From Mao to McDonald’s: Emerging Markets for Potatoesand Potato Products in China 1961–2007

Gregory J. Scott & Victor Suarez

Published online: 27 April 2012# Potato Association of America 2012

Abstract China is not only the world’s largest producer ofpotatoes, but also its largest consumer. This article uses avalue chain framework, FAO times-series data and a reviewof the literature to estimate and then interpret growth ratesfor the different uses of potatoes in China over the last fivedecades. It singles out changes in government policy, pro-duction, per capita incomes, and consumer tastes and pref-erences to explain the rise in consumption of potatoes asfood and the decline in their use as feed. The paper alsonotes the negligible importance of imports as a percentageof the total volume of potatoes consumed and the emerginginfluence of various private sector initiatives before reas-sessing past projections of future utilization levels. It con-cludes by highlighting opportunities for industry andidentifying some key topics for future research.

Resumen China no solamente es el país que produce máspapa en el mundo, sino también el que la consume. Estearticulo utiliza un enfoque de cadena de valor como marcoteórico, los datos de serie de tiempo de la FAO, y unarevisión de la literatura para estimar y después interpretarlas tasas de crecimiento para los diferentes usos de la papaen China durante las últimas cinco décadas. Los resultadossubrayan los cambios en la política, la producción, losingresos per cápita, y los gustos y preferencias de los con-sumidores para explicar el crecimiento en el consumo

humano y la bajada en la alimentación animal. El articulonota también la poca importancia de las importaciones comoun porcentaje del volumen total de papa consumida y lainfluencia emergente de varias iniciativas del sector privadoantes de evaluar proyecciones previas para los niveles deutilización en el futuro. Se concluye subrayando las oportu-nidades para la industria e identificando algunos temas clavepara la investigación en el futuro.

Keywords Utilization . Consumption . Trade . Processing .

Starch . Feed . French fries

Introduction

China became not only the world’s largest producer ofpotatoes in 1993, but also its largest consumer. Given thecountry’s 1.3 billion people and its continued rapid econom-ic growth combined with the sharp downturn in potatoconsumption in Europe (CEC 2007; Haase and Haverkort2006), more recent studies have sought to better understandthe different dimensions to the on-going boom in demandfor potatoes in China (Wang and Zhang 2010; Xie et al.2007). A by-product of that research has been an increas-ingly more targeted assessment of the growing demand fordifferent potato products (Curtis et al. 2007; Fuglie et al.2006; Jansky et al. 2009; Wang and Zhang 2010; Xie et al.2007; Zhang et al. 1999).

This paper seeks a better understanding of the futuretrajectory of the market for potatoes and potato products inChina and the implications for industry. Previous publica-tions on trends for potatoes in China have emphasizedgrowth rates in potato production, area harvested, and yieldsin China (CIP 1999; 2010; Horton 1978; Scott and Suarez2012) or for East Asia including China (Anonymous 1995;

G. J. Scott (*)CENTRUM Católica, Centro de Negocios de la PontificiaUniversidad Católica de Perú,Lima, Perue-mail: gscott@pucp.pe

V. SuarezInternational Potato Center (CIP),Lima, Peru

Am. J. Pot Res (2012) 89:216–231DOI 10.1007/s12230-012-9246-3

Van der Zaag and Horton 1983). Far fewer have focused onsome aspect of consumption and/or utilization trends (Wangand Zhang 2010). Many of those documents that do havelargely focused on simply reporting utilization patterns,levels of consumption, and absolute or percentage changesover time (Gitomer 1996; Guenthner 2001:87–97; Horton etal. 1984; Horton 1987, 1988; Scott 1992) rather than esti-mate the evolution of actual growth rates. Moreover, most ofthese earlier studies are now quite dated. A longer-termperspective can put the results of earlier research in betterperspective, for example, so as to more readily differentiatepossible short-term surges from more definitive trends.

Alternatively, over the last 10–15 years a number of studieshave examined some aspect of food consumption, feed, or seeduse in China in which the specific focus of the researchmay nothave been potatoes, but in which potatoes were included as partof the commodity items under consideration. In these instances,the research results often were based on data collected in orreferring to a particular location, at a particular time, for aparticular group of consumers. Synthesizing these findingscan provide a series of benchmarks so as to better assess agiven tendency and provide an independent verification orqualification of trends based on national statistics.

Materials and Methods

This study utilizes a value chain framework to analyze theemerging markets for potatoes and potato products in China.A value chain approach essentially focuses on the differentfinal uses for a particular food, feed, or industrial commodity;the stages, factors, and participants driving those different usesfrom production through to final end use; and, how they relateto one another (Chitundu et al. 2009; FAO 2010; FIAS 2007;Devaux et al. 2010; GTZ 2007). In this paper, the evolution ofthe principal final uses for potato: food, feed, seed, and pro-cessing for industrial use is the focus of attention—rather thanproduction and then moving forward to final utilization. Suchan approach has become increasingly popular as an analyticalconstruct to examine different commodity sub-systems for avariety of reasons. As markets have become increasinglyliberalized, global, and integrated, decisions about what toproduce or process is driven increasingly by what can be soldor final utilization patterns rather than simply how more canbe grown or processed. In a similar vein, interest by differentcommodity sub-system participants (e.g., traders, processors,retailers as well as consumers and growers), policymakers,and researchers has focused increasingly on those factorsdriving marketing trends rather than simply agro-biologicalconstraints or production technology as key to understandingthe future prospects of a particular crop in a given country.

The specific aim of this paper is to sharpen our appreciationof what the growth rates in consumption and of utilization of

potatoes in China have been and the factors contributing totheir evolution over time so as to better anticipate their mostlikely future trajectory. To that end, the paper focuses on thelast five decades so as to distinguish short-term fluctuations,spikes, and momentary drops in utilization from longer-termtrends. Previous papers devoted to examining growth rates forpotatoes in other developing-country regions (Scott 2011;Scott and Suarez 2011) found this long-term approach usefulfor just that purpose. Furthermore, it refers to the four periodsin the evolution of potato production in China characterizedby Scott and Suarez (2012) as famine recovery (1961–73),self-sufficiency in basic grains (1973–87), market readjust-ment (1988–2002), and post-globalization so as to betterappreciate, among other things, the impact of policy (Fanand Pardey 1997; Lin 1987) and improvements in incomeson growth rates for consumption and utilization. In that re-gard, the paper does not pretend to provide an exhaustivetreatment of all the issues related to the marketing of potatoesand potato products in China over the last 50 years. Instead, itoutlines the principal trends and their major contributingfactors so as to better appreciate what the growth areas havebeen and their key determinants. Similarly, the paper does notaspire to present a detailed review of the particular methodol-ogies employed in the different studies cited (e.g. incomeelasticities). Rather, it tries to provide a consolidated pictureof what earlier researchers have found, where, when, and howon a product-by-product basis. Such a synthesis seeks tocompare and thereby capitalize on these earlier findings, putthem in historical perspective, and in the process capture amore complete picture for the potato market in its totality. Thepaper concludes with a brief review of past projections forpotato utilization, an assessment of alternative scenarios forthe market for potatoes and potato products in China in theyears ahead, and some reflections on these developments interms of opportunities for industry.

This study employed times-series data to generate a se-ries of new estimates for growth rates for potato consump-tion and utilization in China. FAO data for potatoes for food,feed, seed, processing and other uses were employed first tocalculate annual averages for each of these variables for thebeginning (1961–63) and end (2005–07) of the period andthen to estimate annual average growth rates over the entire46-year period. Subsequently, comparable averages for1983–85, or roughly the mid-point in the overall time-series, were utilized to calculate average annual growth ratesover the first (vs. 1961–63) and second (vs. 2005–07) halvesof the times-series in an initial attempt to determine if thesegrowth rates were slowing down or speeding up.

As referencing a particular set of years (e.g., 1983–85) or agiven set of time periods is arbitrary in nature, this study alsoestimated the evolution of the growth rates themselves. To thatend, comparable averages over 3 years for potato consump-tion and utilization were calculated for the beginning and end

Am. J. Pot Res (2012) 89:216–231 217

points for roughly every 10-year period beginning with 1961–63 versus 1971–73. In other words, growth rates were calcu-lated on a moving year basis, i.e. 1961–63 to 1971–73, 1962–64 to 1972–74, on up to 1995–97 to 2005–07. These newestimates for growth rates were then plotted for visual inspec-tion, analysed in themselves in relation to the underlyingstatistics, and then compared with earlier studies for clarifyingthe factors driving these tendencies. In so doing, the paper alsodraws attention to the more readily apparent inconsistenciesand gaps in the data both as a word of caution regarding theirinterpretation and as one basis for highlighting areas for futureresearch.

Results

Average annual total potato utilization in China reached63.8 million metric tonnes (mt) in 2005–07, an increase ofover 50 million mt since 1961–63 (Table 1). Virtually all ofthat increase was the result of growth in domestic produc-tion. Imports—fresh potatoes, frozen potato products andother potato products such as starch, have had minimalimpact on trends in total utilization of potatoes in Chinaover the years.

Notwithstanding the spectacular growth in the utilizationof potatoes during the last five decades, its evolution hasmasked significant variations in average annual growth ratesover time and for the different major categories of final use:food, feed, seed, and processing for industrial use (Table 2).The divergent trends for each of these uses therefore deservecloser scrutiny.

Use of potatoes as food continues to account for the bulk ofcurrent utilization (Table 1, Fig. 1). Following FAO terminol-ogy, “food use” is an umbrella category. It includes fresh andstored tubers as well as processed potatoes primarily in theform of starch-based products such as noodles made at thefarm level (Fuglie et al. 2006; Gitomer 1996; Ye and Rozelle1993). Tubers processed in a factory to make french fries,flakes, powders, and chips are considered as part of potatoes

used for food as well (Wenxiu et al. 2004). Jansky et al. (2009)cite Li et al. (2004) that calculate some 45 % of output goes totable stock and 21 % is used for starch and other processedproducts for human consumption for a total roughly equiva-lent to the percentages reported by FAO (Table 1).

Use of potatoes as food accounted for nearly 73 % of thetotal increase in domestic utilization during the last half cen-tury (Table 1). Nevertheless, growth rates for potato utilizationas food fluctuated considerably over the same period (Fig. 2).They first surged in the 1960s, declined in the 1970s into the1980s, then accelerated considerably through the 1990s. Inrecent years, however, growth rates for potato utilization asfood dropped significantly (Fig. 2)—albeit from over 10 %/yrto roughly 6.6 %/yr. In the same vein, per capita potatoconsumption levels rose from 11.5 kg/yr in 1961–63 to13.8 kg/yr in 1971–73, fell back to 9.7 kg/yr in 1986–88, thenjumped to 40 kg/yr by 2004, plummeted to 29 kg/yr in 2006,before rebounding to 33 kg/yr in 2007 (Table 3). The mostrecent trajectory in the trends for food use and per capitaconsumption suggest that continued growth at acceleratedrates may have become increasingly problematic, if only inthe short-run, as the total volume of potatoes used as food hasbecome so massive in scale and per capita consumption levelsmore than doubled over the last two decades.

Feed use of potatoes exceeded 6.2 million mt on anannual average basis during 2005–07; nearly triple the totalin 1961–63, but 20 % lower than 1991–93 (Table 1). Theseabsolute totals reflect dramatic reversals in growth rates inthe quantities of potatoes used for feed over the last halfcentury. While feed use expanded at over 6 % per annumfrom 1961–63 to 1983–85, it shrank by 1 % over the lasttwo plus decades. Moreover in recent years, the negativegrowth rates (Fig. 3, Table 2) have accelerated therebyreinforcing a long-term trend away from using potatoes asfeed in China (Table 1).

Absolute quantities of potatoes used for seed doubledover the last half century to 2.5 million mt (Table 1), butgrowth rates have slowed considerably (Fig. 4). Mappingthe evolution of growth rates over the entire period reveals a

Table 1 Food Balance Sheets for potatoes in China, 1961–2007

Uses 1961–63 (000 mt) % 1976–78 (000 mt) % 1991–93 (000 mt) % 2005–07 (000 mt) %

Food 7,706 59 11,295 44 16,630 43 44,648 70

Feed 2,299 18 7,951 31 8,446 22 6,188 10

Seed 1,264 10 2,003 8 2,735 7 2,452 4

Processing 1,038 8 3,072 12 8,430 22 6,812 11

Othera 650 5 1,305 5 2,208 6 3,667 6

Total domestic available supply 12,957 100 25,626 100 38,450 100 63,767 100

a According to FAOSTAT “other uses” refers to “waste” and “other uses”, although in previous years it referred only to waste (Anonymous 1995;Horton 1988)

FAOSTAT (consulted April 2012) and calculations for this study

218 Am. J. Pot Res (2012) 89:216–231

phase of declining growth rates, followed by one of steadygrowth, then renewed decline. The overall picture for thelast half century depicts a gradual transition wherebygrowers have apparently relied increasingly on better qualityrather than simply a greater quantity of seed for potatoproduction. In other words, a lower proportion of availablesupply was used for seed as area planted expanded by nearlytwo million ha and as yields continued to improve over thelast 20 years (FAOSTAT, consulted February 2012). Thesedivergent trends suggest–all other things being equal–thatseed quality improved over time. However, several authorsdispute the decline in seeding rates and implicitly the asso-ciated quality improvements in planting material.

In FAO’s Food Balance Sheets (FBS), “processing” is an-other category. It refers to potatoes processed for industrial ornon-food use (e.g., in paper making). According to FAO data,potatoes used for industrial processing represented 6.8 millionmt/yr on average during 2005–07 or roughly 10 % of totalutilization (Table 1). However, that percentage has fallen byhalf over the last two decades as growth rates of processing forindustrial use have declined relative to those for food. Accord-ing to Xie et al. (2007), food uses currently account for themajority of all potato processing in China and most of thatprocessing is on-farm. Farmers typically utilize potatoes tomake coarse starch that in turn is used to make products likenoodles for sale or household consumption (Fuglie et al. 2006).

“Other uses” is a vague utilization category (Table 1). Itincludes both “waste”–covering such things as shrinkagelosses in storage, transport and sale–and “other uses” what-ever those other uses might be. Taken together, “other uses”accounts for some 5 %–6 % of available domestic supply.According to FAO estimates, the percentage of total avail-able supply devoted to “other uses” has hardly varied inspite of improvements in transportation infrastructure,among other things, over the last five decades.

Per Capita Consumption of Potatoes Versus Other FoodCrops

While per capita consumption of potatoes has expandedrapidly in recent years—particularly since the early 1990s(Fig. 5), in-take of other food commodities has also in-creased and in some cases–such as meat, milk, or fruitproducts, much more rapidly still (Ahmadi-Esfahani andStanmore 1997; Dong and Fuller 2007; Liu and Chern2003; Rae 2008; Wu et al. 1995; Table 3). Similarly, whilethe potato’s contribution to daily in-take of calories hasnearly doubled, its share of average total calories consumed(2.2 %) remains minor compared to the cereals such as rice(27 %) or wheat (20 %).

Table 2 Average annual growth rates for potato utilization in China,1961–2007

2005–07 (000 mt) Growth rate % a

1 2 3

Production 63,273 3.5 3.8 3.7

Plus importsb 1,079 5.6 7.6 6.6

Less exportsb 638 10.3 7.2 8.7

Total available domestic supply 63,767 3.5 3.9 3.7

Food 44,648 1.6 6.6 4.1

Feed 6,188 5.8 −1.1 2.3

Seed 2,452 2.6 0.5 1.5

Processing 6,812 7.6 1.2 4.4

Other usesc 3,667 3.8 4.2 4.0

a 1 0 1983–85 vs 1961–63; 2 0 2007–09 vs 1983–85; 3 0 2005–07 vs1961–63b Trade data are from Food Balance sheet data set which differs fromTrade data series; see text for detailsc According to FAOSTAT “other uses” refers to “waste” and “otheruses”; in previous years to waste (Anonymous 1995; Horton 1988)

FAOSTAT (consulted June-August 2011) and calculations for thisstudy

0

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70,000

1961 1966 1971 1976 1981 1986 1991 1996 2001 2006

(000 mt)

Food Feed Seed Processing Other

Fig. 1 Potato utilization inChina by category of final use,1961–2007. Source: FAOSTAT(consulted June-August 2011)and calculations for this study

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Discussion

As in other parts of Asia (Pingali 2006), the fundamentaldriving force behind the growth in potato utilization inChina has been the shift in consumption patterns away froman cereal (rice)-based diets and less preferred vegetables(e.g. sweet potatoes) toward other food commodities suchas dairy products, poultry, and fruit as well as other

vegetables such as potatoes (Table 3). At the national level,the increase in aggregate demand for potatoes as food inChina is manifest in several different dimensions. A pro-gressively larger share of output has been utilized for foodover the last three decades and particularly since 1991–93(Table 1). Average annual per capita consumption rose from14 kg/yr in 1991–93 to 34 kg/yr in 2005–07 (Fig. 5). Var-ious authors while noting these trends have cautioned about

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Fig. 2 Growth rates for potatoutilization as food in China,1961–20071. 1 Growth rates arecalculated on a moving 10-yearinterval basis, see text fordetails. Source: FAOSTAT(consulted June-August 2011)and calculations for this study

Table 3 Average consumption of select food commodities in China, 1961–2007

1961–63 1966–69 1971–73 1976–78 1981–83 1986–88 1991–93 1996–98 2001–03 2005–07

kg/cap/yr

Potatoes 11.5 11.9 13.8 11.9 9.8 9.7 14.1 24.2 34.8 33.6

Rice (milled equivalent) 49.4 66.1 72.0 74.6 83.7 84.3 76.5 80.1 78.8 77.2

Wheat 23.7 32.4 35.9 47.4 67.6 77.4 81.4 79.8 71.9 68.3

Sweet potatoes 94.6 98.2 96.5 92.1 72.6 51.8 50.9 41.6 41.0 32.3

Vegetables (total) including: 72.4 55.8 47.1 49.5 61.7 95.7 113.7 173.1 252.4 276.2

Peas 4.0 2.4 1.8 1.6 1.4 0.9 0.5 0.5 0.4 0.4

Pimiento 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Onions 5.3 4.1 3.1 3.2 3.5 3.9 4.4 7.3 11.1 13.0

Tomatoes 6.4 4.8 4.3 4.6 5.2 5.5 7.1 12.0 18.1 20.8

Fruits (total) 4.3 5.1 5.7 6.7 8.6 14.4 21.1 37.4 48.4 61.4

Meat (total) 5.1 9.9 10.7 11.0 16.0 22.2 30.9 43.4 50.3 54.2

Milk (excluding butter) (total) 2.5 2.3 2.3 2.8 3.6 5.4 6.6 8.2 13.7 26.5

Fish, seafood (total) 4.9 4.9 5.1 5.7 5.7 9.6 13.3 23.0 24.8 26.1

calories/cap/day

Total 1,560 1,850 1,909 2,010 2,359 2,515 2,595 2,866 2,920 2,974

including % from

Cereals including: 58.8 63.1 64.8 66.7 68.1 65.8 61.5 56.7 52.4 49.6

Rice (milled equivalent) 32.6 36.8 38.3 38.3 36.6 34.7 30.6 29.0 28.0 27.0

Wheat 12.8 14.9 16.3 20.5 25.2 26.9 27.3 24.5 21.8 20.3

Animal sources (e.g., meat) 4.6 6.8 7.0 6.8 8.0 10.6 14.1 17.8 20.1 21.7

Potatoes 1.4 1.3 1.4 1.2 0.8 0.7 1.1 1.7 2.3 2.2

FAOSTAT (accessed June-August 2011) and calculations for this study

220 Am. J. Pot Res (2012) 89:216–231

the credibility of statistics on the absolute levels of potatoin-take (e.g., Gitomer 1996; Xie et al. 2007), raising ques-tions about the factors driving recent trends in consumption.

Potato consumption rose in the 1960s as hunger in thecountryside following the famines of 1959 and 1961 spurredgreater production and use at the farm level into the early1970s (Gitomer 1996). Over the same period, governmentpolicy focused increasingly on food self-sufficiency in thebasic grains utilizing the commune system in the country-side (Wang and Zhang 2004) and ration shops in the cities tomeet production targets and manage food consumption. Inthe process, per capita consumption actually fell by over30 % from the mid-1970s to early 1980s (Fig. 5) reflectingthe stagnation in potato production that persisted up to 1988(Scott and Suarez 2012). Nevertheless, after the death ofMao Tse Tung in 1976, centralized control over food pro-duction procurement practices began to break down (Lin1987). Implementation of the household responsibility sys-tem at the farm level beginning in 1978 gradually freedgrowers to make more production decisions themselves,i.e. they were now able to plant or report (more) potatoeswithout fear of recrimination (Gitomer 1996). In addition,

during the 1980s improvements in marketing infrastructure(i.e. roads) and a relaxation of controls on interregional tradein food commodities (Crook 1994; Fan and Pardey 1997;Dong and Fuller 2007) slowly began to provide farmerswith greater access to urban markets in an effort to meetthe latent demand for a more diversified mix of food com-modities at the retail level. By the late 1980s, early 1990s,government control over food distribution was greatlyscaled back. These measures eventually resulted in a greatlyreduced role, if not elimination of the use of ration cards andthe pre-reform grain and oil stores in the cities (Veeck andVeeck 2000; Gale and Huang 2007). Traditional wet mar-kets re-emerged to cater to urban consumers. In the early1990s, government regulations governing foreign direct in-vestment were partially liberalized allowing equity jointventures in retail trade. McDonald’s opened its first restau-rant in mainland China in 1990 as a joint venture with aChinese partner (Watson 1997); it served 40,000 customersday one of operations in Beijing in 1992 (Yan 1997). A US-based potato processing firm built a plant near Beijingin 1992 (Zhang et al. 1999). A massive expansion of super-market chains also began (Coyle 2006). By 2002, some

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Fig. 3 Growth rates for potatoutilization as feed in China,1961–20071. 1 Growth rates arecalculated on a moving 10-yearinterval basis, see text fordetails. Source: FAOSTAT(consulted June-August 2011)and calculations for this study

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Fig. 4 Growth rates for potatoutilization as seed in China,1961–20071. 1 Growth rates arecalculated on a moving 10-yearinterval basis, see text fordetails. Source: FAOSTAT(consulted June-August 2011)and calculations for this study

Am. J. Pot Res (2012) 89:216–231 221

53,000 supermarkets in China had an estimated $36 billionin food sales, or some 30 % of all the urban food retailmarket (Hu et al. 2004). As potato production boomed inresponse to market reforms and shifting demand patterns(Scott and Suarez 2012), per capita potato consumptionwent from 9.7 kg in 1986–88 to 34.8 kg in 2001–03(Fig. 5, Table 3). Since 2000, however, the rise in per capitapotato consumption has stagnated, fallen sharply, andthen recovered raising questions about its future trajectory(Walker et al. 2011).

Beyond these various national developments, annual av-erage per capita consumption figures obscure sharp differ-ences within China. For example, Liu and Chern (2003)present per capita potato consumption estimates of 10–13 kg/yr in Jiangsu and Shandong, and roughly 6 kg/yr inGuangdong derived from results of the National Bureau ofStatistics household consumption surveys carried out during1998. Based on his fieldwork in the late 1980s, Gitomer(1996) had earlier posited that urbanization would have anegative impact on fresh potato consumption. He reasonedthat as consumers migrated from the countryside to thecities, they would acquire a taste for or be reconciled tonew foods as part of their adopted daily diet. According tomore recent studies, in cities far from traditional productioncenters—most notably along the eastern seaboard, potatoesappear to have taken on the role of a relatively new fooditem. In these markets, tubers have become available forregular purchase only since the market reforms were fullyphased in during the late 1980s, early 1990s (Wang andZhang 2004). This may help explain the per capita con-sumption estimates cited above and the some 12.5 kg/yrfor potatoes, sweet potatoes, and starch products from thesecommodities combined for 30 cities and counties also in1998 as reported by Wang and Zhang (2010). In effect,estimates of per capita potato consumption based on house-hold survey data stand in stark contrast to the nationalaverage (Table 3) obtained by dividing annual total availabledomestic supply (Table 2) by population, or to those forconsumers in major growing areas such as 75 kg/yr in 1984in Heilongjiang province based on back-of-the-envelopecalculations (Gitomer 1996). However, despite the seeminglycontradictory nature of these disparate estimates, such differ-ences in regional consumption patterns are not uncommon inlarge potato-producing developing countries in general (see,

e.g. Rose et al. 2009; Thiele et al. 2010; Woolfe 1987), or inother parts of Asia more specifically (FAO 2009).

As incomes have improved in China, numerous studieshave examined the effect of these increases on food pur-chasing patterns for different consumer groups in China, i.e.urban, rural, rich, middle income, less well off (see, e.g.,Dong and Fuller 2007; Gale 2006; Guo et al. 2000; Wan2005). However, very few studies have included or focusedspecifically on potatoes (Ahmadi-Esfahani and Stanmore1997; Liu and Chern 2003; Shono et al. 2000; Wang andZhang 2010) or potato products (Curtis et al. 2007; Fuglie etal. 2006; Zhang et al. 1999). One general theme in thesevarious studies has been that as incomes increased, diets inurban areas in general, and those along the eastern seaboardin particular, shifted away from basic staples such as ricetowards more meat, fish, dairy products, fruit, and preferredvegetables of which there are numerous examples (Guo etal. 2000; Dong and Fuller 2007). Urban consumers in gen-eral and wealthier households in particular also manifest agrowing preference for convenience foods (Curtis et al.2007; Veeck and Veeck 2000). Their food purchases insupermarkets emerged to complement conspicuously thosein traditional outdoor markets (Hu et al. 2004). Increasingly,spending on food by urban consumers has prioritized qual-ity, health, safety and the latest gastronomic fad in lieu ofgreater quantities (Gale and Huang 2007). For those withhigher incomes, this also meant a propensity to spend muchmore on eating out than less well-off urban households (Maet al. 2006).

In that context, results of the remarkably few publishedestimates of the effect of income on the demand for potatoesin China (Table 4) indicate that: 1) consumption of potatoesand potato products will rise with income; 2) they areconsistently positive through time; 3) they reflect primarilyurban consumption patterns; 4) in the case of fresh potatoes,they are lower than for most other food commodities; and,5) nearly all are based on consumption surveys carried outover 10 years ago suggesting a need for future research onthis topic.

Several of these same studies also pointed out the grow-ing income inequality in China. Rural households, particu-larly those in the interior of country, witnessed much moremodest changes in their incomes and consumption patternsover the last two decades (Saporito 2011; World Bank

Fig. 5 Annual average percapita consumption of potatoesin China, 1961–2007. Source:FAOSTAT (consulted June-August 2011)

222 Am. J. Pot Res (2012) 89:216–231

2007). These considerations suggest that at least some ruralconsumers are much more likely to spend more of anyincrease in their income on increased quantities of food(Wu et al. 1995; Gale and Huang 2007).

Results of various studies combined with other reports(e.g., Curtis et al. 2007; Guenthner 2001; Pacific Vision1995; Xie et al. 2007; Yan 1997) suggest that at currentconsumption levels demand for processed potatoes in theform of french fries is stronger than for fresh potatoes inmajor urban markets. Although McDonald’s opened its first1,000 restaurants in China faster than anywhere else outsidethe United States (www.bloomberg.com/news/print/2010-08-19/mcdonald-s-yuan-set-stand, consulted 19/08/2010),the emergence of potato consumption in the form of snacksor french fries has been an added, albeit to date relativelyminor, contributing factor to the increases in per capitapotato consumption nationwide (Guenthner 2001; PacificVision 1995; Watson 1997; Yan 1997; Xie et al. 2007;Zhang et al. 1999). It should also be noted that McDonald’s

is still the second largest multinational quick service restau-rant chain operating in China (Saporito 2011). Furthermore,according to some estimates, Western multinational chainstogether only account some for some 15 % of the restauranttrade dominated by Chinese and other Asian firms (Xie et al.2007). In that regard, China’s imports of frozen potatoproducts did grow at over 26 % per year from 1986–2006(Wang and Zhang 2010). However, even including HongKong and Macau, they still amounted to just 250,000 mt/yrin 2007–09 on a fresh weight equivalent (FWE) basis withan estimated value of $120 million (FAOSTAT, consultedFebruary 2012) versus the estimated 150,000 mt FEW ofdomestic frozen french fry production in 2005 (Xie et al.2007). These figures stand in contrast to the 44.6 million mtof domestic potato production used for human consumption(Table 1) valued at US$ 5.6 billion (assuming an estimatedvalue of US$125/mt).

In light of these various trends, the potato’s role in thediet is most commonly that of a complementary vegetable

Table 4 Selected estimates of the impact of income changes on the demand for potatoes and potato products in China

Author(s) Geographic focus Data base Year(s) Type of product

Potatoes French fries Other

Horton (1987) Mainland China FAO projectionsa 1984 0.3 – –

Ahmadi-Esfahani andStanmore (1997)

Beijing Monthly wholesale prices 1988–90 0.4 – –

1991–94 0.57 – –

Zhang et al. (1999) Mainland China Annual exports and income 1987–97 – 0.06b –

– 0.17c –

Shono et al. (2000) Mainland China National urban household consumption survey 1995 0.237d – –

Liu and Chern (2003) Shandong, Jiangsu& Guangdong

Household consumption surveys 1998 0.529e – –

conducted by the National Bureau of Statistics 0.818f – –

Curtis et al. (2007) Beijing Consumer survey for this study – 0.2837g 0.7471h

01.000i

Wang and Zhang (2010) 30 cities and countiesin Mainland China

Household consumption surveys conducted bythe National Bureau of Statistics

1998 0.26j – 0.16k

NB Results cited in this typology are not strictly comparable for a variety of reasons including the year they were carried out, database utilized,precise coefficients estimated, for the particular product involved; however as a general rule, the intent is to calculate the effect of a one percentincrease in real disposable incomes on demand for the particular potato product such that, for example, a one percent increase in incomes in Beijingduring 1988–90 was estimated to generate a 0.4 % increase in the demand for potatoes, see the studies cited for further detailsa No details available on the source of this estimateb Estimated impact of income changes on the demand for french fries in Mainland Chinac Estimated impact of income changes on the demand for french fries in Hong Kongd Estimated impact of income changes on food expenditures for potatoese Estimated impact of income changes on food expenditures for potatoesf Estimated impact of income changes on food expenditures for potatoes incorporating the effect of demographic variables such as age of theconsumerg Estimated impact of income changes on the demand for french friesh Estimated impact of income changes on the demand for potato chipsi Estimated impact of income changes on the demand for mashed potatoesj Estimated impact of income changes on the demand for potatoesk Estimated impact of income changes on the demand for starch-based potato and sweet potato product, e.g., noodles

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with four noteworthy exceptions. In the more remote pro-duction areas such as more commonly found in parts ofNorth and Southwest China, potatoes combined with on-farm processed products made from potatoes such as noo-dles serve as a local staple (Gitomer 1996; Woolfe1987:206–207). In the more isolated parts of China’s higherelevation northern and southwestern provinces, potatoesalso serve as a food security crop and play a more prominentrole in the diet of poor farm households (Xie et al. 2007).New potatoes in urban markets on the eastern seaboard aremore like luxury vegetables for their high price and thesocial status their scarcity value conveys than a complemen-tary or staple food (ABDD 2004). The emergence of organicpotatoes serves another, high-priced niche (Xie 2008). Inmany large urban areas in China such as Beijing, Guangz-hou, and Shanghai, french fries and potato chips are oftenexpensive, Western foods adopted by the more affluent,younger generation for their taste, convenience, and as aform of gastronomic tourism abroad without leaving thecountry (Curtis et al. 2007; Watson 1997; Yan 1997). Potatochips and extruded potato products are a popular snackamong the urban younger generation, but the absolute vol-umes eaten currently are a negligible component of totalpotato consumption as food as total domestic capacity in2005 was roughly 200,000 mt (Xie et al. 2007). Potatoflakes to make mashed potatoes is even more modestalthough one European processor has built a facility tohandle 80,000 mt (http://www.cosun.com/en/406/424/2019/2032/, consulted 08/09/2011).

Non-food Uses of Potatoes: Feed, Processing, and Seed

In contrast, potato volumes dedicated to feed use in Chinashrank from 22 % of estimated annual available supply in1991–93 to 10 % in 2005–07 (Table 1). Previous reportsindicated that share was 34 % in 1991–92 (Anonymous1995). Recent studies estimate that it is currently closer to15 % (Xie et al. 2007). The revised figures indicate that totalvolumes used for feed appear to have declined relativelymodestly in absolute terms –from 8.4 to 6.2 million mt during1991–2007, but the growth rates compared with absolutelevels of utilization reveal more drastic declines for bothindicators in recent years (Fig. 3). These divergent trendsreflect a series of countervailing market developments.

Given the small scale of most farms in China and as porkremains the preferred meat in China, some 60 % of porkproduction still took place on the farm in the 1990s (Fuglieet al. 2006). Hence, potatoes have most likely continued tobe used in backyard livestock (pig) production following apattern similar to that of Eastern Europe (CIP 2010), but atlower absolute levels of utilization nationwide than 20 yearspreviously for a variety of reasons. The surge in maizeproduction and soybean imports since 2000 has been driven

by efforts to feed more poultry and dairy cattle, assist in themodernization of China’s livestock production more gener-ally, and meet the burgeoning demand for meat and dairyproducts common to other developing countries at this stageof economic transformation (Alexandratos 2008; Rae 2008).In addition, an excess supply of pork in the early 1990s, ledto a plunge in prices. That trend followed by a swine diseasescare later in the decade combined to push at least somefarmers out of pig production (Ibid.). The emergence of off-farm employment opportunities and out migration combinedwith opportunities to produce other products besides pigshave meant some farmers have scaled back, if not given upon-farm livestock production as they were pulled into other,more remunerative activities (World Bank 2007). For atleast some growers, as potato consumption/demand tookoff in the 1990s, the opportunity costs of using marketabletubers for low-value, non-food uses such as feed becameprogressively more expensive (Scott 2002). Nevertheless,with the run-up in production a given percentage of lower-grade, unmarketable tubers represent an ever larger absolutevolume that can be feed to livestock in backyard operations.

Processing of potatoes for industrial uses surged as ashare of total utilization in the early 1990s. The data suggestthat with the massive increase in annual production andbefore the impact of market reforms became fully felt tospur greater per capita consumption (Fig. 5), processingprovided an alternative outlet for the additional supply ofpotatoes (Table 1). However, such processing subsequentlydeclined apparently for several reasons. Firstly, the sale offresh potatoes became increasingly attractive as off-farmdemand accelerated, shipments to the cities became morecommercially viable with improvements in transportation,and marketing reforms facilitated such sales (Scott 2002).Secondly, as obligatory crop procurement practices werephased out (Fan and Pardey 1997), starch processing plantshad to increasingly compete on the open market for requisiteraw material with the attendant supply chain constraintsassociated with managing interaction with large numbersof small growers, with different quality tubers, and shiftsin relative prices of potatoes versus other crops. Althoughengaged in other potato processing activities (i.e., frenchfries), even the most experienced multinational firms havehad difficulty meeting this challenge (Guenthner 2001).Thirdly, imports of potato starch increased from Europe.As potato production imploded in the former Eastern bloc(e.g., Poland)—partly due to the withdrawal of State subsi-dies (Walker et al. 1999), and trade barriers within Europewere lifted, smaller, less efficient, starch processing plantswere eventually forced out of the market by cheaper importsfrom countries such as the Netherlands with larger, moreefficient processing facilities (Haase and Haverkort 2006).Several of these firms continued to benefit from subsidiesfor starch production according to the Common Agriculture

224 Am. J. Pot Res (2012) 89:216–231

Policy (Fuglie et al. 2006). Notwithstanding, at least threeprominent European companies did invest in joint venturesin China to produce potato starch, but one has reportedly runinto financial difficulties and closed down all its foreignoperations (Xie et al. 2007).

The combined result in China has been to put increasingpressure on local processors to look for alternative sources ofstarch supply as various studies confirm that potatoes tend tobe the most expensive source of starch versus sweet potato,maize, rice or cassava and/or to shift their operations moretowards a niche market for more expensive starch-based prod-ucts such as vermicelli where the starch properties of potatoesgive it a competitive advantage versus cheaper alternativessuch as maize (Fuglie 2004; Fuglie et al. 2006). Potato pro-cessors have also seen their net incomes suffer from severelyunderutilized capacity due to seasonal operating practices andpoor conversion rates as they resorted to utilizing lower gradetable potatoes to keep their plants running (Xie et al. 2007).Consequently, some potato processors have gone in search ofgreater subsidies from county or local authorities that oftenhave an equity stake in these operations; others have comeunder greater scrutiny given increasing consumer concernsabout health and safety of processed food products. Morerecently, Chinese officials have filed a complaint with theWTO (World Trade Organization) charging European export-ers with dumping (Ibid.) and followed that up in 2011 with anannouncement to impose sanctions on European imports(http://www.chinadaily.com.cn/bizchina/2011-05/17/content_12523012.htm, consulted 09/08/2011).

Conversely, the potential high value of potato tubers forpossible sale as food and the conspicuous cost of plantingmaterial as a share of production costs (Xie et al. 2007)appear to have spurred efforts to economize on seed use.Estimated seed use as a percentage of total available supplyhas fallen to single digits, although various observers (Gitomer1996:116; Xie et al. 2007) remain sceptical. They note highseeding rates in relation to relatively low yields, e.g. 2 mt/ha ofseed to harvest 14–15 mt of tubers per hectare. Some localobservers talk in terms of seeding rates as high as 2.5 mt/ha(Yun 2004). Hence, it would appear that the percentages ofannual available supply used for seed are probably closer tothose estimated for use in processing (11 %), and those forprocessing closer to the FAO estimate for seed (4 %).Furthermore, the emergence of alternative schemes to pro-duce and multiply good quality planting material has takendifferent trajectories.

As true potato seed has floundered (Almekinders et al.2009; Gitomer 1996: 132–134), seed propagation facilitiesparticularly mini-tuber production have multiplied over thelast 10–15 years and are currently constituted in a variety offorms including public research institutes that now sell seedto generate income to help cover research costs, state-ownedenterprises, joint public-private ventures, local private

companies as well as firms based on partnerships with foreigncorporations specialized in seed production (Delleman 2009;Xie et al. 2007). These myriad schemes have begun to attractgreater attention given the often unregulated nature of theiroperations (Jansky et al. 2009), the implicit potential to prop-agate and disseminate virus-infected planting material, com-bined with the sheer magnitude of national seed requirementsgoing forward. Given the recent run-up in potato prices, thegovernment announced a program of subsidies to stimulateseed production (Keane 2010).

In contrast to the FAO estimates of 5 %–6 % lost to“other uses”, Wenxiu et al. (2004) contend that about15 % of potatoes rot during storage and transport each year.Gitomer (1996) also argues that there are various reasons tothink losses may be considerably higher than the FAOestimate. He mentions, for example, the lack of cold storagein more sub-tropical growing areas in certain parts of thecountry such as Guangdong. Notwithstanding, the value ofpotatoes and potato products such as noodles made fromstarch has provided added incentives to small farmers tocontinue to produce such products from damaged or other-wise unmarketable tubers or to use these tubers for feed (Xieet al. 2007). The persistence of such traditional practices andthe difficulty of distinguishing, let alone estimating, therespective volumes dedicated to these various end uses onmillions of small farms no doubt also helps explain thedifferences between the various estimates and suggests aconsiderable margin for error in any one statistic.

Trade

China’s exports of table potatoes escalated from 45,000 mtin 2000 to 383,000 mt in 2009, according to FAOSTAT’sseries on trade data. Exports of frozen potatoes accountedfor another 50,000 mt on a FWE basis as relative pricedifferentials facilitated exports to Japan (Anonymous2008). China (including Hong Kong and Macau, but listedseparately by FAOSTAT) also imports some 250,000 mt offrozen potatoes FWE as well as another 20,000 mt of freshpotatoes. Typically Asian developing countries export freshpotatoes to neighboring markets such as from Sumatra inIndonesia to Singapore (Adiyoga et al. 2003), or India toNepal and Sri Lanka (Singh 2010). Alternatively, many ofthese same countries import seed and processed potatoproducts i.e., french fries, potato chips, and starch fromEurope or North America (AAFC 2004; 2007; Guenthner2001; Pacific Vision 1995; van Loon 2007; Xie et al. 2007).China has been no exception to date. Table potato exports toRussia’s Far East and Mongolia are perhaps the foremostexample (Ibid.), but also include Southeast Asian destina-tions (Eerdeni 2004). China’s cheaper labor costs combinedwith cultural ties to ethnic Chinese produce merchants insuch places as Bangkok and Singapore greatly facilitate

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commercial transactions dominated by informal tradearrangements (Gitomer 1996; Scott 1987; Xie et al. 2007).

It should also be noted that FAOSTAT reports two differ-ent sets of trade data for potatoes. Under the Trade dataseries, FAOSTAT lists annual imports and exports of pota-toes (i.e. fresh tubers), frozen potatoes, and potato flour.FAOSTAT does not publish disaggregate trade data forcommodities such as potato starch. However, in addition,under the FBS series, FAOSTAT reports total potato importsand exports. FBS data for total potato imports averagedslightly over one million mt FWE during 2005–07 (Table 2),or far in excess of the imports of fresh and frozen potatoes.Based on the data cited by Xie et al. (2007) and Jansky et al.(2009), it appears that starch imports–primarily from theNetherlands and Germany, accounted for the vast majorityof the difference in imports, or roughly anywhere from300,000 to some 960,000 mt FWE, assuming a conversionrate of 1 mt of starch is equivalent to 8 mt of fresh potatoes(Talburt and Smith 1975), to help meet the explosive de-mand for starch (Fuglie et al. 2006). According to the sameFBS data series, total potato imports dropped by some600,000 mt from 2006 to 2007 as non-food potato importsapparently accounted for the bulk of this decline. Imports ofdehydrated potatoes, potato flour and potato chips havebeen minor by comparison (Xie et al. 2007; FAOSTAT,consulted 09/07/2011). Imports of frozen french fries passedUS$120 million in value in 2009, although the volume ofsuch imports declined in Mainland China (excluding HongKong and Macau) by 25 % over the last few years (Fig. 6) astwo, large multinational firms opened new processing facil-ities in China (Brown 2004; Xie et al. 2007).

The two series of export data are harder to reconcile withsome degree of clarity. Aside from exports of fresh potatoesand frozen potato products, FAOSTAT’s trade series reportsthat China exported some 30,000 mt/yr of potato flour FWE,assuming a conversion rate of 1 mt of flour is equivalent to6 mt of fresh potatoes (Talburt and Smith 1975).

Important changes also have also taken place in thedomestic potato trade. The rapid expansion of supermarketscatalysed the development of new supply chains (Hu et al.2004; Xie et al. 2007). Foreign supermarket chains in par-ticular set out developing local procurement specialists tosupply regional supply centers equipped with climate-controlled storage facilities. Seed producers, starch process-ors, french fry plants, and potato chip factories have allscrambled and struggled to find the best way to meet theirsupply requirements. These have varied from working di-rectly with local growers, to contracting rural assemblers, toestablishing their own production operations adjacent themain facility or some combination of the above (Delleman2009; Guenthner 2001; Xie et al. 2007). So far these initia-tives have tended to involve only a tiny fraction of thecountry’s nearly five million potato farmers, i.e., 4.9 millionha harvested (FAOSTAT, consulted January 2012) @ 1.0 haper grower on average. Instead, the vast majority of farmerstheir sell potatoes through traditional marketing channels:producer, rural assembler, wholesaler, retailer, consumer astheir limited land, financial and human resources severelyrestrict their ability to provide the steady supply of higherquality potatoes sought after. Principal constraints to im-proved potato marketing include an underdeveloped systemof market information; very limited modern storage capacityin relation to total annual production—all the more impor-tant given the highly seasonal nature of production in certainparts of the country; limited credit for financing production(Dong et al. 2010)—let alone postharvest activities; weakproducer organizations; and, the shortage of appropriatevarieties for processing (Jansky et al. 2009).

Past Projections and Future Prospects

In light of these various trends, earlier short-term projections(Anonymous 1995) for annual average growth rates in uti-lization of potatoes in developing countries in the Far East

Fig. 6 China: Imports of frozenpotatoes, 1961–2007. Source:FAOSTAT (consulted June-August 2011) and calculationsfor this study

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including China for the period 1988–2000 were far tooconservative: 2.94 % for total utilization of potatoes vs.6.37 % observed; 3.33 % for potatoes as food vs. 10.92 %observed; and, 0.80 % for potatoes as feed. Alternatively,more recent short-term projections that China’s frozenfrench fry imports from the US (Zhang et al. 1999) wouldreach 227,000 mt in 2005 were too inflated.

Long-term projections for food and feed for the period1993 to 2020 have proved to be mixed (Scott et al. 2000).Total food and feed use of potatoes in 2020 was estimated toreach of 28.5 and 13.3 million mt according to the IMPACTbaseline scenario (see Annex). Yet, total food had alreadysurpassed that projection by 16 million mt in 2005–07. Inother words, given China’s massive population, total use ofpotatoes as food jumped by 31 million mt or the equivalentof over 1.5 times the total potato production in the UnitedStates in about 12 years. This jump in utilization of potatoesfor food was primarily due to a surge in domestic produc-tion, but also a) a noteworthy shift in uses patterns (Table 1;CIP 2010; FAOSTAT, consulted 8/2011) and b) with thelifting of controls on production, a greater willingnessby growers to forego past practices of underreportingpotato output to comply with production quotas forgrains (Gitomer 1996). In contrast, after the same dozen years,total feed use stood at roughly half the level reached in 1993(Table 1, Fig. 3).

According to the high demand (HD) scenario, total use ofpotatoes was projected to reach 89.2 million mt in 2020 asfood and feed use were each estimated to accelerate at afaster pace than foreseen by the baseline scenario (Scott etal. 2000). In the HD scenario, income changes are envi-sioned to have a bigger impact on increases in potato con-sumption contributing to a faster growth rate in potatoutilization for food: 2.74 %/yr vs. 2.20 %/yr in the baselinescenario. Similarly, under the HD scenario, changes in feedavailability are projected to increase the growth rate in theutilization of potatoes for livestock feed: 2.78 %/yr vs.0.27 %/yr in the baseline scenario. Given long-term trends,feed use seems highly unlikely to grow at such a rate. Whilesome observers see growth in food use as more problematic(Walker et al. 2011), the current national plan for potatoesassigns a key role to the crop to help meet the food require-ments of 1.5 billion people in the years ahead with a targetof eight million ha for 2015 (Delleman 2009), or 150 plusmillion mt. Yet, as of 2005–07, it would take a growth ratefor total utilization of 2.45 % over the interim years to reachthe total projected by the HD scenario. Based on thesevarious earlier projections tempered with the historical per-spective gleaned from the literature, the most likely scenarioin the coming years is a growth rate in total utilization forpotatoes in China of around 2.0 %. Moreover, that aggregategrowth rate will reflect continued, highly differentiatedgrowth rates for particular categories of utilization.

Conclusions

The biggest market for potatoes in China in the years aheadwill be for table potatoes both on–and increasingly off–thefarm. In China, many farmers sell potatoes and much moreso than in the past. However, the often anecdotal evidencesuggests that potatoes are not yet the overwhelmingly cashcrop that they clearly constitute in other parts of Asia (FAO2009; Scott and Suarez 2011; Xie et al. 2007). Still, as morepeople continue to move from the countryside into the city,more potatoes and potato products will be consumed be-yond the farm gate. The pace at which consumption of tablepotatoes and processed potato products such as noodlesmade from coarse starch will expand either in the cities orthe countryside going forward is much harder to pin down.This is particularly true in the case of on-farm consumption,where most potatoes in China are still eaten, for a variety ofreasons. One there is so little reliable published informationabout current consumption levels, let alone rural consumers’response to possible changes in incomes to base any predic-tion on. Moreover, it is not clear if, how much, and how fastrural incomes might (or might not) improve in the inlandprovinces (see Gale and Huang 2007) where the bulk ofpotato production and consumption is concentrated. Someobservers cite regional development initiatives focused onthese provinces and remittances bolstering rural incomes(Sachs 2008:235–236). Others note that these regional in-come disparities continue to persist (Saporito 2011; WorldBank 2007). Consumption and use of potatoes on the farmin China is an area that clearly would benefit from morequantitative field research.

At the macro level, it might be argued that at 30–40 kg/capita/yr, average potato consumption in China may havepeaked. This scenario was implied by Walker et al. (1999)when consumption levels were half that level and recently ina follow-up paper (Walker et al. 2011) arguing the sameconsiderations apply. In effect, tastes and preferences willsuppress any further increase in potato consumption. Otherstudies envision that diets in China would follow those ofother East Asian countries (Shono et al. 2000) withoutspecifically mentioning potatoes. In the Rep of Korea, forexample, estimated per capita potato consumption is 15 kg/yr (CIP 2010). Alternatively, a number of Asian countriesincluding Kazakhstan (103 kg/yr), Nepal (49 kg/yr) andTurkey (45 kg/yr) have potato consumption levels higherthan those in China (Ibid.). Furthermore, Kazakhstan (US$9,690) and Turkey (US$ 13,770) have estimated per capitaincomes considerably higher than those in China (US$6,020) as well (Ibid.) suggesting that higher incomes mightwell spur greater potato consumption. In that regard, it isinteresting to note the recent experience in Peru. Collabora-tion involving processors, restaurants, catering services,supermarkets, privately-run, technical training institutes

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working together with regional governments (Devaux et al.2010) promoted the culinary versatility and nutritional ben-efits of potatoes. These combined efforts helped per capitapotato consumption rebound from less than 30 kg to nearly80 kg over the last two decades even as real per capitaincomes increased (Scott 2011).

As a bellwether for anticipated growth in consumption ofprocessed potatoes in urban areas, McDonald’s recently an-nounced that they plan to double the number of restaurantswithin China in the next 3 years (www.bloomberg.com/news/print/2011-07-29/mcdonald-s-franchises-to-account-for-up-to-20-of-china-business.html, consulted 09/05/2011) in orderto compete with another international fast food chain currentlyoperating 3,200 restaurants in China (Saporito 2011). Oneway to put these numbers in international perspective is toassume for the moment that China’s food consumption pat-terns will follow those of other East Asian countries (Shono etal. 2000). If China were to have roughly the sameMcDonald’sIndex (i.e. population/number of McDonald’s restaurants/1,000, see Guenthner 2001: 236–242) as South Korea, thenthat would be equivalent to 5,000 McDonald’s restaurants. IfMainland China would have the same McDonald’s index asTaiwan, then that would be roughly 20,000 restaurants. Eitherestimate suggests ample room for further expansion withconsiderable commercial implications.

Prospects of supplying the vast potential demand forfrench fries in China (Brown 2004) has motivated variousinternational potato processing firms to invest in setting uplocal operations. It took one of these firms almost 15 yearsto develop a functional system of suppliers for local rawmaterial (Guenthner 2001:188), but that experience did notdissuade competitors from eventually establishing their ownfacilities in China (Xie et al. 2007). Furthermore, whilefrench fry consumption is certain to expand, fresh peeledand cut french fries as done in Peru (Scott and Zelada 2011)may also have untapped potential. Given the relative cost oflabor versus capital combined with the capabilities of localresearchers and small-scale entrepreneurs in China to bothmanufacture and work with the associated processing ma-chinery (Tang et al. 1990), peeled and cut french fries maywell merit future evaluation as a complement to industrialprocessing. In addition, trends in consumption of processedpotatoes in countries like Argentina suggest that the contin-ued availability of cheap domestic help may temper thedemand for relatively expensive frozen french fries (Scott2011).

Many traders and public officials in China aspire toexpand exports of both fresh and processed potatoes as wellas seed by taking further advantage of their proximity toregional markets such as South Korea, Japan, and the Rus-sian Far East (Wang and Zhang 2010). However, poor orinconsistent quality, limited infrastructure including scarcecold storage capacity, informal trading arrangements, weak

market information, underdeveloped producer associationsamong other constraints have hampered these efforts fromhaving any significant impact on production trends in otherthan a highly localized way (Xie et al. 2007). Competitionfrom other, and in some cases more established exportersthat cater to many of the same potential markets (AAFC2004; 2007; Adiyoga et al. 2003; Guenthner 2001; Singh2010; van Loon 2007) are an additional consideration.

The enumeration of constraints to emerging marketsshould not overlook those factors that limit production in-cluding a weak seed system, prominent pests and diseases, ashortage of production credit, and a massive patchwork quiltof millions of small farms that preclude achieving econo-mies of scale (CIP 2011; Dong et al. 2010; Fuglie 2007;Jansky et al. 2009; Maldonado et al. 1998; Scott and Suarez2012; Xie et al. 2010). These constraints will become thatmuch more formidable should the more ominous predictionsabout climate change prove correct (Hijmans 2003). Latentin this laundry list are potentially lucrative, but poorlydocumented markets for production inputs. These includeirrigation equipment, chemical fertilizers, ecologicallyfriendly pest management materials, smaller scale farm ma-chinery, to say nothing of improved varieties (Wenxiu et al.2004; Xie et al. 2007). They all are essential for generatingadditional market surpluses on the vast majority of potatofarms that heretofore have consisted of rain-fed parcelscultivated using hand tools and with limited, if any accessto modern inputs, but now with growing commercial incen-tives to improve not only the quantity but also the quality ofproduction.

Finally, as marketing topics assume much greater impor-tance for the future development of China’s potato sector,expertise in China’s potato research establishment, like oth-er countries in Asia (Ezeta 2009; Pandey 2008) long focusedalmost exclusively on production issues (Fan and Pardey1997), may well need to diversify its capabilities in order totake full advantage of the opportunities and challenges inthe years ahead.

Annex. Background on the IMPACT Model

Scott et al. (2000) reported estimates of global projectionsfor food supply and demand based on a 1998 version ofIFPRI’s International Model for Policy Analysis of Agricul-tural Commodities and Trade (IMPACT). That IMPACTmodel covered 37 countries or country groups and 18 com-modities, including all cereals, soybeans, the major rootsand tubers (i.e., potato, sweet potato, cassava, and yam),meats, and dairy products, accounting for virtually all of theworld’s food and feed production and consumption. Themodel was specified as a set of country-level demand andsupply equations linked to the rest of the world through

228 Am. J. Pot Res (2012) 89:216–231

trade. In IMPACT, food demand is a function of commodityprices, per capita incomes, and population growth. Itincludes fresh and processed food. Feed demand is a func-tion of livestock production, feed prices, and feeding effi-ciency. Total demand equals the sum of food, feed, and otherdemand, e.g. products for industrial use such as starch. Cropproduction is determined by the area and yield responsefunctions. Area is projected as a function of crop price,investment in irrigation, and estimated rates of land lost tourbanization and degradation. Crop yield is a function ofcrop price, input prices, investments in irrigation, and yieldgrowth due to technological change. Growth in productivitydue to technological change is in turn estimated by itscomponent sources, including advances in management re-search and, in the case of food crops, plant breeding re-search. Other sources of growth considered in the modelinclude private sector investments in agricultural researchand development, agricultural extension and education,markets, infrastructure, and irrigation.

The projections to 2020 referred to in this paper used FAOdata for 1992–94 as the base year and the United Nationsmedium-variant projections for 1996 for demographicassumptions. National income projections were estimated ona review of projections drawn from sources such as the WorldBank. The model is solved of an annual basis by linking eachcountry model to the rest of the world through commoditytrade. The market-clearing condition solves for the set ofworld prices that clears international commodity markets, sothat total imports of each commodity equals total exports.World prices of commodities thus act as the equilibratingmechanism and maintain the model in equilibrium. The out-come of the annualized iterative process is an estimated annualseries of projected market clearing prices, consumption levelsby commodity and country group, feed-use levels, productionarea, yield and production levels by commodity and region,and net trade across country groups by commodity. The anal-ysis extends to 2020.

Key parameter estimates were drawn from econometricanalysis, assessment of past and changing trends, expertjudgment, and a synthesis of the existing literature. Thebaseline line scenario uses conservative estimates of theeffects of income growth on the demand for R&T and theeffects of technological change and other parameters onincreases in production and yield. In the high demand sce-nario, more expansive estimates for some of these sameparameters are employed in selected regions to calculatethe impact on demand and supply. Among the novel featuresof this model was the incorporation of individual root andtuber (R&T) crops—rather than aggregating all R&T intoone commodity, and the full collaboration of commodityspecialists in arriving at the final set of projections, see Scottet al. (2000) for further details.

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