Investment sizzles as potato demand grows

Reading Time: 2 minutes

Published: May 25, 2017

After years of flat demand, North America’s potato industry is enjoying a wave of investment.

In early May, McCain Foods announced a $200 million expansion of its processing plant in Burley, Idaho.

That comes on the heels of a December announcement by Cavendish Farms. It plans to build a $350 million frozen potato processing plant in Lethbridge to replace the company’s aging plant in the city.

Last June McCain’s said it will spend $65 million to expand its processing plant in Florenceville, N.B.

Read Also

soybean

Critical growing season is ahead for soybeans

What the weather turns out to be in the United States is going to have a significant impact on Canadian producers’ prices

Kevin MacIsaac, United Potato Growers of Canada general manager, said global demand for frozen potato products is driving the investment in the U.S. and Canada.

“(It’s) related some to the dollar (loonie) but also to more exports of french fries,” he said from his office in Charlottetown, P.E.I.

“More countries moving into a higher economic level, where they want to buy those kinds of foods.”

McCain’s, in a news release, said the Idaho investment is a response to “increased demand for McCain branded products in North America and around the world.”

The around the world bit refers mostly to Asia, where demand for french fries and frozen potatoes is swelling.

Demand continues to expand in emerging markets, thanks to a growing middle class and the growth of fast food restaurants.

Allied Market Research, in an April 2017 report, said the global market for frozen potatoes was valued at $50.7 billion in 2016.

The market for french fries, hash browns and other frozen products is expected to grow 3.9 percent annually and reach $66.6 billion by 2023.

Looking forward, MacIsaac isn’t aware of further investments in process potato capacity in North America. But it’s clear that North American players are in competition with European processors.

In recent years, Belgium has expanded its processing capacity and potato acres.

“How does Europe fit into the picture, in terms of french fry production?” MacIsaac said.

“Where they will fit in is the unknown, because it is truly a world market.”

The industry investment in Canada is positive news, but national potato acres will likely be static in 2017.

“Basically it’s pretty close to last year,” MacIsaac said.

“There are going to be some increases that are justifiable… based on contract requirements, or expansion requirements in the processing side.”

In an email, MacIsaac pointed to several outlook expectations:

  • Prince Edward Island acres will be flat.
  • New Brunswick acreage will rise to supply expansion of plant in Florenceville.
  • Manitoba acreage is expected to fall by about two percent.
  • Alberta acreage should be up slightly.

“In Alberta there will be some increase in processing acres as the growers gear up for that Cavendish plant expansion,” MacIsaac said.

“It was announced to be up and running for 2019. But I see now they’ve delayed it to 2020.”

On May 16, MacIsaac participated in a conference call with potato industry leaders from the U.S.

The word from America is that acres will remain steady.

“They expect the acreage to be pretty similar. And most importantly to be pretty similar in Idaho … because they are the big producer.”

About the author

Robert Arnason

Robert Arnason

Reporter

Robert Arnason is a reporter with The Western Producer and Glacier Farm Media. Since 2008, he has authored nearly 5,000 articles on anything and everything related to Canadian agriculture. He didn’t grow up on a farm, but Robert spent hundreds of days on his uncle’s cattle and grain farm in Manitoba. Robert started his journalism career in Winnipeg as a freelancer, then worked as a reporter and editor at newspapers in Nipawin, Saskatchewan and Fernie, BC. Robert has a degree in civil engineering from the University of Manitoba and a diploma in LSJF – Long Suffering Jets’ Fan.

Markets at a glance

explore

Stories from our other publications