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Frozen Potato Fries Situation and Outlook

United States

 

The U.S. potato crop is estimated at 21.7 million tons for 1999/00, up slightly from last year’s crop of 21.6 million tons. Washington, Wisconsin, Oregon, Colorado, and California had increases in production while Idaho and North Dakota experienced a decline in production. The Western states account for almost 70 percent of total U.S. potato production, with Idaho and Washington being the two largest producers.

 

About 57 percent of U.S. potato production was processed, of which 29 percent was used to produce frozen potato fries. Today, Russet Burbank is the main variety grown for the production of frozen potato fries. The food service sector accounts for 90 percent of U.S. frozen potato fry consumption while retail accounts for the remaining 10 percent. With a relatively large U.S. potato crop and a steady domestic demand for fries, U.S. frozen potato fry production in 2000/01 is forecast at 3.5 million tons, up from last years level of 3.4 million tons. Over the past five years, U.S. production of frozen potato fries has increased over 2 percent annually.

 

After a decade of record export gains, exports in 1999/2000 were 463,890 tons, down from the previous year’s level of 473,238 tons. While the U.S. dominates the Japanese market with an 87 percent market share, there was a drop in U.S. frozen potato fry exports to Japan in 1999/2000 after a decade of strong growth. In 2000/01, U.S. exports of frozen fries are projected to increase to 485,000 tons (or 14 percent of domestic fry production), up slightly from the previous year of 463,890 tons.

 

The top 5 U.S. potato fry markets accounted for nearly 74 percent of 1999/2000 shipments. These countries include Japan with 49 percent of total exports; Mexico and South Korea at 7 percent; Hong Kong at 6 percent, and Taiwan at 5 percent. The United States also exports to Europe, but the outlook for U.S. exports of frozen potato fries to this market in the 2000/01 season is dim, due to adequate supplies of fries in Europe. U.S. exports generally occur when potatoes are in short supply in Europe, such as in 1998/99, when U.S. fry exports to the European Union were 16,010 tons. In general, transportation costs for frozen potato fries from the U.S. Pacific Northwest are far too high to be feasible.

 

Expansion of the international fast food industry, product quality, rising incomes in many countries, and ongoing Market Access Program activities have all played a role in stimulating demand for U.S. frozen potato fries. Export prospects for the next decade are very promising given the sustained expansion of the international fast food industry.

 

Netherlands

 

The Dutch potato crop was 5.9 million tons for 1999/2000, up 76 percent from last year’s crop, which was affected by poor weather. The harvest expectations for the Dutch 2000 potato crop are excellent given favorable growing conditions. Dutch potato growers are expected to harvest a crop, estimated at 6.0 million tons, a slight increase from the previous year. The acreage for the "bintje" variety, the potato used by Dutch potato fry producers, is expected to decline in the near future. The "bintje" variety has always been preferred by processors because it is relatively simple to cultivate and can be used for multiple purposes. However, Dutch processors are increasingly relying on other varieties rather than the "bintje" variety due to its quality and crop uncertainty, insufficient length, and increasing consumer concerns of heavy reliance on pesticides.

 

The Netherlands has the largest industrial frozen potato fry production in Europe with frozen fry production for 1999/2000 at 1.19 million tons, a 9.6 percent decline from the previous year. The production of frozen potato fries for 2000/01 is forecast at 1.150 million tons. Frozen potato fry production accounts for 80 percent of total processing, while dried products, snack and various other products make up the remaining 20 percent.

 

The Netherlands is by far the largest exporter of frozen potato fries. In 1999/2000, Dutch exports totaled 1.113 million tons and for 2000/01 exports are forecast at 1.065 million tons. The industry depends largely on export demand, as almost 95 percent of production is sold in foreign markets -- mostly in the European Union (EU). The United Kingdom, Germany, France, and Italy account for 75 percent of Dutch exports. Albeit shipments to non-EU countries are very small, exports to these countries have more than doubled over the past three years.

 

Imports of frozen potato fries into the Netherlands have remained small, accounting for less than 5 percent of total Dutch supply.

 

Canada

 

Reacting to strong domestic and foreign demand for frozen potato fries, Canadian potato farmers continue to expand planted area. Western Canada potato area has demonstrated rapid growth throughout the 1990's, led by Manitoba and Alberta. The prairie region now accounts for nearly one-quarter of total Canadian potato output, up significantly from just ten years ago. Alberta’s acreage alone has increased 7,000 acres in 2000. The total Canadian potato harvest for the 2000 crop year is estimated at 4.253 million tons, slightly higher than the previous year.

 

The production of frozen potato fries in Canada continues to show strong expansion. Canada’s fry production rose 12 percent in 1999/2000 to 1,020,000 tons and is forecast to increase more than 10 percent to 1.12 million tons for 2000/01. Much of the increase reflects the startup of state-of-the-art potato processing plants in Alberta and Manitoba. The outlook for 2000/01 is for a further increase in Canadian frozen potato fry production as processors continue to invest heavily in new potato processing plants in the western provinces.

 

Canadian frozen potato fry producers increasingly depend on exports for additional sales. Exports in 1990/00 increased 20 percent to a record 618,978 tons, reflecting expansion of frozen potato fry capacity in the western provinces and increased production for export to the United States and other markets. Canadian exports to the United States accounted for more than 85 percent of total frozen potato fry exports in marketing year 1999/2000. During this period, exports of fries to the United States grew 24 percent to 525,291 tons, valued at C$534 million. Canadian fry exports are forecast at 700,000 tons for 2000/01 and are expected to continue at double-digit growth rates for the near future. Construction of new processing facilities, contracts to supply major U.S. fast food companies, and a lower valued Canadian dollar continue to fuel the growth in export demand. Other Canadian export markets include Japan, the Philippines, Venezuela, and Taiwan. Exports to most major markets advanced strongly, with Mexico accounting for a 138-percent increase. An increase in exports to Japan is expected given Canada’s competitive prices.

 

Canadian imports of U.S. frozen potato fries fell sharply in 1999/2000, reflecting a weak Canadian dollar and lower demand resulting from increased domestic production.

 

Japan

 

Japanese production of frozen potatoes is relatively small and continues to decline as farmers focus on the more profitable fresh market. In 1999/2000, less than 2 percent of Japan’s total potato crop was processed. Hokkaido, northern islands of Japan, accounts for over 80 percent of the nation‘s fresh potato production.

 

In 1999/2000, frozen potato fry imports were 265,000 tons, down from the previous year‘s level of 273,980 tons. Japanese traders of frozen potato products anticipate a slight increase in export shipments at 270,000 tons for the upcoming year.

 

As elsewhere in the world, most fries (nearly 70 percent) in Japan are consumed at international fast food chains, followed by family restaurants, convenience stores, and supermarkets. Japan has more than 6,500 fast food shops. One international food chain consumes over 50 percent of the nation’s frozen potato fries or 120,000 tons annually through its 3,400 outlets nationwide. Japan’s 5,500 family restaurants also consume a significant volume of frozen potato fries (approximately 15 percent), featured throughout the year in their western style menus. Japan’s sales of "ready-to-eat" fries through convenience stores are growing rapidly with more stores handling this product. Sales of frozen potato fries through this sector are estimated at 5 percent of total distribution. Japan’s home consumption of frozen potato fries through supermarkets is fairly small (approximately 10 percent of total distribution).

 

The FAS Attache Report search engine contains reports on the Frozen Potato Fry industries for 4 countries, including, Canada, the Netherlands, Japan, and Taiwan. For further information on supply, distribution, trade, and U.S. marketing opportunities, contact Ted Goldammer at 202-720-8498.)

 

 

Last modified: Sunday, March 17, 2013