The U.S. Potato Processing Market on the Rise
The 2023-2024 potato crop increased 10% from the previous season, the largest year-over-year (Y-O-Y) increase in the 13-NASS surveyed States since 1996. Following the fall harvest, potatoes are stored to meet fresh-market and processor needs throughout the marketing year.
Stocks also include potato seed to plant the following year’s crop. On June 1, 2024, U.S. potato stocks totaled 3.02m tons – up 19% from the three-year average June stock volume. June 2024 stocks represented 15% of the estimated crop, compared with 14% a year earlier.
Over 60% of the U.S. potato crop is destined for the processing market each season. Given the larger stock volume during the marketing year, frozen and dehydrated processors are expected to use some of the 2023-2024 crop into the early part of the 2024-2025 marketing year (MY). An estimated 8.82m tons of potatoes were processed by the eight reporting U.S. States in 2023-2024 through May 31. The season-to-date volume of potatoes processed into dehydrated products (except starch and flour) totals 1.52m tons – the highest in three years. Potatoes used for dehydrated products represented 17% of total processed volume, which is equal to the previous three-year average for this period.
“Following a large fall harvest in 2023, fresh potato prices fell sharply below prices observed during the previous 16 months. USDA, NASS reports monthly grower prices for fresh potatoes in 2023/24 have continued to remain low, ranging from USD10.20 to USD10.60 per cwt between January and May. In the 2022/23 MY, fresh potato prices ranged from USD21.20 to USD23 per cwt during the same period. With ample supplies available, fresh potato retail prices, reflected by the Bureau of Labor Statistics (BLS) Consumer Price Index (CPI), also fell in early 2023/24 MY, but have remained relatively flat since January 2024. If fresh grower and retail prices follow previous marketing year patterns, prices in July and August would be slightly above averages observed in January–May 2024,” according to the latest USDA-NASS report.
Reflecting strong prices over the past year for potatoes used in processing, the producer price index (PPI) for frozen French fries remained above a year earlier. In May 2024, frozen potato products were 15% above a year earlier and 49% above the same month two years ago. Similarly, wholesale prices for potato chips and sticks (plain and flavored) averaged 4% above a year earlier and 30% above the same month two years ago. Industry earnings reports for various potato product producers indicate higher costs per pound of processed potato products are related in part to excess contracted potatoes and mild inflation for labor, energy, and other product ingredients.
