According to a press release issued by Potatoes New Zealand (PNZ) today, the organization has met with Minister Faafoi to discuss investigating the potential importation of heavily discounted frozen potato chips (fries) into New Zealand.
With MBIE’s support, Potatoes NZ says it is undertaking an investigation to gather evidence of the potential import threat.
- PNZ want growers to feel confident in the industry recovering from pandemic crisis
- PNZ want to discourage the Europeans from attempting surplus import
- PNZ is gathering economic trade data and carrying out public interest analysis
- There are limitations to the current legislation not allowing a straight out ban
- There is the possibility of ‘kicking in’ the remedies if evidence is provided
- MBIE supports PNZ’s message to ‘buy local’.
Globally, the disruption of supply chains, and particularly sales to hospitality, by virtue of COVID-19 restrictions has led to the complete collapse of potato prices in major production centres, in particular the European Union (EU). This has led to extraordinary price reductions in frozen potato chips from the EU.
It’s expected that a similar collapse will be seen in other parts of the northern hemisphere, in particular in North America. The EU currently have approximately 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 New Zealand potato-growing and potato-processing industries.
New Zealand producers of frozen potato chips have built significant stock levels and are already having to deal with an oversupply of raw potatoes.
The range of remedial action processors will be considering will include shift reductions, temporary plant closures and potentially significant redundancies. As we move to Level 1 and hospitality opens back up, the local market for frozen potato chips will be extremely competitive, even without the added pressure of below-cost imports landing here.
NZ companies must be able to clear their inventories built up during the lockdown.
Recovery can only happen 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.
NZ Potato Industry Fast Facts:
- The NZ potato industry value is just over $1 billion dollars per annum
- NZ processed potatoes account for 55% of NZ potato industry value
- 85% of all fries eaten in NZ are NZ fries
- 15% of fries consumed in NZ are imported
- ½ NZ fries produced are exported = $100 million