China’s potato chip production continues to grow in response to strong market demand, according to a report presented by USDA Foreign Agricultural Service.
Industry sources estimate China’s MY2017/18 sliced potato chip and fabricated potato chip production at 450,000 MT and 350,000 MT, a 7% and 13% year on year increase, respectively.
Frozen French Fries (FFF) China’s MY2017/18 FFF production is forecast at 250,000 MT, a 10% increase from 230,000 MT in MY2016/17. China’s FFF production has been increasing steadily in recent years, driven by increasing domestic demand from fast food restaurants and convenience stores. FFF production has strict fresh potato requirements, such as shape, starch content, sugar content, and color. Therefore, processors usually contract with farmers to produce potatoes which meet certain quality conditions.
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China’s processing potato supply is very limited between March and August, the report says. Many potato processing machines only run from mid-August to late March due to the limited supply of suitable fresh potatoes and inadequate storage facilities. Many potato processing factories are located in China’s Northeast, i.e. the northern single crop zone, where potatoes are harvested from September to October. The potatoes produced in other zones are generally not suitable for processing. As a result, China’s processing potato supply is very limited between March and August, according to the report.
Processing potatoes account for about 15 to 20% of total production, and include such products as starch, dehydrated potatoes, chips, and frozen French fries.
Potato starch China’s MY2017/18 potato starch production is forecast at 540,000 MT, about a 20% increase from 450,000 MT in MY2016/17, as a result of larger fresh potato production. MY2016/17 potato starch production was much lower than expected due to the limited fresh potato supply.
In 2016, it was reported that bad weather conditions in major potato producing areas, such as Gansu and Inner Mongolia resulted in yield reductions and price increases. According to China’s Ministry of Agriculture (MOA), the average potato price in 2016 was 2.4 RMB/kg (US$0.17/lb), about a 13 percent increase from 2015. On September 16, 2017, China’s Ministry of Commerce extended the countervailing duties levied on potato starch imported from the EU for another five years. Potato starch imports from the EU are subject to countervailing duties ranging from 7.5 to 12.4 percent. The countervailing duty is not the only duty that applies to EU potato starch exports to China. The countervailing duty is in addition to an antidumping duty ranging from 12.6% to 56.7%, dating back to August 2006. The anti-dumping duty is up for review in February 2018.
