USPB: U.S. EXPORTS EXPECTED TO BENEFIT FROM WORLD SUPPLY

Published online: Oct 03, 2012 Potato Storage, Potato Harvesting, Seed Potatoes
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DENVER-For the recently completed marketing year, the volume of U.S. potato and potato product exports grew 10 percent to the fresh weight equivalent of 65,271,616 cwt. This is equal to 16 percent of total U.S. potato sales for the year.
 
For the past 10 years, the volume of exports has risen 58 percent, or an average of 6 percent per year. Based purely on this trend, exports for fiscal year 2012-2013 will be over 69 million cwt. However, there are many reasons to believe exports will exceed the 10 percent growth and actually be closer to 15 percent for a total of 75 million cwt, or 18 percent of total sales volume.

Tim O'Connor, President and CEO of the United States Potato Board (USPB) indicated, "The major factors behind this growth in exports include the U.S. and world potato supply situation, growing international demand, a continued weak dollar, increased market access and the impact of USPB international marketing and promotion programs." O'Connor cautioned, "Not all of these are certain to play out in favor of increased exports, but we believe at least the majority will."
 
John Toaspern, USPB Vice President International Marketing, provides the following reasons why the USPB is bullish on exports for MY13.


"In MY12, U.S. supplies of both frozen and dehydrated potatoes were tight, resulting in high prices and missed opportunities in international markets. Processors were unable to meet demand and, in some cases, had to reduce supplies to current customers. This should not be a problem in MY13. As U.S. growers are well aware U.S. fall potato production is forecast to increase by around 8 percent.

"On the other hand, production in Europe is expected to be down from last year's very large crop. The Northwestern Europe Potato Growers (NEPG) estimate of production for Belgium, Germany, France, the Netherlands and the United Kingdom is 22.99 million tonnes. This is down 14.5 percent compared to 2011. The decline is the result of a 5.8 percent reduction in acreage and a 9.2 percent lower yield per hectare. This switch from tight supplies in the US and abundant supplies in Europe to the other way around should result in the US picking up significant export gains in markets in Asia and Latin America and possibly even the Middle East and Europe itself. It must be noted, production in Canada is expected to be up 7 percent, so some of these export gains will go to our neighbors to the north.

"World trade in potatoes and potato products, as measured by the exports of the major suppliers, has increased, on average, 5 percent every year for the last 20+ years, with the exception of MY12 when a decrease of 3 percent occurred due in large part to a significant decline in fresh exports after the large shipments to Russia and other drought affected markets in MY11. Given continued expansion of western-style restaurants around the world and signs some economies are beginning to recover, there is no reason to believe worldwide trade in potatoes will not return to at least trend line of 5 percent growth in MY13.

"Over the past 10 years, the U.S. dollar exchange rate has weakened against the currency of both our major potato production competitors and the currency of our major export markets. The U.S. dollar has declined 58 percent against the New Zealand dollar, 36 percent against the Canadian dollar and 30 percent against the Euro since 2002. In our largest market, Japan, the dollar has declined 51 percent against the yen, while declining 24 percent against the Chinese Yuan and 12 percent to the Korean Won. The only major market where the dollar has appreciated is in Mexico where the dollar is up 53 percent to the peso. It is important to note, however, the dollar has strengthened against all of these currencies except the Yuan over the past 12 months.

"Gaining increased market access for U.S. potatoes and products is very difficult and uncertain; however, there have been some recent successes. The implementation of the U.S. Free Trade Agreements with Panama, Colombia and Korea all resulted in the elimination of the duty on U.S. frozen potatoes and greatly expanded access for U.S. dehydrated and fresh potatoes. We will see the full impact of these agreements in FY13. The U.S. recently gained access for fresh potatoes to Vietnam and while the numbers are still very small, this is another new opportunity for U.S. growers. While far from certain, good progress has been made by USDA on gaining access for fresh table-stock potatoes to the Philippines (currently only chip-stock potatoes are allowed in), access for seed potatoes to Egypt, improved access for fresh chipping potatoes to Japan, improved access for fresh potatoes to Taiwan and improved access for fresh potatoes to Mexico. If this access is achieved, the increase in U.S. potato exports could be significant.

"The USPB International Marketing Program has made significant improvements in its targeting, technical expertise and messaging, which has helped expand US potato export market share and, in many markets, increased overall demand for potatoes by opening new channels, creating new uses, introducing new products and improving the perception of potatoes. Additionally, the level of investment of USPB grower assessment dollars and USDA export development funds has been expanded, which will further increase demand for US potatoes."

O'Connor is hopeful all these factors will help absorb much of the larger US potato crop and establish new markets for US potatoes that will continue to grow in the future.

For more information on the USPB as the nation's potato marketing organization, positioned as the "catalyst for positive change," and the central organizing force in implementing programs that will increase demand for potatoes, please visit
www.uspotatoes.com.

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