You can now find frozen chips 30% cheaper – because of an administrative bungle
- Frozen potato chip prices are down by 30% in some cases – for imports.
- A long-standing duty on such imports, intended to prevent dumping of chips from the likes of Europe, has lapsed.
- An investigation, part of a standard trade process, did not complete on time.
- Regulators and the industry are pointing fingers at one another about that bungle.
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Frozen potato chips, the kind that becomes the chips in fish and chips, are now going for up to 30% less than they have in South Africa in recent years, thanks to a mistake in applying trade rules.
Import duties on such chips have now lapsed, Moneyweb first reported this week, causing alarm in the local industry and forecasts of "unavoidable" job losses.
The long-standing duties were imposed to protect the local market against dumping by producers from the likes of Europe, with its massive farm subsidies. Belgium in particular is an aggressive low-price exporter of frozen chips, as the largest global producer by far.
Under global trade rules, anti-dumping duties expire after five years unless a "sunset review" is initiated, to formally consider their extension. Such a review was launched in South Africa – by local producers who insist their futures are in serious jeopardy from cheap imports – but not completed within the maximum of 18 months allowed.
Why the review was delayed depends on who you ask. Producers say the International Trade Administration Commission (Itac) did not do its job of verifying information properly. Itac, on the other hand, says producers provided information that was incorrect or incomplete, and delayed its investigators by having side meetings.
South Africa has seen wild gyrations in potato prices triggered by weather recently, though a regulatory deal on access to a potato variety ideal for slap chips benefited local farmers in early 2020.
In the meanwhile the global market in potatoes has been rocked by Covid-19, and associated lockdowns, with farmers in places like Britain seeing a near-collapse of demand at times as fast-food restaurants were forcibly closed.
Local producers estimate they will lose around 10% of their current sales to imports.
(Compiled by Phillip de Wet)
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