Importing cheap potatoes from EU 'catastrophic' for local industry

Potato and Vegetable Processors Forum urges government to halt imports amid downturn

09 September 2020 - 18:01 By Ernest Mabuza
The local potato industry has called on the government to halt the import of frozen potato chips from the European Union.
The local potato industry has called on the government to halt the import of frozen potato chips from the European Union.
Image: 123rf/yelo34

The Potato and Vegetable Processors Forum (PVPF) is lobbying the government to impose a temporary prohibition on imports of frozen potato chips from the European Union (EU) as a result of market conditions brought on by Covid-19.

The request was made to protect the sustainability of the local potato industry, inclusive of employment by local potato growers and processors in the country.

The forum — which includes PSA, McCain Foods SA, Natures Garden and Lamberts Bay Foods —  said since 2000/01 potatoes accounted for about 45% of total vegetable crops produced in SA and contributed about R8.5bn to the economy.

It said these numbers were under threat because of a surplus of frozen and processed potato products in Europe, as a result of a decreased demand brought on by the Covid-19 pandemic worldwide, and hence significantly depressed prices.

As SA is a key destination for processed potato product exports from the EU, where there was a history of dumping, it said, this would hurt the country’s agricultural sector and surrounding communities.

Over and above the normal farm support that EU farmers received, there were also special Covid-19 support measures afforded to potato producers abroad, said the forum. EU support to their farmers, combined with low-priced surpluses, would drive export prices down further, with a significant risk of increasing dumping margins threatening the South African potato industry.

André Jooste, CEO of Potatoes SA, said the local potato industry had already suffered significantly from a decrease in demand as a result of Covid-19 related regulations, such as the closure of restaurants and fast-food outlets, and restrictions on trade and the movement of informal traders.

“The result was a significant drop in prices, far below break-even prices for producers, and a build-up of stock levels in the processing sector. A further blow due to low-priced imports from other countries could be catastrophic,” he said.

Jooste also said there was no guarantee that the benefit of lower prices as a result of imports from Europe would be passed on to consumers.

“In fact, a longer-term consequence is that consumers could face higher prices if South African growers and processors are forced out of business as a result of cheap imports on the back of Covid-19 inflicted reasons.”

He said by raising concerns against the importation of these products, South Africans had an opportunity to buy and support the local industry and help rebuild the economy — especially if one considered the strong labour multiplier of the industry.

As an example, Jooste said, the leading processor of potatoes and vegetable products in the country supported more than 6,800 full-time jobs and procured potatoes from more than 100 local farmers who planted in excess of 4,500ha of potatoes annually.

“It is therefore imperative that we prioritise our growers, our supply chain and the expansion of the local agricultural economy, especially if we are to combat the financial effects of the Covid-19 pandemic.”