CEO Chris Claridge
Potatoes industry value at $982 million – Close to a Billion Dollars.
Potatoes New Zealand has two important key strategic goals we are endeavouring to achieve by 2025. These were set in 2013 as part of our Strategic Plan. Leading into a Levy Referendum Vote during April and May it’s important to ascertain if we are delivering on our goals.
The goals are:
- Double the value of fresh and processed New Zealand based exports by 2025.
- Enhance the value of the domestic market by 50% by 2025.
The 2017 calendar year values and volumes are now available and the news is very positive. Our total industry value to Dec 2017 including domestic retail sales, food service such as restaurants takeaway chips and exports, is closing on a Billion dollars per annum.
| Industry Market Growth (NZD$000) | |||
| 2013 | 2017 | % growth | |
| Domestic Market | $ 665,500 | $ 852,500 | 28% |
| Export Market | $ 110,500 | $ 129,300 | 17% |
| Total Industry Market | $ 776,000 | $ 981,800 | 27% |
Table 1: Industry Growth by Market
Key take outs from Table 1 are;
- Domestic Market Value* up 28% to $853 million per annum from $666 million in 2013.
- Export Market Value up 17% to $129 million per annum from $110 million in 2013.
- Total Industry Value* up 27% to $982 million per annum from $776 million in 2013.
What is pleasing is the increase in exports. Looking more closely at the export sector in Table 2 there are strong performances in the frozen fry and the fresh table potato sectors.
| Exports By Sector (NZD$000) FOB Value | |||
| 2013 | 2017 | % growth | |
| Table potatoes | $ 18,000 | $ 29,500 | 64% |
| Crisps | $ 15,500 | $ 8,200 | – 47% |
| Frozen Fries | $ 76,700 | $ 91,600 | 19% |
| Seed potatoes | $ 300 | $ 30 | – 90% |
| Total Export Market Value | $ 110,500 | $ 129,330 | 17% |
Table 2: Export Growth by Sector
Whilst the total export value for 2017 is up 17% from 2013, it is interesting to note that the value of Crisps exports has dropped 47%. This can be directly attributed to the shortage of crisping potatoes in New Zealand in latter half of December 2017 due to wet weather conditions. The sector is expected to return to normal during 2018 and normal export values should return. It is pleasing to see the value of exports of fresh table potatoes has increased by 64% between 2013 and 2017. Strong performances in the Fijian export market have underpinned this sector.
| Domestic Market Categories (NZD$000) | |||
| 2013 | 2017 | % growth | |
| Table potatoes – domestic retail | $ 119,000 | $ 218,000 | 83% |
| Table potatoes – foodservice | $ 24,000 | $ 30,000 | 25% |
| Crisps – retail | $ 143,300 | $ 179,700 | 25% |
| Frozen/Fries – Domestic Retail | $ 66,800 | $ 78,100 | 17% |
| Frozen/Fries – Restaurant & QSR’s | $ 294,600 | $ 329,600 | 12% |
| Seed potatoes – industry sales | $ 17,700 | $ 17,070 | -4% |
| Total Domestic Market Value | $ 665,500 | $ 852,500 | 28% |
Table 3: Domestic Growth by Category
The domestic market value has performed strongly with an overall growth of 28%. This is well above CPI for the period, showing that this market is experiencing real growth. It is also pleasing to note the 83% growth in the value of table (fresh) potato retail sales over the four year period. Statistical data for this category shows that dollar value per kg for retail sales has risen while volume consumed has remained relatively constant. This is attributed to changing consumer behaviour with a switch to smaller pack sizes and with overall price increases in the category.
Hot chips remain a perennial consumer favourite with food service, restaurants and takeaways (QSR’s) continuing to contribute a large portion of the industry value. Domestic retail markets for frozen fries and crisps have performed well recording 17% and 25% growth.
So, are we on target?
Based on the levy received, the 2013 farm gate value was estimated at $103 million. The 2017 estimated farm gate value is now at a $170 million, showing an increase of 65%. Evidence that increased market value is being returned at the farm gate.
In summary when tracking performance at December 2017 we are well on track to achieve these goals.
- Exports – on target. 2013 value = $110 million; 2017 value = $129 million. This is an increase of 17%. An annual growth rate of 6% is required to achieve the target set in 2013 of doubling the export market value by 2025. The current rate of growth is 3.5% per annum, 6% should be achievable given the current industry growth strategy.
- Domestic Market – on target. 2013 value = $665 million; 2017 value = $852 million. An increase of 28%. An annual growth rate of 3.5% is required to achieve the target set in 2013 of increasing the domestic market by 2025; current rate of growth is 5%, therefore we are well on track to achieve the goal.
There is still work to be done to achieve these goals, but we are tracking favourably. The next important goal to achieve is increase the return per hectare to growers. This is a major focus of the PNZ for 2018 and the next levy period.
[ENDS: 860 words]