An investigation by the International Trade Administration Commission revealed that there is dumping of frozen potato chips into South Africa by Belgium, Germany, and the Netherlands. Supplied/Food For Mzansi
Following the complaint by the potato industry, both farmers and processors, the International Trade Administration Commission (ITAC) initiated an investigation to determine claims of dumping of frozen potato chips, classified under HS Code HS 2004.10.21 and HS 2004.10.29, imported or originating from Belgium, Germany, and the Netherlands.
The investigation covered the period from 01 July 2020 to 30 June 2021 and for material injury from 01 July 2018 to 30 June 2021.
South Africa’s imports of frozen potato chips from the three countries increased by 88.6% between 2020 and 2021 to reach 29 635 tons. Moreover, in the first five months of 2022, the imports from the three countries grew by 114% compared to the corresponding period in 2021.
This sharp rise in imports can be attributed to the expiration of anti-dumping tariffs in the first quarter of 2021 which coincided with high potato harvest in the European countries. In the roughly 30 000 tons imported in 2021, Belgium accounted for 67%, Netherlands (17%), and Germany (10%).
ITAC’s investigation published at the end of June 2022, revealed that there is indeed dumping of frozen potato chips into South Africa and SACU markets originating from Belgium, Germany, and the Netherlands.
This follows allegations by the industry that the three countries are supplying frozen potato chips at dumped prices which causes material injury and profit loss for South African potato farmers and processors.
Moreover, the investigation found that domestic players in the frozen potato chips business have suffered material injury; with sales down by 10%, employment declining by 13% and profits eroding by 24% relative to 2018/2019 baseline.
The commission, therefore, decided to request that the commissioner of SARS imposes provincial measures on imports of frozen potato chips originating in or imported from Belgium, the Netherlands and Germany for a period of six months.
The amount of provisional anti-dumping duties ranges from 181% for German producers, 104% for some producers in the Netherlands and 23% for those in Belgium – which will be in place until January 2023 when the final five-year tariff determination will be finalised.
A similar issue between Belgium, the Netherlands, and Germany and Colombia occurred in 2017 when Colombian government claimed that the European Union (EU) countries were dumping frozen potato products.
Some of the same companies that export to South Africa are also those that the Colombians accuse of dumping frozen potato products. However, the EU refuted any wrongdoing by its exporting companies in its DS591 report, which was issued in March 2021.
Between 2010 and 2020, the amount of potatoes consumed per person in South Africa doubled at the back of increasing production that has reached 2.6 million tons of potatoes in 2021.
Despite the steady growth in production over the long term, there are frequent short-term fluctuations which often causes erratic price changes in the local markets.
This was the case in 2021, when the price of kilogram increased to R14.21 underpinned by low volumes caused by rains in the Free State and Limpopo growing regions. Since the potato prices started moderating and in the first six months of 2022, the price was 3.1% lower than the corresponding period in 2021, despite the global food prices reaching record high in 2022 due to Russia-Ukraine conflict.
The decline in potato prices in 2022 implies that prices are under pressure from the supply-side as noted by the ITAC investigations and the newly introduced anti-dumping duties are likely to cause short term rise to prices.
However, as the market price trace the long-term equilibrium supported by reliable local supply, the price will stabilise, which is also positive for farmers as they will receive good prices in the near term.
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