Canadian Potato Situation and Trends 2006-2007 (2 of 9)


Canada's potato production and processing industries are currently valued at C$6.5 billion in both direct and in-direct contributions to the economy, and provide employment for 33,000 people, mainly in rural areas. The Canadian potato production and processing industries support numerous rural regions across the country.

Background

At the end of the 1980s, the Canadian potato industry started a spectacular expansion as the precursor to the North American Free Trade Agreement (NAFTA), the Canada-US Free Trade Agreement, came into effect. Annual potato production almost doubled from 2.88 million MT in 1989 to 5.28 million MT in 2003 and harvested acreage increased by 58% from 114,500 ha to 181,100 ha. Potato production shifted west. Expansion on the Prairies has been remarkable and is a direct result of developments in the French fry sector. Several other factors also contributed to the success of this western expansion: its proximity to North American markets for processed products, Western Canada's land base suited potato production, availability of water and land for rotation purposes, availability of the capital required to invest in specialized machinery and storage facilities.

French fry production increased in response to retail and food service demand in North American and around the world. Processing plants were built in Prince Edward Island, Quebec, Manitoba and Alberta. Canadian growers increased their production to meet the demand for French fries and seed potatoes.

Table 3 - Canadian Potato Production and Area, 1997-2006
Province 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 %
Change[*]
* % Change from 2005 to 2006
Statistics Canada (22-008-XIE)
Area Planted (ha)
Newfoundland 300 300 300 200 200 300 300 300 300 300 0%
Prince Edward Island 45,300 45,300 45,700 44,100 43,300 44,100 42,900 42,900 38,800 39,250 1%
Nova Scotia 1,900 2,000 2,100 2,100 2,100 2,200 2,100 2,200 1,700 1,400 -18%
New Brunswick 22,700 23,100 22,700 22,300 23,600 23,500 23,900 23,700 23,100 23,500 2%
Quebec 19,000 18,600 17,900 18,600 18,900 19,800 20,200 19,300 19,700 19,000 -4%
Ontario 15,700 17,400 17,600 17,700 17,600 17,700 18,200 16,200 14,700 15,000 2%
Manitoba 29,100 29,900 29,900 31,600 31,400 35,600 41,700 38,800 34,800 33,000 -5%
Saskatchewan 3,400 5,500 3,200 4,200 5,100 5,300 5,500 4,800 4,000 4,000 0%
Alberta 12,500 13,400 17,400 21,400 23,600 25,100 26,700 23,500 22,700 22,050 -3%
British Columbia 3,600 3,400 3,300 3,400 3,500 3,600 3,700 3,600 3,300 3,200 -3%
Canada 153,500 158,900 160,100 165,600 169,300 177,200 185,200 175,300 163,100 160,700 -1%
Area Harvested (ha)
Newfoundland 300 300 200 200 200 300 300 200 200 300 50%
Prince Edward Island 45,300 44,500 44,500 43,700 43,300 43,500 42,700 42,700 38,600 38,500 0%
Nova Scotia 1,900 1,900 1,900 2,100 2,100 2,200 2,100 2,100 1,600 1,400 -13%
New Brunswick 22,700 22,900 22,300 22,300 23,200 23,500 23,700 23,500 22,500 23,100 3%
Quebec 18,700 18,300 17,600 18,100 18,600 19,400 19,800 18,700 19,200 17,800 -7%
Ontario 15,700 17,400 16,900 16,100 17,300 16,900 17,800 15,800 14,400 14,600 1%
Manitoba 28,900 29,300 29,500 29,900 30,200 34,000 41,100 37,600 30,800 32,600 6%
Saskatchewan 3,400 5,300 3,200 4,100 5,000 5,100 5,300 4,700 4,000 3,700 -8%
Alberta 12,300 13,000 17,100 19,300 23,200 22,600 24,700 23,100 20,800 21,500 3%
British Columbia 2,800 3,200 3,300 3,400 3,500 3,500 3,600 3,400 3,300 3,200 -3%
Canada 152,000 156,100 156,500 159,200 166,600 171,000 181,100 171,800 155,400 156,700 1%
Average Yield (MT/ha)
Newfoundland 15.67 14.33 14.50 20.50 22.00 17.33 22.67 21.30 18.61 25.78 39%
Prince Edward Island 29.72 29.71 29.15 30.27 19.28 31.39 29.70 30.82 30.82 33.62 9%
Nova Scotia 20.84 23.47 24.05 26.95 16.86 24.95 24.14 26.35 24.10 23.54 -2%
New Brunswick 29.09 29.76 27.97 28.53 28.06 29.11 28.55 31.94 29.14 33.62 15%
Quebec 24.33 25.96 26.14 26.22 25.77 23.55 26.63 29.76 25.48 29.06 14%
Ontario 22.42 20.22 20.76 21.30 20.76 18.69 22.93 22.64 18.16 23.43 29%
Manitoba 25.81 26.38 25.25 28.07 26.22 24.66 27.45 27.46 23.54 30.26 29%
Saskatchewan 27.79 29.94 28.00 29.90 27.34 31.69 35.04 31.38 29.70 30.26 2%
Alberta 32.62 33.15 32.54 34.75 35.29 31.36 36.97 39.23 38.56 38.33 -1%
British Columbia 25.50 27.22 29.30 28.79 31.20 32.69 32.72 32.50 30.82 31.38 2%
Canada 27.44 27.73 27.27 28.69 25.33 27.52 29.17 30.48 28.22 31.88 13%
Total Production (Thousands of MT)
Newfoundland 5 4 3 4 4 5 7 5 5 7 61%
Prince Edward Island 1,346 1,322 1,297 1,323 835 1,365 1,268 1,316 1,191 1,295 9%
Nova Scotia 40 45 46 57 35 55 51 57 39 32 -17%
New Brunswick 660 682 624 636 651 684 677 750 655 776 19%
Quebec 455 475 460 475 479 457 527 556 489 518 6%
Ontario 352 352 351 343 359 316 408 357 261 341 31%
Manitoba 746 773 745 839 792 838 1,128 1,034 724 986 36%
Saskatchewan 95 159 90 123 137 162 186 146 119 113 -5%
Alberta 401 431 556 671 819 709 913 905 804 825 3%
British Columbia 71 87 97 98 109 114 118 109 101 102 1%
Canada 4,171 4,329 4,268 4,568 4,221 4,705 5,283 5,235 4,387 4,995 14%

In 2003, high per hectare yield (29.17 MT/ha) and a record harvested acreage (181,000 ha) resulted in the largest crop in history.

The expansion of the Canadian potato industry was also strongly linked to the fluctuation of the Canadian dollar value versus the US dollar value. In the 1990s, a lower Canadian dollar value helped the Canadian potato industry. The major expansion came between 1993 and 2002, when the value of the Canadian dollar was lower. At the end of that period, demand for all North American potato products was declining, due to the low value of the Euro. Since 2003, a higher Canadian dollar has contributed to slow the expansion of the Canadian potato industry and to reverse the trend. Canadian industry competitiveness has been negatively impacted and a substantial amount of French fry processing capacity returned to the U.S. In 2004, French fry processors in Canada reduced contract volumes for potatoes due to sluggish North American demand for French fries. Sluggish demand for potatoes and potato products has resulted in table and seed potato surplus and declining prices for producers. A decrease in the 2004 potato production was necessary to start bringing supplies and demand into a profitable balance. The Canadian potato industry reacted to new market conditions and reduced the acreage planted to potatoes, the first acreage decline in 15 years. However, favourable growing conditions resulted again in a bumper crop and the national yield record (30.48 MT/ha) was broken for the second time in a row, which made up for cut acreage.

Table 4 - Canadian Potato Production and Value, 1997-2006
Province 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 %
Change[*]
2006 data not available
* % Change from 2004 to 2005
Statistics Canada (22-008-XIE)
Potatoes Sold, Consumed, Seeded or Fed to Livestock (Thousands of MT)
Newfoundland 4 4 3 4 4 5 6 5 4 -11%
Prince Edward Island 1,323 1,298 1,279 1,023 830 1,352 1,255 1,295 1,182 -9%
Nova Scotia 37 41 43 54 33 52 48 54 37 -32%
New Brunswick 618 644 599 613 639 663 649 665 634 -5%
Quebec 434 459 448 453 471 441 503 509 469 -8%
Ontario 328 326 337 322 341 299 363 304 253 -17%
Manitoba 670 698 681 825 779 829 996 1,001 715 -29%
Saskatchewan 87 136 81 114 128 150 178 117 103 -12%
Alberta 361 392 523 659 800 695 899 889 790 -11%
British Columbia 66 79 90 93 104 109 112 98 96 -2%
Canada 3,929 4,078 4,084 4,158 4,130 4,595 5,010 4,937 4,282 -13%
Value (Cdn $ '000)
Newfoundland 1,312 1,445 1,140 1,399 1,395 1,940 2,280 1,725 1,841 7%
Prince Edward Island 187,290 218,355 195,617 139,947 192,511 229,825 162,248 165,376 233,786 41%
Nova Scotia 6,310 7,141 8,986 11,775 7,085 11,656 9,785 10,804 7,602 -30%
New Brunswick 86,102 103,102 94,750 91,868 152,967 118,321 91,198 83,241 124,556 50%
Quebec 73,918 83,750 86,075 86,317 120,938 104,361 86,849 88,349 120,592 36%
Ontario 62,871 61,013 65,182 61,957 89,842 91,778 88,194 65,838 71,784 9%
Manitoba 126,168 115,035 117,748 143,643 143,463 149,157 163,384 167,980 126,873 -24%
Saskatchewan 28,353 38,242 29,431 38,460 52,195 58,899 60,255 33,245 32,319 -3%
Alberta 67,888 75,696 104,829 110,571 153,435 148,638 169,375 168,103 153,223 -9%
British Columbia 21,555 32,447 37,782 35,657 46,812 63,455 49,197 45,787 47,764 4%
Canada 661,767 736,226 741,540 721,594 960,643 978,030 882,765 830,448 920,341 11%
Average Price (Cdn $/MT)
Newfoundland 305.12 370.51 438.46 368.16 348.75 395.92 361.90 359.38 431.75 -1%
Prince Edward Island 141.56 168.19 152.97 136.85 231.83 170.05 129.31 127.71 197.77 -1%
Nova Scotia 171.93 172.49 209.95 219.27 213.40 223.30 203.43 200.82 208.20 -1%
New Brunswick 139.26 160.00 158.18 149.84 239.46 178.41 140.48 125.12 196.50 -11%
Quebec 170.24 182.46 192.13 190.71 256.71 236.43 172.80 173.44 257.19 0%
Ontario 191.80 187.21 193.48 192.53 263.47 307.05 242.76 216.57 283.71 -11%
Manitoba 188.23 164.90 172.80 174.20 184.12 179.99 164.06 167.81 177.37 2%
Saskatchewan 326.65 281.40 362.00 337.66 407.14 392.40 338.51 283.42 314.43 -16%
Alberta 188.00 192.91 200.36 167.71 191.70 213.78 188.34 189.11 193.98 0%
British Columbia 324.62 410.72 418.41 385.48 452.29 582.16 438.48 468.17 499.05 7%
Canada 168.44 180.54 181.56 173.55 232.61 212.84 176.21 168.20 214.92 -5%

In January 2005, PEI potato producers instituted several initiatives including a voluntary diversion program to remove potatoes from the market and a potato production cap for the 2005 planting year. They also encouraged producers of other provinces to cap their acreage in production. The PEI potato industry initiated a potato acreage buy down program in 2005 in support of the efforts by United Potato Growers of America (UPGA) to diminish overproduction of table potatoes and to bring supplies more in line with demand across North America, and thereby increase returns to growers. The PEI program was funded by doubling the levies paid by all growers for the 2005 crop, and 3,900 ha were removed from potato production through the program. Finally, producer initiatives and contract cuts for processing potatoes combined with hard weather conditions resulted in an 18% decline of the 2005 Canadian production compared to the previous year. Market prices started strengthening.

In February 2006, grower representatives from the major potato producing provinces approved the formation of a new national organization, United Potato Growers of Canada (UPGC). The new organization focuses on improving the marketing of potatoes via the development of better market information and analysis, and stronger communications and cooperation between grower organizations across the country and with their sister organization, United Potato Growers of America. UPGC and UPGA agreed to work on the development of a North American Potato Cooperation Agreement to formalize the collaboration between the two organizations. The two organizations want to encourage a better balance between production and demand across North America, so that potato producers can obtain a reasonable return for their crops each year.

Production

Total potato production was estimated at almost 5 million metric tonnes (MT), a 14% increase over the 2005 crop, but 5% below the record crop of 2003. While the area planted in the last two years was similar, the area harvested in 2006 was 156,700 ha, up 1% and yield reached 31.88 MT/ha representing a 13% yield increase.

Better weather conditions in most Canadian provinces in 2006 resulted in the best yielding potato crop in history at 31.88 MT/ha. The former Canadian 2004 record yield (30.48 MT/ha) was smashed. Three provinces, Prince Edward Island, New Brunswick and Alberta, broke the 33.6 MT/ha barrier (300 cwt/acre) for yields. Most provinces except Nova Scotia and Saskatchewan experienced an increase in production. Manitoba recovered from the 2005 crop failure with an increase of 36% in production, accounting for 43% of the total Canadian production increase in 2006.

In 2006, the United States and Canada found potato cyst nematode (PCN), a quarantine pest. In April 2006, the pale cyst nematode (Globodera pallida) was found for the first time in eastern Idaho in the United States. In August 2006, the golden nematode (Globodera rostochiensis) was detected and confirmed for the first time in Quebec in a field of commercial potatoes within the potato growing area of St-Amable, located 20 km east of Montreal. The Canadian Food Inspection Agency (CFIA) and the U.S. Department of Agriculture's Animal and Plant Health Inspection Service (USDA-APHIS) have developed a Joint potato cyst nematode certification protocol for all seed potatoes traded between Canada and the United States. The goal of this protocol is to maintain the safe movement of regulated articles between Canada and the United States while continuing to protect against the spread of these nematodes. The initial phase of the protocol began on March 21, 2007, as the first step in implementing potato cyst nematode surveillance for Canada and U.S.

Processing

Frozen French fry production was estimated at 1.325 million MT in 2005-2006, down 3% from 2004-2005, reflecting the reduced contract volumes by processors. This is its second decline in production over the previous year since its relentless expansion in the late 1980s. The annual rate of French fry expansion had averaged approximately 9% through the 1995-1996 and 2003-2004 seasons. See Processed Potatoes section.

Approximately 55% of potatoes grown are used for processing. Out of that, the largest percentage is used for French fries and about 10 to 15% are used for chips and dehydration.

It takes 2 to 2.5 kg of potatoes to produce 1 kg of French fries, about 5 kg for a kg of potato chips, and about 4 kg to produce 1 kg of dehydrated potatoes in granules. Canada has only one potato starch plant situated in Manitoba.

Consumption

In 2005, potatoes accounted for 37% of all fresh and processed vegetables consumed in Canada. Total potato consumption has been declining in recent years, falling from 75.09 kg per person in 1996 to 65.63 kg in 2005, although there was a peak of 77.30 kg in 1997. The decrease in potato consumption resulted from various dietary trends and negative consumer perceptions about its nutritional value, even though potatoes remain a healthy food product.

Table 5 - Potato Consumption in Canada, 1996-2005
Type 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 %
Change
% Change from 2004 to 2005
* Disappearance is beginning stocks+production+imports-exports-manufacturing-seed and waste-ending stocks.
Statistics Canada (23F0001XCB)
Fresh Equivalent Disappearance (kg/Person)[*]
Fresh 40.59 42.69 38.36 39.61 36.99 38.88 34.67 34.26 31.64 29.83 -6%
Processed
Frozen 13.55 13.35 13.29 13.33 13.50 13.68 13.86 13.37 13.13 13.07 0%
Chips 10.45 11.07 11.15 11.17 12.30 11.89 11.61 11.14 11.24 11.17 -1%
Other Processed 10.50 10.19 11.10 11.99 12.11 12.07 12.32 12.56 12.45 11.56 -7%
Sub-total 34.51 34.61 35.54 36.49 37.91 37.64 37.80 37.07 36.83 35.80 -3%
Total 75.09 77.30 73.90 76.10 74.90 76.52 72.46 71.33 68.46 65.63 -4%

The decline in total potato consumption has occurred primarily because Canadians are cooking fewer fresh potatoes. Fresh potato consumption dropped by 27% between 1996 and 2005. On a fresh equivalent disappearance basis, fresh potato consumption represents 45% of total potato consumption while processed potato consumption such as frozen French fries, potato chips and other processed reaches 55%.

Frozen potato product consumption, mainly French fries, has been also decreasing since 2002. Potato chip consumption has been declining since 2000, but has been more stable in the last three years. Dehydrated potato product consumption has increased steadily in the last decade, but a light decline occurred in 2005.

The Canadian Seed Potato Certification Program

This CFIA program combines advanced technology with a team of skilled growers, trained inspectors and qualified professionals. Seed potato certification involves two different but complementary activities: domestic seed certification, and export phytosanitary certification. In Canada, both activities are national in scope and are administered by the Canadian Food Inspection Agency (CFIA), a federal government agency under the direct responsibility of the Minister of Agriculture and Agri-Food Canada (AAFC). CFIA also holds the responsibility for variety registration and for the administration of Plant Breeder's Rights. All varieties produced in Canada must be registered with CFIA's Variety Registration Office (VRO) and be represented by a Canadian agent.

A group of specialized officers, under the Potato Section of the Plant Health Division is responsible for maintaining the Canadian standard for the production and certification of seed potatoes. All seed sold on the Canadian market must meet this strict standard enforced by CFIA. The Potato section is also responsible for the negotiation of phytosanitary agreements with other countries. On the basis of these agreements the section ensures that the International Phytosanitary Certificates issued by the operational branch of CFIA conform with the import requirements of the importing country in accordance with the international standards International Plant Protection Convention (IPPC), North American Plant Protection Organization (NAPPO), United Nations Economic Commission for Europe (UNECE)).

The main characteristics of the Canadian Seed Potato Certification program are the following:

  • Disease-Free Nuclear Seed: All seed potatoes produced in Canada originate from nuclear stock which is produced under sterile conditions from tissue culture that has been subjected to multiple laboratory tests and found free of any diseases.
  • Limited Generations: Seed potatoes produced from nuclear stock can remain in the certification program for no more than seven years. Each growing season the seed moves sequentially downward through the classification system. This "flush-through" system minimizes the risk of disease build-up.
  • Disease and Varietal Purity Standards: These standards are maintained through a system consisting of multiple field inspections, laboratory testing, post-harvest testing and sound agronomic practices.

Organic Production

Organic production presents an option for current growers and new entrepreneurs interested in taking advantage of a growing market demand. Potatoes are one of the most difficult commodities to grow organically. Achieving success requires new ways of thinking about production and marketing practices. Organic growers must control the same insects, the same weeds and the same plant diseases as conventional growers, but with completely different practices. Late Blight and the Colorado potato beetle are two of the major pest problems negatively impacting potato yields and profitability. Although organic production is not suitable for all situations, producers with the necessary skills who implement judicious marketing plans can succeed in this new niche market. The adoption of new disease and pest resistant varieties well adapted to organic production may represent an opportunity for seed growers. Spurred by consumer demand, premium prices and environmental concerns, the growth in market demand is expected to result in a continuing increase in acreage of organically grown potatoes. For more information, see Organic Production; Organic Production-NB; Commercial Potato Production - Organic and Pesticides Free Production-MB.

The Government of Canada recognizes the importance of the organic food production sector. A voluntary national standard for organic agriculture was published in June 1999 and was revised under the auspices of the Canadian General Standards Board (CGSB). In 2006, the new national standards for organic agriculture (CAN/CGSB-32.310-2006 (external PDF) and CAN/CGSB-32.311-2006 (external PDF)) were published. A mandatory national system was announced in December 2006. These regulations will protect consumers against false organic claims and will govern the use of a new Canada Organic logo. The Organic Products Regulations will strengthen the organic industry's capacity to respond to international and domestic market opportunities. Phased in over the next two years, the Canada Organic logo will be permitted for use only on those food products certified as meeting the revised Canadian standard for organic production and that contain at least 95 percent organic ingredients. Following this phase-in period, it will be mandatory that all organic products be certified for interprovincial and international trade.

On December 14, 2006, the Minister of Agriculture and Agri-Food Canada announced that Canada was the first country in the world to track organic trade data.

In Quebec, the Reserved Designations Act has governed organic designation since February 2000. The Conseil des appellations réservées et des termes valorisants (CARTV), mandated to control the use of the organic designation, adopted the Quebec Organic Reference Standard. This standard is at least equivalent to those adopted by the Codex Alimentarius Commission. The CARTV is responsible for accreditation of certification bodies, based on this reference standard and on standard ISO/CEI 17011, which deals with the requirements regarding product certification.

Organic potatoes marketed in other countries must be certified organic by an organization that is recognized by the importing countries.