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China: Frozen French fries production expands

Marketing year 2021/22 (September to August) fresh potato production is forecast at 94 million metric tons (MMT), a 5 percent decrease from the estimated 99 MMT produced in MY2020/21, a result of decreased acreage. According to industry sources, potato planting area decreased in the northern single crop zone due to very high corn prices that led farmers to switch between the crops.

Many farmers shifted to corn production incentivized by strong returns. Additionally, the potato area sown from September to November 2021 in the southwestern mixed crop zone is also expected to decrease due to low potato prices (see Figure 1, below). Industry sources shared that potato prices decreased over 25 percent in the first half of 2021 from the same period in 2020, due to increased production. The increased production in 2021 was due to high potato prices in 2020, which supported increased planting acreage.

According to the 2021 China Agricultural Outlook Report, on average, the wholesale price for fresh potatoes in 2020 was RMB 2.62/kg (U.S. $0.18/lb.), an increase of 9.2 percent over 2019, which is the highest level in the past ten years. The potato price in the first half of 2020 was particularly high for two reasons: 1) 2019 stocks were low; 2) In the spring of 2020, potato production areas (mainly the southwestern mixed crop zone, including Yunnan province) suffered unfavorable weather conditions (i.e., freeze damage), which resulted in lower-than-normal production levels and higher potato prices. The price of potatoes fell in the second half of 2020 due to an abundant supply from the northern single crop zone.

Frozen French fries
China’s MY2021/22 FFF production is forecast at 420,000 metric tons (MT), a 20 percent increase from the estimated 350,000 MT in MY2020/21 for two major reasons: 1) According to industry sources, a new FFF production line will be put into production in MY2021/22 in Inner Mongolia; 2) FFF producers will expand their production as much as possible to make up for the reduction of imports (see trade section).

Industry contacts also believe FFF production capacity expansion may happen in next few years to meet increasing domestic market and export demand.

 

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