Wheat Levy Chokes Local Millers

Pauline Dikuelo | Monday June 18, 2018 13:06

 

Currently, the levy is at nine percent following the reduction from 15% by the Ministry of Investment, Trade and Industry (MITI) last April.

BMA chairperson, Nkosi Mwaba said investor confidence in the local milling industry is at its lowest while shareholders are hesitant to make further investments.

“With this rate of the levy, the industry would collapse because investors and some members of the association have started exploring other markets and adjusting their business models away from manufacturing,” he revealed.

Mwaba said despite the government’s efforts, the current levy is not an efficient mechanism to address the threat noting that South African millers have already started to invade the local market with excess flour.

South African millers produce three tonnes of flour per annum while Botswana produces 120,000 tonnes of the same products in a year.

“Local millers are the only market for white maize farmers and are the largest suppliers of animal feed to the beef sector in the country,” he said.

“Without the milling industry, the beef sector would be fully dependant on South Africa and Zambia for maize and wheat bran supplies.”

Mwaba however noted that the Bakers Association, which is made up of 96% in-store bakeries in the retail sector and four percent of the market, support the levy as it allows them to access flour at a cheaper price from the neighbouring country.

“They have vowed not to support local millers and informed us that they would rather buy flour from South Africa as the levy makes buying locally more expensive,” he said.

When the government initially introduced the levy, it was thought it would prevent dumping of cheap imports into the country by South African millers, which was making the local milling unsustainable. The levy is being phased out at a rate of 1.5% per annum.