21 May 2023
Daily Maverick
by Georgina Crouth
The commission has finally announced definitive tariffs on frozen French fry imports to prevent dumping and protect South Africa’s farmers and processors. It’s great news for South African potato producers but for importers, not so much. The SA Revenue Service has had the final say on the battle over frozen French fry imports, by imposing anti-dumping duties as recommended by the International Trade Administration Commission (ITAC).
The commission, whose core functions include investigating customs tariffs, trade remedies, and import and export controls, has finally announced definitive tariffs on frozen French fry imports to prevent dumping and protect South Africa’s farmers and processors. This after an earlier investigation into allegations that frozen chips from Belgium, the Netherlands and Germany were being dumped in southern Africa. The probe, launched on 19 November 2022, determined that the SA Customs Union was materially harmed by imports from the EU, in the form of price undercutting, declining sales volumes, job losses, declining production volumes and other harms. It’s been welcomed by the South African potato industry, since the tariffs had lapsed earlier this year.
The decision, which went into effect this week, comes after the conclusion of an anti-dumping investigation initiated by the body in November 2021, examining the potential material impact of frozen potato chip imports on South Africa’s agriculture and agri-processing activities.
In a statement, industry body, Potatoes SA’s CEO Willie Jacobs said: “The reality is that cheap or low-quality frozen potato chips entering the market could be detrimental to South African producers and the sector as a whole, and could cause a surge in illicit trading activities. These regulations will go a long way in preventing this, allowing farmers who are currently expected to grow 2.5 million tons of potatoes this year, to thrive.”
His association said overall frozen fry import rates are now 67.33%, 239.10%, 181.05% for Belgium, the Netherlands and Germany respectively, which is similar to those outlined by ITAC in its Essential Facts finding in October 2022.
SA – one of the few countries in the world with a local supply of fresh potatoes all year round – processed about 400,000 tons of spuds between 2017 and 2021. Jacobs said the implementation of anti-dumping tariffs could help level the industry playing field and ensure fair competition.
“By supporting local producers, we can promote job creation, foster economic growth and maintain quality standards for the benefit of all stakeholders involved. This will also offer much-needed stability to consumers who are already facing significant pressures.” Ayabonga Cawe, the chief commissioner at ITAC, told 702 on Thursday that what had happened is that the commission had petitioned SARS to impose provisional duties, on finding that there was dumping of about 60,000 tons. After a six-month period had lapsed, during which the commission investigated the matter, those duties had fallen away. “Many of these products were landing in our country not only duty-free but also landing at prices that were much lower than comparable prices. That then, had particular implications on the pricing behavior of some of the domestic participants, including the applicants in this case (McCain Foods, Nature’s Garden and Lamberts Bay), but also it has other implications
“Some of the South African firms would have experienced declines in sales and profitability, production volumes, market share, and of course, also, for a country like ours, declines in employment.”
Cawe said there is a perception that ITAC’s work in tariff setting and in the use of anti-dumping instruments, countervailing or even safeguards, is aimed at increasing prices, which has a massive impact on poorer consumers. With food price inflation for March at around 14%, ITAC is cognisant of the impact on consumers but they do have other measures at their disposal, such as the variable tariffs on maize, sugar and wheat, which effectively create an adjusting mechanism of the duties depending on global prices.“We do this to cushion not just the consumers themselves, but also to provide protection and instances of low global prices for many producers in the market.”
ITAC’s research report, “Investigation into the alleged dumping of frozen potato chips from Belgium, Germany and The Netherlands: Final Determination” was released on Thursday.