Report Highlights:

Driven by a higher potato production in MY2014/15, EU exports of frozen potato products are expected to be up. Export opportunities are especially found in emerging market and will be further defined by geopolitical developments. The U.S. will continue to compete with the EU in markets like Chile, Australia, Saudi Arabia and Malaysia.

EU Policy 

The reform of the Common Market Organization in fruit and vegetables of 2007 made all areas in the EU eligible for payments, irrespective of the crop being produced. Potato operators can profit from EU actions on promotion aimed at positioning EU’s agriculture and food industry to seize new market opportunities. In addition, the European Union created systems such as PDO (Protected Designation of Origin) and PGI (Protected Geographical Indication) to promote and protect food products. Potato producers are entitled to benefit from these systems. 

On August 7, 2014, the Russian Government implemented sanctions on a wide range of products from the EU. The ban will not affect directly the EU-28 exports of Frozen Potato Products as this product group is at the moment not on Russia’s list of banned products. Although ware potatoes are on the list, it will not affect trade this Marketing Year (MY) due to the fact that Russia already banned EU ware potatoes since July 1, 2013 because of phytosanitary reasons. 

EU Exports and Outlook 

The Netherlands, Belgium, Poland, France, and Germany dominate EU exports of frozen potato products. The production of ware potatoes in these countries this year is therefore a good indicator for forecasted EU exports for MY2014/15. Their combined production is expected to be up by 2.6 million MT or 12 percent. The growth in production is supported by a higher acreage of potatoes and more importantly an expected higher yield per hectare, especially in Germany and Belgium. It is also however important to keep in mind that if the current unfavorable weather conditions for harvesting continue, the quality of ware potatoes might temper the mood.

Trade in frozen potato products is still dominated by trade between the EU member states. Member states’ exports to third markets however continue to grow and represent a quarter of total exports. EU exports of frozen potato products to these markets more than doubled in past five years and reached more than 1 million MT in MY2013/14. The Netherlands is the EU’s leading exporter of frozen potato products, followed closely by Belgium. In MY2013/14 the Netherlands’ exports to third markets totaled 452,000 MT, up by 13 percent, while Belgium’s exports totaled 370,000 MT, up by 6 percent. Together, the Netherlands and Belgium are responsible for 80 percent of total EU exports. Their combined leading export markets continue to be Saudi Arabia and Brazil. 

Poland, France and Germany are also active on third markets, exporting respectively 105,000 MT, 53,000 MT and 49,000 MT in MY2013/14. Polish exports, up by 14 percent, continue to increase year after year and are driven by growing demand from its leading export market Russia. Due to its geographical location, Poland is in addition an important supplier to the fast food industry in the Ukraine, Serbia, Kazakhstan and Belarus.

More ware potatoes are expected to be shipped to markets outside the EU. Some ware potatoes are sold against day prices but the majority is sold under contract. Given the expected higher production of ware potatoes this year, day prices have dropped to a record low €1,50 - €3,00 per 100 kg and there are no indications that prices will recover soon. This makes ware potatoes not under contract more competitive internationally. More ware potatoes are expected to be shipped to international markets in Africa and to a lesser extent to Azerbaijan, Moldova and Ukraine. Last year the EU exported 530 thousand MT, this year exports to third markets are expected to go up to 600 thousand MT. Russia used to be the largest market for EU ware potatoes but is due to recent developments it is not expected to become a market again soon.

There will still be enough good quality ware potatoes available for further processing. As a result more frozen potato products will be available and at competitive prices, especially given the current favorable exchange rate. Export opportunities for EU frozen potato products are in addition determined by developments of the demand side. The growing per capita consumption on frozen potato products and the further development of the fast food industry, both in emerging markets, offer additional opportunities for EU fries this year. Export opportunities are especially found in the Middle East, Russia, Latin America and South East Asia. The export opportunities will furthermore be defined by geopolitical developments throughout the year. The U.S. will continue to compete with the EU in markets like Chile, Australia, Saudi Arabia and Malaysia