This past marketing year was a difficult one for U.S. potato exports, especially frozen products. The 11-year streak of increasing exports was broken due to the slowdowns at West Coast ports, the strong dollar and excess supplies of low-cost frozen products Europe. The result was a 12-percent decline in the volume of U.S. exports of frozen products and a 15-percent decline to the U.S. Potato Board’s (USPB) target markets. At the same time, the European Union enjoyed a 22-percent increase in total exports of frozen and 51-percent increase in sales to the USPB’s target markets.
The 2014 potato crop in the Netherlands, Belgium and France was substantially higher than in the previous two years, while demand for potatoes in the EU continues to decline, resulting in a surplus of low-priced raw product. Production of frozen potato products in Belgium has increased 1,000 percent in the past 25 years as many growers switched from cereals to potatoes and processing plants were built with government subsidies. Meanwhile, the euro is now 21 percent weaker compared to the U.S. dollar than it was two years ago. These two factors meant Belgian fries were priced 37 percent lower than U.S. product during the past year.
As I have previously documented, the 50-percent slowdown in operations at West Coast ports from October 2014 through March 2015 resulted in a 20-percent decline in U.S. exports to markets in Asia, with some markets being impacted much more: Both Taiwan and Malaysia were down 29 percent, while Vietnam was off 24 percent and Thailand was the hardest hit, down 34 percent.
Based on these factors, USPB grower leaders allocated an additional $300,000 in funds from reserves to be used in the international marketing program to combat these barriers and regain lost sales. The grower dollars have also been leveraged with $400,000 in Market Access Program (MAP) funding from the USDA. These funds have been utilized by the USPB’s international representatives to carry out a wide array of activities in those markets.
In the Philippines, in conjunction with MAP funds, the USPB bought EU fries from importers and donated them to orphanages if the importers would replace the product with purchases of U.S. fries. We also gave restaurants a free case of U.S. fries for every five cases of U.S. fries they purchased. In China, the USPB launched a social media campaign in conjunction with restaurants that switched back to U.S. fries.
In Malaysia, the USPB’s rep went door to door meeting with restaurants to explain why they should buy U.S., based on the return on investment messages developed from previous research. For the many restaurants that did switch back, the USPB conducted promotional activities that highlighted where people should go to get high-quality U.S. fries.
In Thailand, the USPB supported McDonald’s Thailand after they switched to 100 percent U.S. product by bringing a media tour to the U.S. to learn about high-quality U.S. fries and the farmers, processors, researchers and others that make them possible. The TV station on the tour filed five news stories of three to five minutes each that highlighted each aspect of the process. There have also been more than 10 stories filed online, in newspapers and in magazines touting the quality of U.S. fries.
In Taiwan, the USPB is running a social media campaign with 10 restaurant chains that switched back to U.S. product. The campaign provides chances to win prizes for customers who order fries at one of the restaurants.
In the largest market for U.S. fries, Japan, the USPB utilized a four-pronged approach. First, a consumer website was set up that focused on how much fun U.S. fries are, including a music video dedicated to U.S. fries. Consumers can win prizes for submitting their own versions of the video or pictures of themselves enjoying U.S. fries. A video was also produced showing a young mother reminiscing about the important role U.S. fries played in her childhood and young adult life, culminating in her serving U.S. fries to her children. This advertisement was shown at video kiosks in subway and train stations throughout Tokyo. To boost sales of U.S. frozen potato products at retail, a Halloween promotion was conducted with fun-themed recipes for children to enjoy U.S. frozen potatoes. Finally, in a long-term effort, the 10th of every month has officially been established as U.S. Fries Day. Online and social media promotions are conducted each month in connection with large restaurant chains serving U.S. fries. Participation in this promotion continues to grow since its inception in August.
The result has been a complete turnaround in U.S. exports of frozen products. For the July through October 2015 period, exports to the affected markets in Asia have not only recovered, but increased 13 percent, while total exports to the world have grown by 8 percent. Many of the factors impacting U.S. exports are still in place, particularly the strong dollar, but with the help of USPB programs, U.S. exporters are fighting back!