The country's potato industry is calling on the Government to protect it from "predatory" EU exporters who are dumping surplus product into New Zealand and undercutting local producers.
Chris Claridge, chief executive of Potatoes New Zealand (PNZ), says countries in the EU - namely Belgium and the Netherlands - are attempting to get rid of their own surplus, caused by a lack of consumption due to the COVID-19 lockdown, by "dumping" the product in New Zealand and selling it much cheaper than local products.
"What this does is it presents a real threat to our industry," Claridge told Magic Talk's Rural Today on Tuesday.
"Because New Zealand has an economy that's functioning, that's operating, we're now, we believe, being targeted by exporters in Europe seeking to get rid of their excess supply."
In an attempt to stop the dumping, Potatoes NZ has submitted an application to the Ministry of Business, Innovation and Employment (MBIE) calling for anti-dumping duties on frozen potato products.
Fears about the practice were first raised in May, but Claridge says since then analysis by PNZ has shown "a sharp, significant increase in exports to New Zealand…and it looks like there's been undercutting as well as dumping".
According to PNZ, prices for EU product were between 18 and 38 percent cheaper than local frozen potatoes.
Two-thirds of New Zealand's total potato crop goes into making processed products such as fries or crisps, with around 450 people directly employed in the potato processing industry and a further 3000 indirectly.
But with cheap frozen potato products from the EU flooding the market these processors are in a fight for survival, says Claridge.
And he says if local processors are driven out of business it's not just those who lose their jobs that suffer.
"Going forward this lessens our capability as a nation to grow potatoes and feed ourselves because if our domestic processors are effectively knocked out of business we don't have an industry of scale."
New Zealand exports around $100 million worth of frozen fries each year, mainly to countries in South East Asia and the Pacific Islands.
But despite the importance of the industry here, it pales in comparison to the sector in the EU.
"Europe exports 400,000 tonnes of frozen fries per month," says Claridge. "Our domestic production capability in one year is 140,000 tonnes. So effectively Europe can produce in a fortnight our total annual production - and they can produce that and export that in a normal month."
Potato NZ is now calling for the Government to protect the local industry through the Dumping and Countervailing Duties Act.
By using domestic legislation, Claridge says any action taken would have no impact on free trade negotiations between New Zealand and the EU.
"People have raised these fears about this somehow affecting the EU trade negotiations. This sits outside that. There is no ability for the EU to undertake retaliatory action for this. This is a standard thing that happens, and quite often - individual companies will go to MBIE and go 'look, we've got a competitor dumping in our markets' and they do something about it. But this is the first time an industry group or a primary sector group has put in an application.
"This act has been around since 1988, this is not new. It's just that we are doing it collectively because of the seriousness of the situation."
He accused Belgium and the Netherlands of "anti-competitive behaviour", saying they were "acting against normal international trade rules".
"We don't believe that free trade means no rules - all we're asking is that our Government utilise our domestic legislation to protect the potato industry in New Zealand from the predatory activities of offshore entities".
