Frozen French Fries: Case of the abnormal dip!

• India witnessed a sudden fall in the export (in terms of volume) of frozen French fries from 2014 to 2015, and has not been able to recover to that level till date.
• An analysis of market data clearly indicates that India has the capacity to enhance exports of processed potatoes.
• India’s IPR policy pertaining to plant varieties is farmer friendly and gives ample scope to farmers to grow the seeds, breed or quality of plant variety through its explicit farmer’s right protection policy.
• Global frozen French fries imports at US$ 410 million (CAGR of 5% since 2014) evinces that the growth story of India’s potato processing sector may see a sharp turn if the production is aligned with the demand.

Gone are the days when people indulged in French fries only at restaurants and food joints. Companies like McCain, BB foods and Golden Fries have not just developed the market for frozen French fries but are also constantly pushing the envelope with various flavours. Changing lifestyles and higher purchasing power have certainly contributed positively to the growth of the frozen French fries market in India.

Globally frozen French fries is a big market with over 543,947 tonnes of exports. The major exporters globally for frozen French fries are Pakistan*, USA, Netherlands, Belgium, and Spain and major sinks are Spain, Italy, UK, Japan, and France.

India, with all the endowments of large arable land (159.7 million hectares), unique agro climatic condition and 49% workforce engaged in agriculture does not feature in the top exporters of frozen French fries. India primarily exports frozen French fries to Nepal, USA, Japan, UAE, Australia, Qatar and Sri Lanka. It exported 3,534 tonnes of frozen French fries in 2018.

The most prodding problem today for India is not slow growth of exports of frozen French fries, but the sudden fall of French fries export from 2014. According to the Horticulture Statistics Division of India, production of potatoes from 2014 to 2015 increased from 46,395,000 tonnes to 48,009,000 tonnes, indicating a probable rise in consumption, either raw or processed.

Furthermore, a total of 48,605,000 tonnes of potatoes were produced in India in 2017. In 2013, per capita per year consumption of potatoes (fresh and processed) was estimated at 24.40 kg/capita/year. Taking it as constant, a sizeable part remains for exports in general. However the export of processed potatoes in the form of French fries, chips etc. is not in line with the excess capacity estimated.

As per industry insights, the key challenge to India’s export growth in French fries is the quality of potatoes, which affects the size of the French fries. The global standard in terms of size is 12 mm; besides this, crispiness(Sugar content) and taste are the key drivers for preference for imports. According to industry insiders, Belgium is the preferred importing country for Indian French fries companies. However the year-on-year trend of imports in India does not see a sustained growth, barring a few aberrations. Hence, it may be concluded that the domestic production so far has been able to cater to the demand.

However, the sheer size of global frozen French fries imports at US$ 410 million (CAGR of 5% since 2014) evinces that the growth story of India’s potato processing sector may see a sharp turn if the production is aligned with the demand. The potential markets for frozen French fries globally are Spain, Italy, France, Romania, UK, Japan and Hong Kong. The key markets in Asia are Iraq, Saudi Arabia, Malaysia and Qatar while the prominent destinations in Africa are Botswana, Tanzania and Namibia.

The case of withdrawal of IPR infringement case filed by Pepsico against a few farmers in Gujarat over alleged illegal use of FC-5 variety of potato become important in the light of India’s sui generis policy on plant varieties and seeds’ IPR. India’s IPR policy gives ample scope to farmers to grow the seeds, breed or quality of plant variety through its explicit farmer’s right protection policy.

Hence the need of the hour is to shift focus to the frozen French fries market, effectively strengthen farmer engagement, awareness, processing and supply chain architecture. The emphasis on standardisation in terms of quality, packaging and labelling may also play a major role in the European market (key market), which remains highly sensitive to such non-tariff measures.