Only a small share of potatoes on the global market is traded internationally. The trade in fresh, seed and frozen processed potatoes made up around 7 percent of total potato production in 2017. Yet growth remains on the horizon. Rabobank’s recently released World Potato Map 2019—which can be seen on the following pages—shows that the Northwestern European potato sector benefited most from the growth in global trade during the last decade.
During the last decade, developments in the global potato sector were dominated by the consumption growth of frozen processed potatoes. This benefited frozen processed potato producers in the Netherlands and Belgium, who doubled exports between 2007 and 2017. Potato growers in both countries also reaped the fruit of this development through a higher demand for fresh and seed potatoes.
Whether the next decade will be as successful as the last depends on how the potato sector in northwestern Europe overcomes challenges regarding soil quality, tightening environmental standards, volatile price formation and increasing global trade tensions hampering the flow of potatoes around the world.
Frozen Trade a Tale of Four Countries
The market for frozen processed potatoes has seen tremendous growth over the last 10 years. Since 2007, global trade increased by 3 million metric tons, to more than 7 million metric tons in 2017. Most of this growth took place outside of Europe and North America, with countries in Asia, the Middle East and Latin America leading consumption growth. This increase in consumption is the result of higher disposable incomes, a growing middle class, urbanization, and the expansion of fast-food outlets in these countries.
Whereas potatoes grow in almost every country around the world, there are only four countries that have a significant frozen processed potato sector: the Netherlands, Belgium, Canada and the US. Combined, these countries export more than 80 percent of all frozen processed potatoes. Although all four countries increased exports, frozen processed potato processors in Belgium were most successful. Belgium expanded its share in global exports from 18 percent in 2007 to 29 percent in 2017.
Cost-effective production of frozen processed potato products requires a year-round supply of high-quality potatoes. To achieve the yield necessary for processing, potato growers in North America and northwestern Europe invested in knowledge, mechanization, storage and irrigation. As a result, the yield per hectare is high in both regions.
The prerequisite of yield, quality and year-round supply means that the barriers to entry for frozen processed potatoes are high. This gives processors in the four exporting countries a favorable export position. On the other hand, this position makes the sector vulnerable to trade tensions, as recent import tariffs on the export of European fries to Latin America have shown. A way to overcome the risk of such rising trade tensions is to diversify production geographically.
Dutch Seed Planted Worldwide
Over the last 10 years, the Dutch seed potato sector increased exports by 300,000 metric tons, to almost 1 million metric tons in 2017. Other European countries such as France and Germany also saw their exports increase. With an export share of over 50 percent, Dutch seed potato growers are a very important source of high-quality seed potatoes.
Dutch seed potatoes are mainly exported to countries in North Africa, the Middle East and Europe. Destination countries in North Africa and the Middle East often lack the infrastructure to produce and store high-quality seed potatoes, making these countries dependent on imports. Within Europe, Dutch seed potato exports have benefited from growth in the frozen processed potato industry, which requires specialized potato varieties.
A growing global population and increasing demand for frozen processed potatoes will drive the demand for high-quality seed potatoes in the near future. This supports the demand for Dutch seed potatoes. However, opportunities to expand seed potato acreage in the Netherlands are limited. This means that the sector could see a shift to new seed potato-growing regions in France and Germany, as well as setting up shop in important destination countries in North Africa and Asia.
Africa, Asia Expanding Fresh Market Share
Between 2007 and 2017, the export volume of fresh potatoes grew by around 2.5 percent annually. Most of the trade in fresh potatoes takes place in Europe. A large part of European trade flows consists of fresh potatoes imported by the Netherlands and Belgium to feed a growing processing industry.
China, Pakistan, India and Egypt are gaining prominence as fresh potato exporters outside of Europe. Egypt is a good example of a country developing its domestic potato sector. From 2007 to 2017, the country almost doubled fresh potato exports to 652,000 metric tons, frozen processed potato exports— albeit from a low base—and is an important importer of seed potatoes from Europe. As the example of Egypt shows, the development of regional potato hubs in North Africa and Asia opens new markets for manufacturers of potato harvesting, sorting and seeding equipment, seed potato suppliers and frozen processed potato producers.
Rabobank’s World Potato Map 2019 can be viewed by clicking below.
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