Note: No summary release for POTATO FACTS; it is a full text release. POTATO FACTS DECEMBER 02,1997 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- POTATO FACTS is published annually by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. PTS-2. Published copies of POTATO FACTS are available from the ERS-NASS order desk. Call, toll free, 1-800-999-6779 and ask for stock # PTS-2, $19. ERS-NASS accepts MasterCard and Visa. ----------------------------------------------------------------------------- Contents Potato Facts List of Tables Situation Coordinator Charles S. Plummer Voice (202) 694-5256 FAX (202) 694-5820 E-mail: cplummer@econ.ag.gov Editor Martha R. Evans Design & Layout To be determined Approved by the World Agricultural Outlook Board. Summary released November 26, 1997. Summaries and text of Situation and Outlook reports may be accessed electronically. For details, call (202) 694-5050. The United States Department of Agriculture (USDA) prohibits discrimination in its programs on the basis of race, color, national origin, sex, religion, age, disability, political beliefs and marital or familial status. (Not all prohibited bases apply to all programs). Persons with disabilities who require alternative means for communication of program information (braille, large print, audiotape, etc.) should contact the USDA s TARGET Center at 202-720-2600 (voice and TDD). To file a complaint, write the Secretary of Agriculture, U.S. Department of Agriculture, Washington, D.C., 20250, or call 1-800-245-6340 (voice) or (202) 720-1127 (TDD). USDA is an equal opportunity employer. Potato Facts Lower Acreage and Yields Reduce Potato Crop The November USDA estimate of U.S. fall-season potato production is 418 million hundredweight (cwt), down 8 percent from last year's record crop, but 4 percent above fall 1995. Decreased harvested acreage (down 7 percent from last fall) and slightly lower yields (down 1 percent to 360 cwt per acre) contributed to the reduction in output. The reduction in acreage and production was expected, as record production and relatively low grower prices for the 1996 crop (an average $4.93 per cwt for all seasons) prompted growers to cut back in 1997. However, despite the declines from a year ago, 1997 fall production was still 2 percent above the average of the previous five fall seasons. In the five Eastern States, fall potato production was estimated at nearly 32 million cwt, 7 percent below last year, but 6 percent above 2 years ago. Harvested acreage and yield were both down from last year (6 and 2 percent, respectively). A cool, wet spring delayed early planting, and dry summer weather stunted growth and reduced sizing. In the eight Central States, production was 96 million cwt, down 10 percent from last year, but 1 percent above 1995. Overall, harvested acreage and yields fell as heavy summer rains flooded many fields in North Dakota and Minnesota. In Nebraska, production surged 73 percent above a year ago due to sharply higher acreage and a good growing season. The 10 Western States produced 289 million cwt this fall, down 7 percent from last year, but 4 percent above 1995. Harvest started late as processors worked to finish up potatoes from the huge 1996 crop. Weather was generally good, and growers were able to finish harvest early. Production in Idaho and Washington was down 5 and 7 percent, respectively, from a year ago due to decreased acreage. Late-blight, which threatened much of the Idaho crop earlier this season, never materialized as a significant problem. Stocks Remain High, Prices Expected Higher in 1997/98 With lower production this fall, stocks of fresh potatoes will likely average below a year ago throughout the marketing season. Last year's record production pushed fresh stocks to record high levels, with 103 million cwt in storage on May 1, 1997 17 percent above the previous record set in May 1995. Cold storage holdings of frozen potato products (fries and other frozen) are also at record highs--estimated to be 14 percent above a year earlier (also the previous record) on October 1. These large inventories have frozen processors off to a slow start in processing this year's crop. As a result, open-market purchases by processors were limited early in the 1997/98 crop year. This caused fresh stocks to stay high early in the marketing season and prices to remain lower than anticipated. Although U.S. potato production is down from a year ago, ample stocks of fresh and frozen product combined with this year's output may limit the expected increase in prices. Increases in grower prices will depend on several key factors: consumer demand for fresh potatoes, processor demand later in the marketing year, and trade in fresh and processed products. With a current lull in processing use and an abundance of fresh product this fall, retailers may use holiday promotions in an attempt to increase consumer demand for fresh potatoes. In addition to strong domestic supplies, Canadian potato production is record high, increasing for the fourth consecutive year (see subsequent section). This will likely lead to increased imports of fresh and processed potatoes from Canada, and could limit the rise in U.S. prices. Prices will likely remain relatively low into early 1998, but should rise later in the marketing season (until the fall harvest of 1998). Given these factors, the 1997/98 season-average price for potatoes will likely be between $5.80 and $6.80 per cwt, compared with $4.93 in 1996/97 and $6.77 in 1995/96. If domestic demand does not increase, and if export potential is hampered by a strong U.S. dollar and competition from Canada and the Netherlands, the price will likely be on the low end of the range. Utilization of the 1996/97 Crop Last year's record potato production of 499 million cwt resulted in the largest quantity of potatoes sold in a marketing year--7 percent above the previous record set in 1994/95 (table 10). Fresh use rose 6 percent from a year earlier to 131 million cwt. Processors used a record 283 million cwt of raw potatoes, 11 percent above 1995/96, and 8 percent above the previous record set in 1994/95. However, despite the increased utilization, relatively low prices caused total grower sales to fall to $2.2 billion (down from $2.8 billion in 1995/96). Utilization for frozen french fries for the 1996/97 crop was up 13 percent from a year earlier, accounting for 51 percent of processing use and 29 percent of total use. Utilization for dehydrating was up 20 percent from last year, while fresh use increased by 6 percent. Over the last decade, utilization for french fries and dehydration realized the largest percentage increases of any sales category (other than livestock feed), increasing 50 and 91 percent, respectively, since 1986. With continued strong demand for potato flakes, dehydration use may continue to increase for the 1997/98 crop. Increased use of potatoes for french fries in 1997/98 is less likely and will depend strongly on export demand. Per Capita Utilization Per capita use of potatoes (fresh-weight basis) for calendar 1996 totaled 142.8 pounds, 4 percent higher than in 1995, and the highest since 1929 (table 19). Fresh use declined slightly, and processing use surged to a record high 94 pounds, up 8 percent from 1995. Most of the gain in processing use was in frozen and dehydrated products (up 8 and 17 percent, respectively). With sustained strong production and demand by processors over the past several years, per capita use of potatoes has grown nearly 14 percent since 1990. The increase in per capita use is nearly twice as high as the 8-percent increase realized by all vegetables (including dry beans, peas, and lentils) since 1990. However, with frozen processors slowing production due to large stocks, per capita use of potatoes may decline slightly in 1997 and 1998. As stocks of frozen products grow, fresh consumption may increase slightly if shippers and retailers move more potatoes to the fresh market rather than store them for potential processing use later in the marketing season. Potato Production Up in Canada, Down in European Union Trade Outlook Mixed The first estimate of Canadian potato production is 92 million cwt, 2 percent above last year, making this the fourth consecutive record crop. An extended growing season helped to boost yields in Prince Edward Island (PEI), where growers had a delayed harvest due to wet conditions in many areas. PEI output is estimated to be up 5 percent from a year ago. Production declined in Nova Scotia, Manitoba, and British Columbia. The good crop in PEI may have a significant effect on eastern U.S. markets. If PEI exports to the rest of the world are slow this season, large quantities of PEI potatoes will likely be shipped to eastern U.S. markets. Growers/shippers in Maine typically face stiff competition from PEI growers/shippers due to their relatively similar proximity to major eastern markets. However, in years of large PEI production and pronounced world competition for fresh potato exports, growers/shippers throughout the United States can be affected. Growers in most Western and many Central States may find themselves at a disadvantage due to higher transportation costs to the East Coast. European Union (EU) potato production is expected to be down from last year's large crop. However, the decline may not be enough to significantly boost exports of U.S. and Canadian potato products to the EU. If this is the case, export growth for U.S. processed potato products (primarily french fries) must continue in Japan, China, and Southeast Asia. During the first three-quarters of calendar 1997, U.S. exports of french fries were up an estimated 9 percent to Japan compared with the same period in 1996. Exports of fries were up 18 percent to China (including Hong Kong) and up 34 percent to Southeast Asian countries. Although improved exports to the EU may be difficult in the coming year, lower EU production (particularly in the Netherlands) may slightly ease export competition to Japan, China, and Southeast Asia. This may bode well for U.S. fry exports, but net fry exports may actually continue to decline as fry imports from Canada continue to grow. For the first three-quarters of calendar 1997, fry imports from Canada were up an estimated 62 percent from the same period in 1996. With another record Canadian crop this fall, increased imports of french fries (and fresh potatoes) will likely continue through much of 1998. List of Tables 1. U.S. potatoes: Area harvested, yield, and production, 1991-95 average, 1996, and 1997 2. Winter and spring potatoes: Area harvested, yield, and production, 1995-97 3. Summer and fall potatoes: Area harvested, yield, and production, 1995-97 4. Fall potatoes: Total stocks held by growers, processors, and local dealers, 1981/82-1996/97 5. Fresh potatoes: U.S. supply on May 1, 1990-94 average and 1995, 1996, and 1997 6. Potatoes, frozen french fried: Warehouse stocks by month, 1985-97 7. Potatoes, all frozen: Warehouse stocks by month, 1985-97 8. Potatoes, table: U.S. shipments by selected States, through June, 1995/96 and 1996/97 9. Potatoes, processing: Use in major States by crop years, 1994/95-1996/97 10. Potatoes: Utilization of crops, United States, 1993-96 11. Potato prices received by farmers: Monthly averages for January-June, 1996 and 1997 12. Potato prices received by farmers: Season averages, 1989-96 13. Potatoes, fresh: Retail price, marketing spread, and grower-packer return per pound for sales in the United States, 1985-96 14. Potatoes: Producer price index for frozen french fries by month and year, 1980-97 15. Potatoes: Consumer price index by month and year, 1980-97 16. Fall potato marketings: Percent of crop by month, selected States, 1996/97 marketing year 17. All potato marketings: Percent of crop by month, United States, 1986-96 18. Number of potato chip plants and quantity used for chips and shoestring potatoes by area and United States, 1993-96 crops 19. Potatoes: Per capita use, 1970-98 20. Canadian potato production by province, 1992-97 21. European Union potato production by country, 1992-97 END_OF_FILE