Japan’s Fast Food Industry Running Out of French Fries
Japan’s Potato Production and Potato Imports
Japan produces around 2.3 million MT of potatoes annually, but production has been declining over the last four decades as the country became more urbanized, and as population growth ground to a halt, resulting in less and less available agricultural labor. Most of the domestically produced potatoes get used as starch and table potatoes. Consequently, Japan is a major importer of processed potato products, and french fries make up more than 60% of these imports.
Source: USDA
Source: ITC Trade Map
The 2021/22 Potato Crop
Japan’s potato crop estimate for the 2021/22 season is estimated at only 1.8 million MT, the lowest in the country’s recent history, and down 18% from an already mediocre crop in 2020/21. The news of a lower potato crop is not new to the market, as Hokkaido, the main potato growing province in Japan, has had unfavorable weather conditions for two years. However, the expectation that imports would fill the gap left by the poor harvest never happened.
Japan’s average potato crop for the 5 years ending 2020 was 2.3 million MT, and imports of potato and potato products were around 430,000 MT on average for the past 5 years. Using the rough estimates, that means in a normal year, the supply of potatoes and potato products is around 2.7 million MT. If the supply side is to remain more or less the same as for the last 5 years, imports would have to double, given that the crop is only 1.8 million MT. As mentioned in the USDA’s Updates on Potato Production and Consumption in Japan report, the import demand for frozen potato products, such as french fries was predicted to increase, but this hasn’t been the case. Although this report was released in November, an uptick in imports has been predicted since it became clear that the 2021/22 crop will again be disappointing.
Imports Have Not Increased Sufficiently
For the first 10 months of 2021, Japan imported 296,777 MT of french fries, compared to 285,110 MT over the same period in 2020. The expected increase in imports still hasn’t happened as the global shipping and logistic bottlenecks continue to wreak havoc on the trade of nearly all commodities.
Source: ITC Trade Map
The Fast-Food Industry Hit Hardest
Since the start of the worldwide pandemic, supply chains have been disrupted and logistic bottlenecks have plagued the food industry. KFC Japan ran out of french fries in some of its restaurants at the beginning of October. Starting this Friday, 24 December, McDonald’s Holdings Co. Japan will only sell small-sized french fries in all of its 2,900 restaurants across Japan, meaning medium and large fries are off the menu. According to an article published by Bloomberg, the flooding in Vancouver compounded the problem. Vancouver is a stopover for french fries on their way from the US and Canada to Japan.McDonalds aims to bring in french fries through air freight in order to have all sizes back on the menu before the new year. This will only be a temporary solution until more french fries are imported by ocean freight.
In the 1970’s KFC became an extremely popular Christmas meal, a tradition still strong today. It is estimated that up to a third of KFC’s sales happen during these holidays. KFC will likely have planned ahead for the upcoming rush, but could be left with very little french fries again after the holiday period.