Wheat import duty preferences

The import duty on wheat is currently R832.10 per ton. This is a considerable amount, however, the duty occasionally changes depending on world price movements. The Dollar Based Reference Price (DBRP) formula calculates wheat import duties. This is a topic that requires its own writing so we will not touch on it in this blog.

Nevertheless, importers can take advantage of wheat import duty preferences provided under the Minimum Market Access (MMA) regime and the Economic Partnership Agreement (EPA) with the EU.

Given that South Africa imports a significant amount of wheat, MMA and EPA quotas are in high demand. That being said, it is important to know how each of the quotas work.

Minimum Market Access quota

The MMA quota covers a number of agricultural products including wheat. Currently, 108 279 tons of wheat enter the country annually at a preferential duty rate of 14.4% ad valorem. The duty is calculated based on the FOB value of the wheat.

To benefit from the quota, importers need to apply for a quota allocation or permit at the Department of Agriculture, Land Reform and Rural Development (DALRRD).

DALRRD splits applicants between established importers (allocated 80% of the quota) and new importers (allocated 20% of the quota). However, the actual quota a company eventually get depends on:

  • BBBEE status of applicants
  • The market share of applicants (based on 3 years of historical import volumes)
  • The number of applicants and the volume of quota applied for
  • The total quota available (108 279 tons)

EU – SACU EPA quota

The EPA wheat quota available annually is 300 000 tons. A few key issues to note regarding this quota. Firstly, the annual year is not based on the calendar year. Rather, it runs from 1 February – 31 October each year.

Second, the quota operates on a first-come-first-served basis. This means no quota allocation or permit is required. Any company that imports during the quota period above will import duty-free as long as the above volume under the quota is still available. There is ongoing lobbying from some companies and associations to change the operation of this quota to an application process similar to that of the MMA regime. Given that consultation with Brussels in the appropriate forum has to take place, this might not change soon.

Meticulous planning of shipments is essential to benefit from the EPA wheat quota. Clearing the shipments as the quota period opens is ideal because the quota depletes within a few weeks if not a few days.

SACUM – UK EPA quota

The Southern African Customs Union plus Mozambique (SACUM) – UK EPA was negotiated and concluded. Once the United Kingdom Brexit transition period ends on 31 December 2020, preferential market access to the UK will remain largely the same for South Africa. However, there are a few changes and most notably new Tariff Rate Quotas (TRQ) on certain agricultural products. A new wheat quota of   30 090 tons will be available once the trade agreement enters into force next year. You can find out more about TRQs in the agreement by clicking here.

Need assistance with an MMA quota application or simply want to know more? Contact us on infor@tradesolutions.co.za