French fry demand rises as domestic potato production shrinks under climate, import pressure

Spring potato output falls 10.5%; self-sufficiency rate drops from 68% to 40% over two decades; US chip-potato tariff cuts add to industry strain

Demand for french fries and potato chips is growing in South Korea, but the domestic production base is steadily eroding. Analysts say the country is locking into a structural dependence on imports as processed and restaurant-sector demand expands while homegrown supply contracts.

The Korea Rural Economic Institute (KREI) said in a report released Wednesday that the production base for potatoes and sweet potatoes is weakening and that a medium- to long-term strategy to develop the industry is needed. The report, titled "Analysis of the Tuber Crop Industry and Policy Challenges," called for urgent action.

Potatoes and sweet potatoes are staple food crops and key raw materials for the food manufacturing and restaurant industries. According to KREI, per capita annual potato consumption has trended downward since the 1980s, but overall demand has held steady as consumption of processed and restaurant-sector products such as french fries and potato chips has increased.

Share of households purchasing processed potato products [Rural Development Administration · Korea Rural Economic Institute]

A consumer trend survey by the Rural Development Administration found that the share of households purchasing processed potato products rose from around 20 percent in 2010 to more than 60 percent in 2022. Over the same period, both purchase frequency and annual spending increased, indicating a shift in potato consumption away from fresh potatoes toward processed products.

KREI said imports of frozen processed potatoes have consistently grown alongside rising demand from restaurants and food manufacturers. In effect, a significant share of the increased demand for french fries is being met by imported product.

Spring potato cultivation area and output by year [Ministry of Statistics]

Production conditions, meanwhile, are deteriorating.

KREI said abnormal weather patterns, heavy rainfall and hot, humid conditions are widening output volatility, while rural aging, labor shortages and rising operating costs are making it increasingly difficult to sustain the production base.

According to the Ministry of Statistics, spring potato output last year totaled 356,000 tons, down 10.5 percent from the previous year. Cultivation area shrank 3.8 percent and yield per unit area fell 7.0 percent, meaning poor growing conditions had a greater impact than the reduction in planted area.

The long-term trend in potato cultivation area is also downward. The area under potato cultivation fell from 29,030 hectares in 2000 to 23,956 hectares in 2024, and the pace of decline has accelerated in recent years.

Trend in domestic tuber crop food self-sufficiency rate [Korea Rural Economic Institute]

The self-sufficiency base is also weakening.

Even as processed food and restaurant consumption expands, domestic production has moved in the opposite direction, failing to keep pace with demand. Measured on a FAO Food Balance basis — which includes processed and restaurant-sector consumption — South Korea's potato self-sufficiency rate fell from 68 percent in the 2000s to 54 percent in the 2010s and has dropped further to around 40 percent in the 2020s.

The decline reflects growing imports of frozen potatoes and starch for processing.

The report said the self-sufficiency rate over the most recent five-year period from 2019 to 2023 stands at about 77 percent on a raw-potato basis, but falls to roughly 51 percent once demand for starch and other processed uses is included.

Imports of frozen processed potatoes — the type widely used by the restaurant industry — have risen continuously, with a growing share of new demand being met by imported product. The more french fry consumption grows, the report found, the larger the role imported frozen potatoes play relative to domestic supply.

In the past, domestic and imported potatoes were largely complementary, but the simultaneous decline in domestic production and expansion of imports has made the competitive dynamic increasingly pronounced, the report said.

KREI also flagged the scheduled reduction of tariffs on US chip-use potatoes beginning next year as an additional burden on the domestic industry.

The report said the phased elimination of seasonal tariffs under free trade agreements, starting with US chip-use potatoes, could erode the price competitiveness of domestically grown potatoes.

Pressures on producers are also mounting.

In a survey, potato farmers identified securing adequate selling prices (84.3 percent), responding to abnormal weather (83.0 percent), offsetting rising input costs (79.3 percent) and addressing labor shortages (77.3 percent) as their most urgent challenges.

In response, KREI proposed six policy priorities: developing new varieties and improving seed distribution systems to match shifting consumption patterns; upgrading the production base to cope with climate change; expanding the public seasonal labor program; promoting mechanization; activating contract farming; and improving the distribution structure through greater use of online wholesale markets.

KREI warned that if climate change and import expansion proceed simultaneously, the production base of the potato industry could weaken further.

"Potatoes and sweet potatoes are strategically important crops from the standpoint of food security and the food industry, but the industrial base is becoming increasingly unstable due to climate change and rising imports," said Yu Chan-hee, a KREI research fellow. "A systematic response across production, distribution and processing, along with a medium- to long-term industry development strategy, is urgently needed."

adastra@heraldcorp.com