In a significant development for the US pea protein industry, the Department of Commerce (DOC) has announced preliminary duties on certain Chinese pea protein imports, a move that marks a turning point in a trade dispute that has been simmering for months. This announcement is a response to the claims made by PURIS, the leading US producer of pea protein, regarding the negative impact of low-priced imports on the domestic industry.
The DOC’s preliminary determination has found that Chinese pea protein is being sold in the US at “less than fair value,” with proposed preliminary duties ranging from 112% to 270%. This decision follows an earlier finding by the US International Trade Commission (ITC) that there was “a reasonable indication” that Chinese companies were indeed selling high protein content (HPC) pea protein in the US at prices subsidized by the Chinese government, which constituted dumping.
The issue of dumping and unfair government subsidies is a serious one, as it can distort markets and undercut domestic producers who are unable to compete with artificially low prices. Dumping occurs when a foreign producer sells a product in the US at a price below their sales price in their home country or below the cost of production. Unfair government subsidies can take various forms, including direct cash payments or loans with non-market terms, which can give foreign producers an unfair advantage.
To counteract these practices, antidumping and countervailing duties are imposed to offset the value of dumping and/or subsidization, allowing for fair competition. The DOC’s investigations into the matter have led to a dual response: the implementation of countervailing duties in December 2023, ranging from 15% to 343%, and the recent announcement of anti-dumping duties. The latter are expected to become effective upon publication in the Federal Register, which is anticipated to occur next week.
PURIS has welcomed the DOC’s actions, with CEO Tyler Lorenzen expressing gratitude for the defense of American jobs and the stand against unfair trade practices. The company had previously felt the strain of the competitive pressures, leading to layoffs and scaled-back production at its facilities in Turtle Lake, Wisconsin, and Dawson, Minnesota.
As the industry awaits the final determination expected this summer, the implications of these preliminary measures are already being felt. The DOC has also found critical circumstances, which means that retroactive duties could be applied to products imported in the 90 days preceding the preliminary determinations.
This news arrives amidst a backdrop of expansion in North American pea protein production capacity. Louis Dreyfus Company’s announcement of a new pea protein isolate facility in Yorkton, Saskatchewan, Canada, is a testament to the growing demand for plant-based proteins. The facility is expected to be operational by late 2025, adding to the momentum in the sector.
Despite recent challenges, such as the receivership of Merit Functional Foods in March 2023, the North American market has seen significant growth in pea protein production, with new facilities opening across the United States and Canada. Pea protein is increasingly used across a variety of food products, from protein shakes to plant-based meat alternatives, indicating a robust demand for this versatile ingredient.
The ruling by the DOC is seen not only as a win for PURIS but also as a positive step for other domestic producers such as Roquette, which has faced the need to adjust production due to the influx of cheap imports. The imposition of duties is expected to help level the playing field, providing breathing space for domestic producers to compete on fairer terms.
In conclusion, the DOC’s preliminary duties on Chinese pea protein imports represent a pivotal moment for the US pea protein industry, with the potential to reshape the competitive landscape and ensure the sustainability of domestic production in the face of global market dynamics.