).
The world sugar price in London had fallen to below $311 (R4 747.50) per ton, and in terms of the protection formula for South African producers, the import duty for sugar in this country increased to R4 768 per ton, from R4 018 per ton. The price traded between $311-$315 per ton in London yesterday.
Engelbrecht said many countries had import protection tariffs in place for sugar. But South Africa was the only one that he knew of where the producers were effectively using the tariff to charge consumers double the world price of sugar, and in most other countries, the retail price of it was close to the world price.
The SA Sugar Association (Sasa) has defended the need for high sugar import tariffs on employment – the industry provides some 85 000 jobs directly and 350 000 indirectly – and said that growing imports, together with drought, over-capacity and taxes, had placed many in the industry in a difficult financial position.
Sasa said in its submission to Itac last August that the industry was in a long downward trend, profits were reducing, costs were rising and production was stagnant. In addition, many thousands of acres of land under cane had been lost along with jobs.
He said the extraordinary high import duties had also opened opportunities for the informal or under the table operators to by-pass the duty.
“There is sugar coming into South Africa that is declared as rice with no duty on it. Another way is to keep the imported sugar in bond, then get a false/fortified export document to 'prove' the sugar was exported again, but in fact is sold here, again omitting all duties and VAT,” he said.