South Africa retaliates following Irish cheese fall-out

- Last updated on GMT

Related tags: Irish dairy board, International trade, South africa

South Africa has slapped an import tariff on Irish cheese, alleging
that dumping has priced domestic cheese producers out of the market
and also led to a 15 per cent fall in milk prices, Tom Armitage
reports.

According to South African press reports, the International Trade Administration Commission (South Africa's governmental trade authority) has introduced a 48 per cent tariff on cheese imports from the Irish Dairy Board, a leading Irish dairy co-operative, to come into immediate effect.

For the remaining Irish dairy exporters, however, the import tax has been raised to 60.2 per cent - although the amount of cheese traded outside the Irish Dairy Board framework in South Africa is relatively insignificant.

Irish Dairy Board figures indicate that approximately 1,444 tons of cheese were exported to South Africa in 2003 (its total cheese imports reached 2,656 tons), netting the Irish economy an estimated €4.2 million.

Many Irish dairy farmers were quick to embrace sizeable €1,000 a tonne EU export refund subsidies, which has consequently allowed them to slash current cheese export prices to around €3,000 a tonne.

The Milk Producers Organisation of South Africa, a lobbying movement of which 82 per cent of South Africa's milk producers are members, alleges that a glut of Irish imports has "compromised the competitiveness"​ of South Africa's domestic cheese industry.

South African retailers, for instance, are able to produce cheese for around €3.9 per kg, while imported cheddar cheese retails at prices as low as €1.7 per kg - despite the fact that the cost of producing cheese in Ireland (before subsidisation) is nearly double that figure, at €3.4 per kg.

Dr. Noel Cawley, managing director of the Irish Dairy Board, told DairyReporter.com​ that "this really is an issue that must be headed by trade organisations such as the EU and the WTO, as it concerns the issue of export refund subsidies. We will, however, be launching our own appeal against the decision, although we do not expect an outcome for another six months."

Dr. Cawley said that he did not anticipate other developing nations would take similar retaliatory measures and noted that the decision would not affect The Irish Dairy Board's other core export activities

"Ultimately South African farmers don't want foreign imports in their industry,"​ he added.

Meanwhile, the EU, which remains the largest exporter of dairy products to South Africa, is also facing mounting pressure from developing nations to dismantle what they allege are protectionist non-tariff barriers to trade, preventing them from selling to the lucrative EU export region.

Peter Mandelson, the EU's recently appointed trade commissioner, has already signalled his intention to combat these barriers and the EU's controversial Common Agricultural Policy (CAP), which disseminates €16 billion in annual subsidies across the dairy industry alone, is slated for a radical overhaul later this year.

Related topics: Markets, Cheese

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