China's ministry of commerce ruled on 18 August that potato starch producers from the European Union are guilty of dumping on the Chinese market, causing significant damage to China's own industry.

The ruling, which is not final, demands that importers of potato starch from the EU pay duties from 18 August to Chinese customs.

Two European producers affected by the ruling declined to comment on the decision to AP-Foodtechnology.com.

The amount of the duty varies according to the extent of dumping judged to have taken place by each producer. Dutch company Avebe, the world's biggest potato starch producer, and Germany's Prignitz/Wendland have been ordered to pay tariffs of 44 per cent while French firm Roquette will have to pay 35 per cent.

All others must pay 57.1 per cent.

The dumping investigation was launched in February this year following complaints from Chinese firms. The EU, the region producing the largest volumes of potato starch, has exported the ingredient to China for several years, where it is used mostly in food to alter the texture or save costs on other ingredients.

However imports of potato starch have increased significantly in the last year, driving down the price. According to China's customs bureau, potato starch imports from the EU rose from 19,000 tons in 2004 to 75,000 tons in 2005.

A source at one European producer, who did not wish to be named, said the demand is high because EU-made potato starch is better quality than the Chinese equivalent and is better suited to high quality finished products.

However Chinese potato starch producers accused Europe of subsidizing its industry unfairly.

Zhou Qingfeng, president of Inner Mongolia-based Nailun Agricultural Science and Technology Company, the biggest potato starch processor in China, told the Xinhua news agency that potato starch costs around RMB4300 ($540) per ton in China but prices for the EU produce have been falling since the middle of last year and now cost about $300-$350 per ton.

"An anti-subsidy prosecution is part of the negotiation between the Ministry of Commerce and EU," he told the newswire.

One of the 20 companies accusing EU producers of dumping, Nailun claims to have sold only 30 per cent of its stock between August and December 2005, normally the peak time for sales, as a result of EU competition.

One of the company's sales staff said European prices have now gone up again, since the news of the preliminary decision on dumping.

China has only recently started producing potato starch but thanks to the suitable environment and a long history of potato planting, production has been booming. Demand for the ingredient in the domestic market is expanding by around 20 per cent each year, creating opportunities for both foreign and domestic players.

The Ministry of Commerce is expected to make its final decision on the dumping case some time next year.