We all know what an important role dehy plays in the potato industry, but none of us fully understands what that role is. To understand it better, I am going to provide some facts and figures on the U.S. market, as well as the international marketplace, for dehy. As you will see, trade in dehy is becoming increasingly important.
First of all, let’s look at how many potatoes are processed into dehy. According to the USDA National Agricultural Statistics Service: 50,559,000 cwt. of U.S. potatoes were dehydrated in 2012, with an additional 8,031,000 cwt. going to starch, flour and other similar uses. This is a 14 percent increase over 2011 and a 45 percent increase over 2010. However, as a percentage of total production, the change is only from 10 percent in 2010 to 13 percent in 2012, and if we go back to 2006, dehy accounted for 14 percent of total production.
One aspect that has changed significantly in recent years is the amount of dehy imported into the U.S. In 2012 U.S. dehy imports were 85,433 metric tons—up 164 percent from the 32,325 MT imported in 2008 and 370 percent from the 18,181 MT in 2003. To compare with the amount of U.S. potatoes going to dehy, the fresh weight equivalent of the 2012 imports—at a 6.5 to 1 ratio—is 12,242,463 cwt. On the other side of the trade ledger, U.S. dehy exports have increased 70 percent over the past 10 years from 70,311 MT in 2003 to 119,430 MT in 2012. The fresh weight equivalent of the 2012 exports is 17,114,199 cwt.
The usage of dehy in the U.S. market is much more difficult to determine because the processors do not report sales. The USPB Sales and Utilization Report provides an estimate based on retail and other sales data, though the overall figures are low because they only include an estimate of dehy to chips and none of sales of dehy to other ingredient uses. In 2012, U.S. domestic usage of dehy, converted to the fresh weight equivalent, was 28,250,000 cwt., an 18 percent decline from 2008. The three markets covered are foodservice, retail and chips. Retail sales have grown by 1.4 percent from 8,482,000 cwt. in 2003 to 8,601,000 cwt. in 2012. Foodservice is down 18 percent over the 10 years to 8,649,000 cwt. in 2012, while chip use declined 7 percent to 11,004,000 cwt. Year on year, U.S. usage was up 0.5 percent in 2012 over 2011, with retail up 0.2 percent, foodservice up 4.1 percent, and chips down 1.9 percent.
Dehy exports in 2012 increased by 7 percent from 2011. These were led by a 12 percent increase in exports to Canada and a 16 percent increase to Japan, the two largest markets. The third largest market is Mexico, to whom growth was flat. The graph shows the relative importance of these three markets compared to sales to the rest of the world. It is important to note, however, that dehy exports go to a lot of different countries, and that all of these relatively small sales are very important to the overall growth of the market.
In both the international markets and U.S. market, product from the European Union is the main competitor to U.S. dehy. Of all U.S. dehy imports, the EU accounted for 52 percent in 2012.
There are many reasons the EU is such a strong competitor; from the large size of the processors there, to the lower sugars in the product due to the relatively lesser use of storage potatoes, to government policies that favor exports and keep transportation costs down. But the single most important reason appears to be price.
As you can see in the table, the unit value of EU dehy exports has declined over the past five years, while the unit value of the U.S. product has increased.
World demand for dehydrated potatoes is going to continue to increase; hopefully, U.S. demand will recover as well. U.S. processors are actually well positioned to take advantage of this growth, especially in Asia and the Americas. However, it will require an increased emphasis on developing new markets, introducing new products and fighting for world market share with strong promotion programs by the USPB and the processors.