USPB Researches Chinese Potato Industry to Develop Future Marketing Strategy

DENVER (June, 2007)—United States Potato Board (USPB) staff recently conducted a commercial potato production research mission to China. The purpose in sponsoring this tour was to investigate Chinese commercial potato production, processing and marketing, and better determine the future strategy the USPB will be able to develop in China.

The large-scale study to assess China’s potential was contracted by the USPB to Promar International with Nick Young as the head of the project and coordinator of the research mission. USPB Board Members Lon Baley of Malin, OR, and David Radtke, of Sanford, CO, were joined by USPB International Marketing Manager Susan Weller.

Additionally, USDA Foreign Agricultural Service (FAS) Washington, D.C. Marketing Specialist, Krista Dickson, and the USPB’s China Representative, Daniel Chen, were present for the tour. Jiang Junyang from the US Ag Affairs office in Beijing and USPB International Marketing Vice President John Toaspern joined the team later in the schedule.

Visits included tours of key production regions in Inner Mongolia and Shandong province, processing facilities, wholesale and retail markets and numerous presentations and workshops about the Chinese potato industry. Members of the group also met with USDA FAS personnel to discuss market access to China and USPB programs.

“The research mission definitely accomplished its objective of providing the USPB staff and research team with an increased understanding of the Chinese potato industry,” Toaspern said. “It is a huge country with varying levels of development, so we were only able to see snap-shots, but I think they were the important ones.”

The group first traveled to Inner Mongolia where newly established large scale production has been developed to supply fry and chipping plants elsewhere in China. Presentations were made by various Chinese industry experts. Topics of discussion

included the history of production in China which started in 1550 with the introduction of potatoes from the Netherlands. Potato production trends, utilization, the seed production situation and how some Chinese associations are working with farmers to improve marketing were the themes for other presentations.

PRODUCTION PROFILE

Overall, potato production in Inner Mongolia has grown 1 million hectares every five years. Higher yields are generally due to increased land base versus grower efficiency.

Inner Mongolia is a massive area which has very fertile soil but very little water. Still, the region supports potato production with its climate (warm days, cool nights) and minimal insect pressure.

The estimated utilization of the Chinese potato crop is: 30 percent as food, 30 percent as animal feed, 8 percent as seed, 22 percent for processing (mainly coarse starch made by farmers with 5 percent used for frozen /dehy) and 10 percent for other uses.

Chinese seed standards apparently do exist, but there are no inspections, controls or enforcement. Less than 20 percent of growers are using seed that is termed as good quality, but not necessarily certified. Thirty institutions and universities are involved in breeding and all varieties are public. Many U.S. varieties entered China in the 1940s, followed by Russian and Eastern European varieties.

Although over 110 Chinese varieties were released between 1980 and 2000, and 54 were released from 2001 to 2005, there are only about 20 main varieties. Atlantic and Shepody are presently the varieties used most extensively.

While the Chinese government is supportive of the industry’s increasing storage capacity, the country is importing farm equipment, developing new wells and planting many kilometers of trees for windbreaks to prevent soil erosion.

PROCESSING INDUSTRY

The USPB mission then traveled to Harbin in the far north of China to meet with employees from McCain Foods, and then south to Shandong, which is referred to as the “California of China”. Potato harvest was just getting underway in this temperate area, with its fertile soil from the Yellow River Delta, making it one of the most productive areas of China.

The group then returned to Beijing to tour regular potato chip and “Staks” plants at PepsiCo. Atlantics were utilized at the chip facilities, with some access to Frito-Lay varieties. The Staks plant was using mainly local dehy and starch.

Next on the tour was a J.R. Simplot plant producing fries and hash brown patties. A new full sized production line had just been installed. The quality at this facility is first class and is running at full capacity. Only 20 large contract farmers supply all of the inputs and technical assistance. In fact, potential customers are being turned away.

While the Chinese potato industry is continually progressing in its size and scale, the constraints that need to be further developed are clean seed, water and cultural practices. The USPB mission clearly identified strategies for moving future research forward that will serve as the basis for further Chinese market development work on behalf of US potato growers. 

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