Fast food chains such as McDonalds and KFC worldwide increasingly have to say no when customers order a portion of fries with their burger or chicken wings. Distant destinations in Asia and Africa are particularly affected. Is there indeed a major shortage of chips or are other factors underlying this alleged shortage of chips?
Also Boerenbusiness and Food Business wrote several times in recent months deficit of fries at fast food chains. McDonalds in particular is affected by this in Asia. KFC also announces that it can no longer always serve fries with their meals in Africa. Japan, Malaysia, Taiwan and now Indonesia all have a shortage of French fries. At least, when you eat at McDonalds. The sale of fries is limited to only small portions.
Does the chip shortage exist?
That begs the question: is there really a global shortage of French fries? The harvest in Europe, parts of Canada and the United States was slightly smaller last year, but there is certainly no question of a harvest failure. In other countries the harvest was average to good. The exception to the rule is South Africa. Over there took care frost and rain certainly result in a significantly smaller harvest. The consequences were especially noticeable in the production of chips. Precisely because those varieties have performed poorly.
French fry producers in the US and Europe are working overtime, as record high processing figures also show. Every potato is needed for that. An average to slightly below average harvest coupled with a shrunken acreage ensures that there is less raw material available than factories demand. In Europe, a disappointing quality (hollow) also plays a role in some varieties. So it is possible that the US is indeed a very poor country stock has. It is unknown to what extent European cold stores are full of fries. Those figures are not made public. Looking at sales versus harvest, it is also likely that there is no plentiful supply.
Canadian export ban
This year, American processors - who supply a lot to Asia - can hardly use Canadian potatoes. In the west of the country the harvest dried up. Along the east coast, yields were record high. A prohibition on the import of potatoes from Prince Edward Island (PEI) – due to phytosanitary requirements – ensures that Canada's largest growing area remains out of reach for the US.
The availability of potatoes is half the story. An even more important factor is the global logistics disruption caused by the coronavirus. For example, ships carrying French fries (among other things) are waiting for more than a month before they can unload their products in African ports. This problem is also visible in other places in the world.
Port is silent
Another problem can be found at the home ports. For example, export traffic in the Canadian port of Vancouver was largely at a standstill after a major disruption floods. This port is frequently used to export products such as fries to Japan. Port facilities in the US have also been hit by hurricanes and flooding in the past 48 months.
Chip manufacturers have another problem and that is the supply – and especially the price – of their other inputs. Potatoes are just one part and also a product for which they have a strong negotiating position. Cardboard boxes, cooking oil, plastic and, above all, electricity have also risen sharply in price. This means that production costs have gone through the roof. Passing on the higher costs directly to the customer – and ultimately the consumer – has generated a lot of commentary. In extreme cases, products are even banned from the shelves by retailers to 'protect' consumers against the higher price level.
The future
It remains to be seen whether the global chip market will have much room to breathe until the next harvest. The price of inputs hardly shows a downward trend. The price of vegetable oils required for frying fat is at one record high. Energy also remains expensive and the potato price is slowly increasing. Looking at the coming season, this increase will only continue due to higher production costs. In addition, the logistics problems have not yet been solved, although prices for shipping traffic are slowly falling.
At the same time, there is also discussion in countries that are highly dependent on imports as to whether things should be radically different. That includes, among other things Kenya the case. Our own harvest (approximately one million tons of French fries potatoes) was excellent last season. It is even more unbelievable that KFC restaurants can no longer serve fries when you order chicken nuggets. More local production sounds logical at first glance, but it is a slow process and not always realistic. Japan – the largest importer of American fries – cannot even come close to meeting its own needs.
Setting up your own cultivation, processing and marketing takes years and places great demands on the agricultural sector in the country. Over the next five to ten years, Asian and African countries will remain dependent on Europe and the US when it comes to their fries.