In contrast to the European potato sector, potato cultivation has been cut considerably in the United States. As a result, processors are expected to produce significantly fewer chips. This offers opportunities for Belgian and Dutch chip suppliers, who already saw their sales increase last season.
You would expect the United States to be able to largely support itself with French fries. Nothing could be further from the truth, because processors from Belgium and the Netherlands are seeing the number of American customers increasingly increasing. In the past 12 months up to and including April, the country was even the third largest customer outside the EU. Compared to the same period before, the export volume increased by almost 3%. That's not surprising. Due to tight availability of potatoes, less could be exported.
Jumping for orders
Only Saudi Arabia and Brazil, as non-EU countries, buy more European fries. This makes the country almost as important as Poland, which hovers at the bottom of the top 10 in the European rankings. Next season there is a chance that the US will again import a significant volume of 'French fries'. Possibly more than usual. European processors are eager for orders. With the current knowledge of the matter, the potato supply is also no obstacle.
The analysts at North American Potato Market News (NAPM) estimate that processors have concluded 15% to 20% fewer fixed-price contracts for French fries potatoes, in order to pre-sort to reduce French fries consumption due to the coronavirus. Even more than in Europe, fries are invariably consumed outside the home. There are hardly any Americans with a deep fryer. The potato area shrinks in the US an estimated 6%. That's 24.000 hectares. Growers have partly planted free potatoes and partly the industry can fall back on the stock from the 2019 harvest.
The table market is also interested
However, the table potato market (which Russets also use) is also the market for free potatoes. Due to the lower availability, NAPM therefore expects a 10% decrease in consumption. This means that processing could be 980.000 tons lower. Not so few potatoes have been processed since the 2015-2016 season (8,84 million tons). This also has consequences for chip exports, which are estimated to be one fifth lower. American figures show that until June 1, the industry was operating at 60% of its old capacity.
In the past 12 months, the US imported nearly 1 million tons of frozen potato products. Imports are therefore considerably higher than exports. However, these figures give a distorted picture. The US is a major French fries exporter worldwide and fuels the demand for the product domestically with French fries from Canada. Most processors have factories in both countries. The processors are constantly working to stay in balance.
Canada has a dominant presence
Canada's role in this game decreased last season. While the country still accounted for more than 2018% of fries in 2019-90, last season this was still 87%. Belgium and the Netherlands supplied more fries and Germany also participated. This level will probably remain the same next season or it will increase further. Europe is happy to export at competitive prices. Canada hasn't gotten that far with its contract farming reduced, which means that the American northern neighbors also have an eye on more sales.
The US is one of the countries hardest hit by the corona crisis. Yet fast food chains are operating again as usual and even above forecast. A lot of fries are consumed here. If corona continues to have a grip on the country, the situation could change quickly. The NAPM analysts now expect a decline of up to 1% in domestic sales.