A small French fry is not just for Western fast food; Gold supporting role”, It is also a crucial link in the global food supply chain. In recent years, the export volume of frozen French fries from China has continued to rise, making China a net exporter for the first time in 2022, marking a shift in its position in the global French fry industry. In the first ten months of 2024, the export volume of frozen French fries from China reached 155100 tons, exceeding the total amount for the whole year of 2023. The relevant transformation not only leads the industrial transformation from fields to dining tables, but also highlights China's growing influence in the global french fry market. With the booming development of the domestic consumer market and the reshaping of the international supply chain, China is becoming an undeniable force in the global French fry industry, and the big market behind a single French fry is gradually unfolding.
A potato turning into French fries requires 17 steps
A potato requires a complex and intricate process from the field to being processed into frozen French fries. Wang Nan, President of Xuechuan Agricultural Group, a leading domestic potato industry enterprise, told Global Times reporters that this process involves about 17 steps, including cleaning, peeling, cutting, blanching, drying, deep frying, quick freezing, and other multiple stages. Each stage is crucial to ensuring the quality and taste of the French fries. According to the size and efficiency of the device, it takes about an hour for a potato to turn into French fries.
Suitable potatoes are very important for producing French fries with excellent export flavor and taste& ldquo; The processed potatoes used in French fries are a specialized category of potatoes, which is different from what we usually eat& rdquo; Wang Nan told reporters that processing potatoes requires high dry matter content and low moisture content, while potatoes used in Chinese cuisine have low solid content and high moisture content, making them unsuitable for making French fries.
“ The potato industry chain in China is relatively complete& rdquo; Xu Jianfei, Chief Scientist of the National Potato Industry Technology System and Researcher at the Vegetable and Flower Research Institute of the Chinese Academy of Agricultural Sciences, stated in an interview with the Global Times that currently, potatoes in China are mainly consumed fresh, accounting for about 70%, while the processing ratio is relatively low, only about 12.5%, far below the level of 60% to 70% in developed countries.
But Xu Jianfei said that the processing materials for frozen French fries in China currently mainly rely on foreign potato varieties. The proportion of varieties cultivated abroad in China is about 30%, while in processing specific varieties, more than 90% are foreign varieties.
At present, the potato varieties used in China for making frozen French fries are mainly those originating from Canada; Xia Boti;. The potato of Shapoti variety has high dry matter content and low sugar content, which is very suitable for deep frying and is one of the ideal varieties for making frozen chips. This variety was introduced to China in 1987 and initially achieved large-scale production around 2002.
Xu Jianfei said that in order to avoid being influenced by foreign varieties; Stuck neck&rdquo To promote the self-reliance and controllability of potato seed industry, the domestic potato seed industry continuously strengthens the cultivation and promotion of seed technology innovation mainly focused on processing special varieties and early maturing fresh food varieties, and is currently putting newly developed varieties into production line evaluation and testing.
In addition, some companies have also found that some foreign potato varieties have limitations in the process of processing French fries, such as differences in product appearance and taste compared to traditional varieties, yellow color, and poor taste. At present, the cultivation of domestic potato varieties is improving these issues. Due to the time required for variety cultivation, supporting cultivation techniques, and adjustments to production line equipment and processes, Xu Jianfei stated that this process is still ongoing.
“ China is becoming a global French fry
Main participants in export trade;
In Xu Jianfei's view, the development of China's frozen french fry industry has undergone a shift from relying mainly on foreign imports to relying mainly on domestic independent production. This transformation is the result of the combined effects of internal and external factors. External factors include changes in the international trade pattern under the influence of the epidemic, while internal factors involve capacity improvement, technological progress, and policy support.
McDonald's in Japan, Malaysia, and Indonesia faced a shortage of French fries in 2021. During the pandemic, global logistics were disrupted, coupled with geopolitical tensions and natural disasters, disrupting the global supply chain of frozen French fries and making it difficult for European and American cargo ships to enter the Asian region. The supply chain crisis has prompted brands from various countries to seek new suppliers, and domestic potato processing enterprises with stable supply and price advantages have thus entered the international arena.
Since 2020, Southeast Asian countries such as Indonesia and the Philippines have seen a rapid increase in their imports of French fries from China. After the epidemic, China and India jointly replaced Belgium and Canada as the main sources of imported frozen French fries for countries such as the Philippines and Indonesia. According to the Trade Data Monitor cited by the US Department of Agriculture, the average price of frozen French fries imported by the Philippines from China in the first six months of 2022 was $922 per ton; The average price of frozen French fries imported from the United States is $1128 per ton.
The export of potato products is highly concentrated in a few developed countries, and the entry of Western fast food into China has given rise to some domestic supply enterprises. With the rapid development of China's catering industry, emerging local catering brands such as Hua Lai Shi and Tastin are gradually promoting the improvement of upstream supply chains. More and more local food processors such as Landon Xumei, Xuechuan, and Kaida Hengye are gradually emerging and competing with international giants for market share.
“ At the beginning, foreigners felt that China could not grow well processed potatoes. No one thinks that the Chinese will build their own French fries company to make frozen French fries. On the one hand, the investment and entry barriers for French fry companies are very high. On the other hand, the global supply pattern of French fries has been relatively stable before& rdquo; Wang Nan said.
Establishing a French fry processing enterprise requires a significant initial investment, including factory construction, production line procurement, raw material procurement, etc& ldquo; Building a factory with a production capacity of about 100000 tons requires an investment of about 1 billion RMB& rdquo; Wang Nan stated that it not only includes the expensive cost of purchasing imported equipment, but also involves the construction of many supporting facilities, such as steam boilers and sewage treatment facilities. The maintenance of these supporting facilities also requires a significant investment of funds.
In addition, compared to Europe and America, the yield of potatoes per mu in China is lower. Wang Nan said that this means that even after the same processing steps, the cost of French fries produced in China will be relatively high.
But thanks to the application of high-yield varieties, the improvement of production technology, and the popularization of virus-free seed potatoes, the total potato production in China has increased since 2010. According to Xu Jianfei, the yield of potatoes per mu has increased from 1.08 tons in 2010 to 1.38 tons by the end of 2022, shifting from relying on area expansion to a high-quality transformation relying on yield growth. During this period, the continuous investment of the Ministry of Agriculture and Rural Affairs and the Ministry of Finance in the modern agricultural industry technology system, especially the support for the potato industry, provided technological support for the development of the French fry industry.
In addition, the technological progress and capacity improvement of domestic processing enterprises are also key factors driving export growth. Xu Jianfei analyzed that after 2017, the number of potato processing varieties cultivated in China gradually increased, but until 2020, domestic french fry processing enterprises were still mainly foreign-funded or joint venture enterprises. After 2020, some domestic enterprises began to build large-scale frozen french fry production lines, rapidly increasing production capacity. The annual production capacity increased from over 500000 tons to over 1.2 million tons within three years, forming a certain competitive advantage internationally.
“ Potato Country; The website published an article stating that& ldquo; China is becoming a major participant in the global export trade of French fries;. In 2023, China's share of the global French fry market is 3.1%, higher than 2.2% in 2022 and 1.1% in 2021. Despite a 4.6% decrease in global trade volume of frozen French fries, China's exports of French fries increased by 36.5%, nearly doubling in the past two years.
The French fry industry may face cyclical reshuffling
Public data shows that the global export volume of frozen French fries is highly concentrated in a few developed countries, with the five major exporting countries (Belgium, the Netherlands, Canada, the United States, and France) accounting for over 80% of the global export volume for a long time.
“ It is not easy for Chinese fries to gain global recognition& rdquo; Wang Nan recalled that at first, no one in China made frozen French fries. In 2019, Xuechuan began exporting frozen French fries, and then gradually increased its export volume in 2020 and 2021& ldquo; When our products were first exported, foreigners really had great doubts. But in recent years, they have seen the quality of Chinese products and gradually recognized that China can also make good French fries& rdquo; After the market became hot, more local enterprises such as Mingjie and Kaida Hengye also participated in international market competition& ldquo; The result you see is that China will become a net exporter of frozen French fries in 2022& rdquo; Wang Nan said.
At present, China's frozen french fries production capacity is mainly for domestic sales, but the export proportion continues to increase. Public information shows that 40% of the revenue structure of Kaida Hengye, a leading domestic potato product production and processing enterprise, comes from overseas. Snow River's frozen French fries have also been exported to over 30 countries, including Southeast Asia, Japan and South Korea, Australia, New Zealand, Fiji, and some South American countries.
The frozen French fry industry in China has made significant progress, but challenges still exist. After the epidemic, the price of French fries experienced a significant decline, falling back to the level of 2019-2020, with a decline of over 20%. Currently, the Chinese french fry industry is facing a cyclical reshuffle period, which poses challenges to both exports and domestic market sales.
Industry insiders told Global Times reporters that the surge in market demand during the pandemic has attracted numerous cross sector investors to enter the frozen food industry, leading to fierce price competition in China's domestic industry. In addition, the development of potato planting bases also requires time, but the sudden increase in production capacity puts enormous pressure on front-end planting, which may lead to blind planting and competition for raw materials, further exacerbating market fluctuations. This poses a severe challenge for Chinese french fry companies in both export and domestic market sales.
In this context, the Chinese french fry industry needs to seek new growth points and markets. Wang Nan told reporters that there are opportunities for the export of frozen French fries from China in both African and South American markets in the future, and it may be explored to deploy some production capacity locally in the future.
Xu Jianfei believes that as the world's largest producer of potatoes, China has enormous potential for the development of the potato industry, especially in the processing sector. It is estimated that the investment threshold for establishing a large-scale production line for frozen French fries is high, with an export price of approximately 1.3 US dollars per kilogram. However, the production cost of raw potatoes for processing in China is relatively high, especially in North China, where the comprehensive planting cost of producing 3 to 4 tons of raw potatoes for French fries is about 4000 to 4500 RMB. Considering the subsequent storage, transportation, and processing costs, the profit margin for frozen French fries is between 10% and 20%, which is relatively low.
For the domestic market, the processed varieties should not only meet the needs of the processing industry, but also adapt to the Chinese eating habits. Xu Jianfei told reporters that China's potato industry is trying to; Change lanes and overtake;, Develop diversified products that meet the tastes of countrymen people, and promote seed industry innovation and production technology improvement to improve processing quality, increase unit yield and reduce costs. In the future, the development of China's potato industry will focus on seed technology innovation, large-scale yield improvement, and diversified processing, promoting the continuous improvement of the potato industry technology system construction.