Food trade tariffs: what, when and where do they apply?

Global food trade is critically important for providing food when and where it’s needed. Imports play an important role in South Africa’s food supply chain; however, local food trade may be put at a disadvantage when products can be sourced internationally at lower cost. To discourage unfair trade and protect local markets, tariffs are imposed on imported goods, in accordance with the Customs and Excise Act 91 of 1964.

Global versus local food trade

Global food trade is driven by several factors, including seasonality, local availability and excessive demand, as well as the expansion of the middle class and growing interest in international food culture. Although imports form an integral part of the food supply chain, local food trade may also be compromised by the availability of a cheaper imported alternative. To discourage unfair trade, protect local markets and raise revenue, tariffs are imposed on imported goods by the Customs and Excise Act 91 of 1964.

Trade tariffs on imported foodstuffs

Trade tariffs differ between products; they are usually calculated as a percentage of the value of the goods, or as cents per unit. The tariff classification code is directly linked to the rate of duty payable on that commodity. Some items tend to fetch higher duty rates than others. Fresh or frozen carcasses of bovine animals, for example, carry a general rate of duty of 40% or 240c/kg, whereas fresh or frozen carcasses of swine animals are subject to a tariff of 15% or 130c/kg. Butter is tariffed at the whopping rate of 500c/kg, while rates of duty generally do not apply to bird eggs and spices (with the exception of ginger and capsicum).

Trade tariffs according to country of origin

The rate of duty also differs depending on the country the product was imported from. Almost all products imported from the Southern African Development Community (SADC) are exempt from tariff charges, to encourage trade between and economic development within member countries. This inter-governmental organisation includes Botswana, Lesotho, Madagascar, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zambia, Zimbabwe, Malawi and Seychelles. Products imported from the European Free Trade Association (EFTA), which includes Iceland, Liechtenstein, Norway and Switzerland, and from MERCOSUR, comprising mainly South American countries, are typically taxed with a trade tariff. Imported products from the European Union are generally ‘duty free’, except for meat, dairy, sugar confectionary, and a few other items.

Trade tariff implementation

The Commissioner for the South African Revenue Service (SARS) is responsible for the administration and enforcement of the Customs and Excise Act 91 of 1964 (Customs and Excise Act) and the regulations promulgated under the Act. In cases where the tariff classification of a product is unclear, i.e. the product could easily be classed under several tariff headings, or there is no clearly identifiable appropriate tariff heading, it is the duty of the importer to approach the local SARS office and apply for a written tariff determination.

In today’s complex web of global food trade, it is crucial for an importer to have sufficient knowledge of the food trade tariffs that may apply to the product being imported. For a full list of applicable trade tariffs, click here. If you are unsure of the correct classification of imported goods, or are interested in further consultation regarding this topic, contact FACTS.