SOUTH AFRICA – South Africa raised duties on wheat imports to the highest on record to protect local producers after US prices of the grain dropped to the lowest in more than five years this month.

The Treasury increased the tariff by 78% to R911.20 a metric tonne, it said in a statement posted on the website of the South African Grain Information Service (Sagis). That is the highest since the government introduced the regime in January 2002, Sagis GM Nico Hawkins said.

“An increase in the tariff would provide a base for domestic prices,” Wandile Sihlobo, an economist at the Grain SA farmers’ lobby, said by phone on Friday.

“The tariff is a good increase given that South African producers right now are heading towards harvesting.”

Wheat is trading close to a five-year low in Chicago amid a global glut and as world inventories may climb to a record high in 2016 as farmers reap the biggest crops in the US, Russia and Ukraine, the largest producers.

In SA, farmers probably planted the second-smallest area on record this year, substituting the grain for more profitable, higher-yielding crops such as corn.

While SA is the sub-Saharan region’s biggest producer of the grain after Ethiopia, it’s still a net importer of wheat, according to US Department of Agriculture data.

The duties comprise the difference between a reference price of $294 a tonne and a weekly price for hard red winter wheat, which averaged about $220 a tonne in the week through September 22, Mr Hawkins said.

The rand has weakened 16% against the dollar this year, reaching a record R14.0813 on September 24. Wheat climbed 0.4% to R4,139 a tonne in Johannesburg on the South African Futures Exchange, extending the increase this year to 3.5% – Bloomberg