Canadian Potato Situation and Trends 2006-2007 (5 of 9)


The most significant change in the potato industry in the past 30 years has been the growth in consumption of French fries and a decline in fresh potato use. This appears to be a function of rising incomes and a more hectic lifestyle where people are eating out more often due to time constraints. Tourism, microwave ovens, increased numbers of women in the workplace, urbanization and diversification of diets stimulated growth in consumption. North America has led this trend followed by Europe and other developed countries. However, eating habits are changing throughout the world and will likely limit production and export expansion of frozen potato products in most countries over the next few years, except China.

Fast food firms believe most of their future growth will be in the developing world. New processing plants are being built worldwide. Good quality processing varieties must be available to meet those demands. Initially, supplies of finished product were imported from existing plants in other countries. Once supplies of raw product became available locally, industry built processing plants, leading more countries to become processors.

Table 9 - World Frozen Potato Product Situation, 1996-1997 - 2005-2006
Country 1996-
1997
1997-
1998
1998-
1999
1999-
2000
2000-
2001
2001-
2002
2002-
2003
2003-
2004
2004-
2005
2005-
2006
%
Change [**]
Frozen Potato Products by Marketing Year (July to June)
** % Change from 2004-2005 to 2005-2006
USDA, FAS
Production (Thousands of MT)
Canada 775 860 910 1,020 1,050 1,080 1,170 1,390 1,365 1,325 -3%
Netherlands 1,126 1,100 1,075 1,100 1,175 1,150 1,127 1,358 1,371 1,300 -5%
United States 3,382 3,284 3,566 3,498 4,331 3,750 3,838 3,752 3,857 3,999 4%
Imports (Thousands of MT)
Canada 12 28 24 14 17 31 31 37 31 35 13%
Netherlands 56 55 65 85 105 75 83 155 105 115 10%
United States 249 339 368 465 533 651 673 827 780 650 -17%
Exports (Thousands of MT)
Canada 345 448 516 619 634 736 768 1,015 979 970 -1%
Netherlands 970 950 965 930 1,030 990 1,011 1,385 1,184 1,140 -4%
United States 385 425 473 464 523 508 441 482 514 560 9%

The Netherlands, Canada and the United States are the leaders in the international trade in frozen potato products. In marketing year 2005-2006, the U.S. was the largest producer, with 3.99 million MT. Canada followed with 1.325 million MT, and The Netherlands with 1.3 million MT. In 2005-2006, frozen fry exports from these three countries were 2.67 million MT, similar to 2004-2005 and 9.4% above the previous five year average shipments.

The United States

The U.S. ranks first in the world as a producer and third as an exporter of frozen potato products. Its production slightly declined during the 2003-2004 marketing year due mainly to changing eating habits in major markets over the last several years and increased competition among international suppliers. However, production has been increasing in the last two marketing years. The U.S. potato industry is facing competition from Canada, New Zealand, Australia, and the EU. See Trade and processing section.

Canada

Canada is the second largest producer and exporter of frozen potato products in the world. During the 2005-2006 July to June marketing year, Canadian frozen potato production declined 3% to 1.325 million MT and 970,000 MT of frozen potato products were exported.

The country's modern frozen fry industry is very export oriented and is increasingly dependent on exports for expansion. Reliance by Canadian processors on the U.S. markets continued during 2005-2006, but exports to other countries, mostly to Mexico, Venezuela, South Korea and China have helped in market diversification.

The Canadian industry must be aggressive in maintaining existing markets and developing new ones; Mexico and China are seen as major potential markets. See Processed Potatoes section.

The Netherlands

The Netherlands is the world's third largest producer and the largest exporter of frozen potato products and during the 2005-2006 marketing year produced 1.3 million MT and shipped 1.14 million MT. Its industry depends mostly on foreign markets. The EU accounts for about 90% of Dutch exports. The United Kingdom, France, Germany, Spain and Italy account for about 70% of Dutch exports. In the past, the expansion of American fast food chains in Europe encouraged exports of Dutch potato fries. Shipments to non-EU countries are slowly increasing.

Processing plants are already run at full capacity in the Netherlands. Industry expansion and new processing capacity have been developed in France and Belgium to compensate for the cost of transporting potatoes and to supply the growing demand in the Mediterranean countries. Other investments are expected outside the EU, or in countries like Poland to supply the increasing demand in Central and Eastern Europe.

The European market for fries and chips seems to be saturated. Demand fell after the introduction of the euro. Consumers are changing their eating habits and are having fewer meals outside the home.