The export of frozen potato products worldwide was no match. The market mood remains high for many parties, but new export figures show a completely different picture. That is the case in the United States. The country saw its export volume drop considerably. In our own country it is also difficult to find a place for all the potatoes.
The US exported 250.000 tons of potato products in December. That is a decrease of almost 10% compared to a year earlier. Expressed in tonnes, 27.000 fewer tonnes left US borders. This makes the reduction smaller than in November, when 13% fewer potato products were exported. Frozen potato products in particular – and French fries in particular – are less popular. Their exports decreased by 18% in December. All other segments remained stable.
Chip volume smallest in 4 years
The volume of 57.800 tons of frozen chips exported in December is the smallest in four years and a fifth less than the average in the last month of the year. Fifteen of the twenty largest customers bought fewer fries. Only Japan, the US's largest customer, purchased significantly more volume. That improved the result somewhat. Number 2 (Mexico) purchased almost a quarter less product.
The financial result shows that potato exports do not need volumes to set a record. An export value of €72,6 million was achieved across all potato segments. Never before has that value been so high in December. Calendar year 2023 will result in a record turnover of €696 million. No less than €296 million more than the previous record result of 2022. Fries and other frozen potato products are the most important in these figures, because their value is still significantly above average.
Yet more imports
It is striking that the US continues to import a record amount of French fries and other frozen potato products. In December this was more than 111.000 tons. 2,2% more than a year earlier. The largest volume comes from Canada, which itself has an excellent potato harvest this season and therefore has something to sell. Nevertheless, the import volume from the northern neighbor remained the same. European countries in particular exported more fries to the US in December. This involves 7% more fries, which amounts to a total volume of 57.500 tons.
The December figures cap off a poor fourth quarter for US exporters. The market grew slightly in October, but that was over in the last two months of the year. Exports decreased by 4% in Q14, which equates to almost 38.000 tons less end product. On the one hand, this significant decline is exceptional. It is certainly not due to the availability of potatoes – they are plentiful – and that was different in the previous two years.
Guessing about causes
It is a bit of a guess as to the exact cause of this significant setback. Insiders say that some North American processors are shifting their focus to producing high-margin products and are not joining the game of selling bulk to the global market at the lowest price. The fact is that the Americans find it difficult to compete against the European violence on the French fries market. Figures for December are not yet known, but the EU countries managed to sell more fries during Q4 of last year. There were indeed market opportunities.
Potato growers in the US also have a different opinion. Despite the increased processing capacity, factories do not need more potatoes. They're having trouble top harvest to be eliminated by 2023. That sounds like a dream scenario for European processors. Contract negotiations in the US and Canada are largely still ongoing, but it is clear that the aim is to shrink the area. There is a lot of striping in the acres, especially in the Columbia Basin growing area. The acreage is reportedly declining by as much as 15% or more this year. Individual growers sometimes see their acreage halved and have to return the seed potatoes to the factory to avoid being tempted to grow for the free market.
Structural or temporary problem
The key question is whether the declining American chip exports is a temporary or a structural phenomenon. A vice president of McCain North America suggested last month that the chip bubble will go away sooner or later burst. Are the export figures for Q4 a harbinger of this? Exports from the EU may be slower than the last 24 months, but processors are still able to keep price levels in check. Even if French fries sales stagnate, they still make a lot more money when it comes to turnover and net result. Their biggest problem is primarily the supply of raw materials. The exact opposite of the current American situation.