A major importer and distributor of frozen food-based commodities has called on the government to urgently lift the import duties on French fries warning that there is already a shortage of supply which will also push up prices.
“In the short-term, we strongly feel that government should consider lifting its antidumping duties and engage more openly with importers and businesses to discuss constructive solutions to SA’s supply chain constraints,” Fred Hume, the MD of Hume International, said on Monday.
He said imposing sudden, sharp tariff hikes risks placing consumers under even more pressure, especially at a time when food prices are elevated as a result of rising input costs like fuel and fertiliser.
Hume sources products across five continents for distribution across Sub-Saharan Africa.
The government is under pressure to slash import duties on many products as consumers come under pressure. In August, trade, industry and competition minister Ebrahim Patel suspended antidumping duties on chicken imported from five countries for the next 12 months, citing the fight against food inflation and its effects on the poor.
Yet the government recently introduced higher duties for imported frozen potatoes from Europe in a bid to protect the local industry, a move that could push up the price of French fries while many households struggle to afford basics as the cost-of-living crisis deepens.
The International Trade Administration Commission (Itac) — the organisation responsible for customs tariff investigations, trade remedies and import and export control — imposed provisional antidumping duties for frozen potato chips imported or originating from Belgium, Germany and the Netherlands.
The provisional duties — which are up to 181% for German producers, 104% for some producers in the Netherlands and 23% for those in Belgium — will be in place until January 2023, when the final five-year tariff determination will be finalised. This as the state moves to curb dumping.
Hume said many companies have over the years been forced to rely on imports because there is not enough production capacity locally.
“I would like to firstly clear up any confusion and make a clear distinction between fresh potatoes and products such as frozen French fries. Potatoes must be processed to make French fries, which is the end product that we import to supplement our SA-made supplies for clients,” he said.
“But despite having received the benefit of tariff protections for the better part of a decade, there has not been sufficient investment towards expanding production capacity and ensuring that there is enough supply of frozen French fries for the market’s needs, which is why so many companies have been forced to rely on European producers to supplement their stock.”
Hume said that in many cases, clients are paying up to 50% more for frozen French fries from Europe to secure steady supply. “This is why we believe that there needs to be greater transparency and industry engagements in the decision-making process for tariffs, as there is a clear-cut case that anti-dumping duties are being calculated incorrectly in a grossly undersupplied market without consideration for all the facts.”
“An ideal situation would actually be for us to have the majority of product supplied locally should the industry commit to urgently expanding its capacity over the next few years.
“Not only would this shorten our supply chains for local clients, but as French fry distributors, we also supply to several other countries across Africa, and we would welcome the opportunity to export more SA-made frozen fries. This would be the ultimate win-win,” Hume said.
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