The World Potato Picture Manitoba Potato Production Days

Compiled by

Cedric Porter & Guy Faulkner World Potato Markets

www.worldpotatomarkets.com

World Potato Markets Essential weekly information for potato growers, packers,

processors, buyers and retailers.

World Potato Markets is published every Tuesday and covers European and World markets for potatoes, keeping track of physical and futures market prices and the latest area, yield and production statistics. It monitors volumes, values, destinations and originating countries of world exports and imports of fresh potatoes, fries, chips (crisps), dehydrated products and seed.

World Potato Markets provides detailed forecasts of plantings and yields in the central five EU countries (Germany, the Netherlands, France, UK and Belgium). It also reports on crops in North America, in other EU countries and in all important growing countries.

A world united by the Potato

A world united by the Potato

World potato production up 50% since 1980. Source: UN FAOSTAT

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World potato production in billion lbs

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Asia Africa Europe EU-27 S. America N.America

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2050 Population by continent and % change to 2050. Source: UN

Billion people % change

…Biggest opportunities are outside the EU & N. America

% production by region

Asia, 48.8

Europe, 31.6

Africa, 7.5

N. America, 6.2 S. America, 3.9 Cent Am +

Caribb, 0.6

Oceania, 0.4

Importance of China, India & EU

China, 24.9

India, 11.9

Rest of Asia, 11.9

EU, 15.1

Rest of Europe, 16.6

N. America, 6.2 S. America, 3.9 Cent

Am + Caribb,

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Oceania, 0.4

Stable Canadian production

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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Canada production in million cwt. Source: Statcan

Steady growth in Manitoba production

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PEI Manitoba Alberta NewBrunswick

Quebec

Canadian potato production by Province in cwt million. Source: Statcan

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2015

2016

Canadian yields have increased by 27% since 2005

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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Average Canadian yield cwt/ac. Source: Statcan

Manitoba’s yields compare favourably World potato yields in cwt/ac in 2016 unless otherwise stated

World 178

US fall 451

Idaho (2015) 405

Germany 392

Belgium 384

UK 384

Netherlands 379

Oceania 369

France 357

Manitoba 344

Canada 306

European Union 288

Argentina (2014) 262

India (2014) 204

Poland 201

Europe (2014) 198

Asia (2014) 168

China (2014) 151

South America (2014) 147

Russia (2014) 134

Africa (2014) 122

Sources: Satcan, USDA, Eurostat, UN FAOSTAT

Top 15 markets for frozen French fries in metric tonnes Imports in year

to Aug. 2016 % change 2006:16 Main suppliers

United States 860793 +13.4 Canada (98%) France 587013 +39.6 Belgium (64%), Netherlands (32%) United Kingdom 569223 +56.4 Netherlands (63%), Belgium (33%) Netherlands 348288 +329.8 Belgium (78%), France (7.5%) Japan 318660 +7.7 USA (75%), Belgium (9%), Netherlands (7%), Canada (6%) Brazil 314280 +168.6 Argentina (48%), Netherlands (24%), Belgium (22%) Italy 242052 +38.6 Belgium (29%), Netherlands (28%), France (24%) Germany 240721 +13.6 Netherlands (70%), Belgium (16%), Austria (8%) Saudi Arabia* 233627 +163.5 EU (82%), USA (15%), Spain 182370 +41.3 Netherlands (36%), Belgium (34%), France (24%) Belgium 160899 +135.6 Netherlands (78%), France (7.5%) China 155578 +184.0 USA (71%), Canada (13%) Australia 117270 +365.4 NZ (37%), USA (26%), Netherlands (25%), Belgium (10%) South Korea 106376 +192.8 USA (82%), Canada (8%), Belgium (5%) Russia 99015 +85.7 Netherlands (42%), Poland (41%), Belgium (7.5%) * Calculated figure based on export figures from main suppliers. Source: IHS GTA & World Potato Markets

North America & Europe dominate frozen market, but growth is outside those areas

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NorthAmerica

Europe Asia (exChina &

MidEast)

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MiddleEast

China CentralAmerica

Africa Growth2011-15

Projectgrowth2016-20

Frozen potato product market in billion lbs. Source: Euromonitor

China is largest foodservice market, but chain penetration is still small worldwide

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China N. America Asia Pacific(ex China)

W. Europe LatinAmerica

Mid East &Africa

E. Europe Australasia

World food service markets in US$ billion. Source: Euromonitor

Chains

Independents

Frozen fries account for 53% of total potato trade

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Excludes seed and sweet potatoes

World potato export values (€ billion)

Fries Other, incl. ware

Unstoppable world fry demand – increases of 63% by volume & 126% by value since 2005

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Fry exports by 20 leading countries

Million tonnes € million

Canadian fry exports recover from 2010 low

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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Canada frozen fry exports in billion lbs. Source: IHS-GTA & World Potato Markets

Higher prices mean value of trade has increased by 50% since 2005

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Value and price of Canadian fry exports. Source: IHS-GTA & World Potato Markets

Canada frozen fry exports in Ca$ billion

Canadian fry export price in Ca$/cwt

Reliance (over reliance?) on the US export market

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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

% of Canadian fry exports by volume sold to USA

Canada loses out to EU & USA in world fry markets

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Frozen fry exports in cwt billion. Source: IHS-GTA & World Potato Markets

EU outside EU

Canada not including USA

USA

Canadian fries are competitive

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Price of fry exports in Ca$/cwt to world markets. Source IHS-GTA & World Potato Markets

USA

EU

Canada

Canada has lost out to the US in the Mexican market

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Fry exports and prices to Mexico. Source: IHS-GTA & World Potato Markets

Canada exports

US exports

Canada price

US price

Canadian fries are cheaper than EU ones in China

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Fry exports and prices to China Canada exports EU exports

US exports Canada price

EU price US price

US dominates Japanese fry demand despite high prices

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Fry exports and prices to Japan

Canada exportsEU exportsUS exportsCanada priceEU priceUS price

EU potato area stabilises in 2016

50% drop in area since 1999

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EU area and production of potatoes

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Ware area and production estimates for EU-5. Source: NEPG

Million tonnes 000 hectares

What’s key is the production in main five Western European countries. In 2016 output was down

despite increase in area

5 = Belgium, France, Germany Netherlands & United Kingdom

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Belgian processing potato use & fry exports in tonnes (exports in years ending August)

Potatoes processed in tonnes Fry exports

Massive increase in Belgian fry output and exports

Dutch output of ‘pre-cooked’ products, 12-month periods (‘000 tonnes)

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Dutch processing usage, 12-month periods (‘000 tonnes)

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Belgium and Netherlands are at or near Peak Potato.

US potato production is stable

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US Fall potato production in 1000 cwt

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Idaho Grower Returns Index, Russet Burbank ($/100lb). Source: NAPMN

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EEX/Eurex weekly processing potato index (€/tonne)

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2013/14 2014/15 2015/16 2016/17

A high priced EU potato season

Current EU free-buy processing price is €250/tonne (US$10.60/cwt) compared to US$4.68/cwt in USA. But difference between lowest and highest EU price in last eight seasons is 14 times. In US it is only 4.5 times. Uses exchange of US$=€1.07

Canadian fresh exports have recovered

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Canadian fresh potato exports. Source: IHS-GTA & World Potato Markets

Canada fresh potato exports

% of fresh potatoes sold to US

Canadian seed exports are slipping

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Canadian potato seed exports. Source: IHS-GTA & World Potato Markets

Canadian potato seedexports

% of sales to US

Dutch seed exports have peaked, providing opportunities for other exporters

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Dutch potato seed exports in cwt million

Brexit update

• The formal two year process of the UK leaving the EU should begin in March 2017

• Negotiations between the UK and EU will focus on post-Brexit relationship

• UK’s aim is to have as free as possible access to the single market, but with controls on freedom of movement of people

• EU will not want too favourable deal for the UK as that may encourage other countries to want to leave the EU

• After 40+ years unpicking thousands of laws, agreements and arrangements will be complex and time-consuming

• UK currently receives Ca$5 billion a year in EU farm support. That will end in 2020. Expectation is for lower more environmentally-focused payments with some support for R&D and business development

UK is a big importer of food – only 60% self-sufficient

Imports have become more expensive because of a weak pound, but could be longer term non-EU opportunities as new trade deals forged

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Monthly UK food trade in £ million (September in black)

ExportsImports

Big UK potato trade deficit

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UK potato imports and exports in US$ million

Exports Imports

Possible Brexit scenario in five years

• A new trading arrangement between UK and EU that allows some preferential access, but not free access

• Controls on the movement of people between UK and EU borders. • A visa scheme that allows overseas workers to work in the UK (including

agricultural and food ones) • UK will be looking to do new trade deals with countries across the world.

USA, China, India, Canada, Australia and Brazil will be top of the list for new deals

• Reduced EU food imports could provide opportunities for UK farmers and for non-EU countries

• Reduced farm support in UK may be a threat to established farmers, but provide opportunities for others

UK focus on innovation not volume for market growth

Future of EU – 2017 is another key year. All these politicians are opposed to EU membership

Geert Wilders. Netherlands. Right

wing politician. Leading in polls for

March General election

Marine le Pen. France. Leader of National Front.

Expected to be one of two Presidential

candidates in April

Frauke Petry. Joint leader of Alternative for Germany

party. Not expected to win September election, but

third in opinion polls

What future for the EU? Three scenarios

Scenario 1: Anti-EU parties in Germany, France, Netherlands and other countries hold balance of power and call referendums that see those countries leaving EU and effectively ending the whole project. Possibility: not very likely

Scenario 2: Convincing wins for pro-EU parties, resulting in a strengthening of the EU. Possibility: unlikely Scenario 3: Strong showings for anti-EU parties, but not strong enough to hold power. The EU continues, but calls for reforms that give less power to the EU . Possibility: most likely of three

The West is angry and voicing that anger

European reaction to Trump victory

• Fair to say that most European countries would have preferred a different result

• Concerns over trade relations, Climate change, reduced US support for NATO and future relationships with Russia

• Acknowledgement that TTIP is now not likely • Possible stronger links with a post-Brexit UK • EU exported US$412 billion to US in 2015 and imported US$275

billion. China was largest importer into EU at US$390 billion. Canada is second largest net food exporter after Brazil with US$25 billion more exports than imports in 2015.

CETA could be last big trade deal for a long time – expect smaller category, by category deals

I’m publishing a Brexit Food & Farming newsletter

See: www.brexitfoodandfarming.com for more

A time of unique opportunity for Canada

Canada is among the most land secure countries in the world

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Hectares of arable land/person 2015. Source: World Bank & UNFAOSTAT

2015

2050

The Ca$ remains competitive

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Weekly average value of Ca$ (US$1=)

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Weekly average value of Ca$ (€1=)

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Happy Birthday

Maxing the Maple

Maxing the Maple

Maxing the Maple

Potato players

Potato takeaways

• World demand for potato and potato products continues to grow and fastest growth is outside Europe and North America

• Canada is competitive, but it has lost out to the US and EU suppliers in recent years

• Increasing European capacity is becoming more difficult • Canada has some unique advantages that will be able to help it

sell more potatoes and products in the future

And remember…

Thank you

Cedric Porter and Guy Faulkner

World Potato Markets

Agri Markets Ltd

Tel: +44 1892 543444

www.worldpotatomarkets.com

Email: info@worldpotatomarkets.com