After years of flat demand, North America’s potato industry is enjoying a wave of investment.
In early May, McCain Foods announced a $200 million expansion of its processing plant in Burley, Idaho. That comes on the heels of a December announcement by Cavendish Farms that it plans to build a $350 million frozen potato processing plant in Lethbridge, Alberta, to replace the company’s aging plant in the city.
Last June McCain said it will spend $65 million to expand its processing plant in Florenceville, New Brunswick.
Kevin MacIsaac, United Potato Growers of Canada general manager, says global demand for frozen potato products is driving the investment in the U.S. and Canada.
“(It’s) related some to the dollar but also to more exports of french fries,” he says. “More countries moving into a higher economic level, where they want to buy those kinds of foods.”
McCain said in a news release that its Idaho investment is a response to “increased demand for McCain-branded products in North America and around the world.”
The “around the world” presumably bit refers mostly to Asia, where demand for french fries and frozen potatoes is swelling. Demand continues to expand in emerging markets, thanks to a growing middle class and the growth of fast food restaurants.
Allied Market Research said in an April 2017 report that the global market for frozen potatoes was valued at $50.7 billion in 2016. The market for french fries, hash browns and other frozen products is expected to grow 3.9 percent annually and reach $66.6 billion by 2023.
Looking forward, MacIsaac isn’t aware of further investments in process potato capacity in North America. But it’s clear North American players are in competition with European processors. In recent years, Belgium has expanded its processing capacity and potato acres.
“How does Europe fit into the picture, in terms of french fry production?” says MacIsaac. “Where they will fit in is the unknown, because it is truly a world market.”
The industry investment in Canada is positive news for the country, but Canadian potato acres will likely be static in 2017.
“Basically it’s pretty close to last year,” MacIsaac says. “There are going to be some increases that are justifiable … based on contract requirements or expansion requirements in the processing side.”
In an email, MacIsaac pointed to several outlook expectations for Canada’s potato industry:
- Prince Edward Island acreage will be flat.
- New Brunswick acreage will rise to supply expansion of a plant in Florenceville.
- Manitoba acreage is expected to fall by about 2 percent.
- Alberta acreage should be up slightly.
“In Alberta there will be some increase in processing acres as the growers gear up for that Cavendish plant expansion,” MacIsaac says. “It was announced to be up and running for 2019. But I see now they’ve delayed it to 2020.”
On May 16, MacIsaac participated in a conference call with potato industry leaders from the U.S. The word he received in that meeting is that U.S. acres hsould remain steady.
“They expect the acreage to be pretty similar,” says MacIsaac. “And most importantly to be pretty similar in Idaho … because they are the big producer.”
Source: The Western Producer