“Should the [Trans Pacific Partership] result in meaningful tariff reductions, we expect the frozen potato market—the most mature market to date—to increase by $140 million over the next five years, with total sales approaching $500 million by 2017.”
In early April, the Obama Administration made an announcement that should come as welcome relief to U.S. potato growers suffering through near historic low prices: the United States government is supporting the inclusion of Japan in ongoing Trans Pacific Partnership trade talks.
The Trans Pacific Partnership, or TPP, is a potential trade pact between the United States and 10 other countries (Australia, Brunei Darussalam, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam) that would enhance trade and investment among the TPP partners. Should the other countries agree to give Japan a seat at the table, the final TPP agreement would be a tremendous boost for the U.S. potato industry, which already ships one-fourth of its exports to that country.
Of particular interest to NPC is the effort to reduce tariff trade barriers as part of a final TPP agreement, including tariffs and fees currently imposed by Japan for U.S. potato imports. Between tariffs and consumption taxes, Japan increases the costs of U.S. dehy potatoes by 25 percent, frozen potatoes by 13.5 percent and fresh potatoes by 9.3 percent. Eliminating or reducing these fees would help put high-quality U.S. potato products on more even ground in Japan compared to domestically produced products.
However, even with these trade barriers in place, Japan is already the largest export market for U.S. potatoes, with a value of more than $400 million in FY12. Far from fully mature, we have seen the Japanese market grow in leaps and bounds over the past decade.
Over the last five years, frozen potato exports have grown by 42 percent and dehy exports have grown by 24 percent. In just the last year alone, fresh chip-stock sales have grown by an astounding 72 percent.
Should the TPP result in meaningful tariff reductions, we expect the frozen potato market—the most mature market to date—to increase by $140 million over the next five years, with total sales approaching $500 million by 2017.
For other potato exports, we expect:
• Dehy exports to experience an annual growth of 10 percent, leading to annual exports of around $50 million by 2017;
• Fresh chip-stock exports to grow by at least 25 percent per year, resulting in total annual sales of $25 million by 2017; and,
• Fresh table-stock exports to approach $100 million per year in five years if sanitary and phytosanitary access is granted.
The potential of Japan gaining full partnership status in the TPP underscores the growing importance of exports for the health of the U.S. potato industry.
Over the past 10 years, exports of U.S. potatoes and potato products throughout the world more than doubled from nearly $650 million in 2002–03 to nearly $1.6 billion in 2011–12. While it is small in comparison to other commodities like wheat and soybeans, the burgeoning export story is important for the continued health of the U. S. potato industry.
Through the efforts of the United States Potato Board, which is working to increase the demand for high-quality U.S. potatoes and potato products overseas, as well as through the help of our federal and state partners in securing international market access agreements, the industry has succeeded in increasing the volume of U.S. potato exports to 18 percent of total production.
Today, with nearly one out of every 10 potato rows destined for an export market, the U.S. potato industry is committed to promoting any and all international trade pacts—such as TPP—that will help keep supplies tight and prices healthy back at home. PG