Friday, March 29, 2024

Spud sector monitors cheap chips

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Potatoes New Zealand has solicited Government support to investigate a potential import threat as the industry recovers from covid-19. Last month it called for Government action as local growers come under threat from cheap, imported chips. 
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The industry asked the Government to urgently consider imposing short-term measures limiting the import of heavily discounted frozen potato chips. 

Potatoes NZ has now met Commerce and Consumer Affairs Minister Kris Faafoi and with support from the Ministry of Business, Innovation and Employment is gathering evidence.

“We want growers to feel confident in the industry recovering from pandemic crisis and we want to discourage the Europeans from attempting surplus importation to NZ,” Potatoes NZ chief executive Chris Claridge said. 

The investigation is gathering economic trade data and doing a public interest analysis.

While there are limitations to the legislation not allowing a straight-out ban there is the possibility of kicking in the remedies if evidence is provided.

The potato industry is heartened that MBIE supports the industry’s message to buy local.

Globally, the disruption of supply chains and particularly sales to hospitality because of covid-19 restrictions have led to the complete collapse of potato prices in major production centres, in particular the European Union. 

That has led to extraordinary price reductions in frozen potato chips from the EU that has a 2.6 million tonnes surplus of potatoes in store and an unknown amount of frozen fries. 

They have already planted pre-covid-19 and significant surpluses will exist in the market for some time. 

“The concern for our industry remains that along with the existing domestic impact of the pandemic crisis any profiteering activity from overseas exporters will in turn cause further damage to the NZ potato-growing and potato-processing industries,” Claridge said.

NZ producers of frozen potato chips have built significant stock levels and are already having to deal with an oversupply of raw potatoes.

Recovery can happen only if local demand is met first and foremost through the supply of locally produced potato chips.

“Achieving that outcome is critical for grower confidence and the minister has made clear to industry his sympathy for that,” Claridge said.

Mid Canterbury potato grower Guy Slater is on the newly formed sub-committee with NZ potato processors to plan pandemic recovery for the sector of the potato industry that generates 55% of its $1 billion value.

Slater said it is clear any threat to process growers in NZ will affect a great number of people.

“We’ve had biosecurity challenges before, which are ongoing and costly but they can be controlled. 

“This current import challenge has me deeply worried, primarily for our partners and for our customers, the processors. Without them we are nothing.

“NZ growers may lose options if this threatened import happens.”

When it comes to forward planning, like many other growers, Slater is cautiously looking at the options. 

“If the Europeans send these spuds down they don’t pose a quality threat to us that’s for sure because we’ve got a better product.” 

Undermining a level playing field by subsidisation is the concern. 

“We’ve specialised in the process side of growing. 

“We have very small margins now and really need bigger yield and lower costs and if there is a price threat we will run out of wriggle room.” 

Slater said threat to process potato prices could be the end for growers already feeling bombarded with compliance costs as well as recent biosecurity incursion recovery.

“Thankfully, the potato is a good crop in terms of compliance, however, councils are wanting costly proof of this. 

“We monitor nutrient levels and water usage weekly. We’ve become very sustainable and transparent. 

“We’re dealing with a product that has to be fit for purpose.”

On the plus side for now, process growing is contracted yearly and contracts have been honoured.

Any surplus will be sitting with processors and is worrying for the whole industry, Slater said. 

“I’m not a political commentator and I don’t want to take my eye off the ball. 

“I’m a business operating in extraordinary times but a level playing field is essential.

“If the Europeans screw the scrum I owe it to my business, my team and the wider potato industry to ask the ref to make a call. 

“We want it addressed quickly, based on evidence, and in this case the Government’s reply could be a game changer,” Slater said. 

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