2021-2022 Marketing Year: Higher Chinese Frozen French Fries Production and Imports

China’s 2021-2022 Marketing Year (MY) frozen French fries (FFF) production is forecast to be 20% higher at 420,000 metric tons (MT) in response to international logistics disruptions that led to lower imports and increased export demand by China's neighbors.

According to the United States Department of Agriculture (USDA) – Foreign Agricultural Service and Global Agricultural Information Network (GAIN) CH2021-0111 report from September 15, 2021, China’s MY2021-2022 FFF imports are forecast higher by 5% at 84,000 MT assuming international logistics improve by the middle of the calendar year 2022.

The same document also shows that China’s MY2021-2022 fresh potato production is forecast at 94 million metric tons (MMT), a 5% decrease over MY2020-2021, primarily due to decreased acreage.

A New FFF Production Line

The USDA-GAIN report cites two major reasons for the expected spike in production. More precisely, according to industry sources, a new FFF production line will be put into production in MY2021-2022 in Inner Mongolia, respectively FFF producers will expand their production as much as possible to make up for the reduction of imports.

“Industry contacts also believe FFF production capacity expansion may happen in next few years to meet increasing domestic market and export demand,” the USDA-GAIN experts added.

Industry contacts indicate also that FFF consumption will increase at a moderate pace over the next decade, due to continued urbanization of China’s rural areas, which brings greater exposure to FFF and related products, along with an increasing number of fast-food restaurants opening in China that carry FFF products for sale. The rapid development of delivery food service in China is also contributing to FFF consumption. Industry sources report that the sale of FFF at convenience stores, supermarkets, and through online retailers is expected to increase exposure and allow for greater consumption.

Expected Improvements to International Logistics Supports China's FFF Imports

USDA's experts estimate that China’s MY2021-2022 FFF imports will reach 86,000 MT, about 5% higher than the estimated 82,000 MT imported in MY2020-2021 because of expected improvements to international logistics.

“In the first 11 months of MY2020-2021, China imported 76,797 MT of FFF, almost a 25% decrease from the same period in MY2019-2020, mostly due to disruptions in international shipping. [...] Industry members anticipate that logistics difficulties and container shortages will continue until the early or middle part of 2022,” USDA's representatives added.

China’s average FFF imports in the past five years (MY2015-2016 - MY2019-2020) averaged around 140,000 MT. Industry contacts indicated that even if the international logistics capacity returns to normal, China’s FFF import volume might not return to previous levels because of domestic industry expansion.

The United States remained the largest FFF exporter to China in MY2020-2021, accounting for nearly 45% of China’s total FFF imports in the first 10 months of MY2020-2021. The next largest suppliers, Turkey, the Netherlands, Belgium, and Argentina together accounted for 52% of China’s FFF imports in the first 10 months of MY2020-2021.

China’s FFF imports are year-round with the heaviest volumes typically occurring between April and July, coinciding with the domestic potato-growing industry’s “off-season.” However, MY2020-2021 imports differed from previous trends because of the delayed arrival of goods caused by disruptions in international logistics.

Fresh Potato Production Decrease

MY2021-2022 (September to August) fresh potato production is forecast at 94 million metric tons (MMT), a 5% decrease from the estimated 99 MMT produced in MY2020-2021, a result of decreased acreage.

“According to industry sources, potato planting area decreased in the northern single crop zone due to very high corn prices that led farmers to switch between the crops. Additionally, the potato area sown from September to November 2021 in the southwestern mixed crop zone is also expected to decrease due to low potato prices,” the USDA commented.

Industry sources shared that potato prices decreased over 25% in the first half of 2021 from the same period in 2020, due to increased production. The increased production in 2021 was due to high potato prices in 2020, which supported increased planting acreage.

The top six potato-producing provinces in China are Sichuan, Guizhou, Gansu, Inner Mongolia, Hebei, and Yunnan. These provinces account for over 60% of total fresh potato production.

According to the 2021 China Agricultural Outlook Report, over the next ten years, China’s potato acreage will increase by an average of 0.7% annually and the potato yield will increase by an average of 0.7% annually, with improvements in seed potatoes and the use of better-quality land and land management practices.

As a result, the report estimates potato production will increase by an average of 1.4% annually for the next ten years. These estimates are higher than the 2020 report, as China estimates that improvements in seed potato quality will continue to be realized.