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These anti-dumping duties fell away in January, but were reintroduced yesterday after the International Trade and Administration Commission (ITAC) found that frozen potato chip imports from these countries were undercutting and harming the local industry by selling the product below their domestic market values or their average cost of production.
Wolfe Braude, Agbiz Fruit general manager, said in a press statement that European exporters gave up trying to deny they were dumping frozen potato chips in South Africa half-way through the ITAC investigation, and then focussed on a defence that their illegal behaviour helped to lower prices for consumers eating fast foods.
“If this logic was sound, then the next iteration in this argument would be to condone other illegal actions that lower prices for consumers,” he said.
He said that it was not the first time that European exporters were found dumping in South Africa, and that other developing countries, such as Brazil, Colombia and China, were also targeted by European frozen potato chip dumpers. Besides this, European exporters benefit from a generous agricultural subsidy regime, whereas South Africa did not have such an equivalent.
Willie Jacobs, CEO of Potatoes South Africa, told Farmer’s Weekly that the industry was greatly relieved about the announcement, as it came a day before the 18-month cut-off within which an anti-dumping investigation had to be completed.
He said that Agri Inspec data revealed that frozen potato chip imports from Germany and the Netherlands had increased by 100% in January, after the removal of anti-dumping duties, and was probably higher, as the industry had since became aware of companies that were reporting wrong codes to avoid import taxes.
He confirmed that the dumping of frozen potato chips was decimating the local industry.
“Farm gate potato prices have been relatively sticky over the past five years, with average prices about 2% lower last year than in 2017. Production costs, in contrast, have increased substantially, some by more than 45% over the past year, with load-shedding and unpredictable environmental factors exacerbating the situation. The Sandveld, for instance, received less than half of its annual rainfall last year.”
He added that farmers earned roughly R10,8 billion in potato sales last year, whereas consumers spent about R32,4 billion on potatoes.
Jacobs said that the challenging market and production environment had resulted in the number of potato farmers in South Africa decreasing by 14% to 550 over the past 10 years, and predicted that profitability issues would result in a further decline this year.
Georg Southey, general manager of Merlog Foods, however, described the re-introduction of anti-dumping duties on frozen potato chips as a disaster for especially quick service restaurants and corner shops that did not have time to sit and peel fresh potatoes.
He argued that South Africa had a shortage of supply on the production and processing side, because of load-shedding and disease problems, amongst others.
“The anti-dumping duties will only drive up frozen potato chip prices. Wholesalers were already paying a 20% premium on imported frozen chips, as the imported product sold for roughly R33/kg for the past three months, versus R25/kg for the locally produced product.”
