Abstract:
INTRODUCTION
Big changes in potato consumption coupled with the maturing fresh and, in the US, the French-fry market, are making potato production, processing and retailing very hard work with smaller rewards.
In the UK the British Potato Council points out a 33% decline in fresh potato consumption between 1989 and 1999.
For potato growers, who enjoyed and prospered in the relatively "easy times" of the 1990s, life has changed.
Demanding environmental protection regulations, restrictions on the use of water for irrigation and in Europe impending pollution prevention legislation are making simple potato growing a complex operation.
In the US larger French-fry manufacturers have cut production as even export markets like Japan have reduced their consumption of French-fries.
In the UK McCain's proposed 400,000 tonne per year factory seems to have been put on hold.
What is Forcing these Changes?
The huge growth in French-fry production in the 1990s was fuelled by the amazing growth in fast food eating in restaurants like MacDonald's.
But as consumers of French-fries become wealthier, better educated and further travelled they feel French-fries are too fatty and unhealthy.
These consumers look to healthier options like salads, bread or pasta and they are more comfortable in the new restaurant market sector of "fast casual" restaurants than in a burger Joint!
Other Developments
European potato growers and potato politicians are anxious about the imminent expansion of the EU- New members such as Poland are serious potato producers (37 million tonnes compared to the EU's 43 million). However a developing economy and cheaply grown potatoes present opportunity for French-fry manufacturers and potato pre-packers.
Fewer Potato Buyers!
The increased competition in the mature US and EU potato markets has led to fewer but much bigger buyers of potatoes.
McCains the largest French-fry manufacturers buy over 6 million tonnes of potatoes each year for their factories world wide.
In the EU only two or three supermarkets arc emerging as the significant players in several member countries.
Given this market domination buyers are able to place special demands on all aspects of potato quality and methods of production and an iron grip on prices!
Potato Grower's Reactions
Growers are abandoning potato production but in most countries the potato area declines very slowly if at all.
A certain sign of an industry in trouble and not reading market signals.
In the UK and US potato growing enterprises have increased in area and become very specialized.
The Future?
Potato consumption in the developed economies of the northern hemisphere will decline.
Potato buyers and processing factories will get bigger and bigger and more demanding with some countries or areas of countries ceasing potato production and processing as competition increases.
Will consumers permit the introduction of genetically modified potatoes which could make production in many areas sustainable?
Producers and processors in non viable potato production areas need to recognise their financial positions and future before it's too late.
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