Signals are green for the fries sales

For the most recent problems, several experts point to the floods in southwestern Canada. As a result, incoming and outgoing goods via the port in Vancouver, which is important for the North American chip industry, suffered damage. For example, the transport network to eastern Canada was damaged and roads to the American state of Washington were temporarily closed. However, there is more underlying play and that is the high demand for fries on the global market. For example, Christophe Vermeulen, CEO of Belgapom, says in the article in De Tijd: "I hear from our members that the order books are full until June. The first months of the year are traditionally still very busy. In those circumstances, not much should go wrong. or you will have supply problems." Between the lines, several insiders make similar comments.

What do the numbers show?
Now it is difficult to substantiate such statements with hard figures. But if we compare different sources, we at least get the impression that there is some truth in it. Preliminary figures from market research agency IndexBox show that the global market for frozen potato products has grown to a total of 2021 million tons in 23,93. This means that total consumption this year has already surpassed the pre-corona year of 2019, when the market was estimated at 23,91 million tons. By far the largest sales region is Asia-Pacific, which will account for 2021 million tons in 10,76. For comparison: in 2020 and 2019 this was 10,57 and 10,54 million tonnes respectively. Indexbox does not yet have figures on production and exports.

If we look at the figures that are available, such as those from the VAVI, you can conclude that the industry is running at a rapid pace. The Dutch industry has already processed 1.311.500 tons of potatoes this season until November. Although this is less than the record of 2019, the season started later than normal. In addition, the processing figures were close to a record for several months or even a new record was set. The flourishing European exports on the world market are supported by reports from the American trade organization Potatoes USA. In the explanation of the US export figures, Potatoes USA writes that it is experiencing stiff competition from Europeans, especially in the Asian market. According to the latest published figures for the third quarter of 2021, the US exported 30% more fries compared to a year earlier. The Philippines and China are the most important growth markets.

Short supply of potatoes
However, potatoes are needed to maintain the export pace. A poor price-wise potato year 2020/2021 and lower contract prices for the 2021 harvest, among other things, led to a shrinkage of the European potato area. The harvest was average with some quality problems here and there, which now results in a limited supply of French fries potatoes. A relatively small harvest is not only an issue in the EU, but also in the US. According to the USDA, that country has had the smallest harvest since 18,7 with 2013 million tons. The acreage in the US may have grown, but due to the extreme heat last summer in the largest growing area, the harvest was ultimately smaller. Another major player, Canada, harvested approximately 6,25 million tons of potatoes last season, the largest harvest ever, according to Statistics Canada. However, this large harvest does not immediately provide relief on the North American market. Wart disease was found in the largest growing area, Prince Edward Island, in October. The island accounts for about 20% of Canada's potato crop and quarantine measures have made exports from Prince Edward Island very difficult.

The fact that (European) potato quotations remain relatively stable for the time being is most likely due to the large share of potatoes that the industry has available directly through contracts or indirectly through co-delivery potatoes and pools. The question is how long they can survive on that stock in the second half of the season. Sooner or later there will be processors who will have to go to the farm for extra potatoes. In this sense, the signals are also green for growers due to a combination of good sales opportunities for fries and a limited supply of potatoes.