On 11 May the International Trade Administration Commission of South Africa (Itac) published a notice on the increase in the Dollar-Based Reference Price (DBRP) for sugar, classifiable under tariff heading 17.01 from US$566/ton to US$856.32/ton.
The application was lodged by the South African Sugar Association (SASA) who reasoned that the industry has been on a long-term downward trend. This is attributed to on-going challenges of reduced profitability driven by increasing input costs and stagnant yields. Since 2000, the industry has lost significant areas under cane, a net loss of 70 000 ha. Should the current policy framework be maintained, this current trend is likely to continue at a faster pace.
There are three reasons for the new application to increase the DBRP: (a) The continued influx of duty paid imports; (b) The current level (USD566) is inadequate and is below cost of production (inadequate margins); and (c) As a mitigation measure against the impending Health Promotion Levy (HPL), formerly known as the Sugar Sweetened Beverage tax.
Comment is due by 01 June.