Nueva Zelanda: Potato industry faces decline in production but sees value growth

Declining Production

Over the period from 2019/20 to 2023/24, total potato production in New Zealand decreased by 72,800 tonnes, reflecting a 13.7% reduction. This decline in production has been attributed to a range of factors, including fluctuating market conditions and changing consumption patterns both domestically and internationally. Despite the drop in total production, the potato sector remains a significant part of New Zealand’s agricultural landscape.

Increase in Industry Value

While production has decreased, the total annual value of the potato industry has risen by $177.4 million, marking a 16.3% increase from 2019/20 to 2023/24. This growth can be attributed to the increased value of table potatoes and processed products, particularly frozen and crisp varieties, which continue to dominate the domestic market.

Export Market Challenges

The export market for New Zealand potatoes remains relatively small, with exports accounting for only 10.6% of the total industry value in 2023/24, a decrease from 12.6% in the previous year. The fresh potato export market is particularly constrained due to stringent phytosanitary requirements imposed by key importing countries.

Fresh potatoes are currently prohibited imports in several major markets, including Japan and Australia, further limiting export opportunities. As a result, New Zealand’s fresh potato exports have remained minimal, with the export of processed products like fries and crisps becoming more important.

Growth in Hectarage and Domestic Consumption

Despite the production decline, the hectarage devoted to potatoes has increased by 10% between the 2022/23 and 2023/24 seasons, with an additional 842 hectares cultivated. This increase in planted area reflects the ongoing demand for potatoes, particularly in the processed sector.

Domestically, processed potatoes—especially those used for crisps and frozen fries—account for a significant portion of the industry’s value. In 2023/24, processed potatoes made up 61.3% of the total domestic industry value, underscoring the sector’s strong presence in the New Zealand market.

Declining Value in Frozen/Fries Segment

However, there has been a decline in the value of the frozen/fries segment, which dropped by 22.7% from $610.2 million in 2019/20 to $472 million in 2023/24. This decline reflects broader market trends, including changing consumer preferences and increasing competition from other food products.

Conclusion

While the New Zealand potato industry faces challenges, including a decline in production and a limited export market, it has managed to sustain overall growth in value. With the increase in hectarage and strong domestic demand for processed potatoes, the industry remains resilient. To maintain growth, the sector will need to address export barriers and continue adapting to shifting consumer preferences both at home and abroad.

Source: Fresh Facts 2024. Data provided by Potatoes NZ

Image: Credit KlAnke from Pixabay