Manitoba Potato Production Days Compiled by Cedric Porter & Guy - - PowerPoint PPT Presentation

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

• riginating 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

1000 2000 3000 4000 5000 6000 7000 8000 9000 1975 1980 1985 1990 1995 2000 2005 2010 2015

World potato production in billion lbs

• 20

20 40 60 80 100 120 1 2 3 4 5 6 Asia Africa Europe EU-27

• S. America

N. America Oceania % change 2015:50 Population in billions

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, 0.6 Oceania, 0.4

Stable Canadian production

20 40 60 80 100 120 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Canada production in million cwt. Source: Statcan

Steady growth in Manitoba production

5 10 15 20 25 30 PEI Manitoba Alberta New Brunswick Quebec

Canadian potato production by Province in cwt

• million. Source: Statcan

2013 2014 2015 2016

Canadian yields have increased by 27% since 2005

150 170 190 210 230 250 270 290 310 330 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

2 4 6 8 10 12

North America Europe Asia (ex China & Mid East) South America Middle East China Central America Africa Growth 2011-15 Project growth 2016-20

Frozen potato product market in billion lbs. Source: Euromonitor

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

100 200 300 400 500 600 700 800

China

• N. America Asia Pacific

(ex China)

• W. Europe

Latin America 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

0.0 1.0 2.0 3.0 4.0 5.0 6.0 06 07 08 09 10 11 12 13 14 15

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

1000 2000 3000 4000 5000 6000

1 2 3 4 5 6 7 8

05 06 07 08 09 10 11 12 13 14 15 16

€ million Million tonnes

12-month periods ending July, Aug., Sep. or Oct.

Fry exports by 20 leading countries

Million tonnes € million

Canadian fry exports recover from 2010 low

1.750 1.800 1.850 1.900 1.950 2.000 2.050 2.100 2.150 2.200 2.250 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

10 20 30 40 50 60 0.000 0.200 0.400 0.600 0.800 1.000 1.200 1.400 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Ca$/cwt Ca$ billion

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

70 72 74 76 78 80 82 84 86 88 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

0.000 0.500 1.000 1.500 2.000 2.500 3.000 3.500 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

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

EU outside EU Canada not including USA USA

Canadian fries are competitive

10 20 30 40 50 60 70 80 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

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

10 20 30 40 50 60 70 80 50 100 150 200 250 300

2011 2012 2013 2014 2015 2016

Ca$/cwt Cwt million

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

10 20 30 40 50 60 70 80 50 100 150 200 250 300

2011 2012 2013 2014 2015 2016

Ca$/cwt Cwt million

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

10 20 30 40 50 60 70 80 100 200 300 400 500 600 700

2011 2012 2013 2014 2015 2016

Ca$/cwt Cwt million

Fry exports and prices to Japan

Canada exports EU exports US exports Canada price EU price US price

EU potato area stabilises in 2016

50% drop in area since 1999

500 1000 1500 2000 2500 3000 3500 4000 20 40 60 80 100

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16p

'000 hectares Million tonnes

EU area and production of potatoes

Million tonnes 000 hectares

400 420 440 460 480 500 520 540 560 580 16 18 20 22 24 26 28 30 09 10 11 12 13 14 15 16p

'000 hectares Million tonnes 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

500000 1000000 1500000 2000000 2500000 3000000 3500000 4000000 4500000 5000000 1990 1995 2000 2005 2010 2011 2012 2013 2014 2015e 2016e 2017f 2018f

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)

1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000

07 08 09 10 11 12 13 14 15 16

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

2000 2200 2400 2600 2800 3000 3200 3400 3600 3800 4000

10 11 12 13 14 15 16

Belgium and Netherlands are at or near Peak Potato.

US potato production is stable

340000 350000 360000 370000 380000 390000 400000 410000 420000 430000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

US Fall potato production in 1000 cwt

5 10 15 20 S O N D J F M A M J J

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

10/11 11/12 12/13 13/14 14/15 15/16 16/17

50 100 150 200 250 300 350 400 45 46 47 48 49 50 51 52 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

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

2009/10 2010/11 2011/12 2012/13 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

• nly 4.5 times. Uses exchange
• f US$=€1.07

Canadian fresh exports have recovered

70 75 80 85 90 95 100 2 4 6 8 10 12 14 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 % exported to US Cwt millions

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

10 20 30 40 50 60 70 80 90 100 0.5 1 1.5 2 2.5 3 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 % of sales to USA Cwt million

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

Canadian potato seed exports % of sales to US

Dutch seed exports have peaked, providing

• pportunities for other exporters

5 10 15 20 25 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

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

500 1000 1500 2000 2500 3000 3500 4000 4500 2012 2013 2014 2015 2016

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

Big UK potato trade deficit

200 400 600 800 1000 1200 2011 2012 2013 2014 2015 2016

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

• ther 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

0.2 0.4 0.6 0.8 1 1.2 1.4

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

2015 2050

The Ca$ remains competitive

0.9 1 1.1 1.2 1.3 1.4 1.5 July-June years

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

14/15 15/16 16/17 1 1.1 1.2 1.3 1.4 1.5 1.6 1.7 July-June years

Weekly average value of Ca$ (€1=)

14/15 15/16 16/17

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