The South African trade commission ITAC has not imposed a new anti-dumping duty on European fries. Belgian, Dutch and German fries can enter the country again without significant price increases. Yet the last word has not yet been spoken. You can read how that works in this article.
For a long time, South Africa was an unattractive destination for fries from Europe. The country has had an anti-dumping duty since 2013. When that levy was ended at the beginning of 2021, chip exports quickly started again. That was a sore leg for local players. Once again, a levy was imposed by the International Trade Administration Commission (ITAC). Dutch fries have been taxed at 2022% since July 104,5 and German fries have been taxed at 181%. Belgian products fared better with a 23% levy.
Charge not extended
An internal investigation soon showed that there was a misunderstanding about the motivation for the levy. Consumers in the country in particular suffered from ever-increasing costs for fries. South Africa grows quite a lot of potatoes, but they hardly go to the chip industry. The levy expired on January 16 and has not been extended by ITAC.
The Trade Commission's investigation has not yet ended, ITAC itself said. Trade Minister Ebrahim Patel is therefore still possible decide to impose an anti-dumping duty on European fries. European exports at the end of last year were not as high as in 2021, but still more than in previous years. More than 3.000 tons of fries were imported in December. That is more than double what was the case last summer. Belgium supplied 80% of this volume. The role of the Netherlands has actually decreased in 2022, despite the fact that the price level is considerably lower. Total exports last year were 5% below the 2022 level.
Energy shortage
The potato sector in South Africa currently has more to care. Potato growers – but especially processors – are affected by a shortage of energy. Parts of the network are closed to save electricity. That is disastrous for French fries and potato chip production. In addition, growers have to contend with high production costs and a limitation in the amount of water they can use for irrigation. It also doesn't help that the South African Reserve Bank SARB has increased its interest rate to 7,25%. This also disadvantages agricultural companies.
The South African potato sector has developed considerably over the last three decades. Production increased from 1,3 to 2,6 million tons of potatoes. At the same time, the area decreased from 62.000 hectares to 52.355 hectares. These are figures that Potato SA presents. They see the levies as justified to protect the sector in the country. According to the advocate, the fact that the price of fries is being significantly increased has more to do with a correct valuation of the product.
Victory
Anti-dumping duties continue to haunt European French fries producers. Mainly because of the relatively low prices compared to local chip prices in a country. It often takes years before such a levy is lifted again. At the end of last year the EU achieved a small one victory when it turned out that Colombia had wrongly applied such a tax for years.