The United States continues to import many frozen chips from Belgium, the Netherlands and Germany. Because of the strong dollar, it is interesting for the Americans to import the relatively expensive chips. Belgium in particular is strengthening its position. This is at the expense of neighboring Canada.
In July – the month with the most current figures – the United States imported more than 112.000 tons of fries and other frozen potato products. That is an increase of more than 10% compared to the same month last year, when 100.000 tons of fries were imported. In the 12 months between August 2021 and July 2022, a total of 1,3 million tonnes of chips were imported. That is an increase of 15% compared to the same period before.
Attractive fries price
Although the price per ton of product has increased by 10%, it is still interesting for Americans to buy fries in Europe. Germany and Belgium in particular offer their products relatively cheaply. Dutch fries are also cheaper than those from France. This does not alter the fact that the price levels of European processors have also risen considerably, by as much as twenty to fifty percent in one year. What is striking is that Belgium in particular manages to moderate the price level.
It is therefore not surprising that Belgium is the largest supplier after Canada. In 12 months, the export volume of our southern neighbors grew by 8,5%, while the Netherlands had to lose almost 15%. This means that the Netherlands continues to occupy third place. Germany and France complete the top five. In percentage terms, Germany shows the largest increase. In July the volume almost doubled.
Canadian exports are declining
Two factors are crucial for European exports to the US this coming season. For starters, it's the exchange rate. The value of the euro and the dollar continue to fluctuate at equivalent levels. This has been the case since mid-August. Whether this continues depends on various factors. The monetary policy of the EU and the US is mainly what determines the exchange rate, but the war in Ukraine and inflation in Europe are also of great importance. The ECB takes into account that the euro may also move at the same level as the dollar in the last months of this year.
Potato yield increases minimally
The other factor is the potato harvest and French fry production in the US. Despite the fact that, according to the USDA, 3,5% fewer potatoes were planted this spring, a slightly higher yield is expected, namely half a percent above that of 2021. If this comes true, the US will have its smallest potato harvest in twelve years, apart from last year. This still does not help the American industry. Certainly not when you consider that quite a bit of processing capacity has also been added in the US in the last two years.
While Canada had a disastrously poor grain and rapeseed harvest last year, the potato harvest performed extremely well due to cool weather and a lot of precipitation on the east coast. The yield this autumn is estimated to be 3% lower than in 2021, but this still makes it the second largest potato harvest ever.
Canadian competition
American factories are probably gratefully using Canadian potatoes to supplement their own lines where possible. It could also lead to increased chip exports, provided the price level and the Canadian dollar are competitive. Looking at the very tight potato availability in Europe this season, chip exports will also be affected. That is an opportunity for Canada. Due to a Trans-Pacific trade deal with Australia and New Zealand, among others, Canadian processors are also betting on other horses and the volume exported to these destinations is increasing.