Analysis of retail bread prices before and after increases in the wheat import tariff shows that the price of bread does not necessarily rise in response.
By Amelia Genis, Senior Journalist at African Farming and Landbouweekblad
Heleen Viljoen, economist at Grain SA, says there is clear evidence for this.
A wheat import tariff of R422/tonne came into effect in October 2024, which resulted in increased excise duties of 42,20c/kg on wheat and 63, 29c/kg on wheat flour.
“Despite this adjustment, the retail price of bread did not change. Between October 2024 and January 2025, the average price of a 700g loaf of white bread actually decreased from R19,06 to R18,82, and the price of brown bread from R17,63 to R17,34. This shows that tariff changes do not automatically result in higher retail prices.”
The Competition Commission came to a similar conclusion in 2016 when it found that bread prices continued to rise even when tariffs on imported wheat were reduced or lifted.
Viljoen adds that local wheat prices fell by about 27% between May 2022 and December 2024, whereas the price of white bread rose by 10%. “There is a clear pattern: In South Africa, bread prices are shaped by broader value chain dynamics, not only by the wheat tariff.”
This trend, she notes, has persisted from 2016 through 2024, as the graph below illustrates.
No Simple Link Between Wheat and Bread Prices
Viljoen says the Competition Commission concluded there was no simple and obvious relationship between movements in the international wheat price, the local wheat price, and the retail prices of bread and breakfast porridge in South Africa.
“The relationship between the wheat levy and the price of bread and porridge is complicated by other factors throughout the value chain.”
Also read: Important update on wheat tariffs
Energy and Transport Costs Weigh More Heavily than Tariffs
The Competition Commission’s report notes that, between the 2018/19 and 2023/24 marketing years, the price of wheat made up “only 19,8% of the total cost of producing a 200g loaf.” The remaining 80% came from milling and baking, packaging, transport, energy and distribution.
All cost components rose sharply during this period due to global disruptions caused by the Covid-19 pandemic and Russia’s war on Ukraine, which pushed up the diesel price by 52%.
Energy expenditure – incurred at almost every stage of the wheat and bread value chain – further reinforced increases in the retail price of bread.
“In light of this, it is inaccurate and misleading to single out the tariff on imported wheat as the main driver of consumer prices,” Viljoen says.
