Dehydrated Potato Products in the United States

In our recent series on the effects of the recession, we have now looked at fast food, retail frozen foods and potato prices. And a bit longer ago we discussed the savoury snacks sector. However, one sector we never addressed: dehydrated potato products.

And in the United States, this sector is maybe the most seriously affected, though not by the recession alone.

Dehydrated potato products include potato flakes, potato granules, potato flour and potato powder. They are used in consumer products such as instant potato mash, but large amounts are also used as ingredient in snacks and in a range of other foods (soups, bakery, meat)

The USDA reported last week on the potato stocks in the US and this overview included data on the processing of potatoes. The total amount of potatoes used for processing of harvest 2008 up to April 1 was down 7% compared to last year and down 8% compared to two years ago.

Potatoes used for the production of dehydrated potato products was down 15% compared to last year and down 23% compared to the same period two years ago. I looked at the use of potatoes for dehydrated potato products by month and for February and March the use was lower than in any year since 2003 (harvest 2002).

Maybe this reduction should not come as a total surprise given the recent plant closures and staff reductions by potato flakes manufacturers (North American Foods [RDO/Idahoan/United II Potato Growers of Idaho ], Basic American Foods), but it is a considerable reduction.

So are consumers in the United States eating less dehydrated potato products?

This does not seem to be the case.  The per capita consumption of dehydrated potato products in the US seems to be stable if not on the rise after hitting a low in 2006,. Furthermore, a product like potato flakes could very well get a boost from the recession, similar to retail frozen foods.

So what is the issue?

The import and export statistics for potato dehydrates is revealing: Import surged more than 50% while export dropped for the first time after a steady climb (Kudos to the USPB!) in recent years.

Unlike in the market for ware potatoes, the market for dehydrated potato products sees global competition due to the long shelf life and relative ease of transportation of these dry potato products.