South Korean Potato Production Declines in 2022

South Korea's fresh potato production fell by 9.5% to 510,000 metric tons (MT) in the calendar year (CY) 2022 as a result of a significant decline in spring cultivar production in open fields brought on by a decline in precipitation during the May-June period and a 2.9% (21,112 hectares/ha) decrease in planted area.

Shortly, it is anticipated that the planted area for potatoes in South Korea (aside from greenhouse production) will gradually decrease as more farmers switch to more lucrative crops like cabbage, radish, carrots, and green onions, which have experienced significant price increases since early 2021.

Due to the forecasted decreased profitability in 2022, spring potato planting is anticipated to decline by 4% this year. Following a spike in market prices last year, the production volume and planted area for fall potatoes are anticipated to climb by 11.3% and 1.3%, respectively, in 2022.

Potato Prices and Consumption Went Up

The production of open-field spring potatoes fell by 7% to 355,000 MT in 2022 as a result of bad weather (lower rainfall) during the potato growing season in May and early June. As a result, overall potato prices increased by 30.6% to USD3.6/kg. The local potato business claims that the period from January to May 2022 saw rainfall that was almost 50% below average, which had a detrimental effect on field crops including potatoes.

The volume of potatoes in storage by April 2022 was lower than it was in April 2021. The first quarter of 2022 saw an increase in potato prices due to lower stocks. April 2022 saw an increase in the average retail price of potatoes of 41.9% to USD2.7/kg.

The Home Meal Replacement (HMR) market is anticipated to have grown more than twofold since 2015 as dining at home became a popular habit during COVID-19, reaching USD3.5bn in 2021. The HMR market is anticipated to grow further and reach USD4bn in 2022.

Overall potato consumption in Korea fell slightly to 13.8 kg in 2022 from 14.1 kg the year before, primarily because domestic potato production fell by 9.5% despite rising demand for frozen French fries.

The Prepared Potato Boosted Imports

With a 17.2% increase (or 33,400 MT) in prepared potato imports (frozen French fries), Korea's potato and potato products imports climbed by 13.6% to 227,000 MT in 2022. From 2021 volume, Korea's imports of frozen French fries also climbed by 18.3% to 141,474 MT (119,555 MT). Increased demand in the food service industry and relatively inexpensive potato pricing in comparison to other food commodities were the main drivers of rising imports. Additionally, to deal with the rising unit pricing and supply concerns faced by the two biggest suppliers, the United States (U.S.) and Canada, Korean importers expanded their import sources to the benefit of numerous European nations (The Netherlands, Belgium, and Germany) and China.

“Notably, Korea’s French fries imports from the EU and China increased by 117% (22,038 MT) to 40,875 MT from the previous year (18,837 MT) due to its price competitiveness. On the other hand, the U.S. and Canada (the two leading suppliers) recovered slightly by 2.3% (1,945 MT) to 85,664 MT,” according to the 2022 Korea Potato Update report by USDA.

Imports of processing potatoes such as frozen French fries, which normally accounts for about 85% of total imports, increased by 13.3% in 2022.

“Fast food restaurants in Korea were less affected by COVID-19 than other restaurants since they have been actively using delivery services since before 2019. Imports of frozen potatoes for French fries reached a new high in 2022 (…) as French fries became popular among the younger generation, increasing demand at pubs, cafes, and homes. Meanwhile, imports of frozen potatoes and potato flour increased steadily in 2022. The market for potato snacks and potato soup using flour is growing and the competition will intensify since more companies are entering the market,” the USDA report also reveals.

Fresh potato imports declined by about 12,000 MT in 2022 to 39,856 MT. The largest source of fresh potato imports in 2022 was the U.S., which accounted for 54.2% of total imports, followed by Australia with 45.8%.