The potato industry is preparing for the worst amid the mass dumping of cheap, frozen chips by European countries in South Africa. In fact, imported potato chips are now much cheaper than the local version.
The local potato industry believes it has lost its protection against dumping of frozen fries by specific companies in Belgium and the Netherlands.
The anti-dumping duties on these products were effective from 26 January 2016 until 26 January 2021. The lapse of the anti-dumping duties was only published in the Government Gazette on 9 July 2021.
According to Willie Jacobs, CEO of Potatoes South Africa, South African potato growers and processors are likely to be negatively impacted by this.
“Both processors and potato producers, who supply processors, could be adversely impacted if imports below production price parity is landed in South Africa.
“Consumers might find the short-term benefit of lower chip prices (if passed on by the importers), but in the long run, the potato market can be exposed to significant shortfalls,” Jacobs says.
Meanwhile, there is also concern regarding the volumes and concentration, which can be expected as specific production areas are in the market at specific intervals in the year.
State of uncertainty
Jacobs points out that, at this stage, they are uncertain about what to expect.
“We monitor imports on a monthly basis, and as to the end of May, statistics on imports will be available in early August 2021 which will give us an indication of the exact imported volumes and price.”
This comes after some media reports suggested that imported potato chips from Belgium and the Netherlands are now at least 30% cheaper than locally-produced chips.
South Africa has instituted levies on potato production to mainly protect the sustainability of the potato industry.
“We are preparing ourselves for the worst and looking for short-term support measures, while considering a re-application process.”
Statutory levies on potatoes are instituted by government, and Potatoes SA is the custodian of these levies.
The said levies are earmarked for the protection and promotion of the interests of the potato industry.
Stringent regulations have been set out by the National Agricultural Marketing Council as to how, on what and in which proportions Potatoes SA is to apply these levies.
How did we get here?
In allotting blame, a finger-pointing match has ensued amongst exporters and the international trade administration commission (ITAC) of South Africa.
Exporters are blaming ITAC investigators for delays in the verification process while the commission blames the exporters for providing incorrect or incomplete information. There are also talks of exporters having “side meetings”, which delayed the process even further.
Normally the process for anti-dumping measures is driven by McCain (with support of similar entities), who produces the biggest percentage of frozen potato chips in South Africa. McCain is known for its support to South African farmers, including small-scale producers.
McCain applied for anti-dumping measures through ITAC, which Jacobs confirms was completed in time for a review.
“In a nutshell, the process is that ITAC prepares the application for anti-dumping measures for review by the minister of trade and industry, Ebrahim Patel.
“This process was not completed in time before the anti-dumping measures lapsed,” Jacobs reveals.
ITAC has since admitted that the duties expired because it failed to complete its investigation into a sunset review application by local producers in the prescribed time.
The duties were set to expire on 7 August 2019. Reports suggest that McCain Foods submitted a sunset review application to prevent the termination of the duties on 7 February 2019 already.
A sunset review application is when the domestic industry submits an application to ITAC for review in order to have anti-dumping duties extended at the end of a five year period.
However, according to Jacobs, as a potato industry it is advisable for them to focus on the way forward and that surety must be provided to expedite the re-establishment of protective measures.
“We are preparing ourselves for the worst and looking for short-term support measures, while considering a re-application process,” Jacobs says.