The Economics Behind the Potato

As reported in a previous blog, potatoes are the most consumed vegetable by U.S. shoppers year after year. It’s also recognized as a reasonably priced source of nutrition — an excellent source of vitamin C, a good source of potassium and vitamin B6, and contains only 110 calories per 5.3-ounce serving.

But were you aware that potatoes not only offer high-quality nutrients but are a driver of America’s prosperity, including direct economic activities — growing, processing and retail – as well as the creation of jobs throughout the nation?

Domestic Market

That’s right, in a recent in-depth look at the potato category’s impact on the U.S. economy, the National Potato Council’s CEO Kam Quarles said that “the entire supply chain of the U.S. potato industry supported tremendous economic benefits and jobs for our country.”

According to this report, the U.S. potato sector contributed roughly $100.9 billion to the economy in 2021 and continues to grow. This impact was a result of these direct and indirect economic activities:

  • $10.8 billion in agricultural production and agribusiness services.
  • $49.1 billion in processing, wholesaling and retail.
  • $41 billion in foodservice businesses and household use.

In line with this inquiry, the U.S. potato segment is responsible for creating approximately 714,000 domestic jobs and supplying $34.1 billion in yearly wages to those working the length of its supply chain. The in-depth study also estimates that 0.4 percent of the total workforce depends on the potato industry for their employment.

Notably, actual farm production makes up around 10 percent, or $10.8 billion, of the overall economic input of the potato supply chain. In contrast to most specialty crops, potatoes are commercially produced chiefly by generation upon generation of family-owned farms, helping to support various communities in nearly every state. And that certainly is the case here in Pennsylvania.

“Not only are potatoes an essential and healthy component in our diet, but now we can say unequivocally that they are vital to the American economy,” explains R.J. Andrus of Idaho’s TBR Farms and president of the National Potato Council. “Potatoes are an essential component to our prosperity as a nation, built and sustained by America’s potato growers, who put people to work in every city and town across our great country. Today’s report cements the fact that potatoes are America’s favorite vegetable with value.”

Export of Potatoes

What’s more, potatoes, in all their forms, from flakes to slices to whole spuds, have turned out to be one of the most critical agricultural commodities worldwide. With one out of every five rows of domestic potatoes headed for foreign purchasers, U.S. potatoes are among America’s principal agricultural exports.

This very down-to-earth but highly resourceful vegetable has found its way into the recipes and traditions of practically every country in the world and has become an important international commodity. As just noted, approximately 20 percent of all potatoes grown in the U.S. are destined to be exported, in either fresh or processed form, making international trade a major factor of the U.S. potato industry.

The Potato Council states that from July 2022 through June 2023, the total economic contribution of exports of potatoes and potato products is valued at $4.78 billion with an estimated impact on employment of approximately 33,500 jobs.  

The potato is regarded as a dietary staple in localities where other crops have proven difficult or near impossible to produce. This demand for potatoes continues to grow year after year in a variety of markets worldwide.

Fresh Potatoes

The world-wide fresh potato market is anticipated to reach $118.15 billion by 2028. While dehydrated or processed potatoes still tower over the market, a number of commercial food producers believe fresh or chilled potatoes are a better option for their products.

Germany, the Netherlands and Canada are the worldwide leaders in fresh and chilled potato exports, while Belgium, the Netherlands and the United States are the biggest importers of fresh spuds.

The quantity of fresh potatoes in nearly every country has helped make the root vegetable a prosperous and abundantly tradeable commodity. In fact, the Great Potato Famine in Ireland, from 1845 to 1852, prompted various economic revolutions as both importers and exporters fought to recuperate from the consequences of the blight.

To that end, today’s potato crops profit from disease resistance, soil management and genetic research innovations.

Potato Chips

The worldwide potato chip marketplace is expected to reach $40 billion by 2028, mostly due to the acceptance and convenience of shelf-stable potato chips. At present, the U.S. rules the potato chip market, with companies including Frito-Lay and Utz offering both plain and flavored varieties.

Nevertheless, while these major snack firms benefit from mainstream success, the potato chip market also has room for companies focusing on small-batch production, many of them right here in Pennsylvania.

Note: The story goes that the potato chip was invented in 1853 by George Speck (later Crum), a cook at the Moon Lake Lodge Resort in Saratoga Lake, NY. A customer’s frequent appeals for thinner, crispier French-fried potatoes motivated Speck to fry paper-thin potato slices in oil until they turned brown.

The so-called “Saratoga chip” gained popularity with other customers, eventually creating a new snack for the public.

French Fries

Although the beginnings of the French fry are cloaked in mystery, there is no question the side dish/snack itself is having much success with consumers.

The global French fry marketplace is anticipated to arrive at $18.5 billion by 2027, involving both fresh and frozen products. This fast-food market is highly competitive, with would-be customers frequently basing their dining choices on the quality of a brand’s French fries alone.

Dehydrated Potatoes

Potatoes react agreeably to both dehydration and reconstitution. Dried potato flakes are vital to numerous commercial soups, stews, gravies and food thickeners. They also act as the base for instant mashed potatoes, a well-accepted shelf-stable item in many home pantries.

Dehydrated potatoes are also the backbone of numerous snack items, especially Pringle’s brand potato chips.

The worldwide dehydrated potato market is anticipated to reach $9.68 billion by 2030, driven by a mounting demand for processed and shelf-stable foods.

Does the potato have an impact on the world’s economy? The question has been answered in a BIG YES!!

Long live the potato!

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