Price of potato fries set to rise – a lot

The International Trade Administration Commission (Itac) has introduced substantial import duties on imported frozen potato chips from three European countries to prevent further dumping on the South African Customs Union (Sacu) market.

The final duties against Belgium, the Netherlands and Germany range between 8.8% and 239% and will be effective for the next five years.

The duties are substantially higher than the initial provisional duties that lapsed in January this year.

‘Astronomical’

Hume International, a large importer of frozen food including French fries, describes the higher tariffs as “astronomical” given the price pressure consumers are already experiencing.

McCain, the dominant producer of frozen potato chips in the country, requested continued protection against dumping from Belgium and the Netherlands back in 2019.

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The commission failed to complete its sunset review within the 18 months prescribed by the World Trade Organisation and the duties against Belgium and the Netherlands lapsed, leaving the local industry (McCain, Nature’s Garden and Lamberts Bay Foods) exposed to cheaper imports.

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Itac then decided to self-initiate an anti-dumping investigation and included Germany.

Its preliminary investigation found prima facie evidence that the alleged dumping caused “material injury” to the Sacu industry. In July last year it introduced provisional duties ranging between 9% and 181% on imports from the three countries.

The provisional duties lapsed in January and the local market had to compete against imported products at dumped prices.

Dumping occurs when a product is sold in the importing country at less than the price of that product in the market of the exporting country.

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Material harm

Itac said in a statement on Wednesday that it had arrived at a final determination after considering all “relevant written comments” and oral submissions from the importers and stakeholders.

It found that the frozen potato chips continued to be dumped onto the Sacu market, causing material injury to the local industry.

Potatoes SA welcomed the finalisation of the investigation, saying it is not opposed to the imports of potato chips. However, it is important that local producers are able to compete on a level playing field.

Roy Thomas, operations and logistics director at Hume International, says the duties ranging between 8% and 239% depending on the country of origin is “absolutely crazy”.

The maximum provisional duties for Belgium was 23% while the final duty remaining in place for the next five years is 67%, the duty for the Netherlands increased from 104% to 239% and for Germany the duty remained at 181%.

Supply problems

Thomas says pricing almost doubled when the first round of tariffs was introduced.

He says the problem with local supply is that not every potato that comes out of the ground is suitable for French fries.

The three main suppliers who requested the duties – McCain, Nature’s Garden and Lamberts Bay Foods – can meet the demand of large retailers and “blue chip” fast food outlets, says Thomas.

However, many of Hume’s wholesale clients buy imported fries from it “purely on the basis that they are getting no supply” from local producers.

“They were willing to pay the inflated price just to get a reliable supply from an importer,” he says.

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Potatoes SA CEO Willie Jacobs says Itac completed a comprehensive investigation before releasing its final determination.

“Potatoes SA welcomes the protection the anti-dumping duties will offer to the local industry.”

Ebrahim Patel, Minister of Trade, Industry and Competition, approved the commission’s recommendations, and the notice of implementation was published by the South African Revenue Service on Wednesday.

This article originally appeared on Moneyweb and was republished with permission.
Read the original article here.