While farmers are faced with tens of thousands of tons of French fries that have no place to go, American consumers are encountering empty shelves in their search for frozen chips. The chain is set up in such a way that it is difficult to switch quickly to other sales channels.
The surpluses of French fries potatoes that potato growers in the United States are dealing with would normally find their way to fast food chains, (school) canteens, catering establishments and other major buyers. As a result of the corona pandemic, sales have virtually come to a standstill. Many of these points of sale are closed and people are forced to stay at home.
This has a huge impact for a country where eating out is almost the rule rather than the exception. The National Potato Council estimates that between $750 million and $1,3 billion worth of potatoes and potato products are "stuck."
Increase in supermarket sales
The downside is that sales of frozen fries in supermarkets increased by 78,6% until the beginning of April, Reuters reports. Frozen chip products are ideal for hoarding. It provides comfort, convenience and a long shelf life for families accustomed to fast food meals and school cafeteria lunches. The result is that there are significant shortages at American supermarkets.
There are no more fries available in many stores. And that feels very contradictory, knowing that farmers grow their potatoes give away or consider plowing under resulting in millions of dollars in damage.
Supply chain inflexible
The biggest problem in the US is the specialized and inflexible retail and food service supply chain. Kitchens that prepare hundreds of meals a day simply receive their fries differently than the small consumer packages. In addition, the large foodservice packages do not have the correct ingredient and nutrition labels and barcodes that supermarkets require.
The International Foodservice Distributors Association (IFDA) has pledged to temporarily relax the labeling rules. But switching to consumer-friendly packaging remains a challenge for suppliers. This requires, among other things, different machines for packaging and labeling the products.
Cancel potato contracts
Kraft Heinz, the largest US producer of frozen French fries for supermarkets, indicates that the factory is running at full speed to meet demand and replenish inventories. The major suppliers of fast food fries, such as McCain, Simplot and Lamb Weston, are canceling contracts with potato growers because their warehouses and cold stores are full.
Mike Pink, a potato farmer from Washington state, can confirm that. In his case, this would involve a total of more than 400 hectares of contracts that have been canceled. He has already invested $2,5 million in the cultivation and will soon incur another $1,5 million in costs. “The question is whether I continue to invest or whether I plow the potatoes under to limit the damage. It's terrible."