In the second quarter of 2020, sales of frozen fries worldwide decreased by almost 36%. This is evident from data from the Global Trade Atlas. In Europe, the loss is even greater. In North America, the United States was able to limit the loss somewhat.
Between April and June, 637.000 tons of frozen chips were exported worldwide. This is 353.800 tons less than the second quarter of 2019. A decrease of 35,7%. A year earlier, this amounted to a good 991.000 tons of end product.
Big loss for EU
The EU records the largest loss in tonnes. In the second quarter, the Union exported almost 230.000 fewer tons of frozen potato products. That is a decrease of 37%. In the US the percentage is slightly smaller at 34%. In absolute tonnes, the decline in sales there amounts to 84.500 tonnes of end product. Canada exported 46% fewer fries. Good for a minimum of 19.400 tons. In percentage terms, Argentina lost the most, with 46,5% less exports. With almost 29.000 tons of finished product, the country is number 3 in the world rankings, after the EU and the US. New Zealand (number 5) managed to keep the loss the smallest with a minus of 9%.
The figure for the EU applies to exports of finished products to non-EU destinations, excluding Canada. This also includes the UK, which is the largest buyer of European fries. Exports to this country were 43% lower in the second quarter. This is the biggest loss of all customers. For all other countries the volume exported was 34% lower. It is striking that the EU actually exported 68% more fries to the US in the 3 months.
VK does not buy fries
While the Dutch processing figures actually show stable growth, after the low point in April, the EU export figures do not. In April, exports were down 32%, which had grown to 44% in June. This is mainly due to the fact that sales to the UK decreased by as much as 96,5% in that month. Insiders cannot immediately explain why this is so drastic.
In North America, the chip industry has managed to contain losses by dealing efficiently with product flows and limiting costs as much as possible. Consumption increased at the end of the second quarter, but exports fell by 43% in June, compared to the same month in 2019. What is striking is the enormous increase in imports that is visible. Certain restaurant chains in the US are increasingly asking for special potato products. American processors cannot quickly switch between standard US fries and specialties, causing these customers to switch to European product. Moreover, there is the price advantage.
More exports to US expected
Insiders expect this trend, which has been visible for several years, to further accelerate during 2020-21. The US has significantly reduced its acreage and may therefore be heading for a shortage. The European industry has a very ample supply of raw materials and can export significantly more to the US at competitive prices. At the same time, the potato sector in the country itself is trying to put a stop to this stabbing, by increasing import tariffs by 100%. For Belgians and Dutch, the US has now become the third largest destination worldwide after the UK and Brazil.
The largest export market for the Americans is Japan. The loss in export orders in Q2 was somewhat limited to 11%. Of the total trade, almost 80% is in the hands of the US. In doing so, they have further strengthened their grip on the need for fries in the country, at the expense of the EU. China doubled its exports to its Asian counterpart and shows a remarkable growth of 300% in the world rankings. In Q2 it exported 8.700 tons of fries, compared to 2.177 tons a year earlier.
Brazil growth market
The other major chip destination: Brazil purchased 34% fewer fries in the second quarter. It should be noted that less product was purchased, especially in April, after which it rose steadily again. Brazilian import data even shows that 27,5% more fries were purchased in July compared to 2019. More than half come from the EU, compared to 38% last year. Argentina is the other major supplier. Exports to Saudi Arabia fell by 55%. Not only the coronavirus but also the extremely low oil prices cause reduced purchasing power.
The list of export countries has many reductions, but also some growth: South Korea, Taiwan and Australia. The latter country is largely fed by fries from New Zealand. The impact of the coronavirus was relatively limited, meaning the French fries sector was less affected than in North America or Europe. Both countries are trying to protect their trade in fries and have been in the news several times with allegations that the product from the EU provided false competition.
hope and fear
Several major destinations, such as the US and Brazil, are showing clear recovery in their demand for fries. That gives the EU chip sector hope. At the same time, there is the uncertainty of the other two mega-customers: the UK and Saudi Arabia. Given the current forecast for the 2 potato harvest, which does not hint at shortages, the EU can further strengthen its reputation as a global price fighter and thus increase its share of world trade.