- Tariffs that protected the SA potato industry from dumping of products from the EU have lapsed.
- Industry body Potatoes SA warns that this could have dire consequences for local potato producers.
- The South African potato industry provides employment to an estimated 45 000 permanent and seasonal labourers.
A recent lapse of import duties that protected the SA potato industry from dumping means the country is at risk of below-cost frozen French fries flooding the market from abroad, industry body Potatoes SA warned on Thursday.
An application to have anti-dumping tariffs reinstated for another five years will not be completed in time, it said.
The usual process involves application for an extension, which is known as a sunset review. The SA independent regulator, the South Africa’s independent regulator, the International Trade Administration Commission (Itac), then reviews that application.
It is this review that has not been completed.
Potatoes SA believes an influx of frozen French fries from The Netherlands and Belgium will cripple South African potato farmers and producers, and could eventually even impact local food security.
The South African potato industry provides employment to an estimated 45 000 permanent and seasonal labourers and is worth approximately R7.5 billion at primary level, and R26 billion at secondary level.
On average, the industry plants between around 50 000 hectares of potatoes, with the crop accounting for 45% of the total vegetable crops produced in the country.
This amounts to a contribution of around R8.5 billion to the economy."The battle between the local potato industry and global importers has a long-standing history, with South Africa being considered a prime destination for dumping frozen processed potato products," Willie Jacobs, CEO of Potatoes SA, said in a statement.
He expressed concern for the local potato industry and called for support."South African producers have been experiencing many challenges brought on by Covid-19: the cost-price squeeze, rising input costs and most recently, the riots in parts of the country.
Furthermore, our producers don't benefit from the financial support afforded to EU farmers by their governments, and simply cannot compete with below-cost products being dumped in our country," said Jacobs."With less demand for local produce, there will be a ripple effect on livelihoods and job-losses, not to mention the effect on the economy."
Another critical factor to consider, he says, is the longer-term threat that agricultural dumping poses to SA's food security.
"Because agricultural dumping usually results from a high volume of surplus potato products not usable by the countries of origin, we need to be cognisant of the fact that this occurs in cycles. Once excessive stocks are depleted, South Africa will enter periodic shortfalls, resulting in consumer price spikes," says Jacobs."South African producers will need to cater for local demand once more, but price volatility will deter them from entering the market again. Reaction from producers' level is also very slow and can take years to build up production again.
"The extended importation of cheap potato products will have reduced the demand for the local potatoes and our potato farmers will be forced to pull back on planting new crops, leading to a risk of the seed pipeline running dry."
Once the seed pipeline is depleted, it takes five years before commercial potatoes are available again, considering the time it takes from seed to potatoes being delivered to the factory door, he said.
"This not only poses a risk of unavailability of potatoes, but will naturally drive up costs, ultimately disrupting the supply chain and negatively impacting the consumer," says Jacobs.
Other local bodies including FairPlay have raised concerns in recent weeks over the expiry of anti-dumping duties.