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U.S. Exports of Frozen French Fries Sizzle
Summary
U.S. french fry exports in marketing year 1996/97 (July-June) reached a record 385,700 metric tons and $286 million, up 10 percent and 12 percent, respectively, almost double the volume and more than twice the value of just five years ago. Industry sources expect U.S. french fry exports to increase in 1997/98, but currency devaluations and economic uncertainty in Asia will probably dampen the growth of french fry exports.
Market Developments
With the largest U.S. potato crop on record and a steady demand for french fries, U.S. french fry production in 1997/98 is forecast at 3.4 million tons, 1 percent above the previous year. U.S. french fry exports are expected to reach another record in 1997/98.
Canada could surpass the United States in 1997/98 as the world's second largest exporter. Canadian exports in 1997/98 are forecast at a record 425,000 tons, 23 percent above 1996/97 and 83 percent above the 1995/96 volume.
The Netherlands is the world's largest french fry exporter. Exports in 1997/98 are forecast at 990,000 tons, 2 percent above 1996/97 shipments. About 95 percent of Dutch exports go to other EU countries.
Policy Developments
A customs valuation issue with U.S. french fries imported into Thailand was recently settled favorably. The Thai government issued a Customs directive setting an FOB price of U.S. 47 cents per pound to calculate the duty charged on frozen potatoes imported from the United States. This action was objectionable, because invoice prices for imported frozen potatoes typically range between U.S. 30 and 33 cents per pound.
Reasons for the adjustment in the FOB price remained unclear, though industry observers speculated that the measure involves the recent change in government and a policy to increase tax revenues. The Agricultural Counselor in Bangkok on December 4, 1997 sent to Thai Customs a letter conveying U.S. concerns. Subsequently, the two major importers of french fries played a key role in resolving this issue with Thai Customs on December 19, 1997. Because of this agreement, Thai Customs will maintain U.S. 47 cents per pound to calculate the tariff on high value-added frozen potato products but not french fries. In 1996/97 (July-June), Thailand was the tenth largest market for U.S. exports of french fries with exports reaching 7,658 tons valued at $5.5 million.
U.S. Export Demand
During the past 10 years, the quantity and value of U.S. frozen french fry exports have consistently increased, particularly to East Asia, where the number of quick service restaurants has expanded significantly. In 1996/97 (July-June), East Asian countries bought almost three fourths of U.S. french fry exports. Japan alone accounted for half of U.S. shipments of french fries. Hong Kong, the Philippines, South Korea, and Taiwan were also vibrant markets for U.S. french fries. Rising per capita incomes in many countries, tariff reductions around the world resulting from the Uruguay Round Agreement, and ongoing Market Access Program activities should continue to propel demand for U.S. french fries.
For more information, contact William Janis at (202) 720-0897.
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