‘Tsunami’ of spuds predicted
A surplus of potatoes in Europe has the industry here worried a ‘‘tsunami’’ of cheap chips could flood the market, putting hundreds of jobs at risk.
Potatoes New Zealand wants the Government to put short-term restrictions on imports of heavily discounted frozen chips to avoid a food security threat.
With pubs, cafes and restaurants closed due to the coronavirus outbreak, potato prices have collapsed in major production centres, including the European Union.
Potatoes NZ chief executive Chris Claridge said the price of frozen potato chips from the EU — where there is already a surplus of approximately 2.6 million tonnes of chips — would soon go the same way.
‘‘If urgent steps are not put in place to prevent it, New Zealand is likely to be swamped by imports of frozen potato chips at those extraordinary prices,’’ Claridge said.
‘‘That, together with the existing impact of the current pandemic will in turn cause the New Zealand potato growing and processing industries to suffer severe and prolonged damage.’’
That could lead to potato growers planting alternate crops, in turn leading to a shortage of locally-grown potatoes.
‘‘Given New Zealand’s reliance on potatoes as a source of food, that will represent a serious risk to food security,’’ Claridge said.
Commerce and Consumer Affairs Minister Kris Faafoi said he was keeping an eye on the situation. Potatoes NZ had been engaging with the Ministry of
Business, Innovation and Employment (MBIE) on a possible response to any flood of European chips, should it happen, he said.
An MBIE spokeswoman said under World Trade Organisation rules, there needed to be evidence of actual harm or a risk of harm to the industry before any antidumping action could be taken.
Anti-dumping duties could be imposed only after an investigation which concluded the exported goods were dumped and negatively impacting the domestic industry in the importing country.
New Zealand potato growers supply about 85 per cent of the domestic market.
A large proportion of fries are consumed in hospitality businesses, all of which were closed while the country was at Covid-19 alert level 4.
While many have since reopened, most are not operating at full capacity and some will close permanently, with predictions suggesting the number may be as high as 40 per cent.
Claridge said lockdown had flattened sales of New Zealand processed and fresh potatoes.
In the meantime, producers of frozen chips had built up significant stocks and were already having to deal with an oversupply of raw potatoes.
‘‘As a result contracts with farmers for future potato production will be for reduced volumes, and at lower prices.’’
Processors could also face difficult decisions to deal with the increasing stock levels and dramatically reduced demand. Action could include shift reductions, temporary plant closures and potentially significant redundancies, Claridge said. ‘‘As we exit the nationwide New Zealand lockdown, the local market for frozen potato chips will be extremely competitive, even without the added pressure of below-cost imports landing here.’’
Processors needed time to clear the stock built up during lockdown and increase production but that wouldn’t happen if there was a surge in imports of frozen chips, he said. ‘‘That can only happen if local demand is first and foremost met through the supply of locally produced potato chips.’’