Cheap toilet paper imports get flushedHmmm...
Ian McIlwraith
January 2, 2009
ONE of life's humble staples, toilet paper, is likely to cost more and, oddly enough, it's because of an anti-dumping investigation.
The price of toilet paper is not generally top of mind, so most consumers would not have realised that cheap imports from China and India - most of them parcelled up into the Select brand for the Woolworths and Safeway supermarket chains - have been keeping their ablutionary costs down.
The Home Affairs Minister, Bob Debus, has now accepted the results of a year-long Australian Customs Service investigation, which found that imported toilet papers are coming in at prices almost 40 per cent below "normal" and hurting local manufacturers.
Two local makers, Kimberly-Clark Australia and SCA Hygiene Australasia, say that after Woolies awarded a tender in May 2006 to a local importer, Paper Force, their prices on supermarket shelves were undercut by up to 20 per cent.
Woolworths declined to give Customs full details of its toilet paper tender arrangements and says the success of its brand reflects a superior product at an acceptable price.
The retailer has also been under pressure from a campaign by the CFMEU over its sourcing of paper products from Asia Pulp and Paper, which the union says is a leading contributor to deforestation in Indonesia.
Most of the toilet paper used by Woolworths comes from two APP plants, Gold Hong Ye Paper in China's Suzhou and PT Pindo Deli in Indonesia.
A Woolworths spokeswoman said yesterday the toilet paper supply contract ended in August and a new one was being devised to include environmental sustainability specifications.
Woolies' brand may have kept a lid on toilet paper prices but Kimberly-Clark and SCA, which have the lion's share of the toilet paper market, complain the imports are unfairly damaging their businesses because the prices at which they are being sold are below the costs of production - that is, dumping.
Millions of dollars are at stake. In 2007 Australians spent $728 million buying 120,000 tonnes of toilet paper and the market has grown by 25 per cent in just four years.
About two-thirds of toilet paper sold is premium grade - thicker and softer - and Woolies' brand grew from nothing to 6 per cent of the market in just two years. Kimberly-Clark and SCA are foreign-controlled but the anti-dumping investigation found they make enough of their toilet paper here to qualify as locals.
Kimberly-Clark is better-known as the maker of Kleenex and Coles's own-brand in the premium market and Wondersoft in the mid-range. SCA makes Sorbent at the premium end and Purex in the mid-range.
The customs investigation found that PT Pindo Deli's products are 33 per cent to 38 per cent below "normal" prices and Gold Hong Ye's between 5 per cent and 10 per cent below.
Those companies, and other importers, have until late this month to appeal the decision before penalties are applied to the toilet paper they bring in.
A spokesman for APP in Australia says it is likely it will appeal the decision.
The dumping penalties mean it is likely that prices on supermarket shelves will rise.
I used to benchmark the cost of toilet paper at 50 cents per roll, even though the number of sheets per roll gradually reduced covertly, including another 50 cents for the packaging. The ideal price of a four-pack was $2.50 and a six-pack was $3.50 etc and that was usually only during the discounted specials.
The other day, I bought a six-pack of Sorbent for $4.49. Not allowing for packaging, that is 75 cents a roll.
Surely local manufacturers cannot claim that foreign made toilet paper is being imported (dumped) at below production costs as offshore costs would be far less than in Australia. I wonder how much profit those companies made last year.
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Two days left before work, and I have done nothing for the past few days.
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