South Africa’s trade authorities have recommended a 20% import tariff on peanut butter in a move aimed at strengthening local manufacturers, while issuing a firm warning that businesses should not use the higher duty as justification for increasing consumer prices without legitimate cost increases.
The recommendation, made by the International Trade Administration Commission (ITAC), seeks to correct what officials describe as a long-standing tariff imbalance that has disadvantaged domestic peanut butter producers competing against large international manufacturers.
Although the proposed tariff is intended to provide greater protection for local industry, ITAC stressed that safeguarding consumers remains equally important and said pricing behaviour across the sector will be closely monitored.
Tariff Aims To Strengthen Local Manufacturing
According to ITAC Chief Commissioner Ayabonga Cawe, imported peanut butter had previously attracted a duty of only 99 cents per kilogram, while imported groundnuts—the key raw material used by South African manufacturers—were subject to significantly higher import duties.
This unusual tariff structure increased production costs for local manufacturers while making imported finished products comparatively cheaper.
Cawe said the commission considered this a policy inconsistency that weakened South Africa’s food manufacturing sector.
Local producers also face intense competition from overseas manufacturers that benefit from much larger production volumes, allowing them to export peanut butter into South Africa at considerably lower prices.
ITAC’s recommendation follows an application by food producer RCL Foods, which requested a 25% import duty. After reviewing market evidence and conducting its own assessment, the commission instead recommended a lower tariff of 20%.
The proposal has now been submitted to the relevant government authorities for consideration.
Watchdog Promises To Monitor Pricing Behaviour
Recognising concerns that higher import duties could translate into higher retail prices, ITAC said consumer welfare formed a central part of its analysis before making the recommendation to the Ministers of Trade and Finance.
Cawe noted that peanut butter prices have already increased significantly since 2020, with the product becoming more expensive than several other comparable sources of protein on a per-kilogram basis.
He argued that strengthening domestic production capacity is essential for South Africa’s long-term food security, warning that excessive dependence on imports could expose the country to supply disruptions if major exporting nations, including India, introduce export restrictions or experience production shortages.
To prevent consumers from bearing unnecessary costs, ITAC confirmed that it will actively monitor both manufacturers and retailers after any tariff is implemented.
The commission said it does not want businesses to automatically factor the tariff into retail pricing where underlying production costs do not justify such increases.
Cawe warned that the commission would work closely with South Africa’s competition authorities if excessive price increases are detected.
He said any significant increase that cannot be justified by genuine production costs could trigger regulatory intervention and possible enforcement action.
The proposed tariff will also undergo a formal review after three years to assess its impact on local manufacturing, competition and consumer prices, allowing authorities to determine whether the measure continues to serve the public interest while supporting South Africa’s agricultural and food processing industries.
Source: The Money Show; International Trade Administration Commission (ITAC).