Sunday, December 3, 2023

Chips glut threatens spud sector

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Potatoes New Zealand wants anti-dumping tariffs imposed on imported chips as it fears a real threat to the $1 billion local potato industry.
Potatoes NZ chair Stuart Wright says there was a significant increase in levy money dedicated to R&D under Chris Claridge, pictured.
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It fears frozen chips from Belgium and The Netherlands are being dumped on the NZ market.

PotatoesNZ wants the Ministry of Business, Innovation and Employment to impose anti-dumping duties to avoid devastation of the domestic potato industry.

“There’s a significant amount of inventory of frozen fries sitting there that could basically wipe out our entire domestic industry almost overnight,” PotatoesNZ chief executive Chris Claridge said.

Cheap chips are in oversupply because covid-19 has closed hospitality outlets worldwide.

The surplus combined with European subsidies will drive export prices down further, increasing the threat to the NZ industry, Claridge said.

He expects the prices of imports to undercut local prices by 18-38%.

“The damage this will cause will destroy the NZ industry.”

PotatoesNZ says it has shown huge inventories of foreign potato products exist and are being dumped, making it clear the threat is real and an investigation into anti-dumping duties is warranted, Claridge said.

A separate PotatoesNZ commissioned Economic and Community Impact Report from Business and Economic Research Limited (BERL) said in the absence of a duty potato processors will be forced to cut production and demand for potatoes from local growers will drop.

Inevitably, that will lead to a loss of employment and threat to the viability of some potato-growing businesses.

Imposing an anti-dumping duty on imports will help maintain demand for local potatoes and ensure the continuity of employment and business in the growing sector, the BERL report said.

A duty will mean potato growers will experience the same market conditions, including competition between themselves and fluctuations in market prices, as they did before dumping.

Claridge warned five NZ processors employing 450 people will be directly affected if no duty is imposed.

“These processors will be the first to be harmed by the dumping of frozen potato products in the NZ market.”

The principle downstream industries from potato processing are the food service industries, particularly the fast food sector.

“These industries might enjoy lower input prices while dumping continues but they could face disrupted supplies and higher prices once the European market conditions improve.”

Claridge said there is no guarantee the benefit of lower prices will be passed on to consumers.

Dumping occurs because overseas producers have a glut of produce or a collapse in demand in their own markets and both these conditions are unlikely to be sustained.

“A longer-term consequence for consumers is that they could face higher prices if NZ-based processors and growers are forced out of business by dumping,

“You may get cheap chips for a period time and then, when the domestic producers are wiped out, I will guarantee you the price will go up.”

Claridge warned there could be job losses.

While potato growing and processing is a relatively small industry it still directly and indirectly provides employment for 5000 people.

Potatoes are one of the few crops grown outside, produced in most regions and harvested all year round.

“The industry is therefore an important provider of widely distributed and stable employment,” Claridge said.

MBIE is considering the PotatoesNZ applicaton.

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