French fry factories in the United States are making major cuts in the area of potatoes to be contracted. Particularly in the largest growing areas – in Idaho and Washington – growers will be able to secure considerably fewer potatoes on contract this year. Insiders believe that the total area could well decrease significantly this year, which is surprising.
McCain has informed its growers in the Pacific Northwest (Washington, Idaho and Oregon) that it will contract 2025% fewer French fries for the 15 harvest year, according to insiders. Lamb Weston previously announced that it would also cut its contract volumes. Cavendish, another large processor, is reducing volumes by 10%. Only Simplot is leaving volumes virtually unchanged, according to market reports. The company itself has not yet made a firm statement about this. The contract negotiations are still partly ongoing.
Healthy market
This rather severe correction is surprising, given the market situation in the country. Last autumn, 18,95 million tonnes of potatoes were harvested in the US. That is a decrease of 1 million tonnes compared to the previous year, good for 5% fewer potatoes. Due to a slightly smaller harvest, the market is healthy. The sale and export of fries can be called good. At the same time, EU countries such as Belgium and the Netherlands still export a considerable volume of frozen fries to the US. This also applies to Canada.
The potato processors are therefore preparing for less favourable times. The question is whether American growers are now going to take a chance and plant for their own account. That is something that happens much less often than in Europe. Just like in our country, growers there also have to deal with a lack of alternative crops that yield similar balances. What also does not help is that the seed potatoes are already present at the companies in many cases.
Lowest area in 25 years?
It is anyone's guess what the final area forecast will be. Idaho and Washington are by far the two largest potato states with an area of 131.525 hectares in the former and 60.700 hectares in the latter. That is good for half of all potatoes in the US. If that is cut, it will have a major impact. Last year, cultivation shrank by almost 4%. Good for 14.440 hectares.
Looking at the current movement, such a shrinkage is not unthinkable again. If there is a 3% to 4% reduction in area, you end up with 360.000 hectares. That means the lowest area since 2010, when a low production of 16,63 million tons was achieved.
Dependent
On the other side of the border, the situation is similar. There too, a reduction in the (french fries) potato area is expected, although there are no such clear signals from processors who are cutting the contract volume. What the Canadians are particularly concerned about is their enormous dependence on exports to the US. Of the total export volume of fries and potato products, 87% goes to their neighbouring country. The country does export products to other countries, but this concerns relatively small volumes.
For four years in a row, Canada has seen high potato production. In 2021, it shot up to almost 5,5 million tons, and last season it reached a record 5,75 million tons. It is striking that the area remained fairly stable, at 155.260 hectares. That is the largest area since 2007. For this year, insiders are assuming a 5% reduction in potato area, which would put cultivation at 147.500 hectares. That would mean the smallest area in five years.
Sword of Damocles: Trade Tariff
President Trump is threatening to impose a 25% import duty on Canadian potato products. This situation hangs over the head of the Canadian sector like the sword of Damocles. If this threat is carried out, it will have a major impact on sales and therefore also on the potato market in the country. Canada is trying to reduce its dependency, which is not easy in the current export market.