European potato industry rejects Australian farmers' dumping fears

European potato farmers and processors have pushed back against Australian claims they are about to dump subsidized frozen chips from a coronavirus-caused glut into the Antipodean market.

Romain Cools, secretary-general of Belgian grower body Belgapom:

“To be very honest, we have been very surprised about the information reaching us through social media from Down Under.”

With nobody out eating chips during a pandemic, a potato stockpile has built up. Shutterstock Australian grower group AUSVEG has raised the alarm about a EUR 650 million (USD 1.06 billion) assistance package to help Dutch farmers, warning that this could lead to big stockpiles of frozen potato products landing in Australia at loss-leading prices.

Trade unions and farmers last week held rallies outside McCain Foods factories in Victoria and Tasmania, urging federal government protection for threatened Australian potato farmers under anti-dumping rules.

Romain Cools:

“Looked like protectionism.”

“Based on historical experience protectionism has never led to success stories. I am sure that my colleagues Down Under will also subscribe to this position.”

The Belgian and Dutch farmers have certainly racked up a drastic and unwanted stockpile, totaling more than 2.6 million tonnes of unsold produce. They’ve suffered heavy losses, and there have been some government assistance. But the European industry says all is not what it seems.

The problem kicked off as the COVID-19 lockdowns in Europe dramatically cut potato demand, especially from the restaurant and takeaway sector. With no processors buying the potatoes, the spot price crashed to near zero.

Romain Cools:

“The foodservice, hotels, restaurants, bistros, industrial kitchens etcetera have been closed down from the start of the pandemic, and have been or will be the last to be reopened – and this under strict conditions of social distancing.”

“As a result, the free potato market prices in Europe have collapsed – and even at rock-bottom prices, there haven’t been any takers.”

Farmers selling at the spot price have been hit hard. Most of them, though, have long-term contracts with processors for their potatoes – and in those cases, it’s the processors who are taking the hit.

The processors have had to slow production because of a lack of refrigerated storage capacity. And they can’t on-sell their own surplus raw potatoes on the spot market for anything like what they paid for them.

The Dutch government is offering 40 percent of the spot price – about EUR 60 a tonne – for unsold stock, with the potatoes redirected for use as animal feed, or in distilleries or biogas plants. That support amounts to about EUR 50 million of the EUR 650 million the Dutch government has provided across various parts of its hard-hit agriculture and horticulture sectors.

Leon Boer, president of the Netherlands Potato Processors Association, said the Dutch potatoes couldn’t end up in Australia because the farmers would only get the subsidy if they could prove the potatoes were diverted to these alternative end-uses.

Leon Boer, president of the Netherlands Potato Processors Association:

“The potato industry is not supported, and will not dump products in foreign markets.”