On 18 August 2023, the South African Department of Industry, Trade and Competition (DTIC) announced that the International Trade Administration Commission of South Africa (ITAC) accepted an application to investigate allegations that active yeast (i.e., bakers’ compressed yeast) was being dumped from Zimbabwe into the South African Customs Union (SACU). This move follows allegations by South Africa’s sole active yeast producer, Rymco (Pty) Ltd, known commercially as Anchor Yeast, that a Zimbabwean exporter is undermining the SACU market by offloading bakers’ compressed yeast at dumped prices, thereby jeopardizing the industry’s viability.
The root of the dumping suspicion stems from a pricing discrepancy. The baseline product value in Zimbabwe, according to a cash sales invoice from producer Lesaffre, a French food conglomerate, starkly contrasts with the export pricing as captured in the SA Revenue Service datasets. Through this comparative analysis, ITAC deduced that Anchor Yeast presented a convincing prima facie case of dumping, thereby prompting ITAC to initiate an investigation.
Underlining the alleged adverse impacts of this dumping, Anchor Yeast provided a trail of evidence to ITAC, demonstrating dwindling sales from January 2020 through December 2022. This downtrend is not just restricted to sales figures, as the company also reported decreasing market shares, diminishing profit margins, production contractions, dwindling cash flows, and employment cutbacks, all of which culminated in stunted growth.
In addition, the company highlighted an alarming surge of dumped imports within the SACU market. Such inflow patterns, according to Anchor Yeast, allude to the “likelihood of substantially increased importation and that the [product] is entering the SACU market at prices which undercut the SACU manufacturer’s prices that will have a depressing and suppressing effect on prices and are likely to increase the demand for further imports.” Given that Anchor Yeast stands as the SACU’s exclusive producer of this product, it inherently represents the entirety—100%—of SACU’s domestic compressed yeast production.
Evidence Propelling the Investigation
A comprehensive dossier of evidence submitted by the applicant led ITAC to conclude, as the DTIC’s 18 August notification, that there existed a compelling prima facie case. The investigation period for assessing the dumping margin is set from 1 January 2022 to 31 December 2022. On the other hand, the window for evaluating material injury is set for between 1 January 2020 to 31 December 2022.
In accordance with section 16 of the International Trade Administration Act, 2002, and the Anti-Dumping Regulations of the International Trade Administration Commission of South Africa, ITAC announced the commencement of its investigation, which would remain duly cognizant of the World Trade Organization Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade, 1994.
Importantly in this regard, South Africa and Zimbabwe have shared a trade pact since 1964, offering preferential ingress to select agricultural and manufactured commodities. Nevertheless, any form of dumping remains squarely anticompetitive and is not taken lightly.
Procedure and Implications
As the wheels of the investigation are set in motion, ITAC plans to share non-confidential versions of the application and accompanying questionnaires with all recognized importers, exporters, and their associations. This is an open call to these stakeholders to furnish any relevant information that may assist it in its investigation. ITAC also sounded a note of caution, however, emphasizing the potential need to validate the authenticity of the submitted data.
In a related context, Anchor Yeast had to momentarily cease the sales of its “Inkunzi malanga” dry yeast. This decision was influenced by its burgeoning popularity among home-brewed beer enthusiasts, especially during the government-mandated liquor bans at the Covid-19 pandemic’s pinnacle.
The ensuing investigation could have significant implications for the South African bakery sector in light of the country’s significant demand for it, particularly in respect of brown bread. Given that this bread variant—a zero-rated food in South Africa—excludes VAT from its pricing, it serves as an affordable fiber source for countless South Africans in the face of soaring food prices.