The International Trade Administration Commission of South Africa (ITAC), a government agency that administers import duties and trade measures, is aware of the price disadvantage that domestic producers face against imported canned tomatoes, Trade and Industry Minister Dr Rob Davies confirmed on Friday.

This comes as African National Congress MP Professor Ben Turok raised concern about the fact that South African manufacturer All Gold’s tinned chopped tomatoes, selling at R12.99, were substantially more costly than imported Serene canned tomatoes from Italy, which were retailing at R5.99.

Davies said that imports of canned tomatoes from the European Union (EU) comprise 99% of total imports of the product, of which 95% originate from Italy. The landed cost of imports from Italy is R6.80/kg, which is about 20% below the average exfactory selling prices of the domestic producers.

The current general rate of customs duty on canned whole tomatoes was 30%, which was intended to offset the price disadvantages that domestic producers might experience. However, in terms of the bilateral South African-EU Trade Development and Cooperation Agreement the duty on imports originating from the EU was zero.

“In this regard, ITAC can only consider an increase in duties under the general rate of duty heading and not under the EU rate of duty heading, which is covered under a bilateral agreement between South Africa and the EU,” Davies said.

The Minister stated that the only basis for protection against imports of the product from Italy would be if evidence emerged of subsidised or dumped imports, in which case, any antidumping duty might be imposed, but that ITAC had not received an antidumping applications.

Davies said that the commission had found justification for an increase in the general rate of duty on tomato paste, puree and concentrates in powder form, from 15% to the World Trade Organisation-bound rate of 37%.

It was envisaged that the protection offered by the increase would enhance the price competitive position of the developing domestic industry manufacturing these products, in the face of fierce low-priced competition from abroad, especially from East Asian producers, and would enable the domestic producers to use existing underused production capacity and achieve economies of scale.

“Government accepted the recommendation and implemented it from May. In 2011, the total value of imports of tomato paste, puree, and concentrates in powder form amounted to R85.3-million of which 77% was imported from China, 12% from Italy, and the remaining from other countries,” Davies said.

ITAC also recommended that a manufacturing rebate be created for the importation of bulk tomato paste that is used in the manufacture of food, as supply shortages were experienced from time to time.

“The conditions attached to the rebate provision will ensure that permits are only issued in instances where confirmation is received from the local producers of tomato paste, puree and concentrates, that they are unable to supply the downstream manufacturers,” said Davies.

This rebate would allow downstream producers, which previously had to pay the 15% customs duty on tomato paste, regardless of whether local product was available or not, to reduce their costs of production as the duty would now be rebated when there were shortages. “This is in line with government’s objective of increasing the competitiveness of downstream value-adding industries,” he concluded.