Sunday, August 14, 2022

Tomato importers face duties

The federal Government will impose anti-dumping duties on canned Italian tomatoes imported by companies Feger and La Doria, following a landmark case by Victorian food processors SPC Ardmona.

The duties have been imposed in response to findings by the Anti-Dumping Commission that the brands had sold their produce in Australia below a fair market price, impeding local producers’ abilities to compete on a level playing field.

The decision means that all canned tomatoes from Italy are now subject to anti-dumping measures, following the previous imposition of duties on 103 other importers as a result of a previous case by SPC.

In its submission to the Anti-Dumping Commission, SPC estimated that from 2010 to 2014 the processed tomato industry in Italy received more than €900 million (about $1.2 billion) worth of subsidies through programs under the EU’s Common Agriculture Policy.

The Australian Food and Grocery Council says the Australian Government’s decision recognises the impact of these subsidies on the Australian agri-food sector.

“Food and grocery processing is Australia’s largest manufacturing sector and its competitiveness is currently under pressure from high and rising input costs, retail price deflation and high compliance costs,” AFGC CEO Gary Dawson said.

“In this environment, the threat of product dumping is a serious issue warranting the tougher anti-dumping measures introduced by the federal Government. This decision by the Australian Government sends a message to our international competitors that Australia is not an easy target for dumping goods.”

IBISWorld Senior Industry Analyst Brooke Tonkin says the two local industries to be affected by the commission’s changes are fruit and vegetable processing and pasta sauce production.

“Simplot and Coca-Cola Amatil are the two largest players in the fruit and vegetable processing industry [14.8 per cent and 5.9 per cent market shares, respectively],” she said.

“While these players stand to benefit the most from import protection in absolute terms, import protection is likely to have the greatest influence on smaller players. This is because smaller players do not generally have economies of scale, meaning they find it more difficult to compete with low-priced imports based on price.

“Import competition will remain strong for SPC and other players in the fruit and vegetable processing industry, as imported products are likely to still be priced lower than locally made products due to our high local wage costs. However, it will lessen the price difference between local and imported products and should ease competitive pressures for local producers.”

Simplot, Mars Australia and General Mills are the largest players in the pasta sauce production industry (44.7 per cent, 17.1 per cent and 8.6 per cent market shares, respectively).

Ms Tonkin says increasing prices of imported tinned tomatoes will increase purchase costs for producers that do not source these ingredients locally.

“This could place pressure on profit margins of producers in the industry, although margins have substantially more room to fall in the pasta sauce production industry than the fruit and vegetable processing industry,” she said.

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