There is evidence of European-produced potato fries being ‘dumped’ in the New Zealand market at a loss, says a New Zealand industry body, who warns the ‘bad faith’ practice threatens local businesses and must be stopped.
Covid-19 lockdowns and less people eating out have slowed demand for hot potato chips in European restaurants, and left their suppliers with a glut on their hands.
Late last year, the Ministry of Business, Innovation and Employment launched an investigation into the dumping of cheap frozen fries from Europe.
It was prompted by evidence presented by Potatoes New Zealand, whose chief executive Chris Claridge told Morning Report the preliminary report is due to be published by MBIE next month.
“What we do have on record is that one processor from Europe has admitted dumping – admitted having surplus inventory and selling the surpluses to New Zealand, and has indicated that they’ve got the ability to sell more.
“The European market wasn’t able to sell 500,000 tonnes of frozen fries last year, that have to find a home somewhere. At the same time, Europe has increased their plantings, they’re at record plantings,” he said.
“So this threat to our industry is real, it’s continuing, and we’re very keen to see the government act. We believe there should be temporary tariffs to overcome what is happening.”
New Zealand producers were digging in and prepared to fight market disruptions from Covid-19 for some time, but Claridge said allowing reasonable prices to be undercut at a loss was not sustainable for growers, who could struggle to survive.
“The processors who normally contract for our growers are not keen to increase their level of contracts, they’ve gone backwards. So we’re technically now growing less in the New Zealand market.
“And as well, we’re experiencing real problems off-shore, where the Europeans continue to dump into our offshore markets – because we export. We’re seeing a reduction of about 20 percent of our exports worldwide.”
Any actions taken by the government to relieve the situation will be decided against the backdrop of New Zealand’s ongoing free trade negotiations with both the United Kingdom and European Union.
But Claridge and Potatoes NZ said that shouldn’t stop New Zealand sticking up for itself, and there was still plenty of room for actions to drive off under-priced import dumping.
“We are using domestic legislation. These cases happen all the time. Just recently New Zealand imposed tariffs on Chinese high- tensile wire suppliers to New Zealand – China is our largest trading partner and we have a free trade agreement.
“These actions do not cut into free trade arrangements.
“Our legislation must fit within WTO regulations. What people have to realise is that you can’t be nervous about taking these actions, and also any retaliatory action against New Zealand is again in breach of WTO rules.”