Slow demand and slow investments in the U.S. potato sector
28-1-2009 | Food and Agribusiness news
Frozen french fries are the United States’ most important potato export product. Income growth in countries such as China and India, has led to an increase in consumption of Western-type products like french fries. However, in the short term, the economic downturn is expected to slow demand and slow investments in the potato sector, says a Rabo Ag Focus report – U.S. Potatoes.
“While the short-term outlook for the U.S potato sector is at best neutral, the long-term outlook for the U.S. potato sector is positive, once the economy improves,” Rabobank analyst Marieke de Rijke.
Not a small fry
The United States is the world’s fourth largest exporter of frozen french fries, after the Netherlands, Canada and Belgium. “In order to maintain current export levels, it will be key for the potato sector to stand out in quality and customer relationships,” said de Rijke.
The U.S. has a strong position in frozen french fry exports due to a high-quality infrastructure, which is strongly desirable for exporting quality potatoes and potato products around the world. Exports have increased because of rising demand from developing regions, particularly Asia.
“The rapid pace at which the number of fast food restaurants in Asia is growing will continue to accelerate demand for frozen french fries in this region,” said de Rijke.
Fad diets give potatoes a bad rep
Contrary to Asia’s increased potato appetite, U.S. potato consumption peaked about a decade ago. Potatoes were thought to be calorie-loaded and some fad diets gave the potato a bad reputation. ‘Watching carbs’ and healthier lifestyles meant consumers started to favor rice over potatoes as a carbohydrate source.
“Since then, marketing activities have helped reverse the trend of decreasing potato consumption,” said de Rijke.
New potatoes
In an effort to appeal to consumers, potato seed companies, as well as growers and processors, are working together to develop potato varieties that are lower in calories and have a higher nutritions value than the current varieties.
“Further product innovation will be key for consumers to increasingly appreciate the potato again,” concluded de Rijke.
