After storms decimated Japanese potato production in MY 2016/17, FAS/Tokyo forecasts a substantial recovery of Japanese potato production in MY 2017/18 to 2.315 million metric tons, largely restoring production to pre-typhoon levels.
Strong growth in Japanís fast food and restaurant sectors, drove increased demand for frozen potato products such as french fries. Accordingly, FAS/Tokyo forecasts a six percent increase in Japanís import and consumption of frozen potato products in MY 2017/18 (to 385,000 MT).
Japanís fresh potato planted area decreased marginally to 77,200 hectares (ha) in MY 2016/17 compared to the previous MY. Structural problems in Japanís agriculture, such as lack of successors, labor market constraints, and the aging of Japanís population continued to decrease planted area for potatoes marginally. However, the typhoons that reached Hokkaido in the summer of 2016 reduced Japanís potato production 9.2 percent to approximately 2.16 million MT.
Accordingly, FAS/Tokyo estimates that Japanís potato area decreased 1.6 percent to 76,000 ha in MY 2017/18. Despite a reduced planted area in MY 2017/18, FAS/Tokyo forecasts Japanís fresh potato production to recover substantially to 2.315 million MT, an increase of 7.2 percent from MY 2016/17, but 2.7 percent less than MY 2015/16. Much of the recovery can be attributed to the planting of off-standard seed potatoes, which allowed farmers to stretch the available seed potatoes.
Japanese consumption of fresh potatoes has been changing over the years, shifting from fresh table potatoes to processed potato products (see Chart 1). Demand for processing potatoes (particularly chipping potatoes) has been increasing, while demand for table potatoes and potato starch has been on a continuous decline since 2012.
However, reduced production and supply shortages decreased the consumption of each category in MY 2016/17. Consumption of table potatoes fell 9 percent, in part because market prices were considerably higher than normal throughout the MY (see Chart 2). Market prices of fresh potatoes in Tokyo remained high (up 90 percent compared to the previous MY) until a strong harvest of spring potatoes came into the market in March. Additionally, consumption of processing potatoes declined 10 percent to 530,000 MT in MY 2016/17 given the supply limitations.
The GOJ restricts the import of fresh potatoes to designated production areas, during limited portions of the year, and to only two approved ports (see ďPolicyĒ section). However, the GOJ permitted the import of fresh potatoes five weeks earlier in MY 2016/17 to compensate, in part, for the shortage.
As a result, fresh potato imports in MY 2016/17 rose to 39,400 MT, an increase of 36.8 percent compared to the previous MY. Although demand for chipping potatoes is increasing annually, FAS/Tokyo notes that increased import volume in MY 2016/17 was temporary due to the domestic shortage. Therefore, FAS/Tokyo forecasts fresh potato imports to total 35,000 MT in MY 2017/18, 11.2 percent lower than MY 2016/17, but 21.5 percent higher than in MY 2015/16 (and the second highest on record after MY 2016/17).
Frozen Potato Products
Japanís production of frozen potato products was constrained in MY 2016/17 by reduced domestic supplies caused by a series of typhoons. Domestic production was reduced 16.4 percent from the previous MY to 27,912 MT. This volume is less than 10 percent of Japanís domestic consumption of frozen potato products (397,092 MT in MY 2016/17) where the leading product is french fries (see Chart 3). Only 3.5 percent of Japanís fresh potato production is used to make frozen potato products, 60 percent of which is used to make potato croquette.
The frozen potato product industryís access to imported potato supplies (such as dehydrated potato, potato flakes, mashed potatoes, and frozen whole potatoes) contributed to the industryís robust growth in MY 2016/17, leading to a 7.5 percent production increase (to 183,914 MT) in frozen croquettes in 2016.
Considering the continued growth in demand for ready-made frozen potato products, FAS/Tokyo expects Japanís use of potatoes for frozen food production to exceed MY 2015/16 by 4.5 percent to 35,000 MT.
Japan consumes frozen potato products largely as french fries, and therefore hamburger restaurants are the largest retailers of frozen potato products. Accordingly, their sales are the most important factor in determining the consumption of frozen potato products in Japan.
In MY 2016/17, most of Japanís hamburger chains reported increased sales compared to the previous MY. In addition to hamburger chains, ďfamily restaurantsĒ, diners, and even sushi restaurants served french fries as a side dish and contributed to increased consumption (see ďMarket trendsĒ).
Given the growth in fast food and family restaurant sales, Japanís consumption of frozen potato products increased 6.6 percent to 397,092 MT in MY 2016/17. FAS/Tokyo expects frozen potato consumption to continue to grow in MY 2017/18 and forecasts another 5.8 percent increase to 420,000 MT.