Potatoes Market Intelligence

Industry Outlook & Drivers

Global Market Outlook on Potatoes

The potato market in Europe is likely to witness higher output in 2020, with yields likely to increase 5.6 percent Y-o-Y for the 2020 crop, while the US is expected to witness tightness, amid a 5 percent Y-o-Y contraction in potato acreage

• The global potato production is projected to rise 1 percent Y-o-Y in 2020, with demand from downstream processors estimated to remain volatile, due to COVID concerns and lockdown restrictions, impacting restaurant demand
• Potato growers in the US, reduced acreage by around 8 percent since the last five years, in an attempt to improve market prices, which dipped steeply, owing to surplus production of potatoes
• Processing potatoes, which account for about 12–15 percent of production, are expected to display the fastest demand growth, particularly the frozen fries sector. Fresh potato consumption is estimated to gradually decline in the long term
• A rise in demand for starch potatoes can be expected to increase post the removal of the EU sugar quota system, with an expected increase in the production of starch-based sweeteners

Potatoes – Global Trade Dynamics 

• The US–China trade conflict will continue to impact potato trade in the coming years, with the US and China competing for alternate markets for exports
• The recent deal between China and the UK for exports of seed potatoes to Europe indicates China’s attempts to diversify secure and strengthen trade relations, owing to the US–China trade conflict and re-route trade channels for agricultural products to other markets
• China does not allow imports of fresh potatoes, owing to sanitary and phyto-sanitary concerns
• India contributes to only about 1 percent of the global exports, in spite of being the second largest producer
• The Netherlands and Belgium are the leading importers of potatoes globally. More than 65 percent of the imports are consumed by the processing sector
• Malaysia, Russia, Vietnam, and Pakistan account for about 62–65 percent of China’s exports. The major export destinations of the US potatoes are Canada, Mexico, Japan, and Taiwan

Processed Vegetables Industry Drivers and Constraints 

Drivers 

• Year Around Availability and Convenience: Given factors, like seasonality and perishability, processing make it possible to preserve and consume vegetables throughout the year
• Trade Liberalization and Foreign Investments: Incentives for import/export of commodities and linking farmers to high income consumers globally help to boost trade and market
• Reduces Perishability and Wastage: Processing increases shelf life, facilitates transport worldwide, helps to expand export base with reduced spoilage
• Globalization: Increasing consumer awareness and immigration of varied ethnic groups drive imports and processing of non-locally produced vegetable products that need to be transported and stored efficiently
• Rise in per Capita Income: Urbanization, changing lifestyle, increasing awareness, focus on health and wellness, higher disposable income, and evolving consumption habits are increasing the demand for minimally processed and convenient to consume vegetables

Constraints

• Supply Uncertainty: There is no guarantee of consistent supply of vegetables, which depend on weather and harvest. The producing region’s economic condition could cause price volatility, especially vegetables, imported from the developing countries
• Capital Intensive: Decrease in conventionally processed vegetables, owing to an increasing preference for minimally processed vegetable products, call for processors to keep up with evolving trends. The switching cost is high and can be afforded only by large players, leaving the small and medium- level processors at a disadvantage
• Access to Raw Materials: New entrants face challenges in securing raw materials supply at early stages of operations and are prone to high cost fluctuation risks