For marketing year July 2009 through June 2010 (MY09/10), exports of U.S. potatoes and products totaled 1,229,853 metric tons (MT), valued at $1,172,702,250. On a fresh weight equivalent basis (Fresh Weight Equivalent: frozen 1 to 1.7, chips 1 to 4, dehy 1 to 6.5), exports accounted for 53,074,809 cwt of U.S. potatoes leaving the country. This is roughly 15 percent of total production.
U.S. exports of frozen potato products for MY09/10 were 715,036 MT, down 9.78 percent from the previous year's record. The value of frozen potato exports was $729 million, an increase of 1.24 percent. This growth in the value of U.S. frozen potato exports reflects an increase in the unit value from $908/MT to $1,020/MT. This placed U.S. product at a competitive disadvantage to product from the EU with a unit value of $753/MT and Canada at $914/MT.
Export volume to Japan, the largest U.S. market, declined 3 percent to 285,538 MT, mirroring the 3 percent decline in total exports to the market. This reflects the continued economic woes in Japan, where GDP decreased 1.9 percent in 2009. Exports of non-fried and specialty products promoted by USPB grew by 15 percent in MY09/10.
The imposition by Mexico of a 20-percent retaliatory tariff on U.S. frozen potato products-in response to the cancellation by the U.S. government of the NAFTA-mandated pilot program to allow Mexican trucks to operate in the U.S.-resulted in a 41-percent reduction in U.S. exports to Mexico to 45,301 MT. Meanwhile, exports from Canada increased 39 percent to 57,052 MT.
This is the first time ever that Canada has had the larger market share in Mexico.
The overall market declined 12 percent, again reflecting the very difficult economic situation in Mexico. It is a credit to the USPB representatives' dogged efforts in the market that U.S. exports did not fall even further.
South Korea moved into the No. 4 spot, with a 31-percent increase in U.S. exports to 44,616 MT, while exports to China grew by 15 percent, to 44,013 MT. In both markets the USPB program is focused on diversifying the use of U.S. frozen potato products to local cuisine and alternative channels. Exports to the CAFTA-DR countries, where the USPB initiated a marketing program in 2008/09, grew 18 percent to 24,170 MT. Canada and the EU still retain roughly two-thirds of these markets, providing an opportunity for the U.S. to not only benefit from growth in the markets, but also increase market share.
Despite the price disadvantage of U.S. product versus the EU and China, the U.S. was still able to post export growth of 5 percent to the Philippines, 41 percent to Indonesia and 1 percent to Thailand. It is a testament to the USPB efforts in Thailand that any growth was recorded given that the U.S. product still faces a 30-percent tariff, while the tariff on product from Australia and New Zealand is less than 10 percent, and from China it is duty free. Vietnam, where the Board initiated a program this past year, grew 84 percent to a still small 1,572 MT.
On the negative side, U.S. exports of frozen products in MY10/11 will be impacted by the U.S. supply situation, the high U.S. price and tariff disadvantages in Thailand, Mexico and possibly, South Korea and Central America. The world-wide economic recovery should lead to an increase in demand, while the reduction of the retaliatory tariff by Mexico to 5 percent should be positive as well. Declines in potato production in the EU and Canada may also limit supplies available for export from these countries, as well as raise the price, though it will still probably remain below the U.S. price.
The USPB International Marketing Program will continue to focus on increasing demand for frozen potato products by introducing new products, opening new channels and finding new uses. Market share will be maintained or increased through the delivery of added value services, such as restaurant training and promotional assistance, as well as messages on the higher quality and profitability of U.S. products. Overall demand for frozen potato products will be increased through positive nutrition messages and issues management work.