‘Slap’ chips could get cheaper thanks to a new deal on potatoes in South Africa
After the SA competition authorities cracked down on a Dutch seed potato breeder – and its exclusive South African distributor – a new deal could help drive prices down for one of SA’s favourite potatoes.
Local farmers have not had easy access to Mondial potatoes, which deliver a high yield and are ideal for slap chips.
This was because of an exclusive agreement between HZPC Holland, which created the variety, and Wesgrow Potatoes, a SA potato seed grower.
The deal was supposed to expire in 2013, when HZPC lost its exclusive rights to the varietal in South Africa. According to local law, when a new potato variety is created, a breeder only has exclusive rights over it for 20 years. For the Mondial potato, this right expired more than six years ago.
But HZPC and Wesgrow's exclusive deal continued, and in 2017, the Competition Commission accused the companies of anti-competitive behaviour by excluding local producers from growing and selling the Mondial.
Mondial potatoes are waxy, with a high moisture content and low starch. They keep their shape during boiling and are ideal for use in salads and as “slap” chips. Regarded as one of the finest in the market, the Mondial varietal is said to have better disease resistance and produces more ton per hectare than other varieties, says the Competition Tribunal.
The commission accused Wesgrow of “unlawfully refusing access” to Mondial, and depriving South African customers of choice, in contravention of the Competition Act.
It also accused Wesgro of abusing its dominance through alleged agreements the company had with its customers, including reportedly demanding that its customers may not deal with any of its potential competitors, in contravention of the Competition Act.
While not admitting wrongdoing, Wesgrow and HZPC have proposed a new settlement, which the Competition Tribunal accepted on Wednesday.
For the next three years, Wesgrow will supply plantlets of Mondial to local companies at cost price.
It will only supply the plantlets to each company once, “whereafter it will be the responsibility of the company to which the plantlets are supplied to produce and maintain its own genetic material for the Mondial varietal”.
Wesgrow said it won’t impose any conditions on the companies.
“The approval of the settlement agreement ensures that consumers will ultimately benefit from greater competition in the market for the production and supply of the Mondial seed potato varietal,” the Competition Tribunal said in a statement.
The Competition Commission expects that the new deal - “the first case of this nature in South Africa” (involving plant breeders’ rights and seed potato varietals) – to set a precedent in relation to other seed potato varietals, when plant breeders’ rights expire in the future.
Other key potato cultivars - including Sifra, Fiana and Valor – could be next.