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Phasing out of Wheat levy will promote dumping

Publishing Date : 01 June, 2015

Author : NGONIDZASHE DZIMIRI

Local millers have warned that the 10 year phase out of the Wheat levy through a statutory instrument by government will cripple the industry as it will promote dumping.


The statutory instrument has peeved local millers who feel the phasing out of the import levy marks the collapse of the industry. In 2003 Botswana Government enforced a 15 percent levy on all wheat flour imported into the country to develop local industry.


Botswana millers, controlling 85 percent of the market, have warned that phasing out the levy will not only affect the confectionery industry but also extend to livestock rearing, trucking business, and small-scale farmers of wheat, food security and human resource development.


Nonetheless, some expects put it that the levy undermines the potential role of imports, which is essential in preventing collusion. However local millers maintain that there is a need for government to reassess the statutory instrument.


“If a substantive decision has been made to effectively remove the only anti-dumping mechanism that has been put in place, how then will the issue of dumping, which still exists, be addressed .Our concern is that this was our only tool against dumping and dumping still exists as s major threat to local industry,” said Nkosi Mwaba the Chairman of the Maize and Wheat Millers Association of Botswana.


Botswana has always been a dumping ground for South African wheat flour because Gauteng market consumes mostly cake flour. As such white bread flour being an additional component of the milling process, South African millers have excess white bread flour to dispose of.


 Mwaba said the levy was effective at 15% and the strength of this tool has been diluted within a short space of time.  


In a letter addressed to the minister of Trade and Industry, local millers have noted that the effective removal of the wheat levy places the entire milling industry in Botswana under imminent existential threat.  


“Botswana’s milling outputs only make up 4% of the South African Milling capability and as such, milling in Botswana will no longer be viable without an anti-dumping tool.  The market will simply be flooded by imports that are made available at dumped prices and local millers will be forced to adjust their business models to traders and divest from milling operations,” reads the letter.


Mwaba added that this will have a significant impact on employment figures as wheat millers employ over 800 Batswana.


“This goes against the grain of economic diversification and industrialisation efforts and will have an overall detrimental effect on the economy in our view. This has a significant impact on investor confidence as the future of this business in Botswana is now uncertain,” he said.  


Mwaba said this move government will force millers to adjust their business models. “Chances are there will be more imports and less local produce in the short term,” he said.


Millers have also highlighted that with the statutory instrument in place they will be forced to import finished products through traders and distributors as this is more viable in an environment where dumped products are allowed without counter measures.


Mwaba said millers will be forced to participate more aggressively in bakeries themselves as this will boost their margins and completely overshadow the very bakeries that currently exist as they are more resourceful and already have linkages in the trade.

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