Fast food craze in China good for potato processors

By Dominique Patton

- Last updated on GMT

Related tags: French fries, Potato

The rapid growth of China's fast food industry is boosting demand
for frozen French fries and other processed potato products,
helping to offset a downward trend in more mature markets due to
consumer health concerns, reveals a new report.

Rising income levels in China have created a booming fast food market aswell as higher sales of snack and convenience foods. As a result, China's potato consumption has increased by more than 40 per cent over the past five years. Much of the higher consumption is in the form of French fries, according to Rabobank's data. The country is expected to consume about 90,000 tons of the fast food in 2007, and even more in coming years. "In line with the growth of fast food restaurants, consumption of French fries in China is expected to increase by around 20 percent over the next five years,​" the report predicts. Although China is the world's largest potato producer, increasing its area given over to the crop by 30 per cent over the past five years, the country still imports 70 per cent of its French fries, and is likely to continue relying on imports to supply this market. "China is unlikely to be able to increase production in line with increases in demand and so will remain reliant on imports of frozen French fries,"​ writes Rabobank analyst Deborah Perkins. Also, although researchers are providing farmers with better quality and higher-yielding potato varieties, future yield improvements are likely to be gradual due to problems with disease, pests and poor farm management skills, Perkins writes. This is good news for major producers like the US and EU countries. Per capita consumption of potatoes in China is relatively low at 35kg compared with 63kg in the US showing good potential for growth. Moreover, in developed countries potatoes are facing mature fast-food markets as well as increasing concerns among consumers about trans fats. But the major French fry producers are also investing in domestic production and look set to get a greater amount of raw materials from local suppliers. McCain, Simplot and Lamb Weston all have processing facilities in China, and although their output is constrained by low quality raw materials, investment in potato plantations will help to improve domestic supply. Nevertheless, key frozen potato exporters - the Netherlands, Canada, Belgium and the United States - will still gain from China's growing demand. Frozen French fries accounted for 59 per cent of total US potato exports by value in 2005, with 5 per cent going to China but a much bigger 41 per cent to Japan.

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