On 24 July, the general customs duty on imported peanut butter increased from R0,99/kg to 20% ad valorem (of its value). The adjustment addresses an anomaly under which imported raw groundnuts attracted a 10% duty, while finished peanut butter entered the country at an almost negligible tariff.
Adri Botha, chairperson of the South African Groundnut Forum (SAGF), told Farmer’s Weekly that the change could have benefits well beyond peanut butter manufacturers.
“The tariff is an opportunity to rebuild local production and processing,” she said.
In South Africa, peanut butter production accounts for approximately 55% of commercially consumed groundnuts, making a sustainable processing industry an important source of demand for farmers.
Botha said that stronger and more predictable demand could, in turn, support investment in production, cultivars, quality systems, and market development.
The tariff increase followed an application by RCL Foods, initially submitted in 2020, for the duty to be raised to 25%. The company argued that importers were effectively circumventing the 10% duty on groundnuts by importing finished peanut butter instead.
Imports of peanut butter increased by 24% from 2023 to 2024, while the prices thereof were 19,3% below local production costs.
According to the International Trade Administration Commission of South Africa (ITAC), Southern African Customs Union peanut butter imports increased by an average of 15% over the review period from 2023 to 2024, with India supplying about 95% of imported volumes in 2024.
At the same time, the local industry lost production volumes, sales, and market share, while importers gained market share. The ITAC also found declines in profitability and capacity utilisation, against a backdrop of higher raw material, labour, and operating costs.
The SAGF commissioned a Bureau for Food and Agricultural Policy study in 2019, which estimated that a tariff of about 23% on packaged peanut butter imports would be required to bring import prices closer to local production costs.
Botha said the lengthy tariff process, which was interrupted by the COVID-19 pandemic and required much of the work to be resubmitted in 2024, also reflected the need to weigh industry support against consumer affordability.
The ITAC ultimately settled on 20%, as it determined that this provided a balance between supporting domestic production and limiting the impact on consumers, particularly low-income households for whom peanut butter is an important staple.
Botha stressed that the change should also not be interpreted as an automatic 20% increase in shelf prices.
“Retail prices depend on factors that include product origin, applicable preferential tariffs, exchange rates, transport and distribution costs, retailer margins, and competition,” she explained.
The 20% general rate also applies to Mercosur imports, while the African Continental Free Trade Area rate is 8%. Qualifying imports under existing agreements with the EU, UK, European Free Trade Association, and Southern African Development Community remain duty-free.
The ITAC found that local manufacturers had sufficient installed capacity to increase production to meet domestic demand. However, seasonal variation meant processors could still require imported groundnuts to supplement local supply or secure particular grades.
The commission also indicated that it would separately investigate a possible temporary rebate on imported groundnuts for qualifying processors when supplementary raw material was required.
