Potato Shortage Gets Worse in 2022, Global Food Crisis Deepens

Mohit Oberoi, CFA - Author
By

May 17 2022, Published 8:47 a.m. ET

For over two years now, consumers have been battling intermittent shortages of various food products. While the situation was expected to get better in 2022, the Russian invasion of Ukraine has only intensified the problem. U.S. President Joe Biden, U.N. food chief David Beasley, and Goya Foods CEO Bob Unanue have warned of a global food shortage. Potatoes seem to be the latest item to join the list of food products that are in short supply.

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Potatoes are among the most commonly used food products across the world for in-home cooking, restaurants, and snacks like chips. Is there a potato shortage in 2022 and who’s to blame for the situation?

China is the world’s largest potato producer.

Globally, China is the world’s largest potato producer followed by neighbor India. They are the world’s most populous countries in that order and are invariably among the top producers of most food products. Russia and Ukraine are also major potato producers while the U.S. is the fifth-largest producer.

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potato shortage
Source: Unsplash

Idaho and Washington account for over half of the U.S. potato production.

Potatoes are grown commercially in as many as 30 U.S. states. However, Idaho is the largest producer followed by Washington. Together, these two states account for over half of U.S. potato production.

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According to the USDA, the country’s potato production fell on a YoY basis in 2020 and 2021. Frozen potato stocks at the end of 2021 were also lower than what we had at the end of 2020. While the COVID-19 lockdowns and labor shortage played a part, droughts in parts of the country also lowered the yields. In 2021, U.S. potato production was 7 percent lower than the average production in the preceding five years.

COVID-19 lockdowns led to potato supply chain problems.

Potato demand was strong and people loaded up on snacks during the lockdowns. Most of the potatoes that are produced by U.S. farmers find their place in processed foods like chips. As demand soared and supply fell, potatoes faced a supply chain problem like many other food products.

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In November 2021, Canada stopped the potato exports from Prince Edward Island to the U.S. amid concerns about potato wart fungus. The province accounts for a fifth of the total Canadian potato production. The exports resumed in April 2022. Potato production in parts of Europe was also impacted negatively in 2021 due to floods.

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The global potato shortage has gotten worse in 2022.

The global potato shortage has gotten worse in 2022. The Russia-Ukraine war has only added to the food shortage situation. While potatoes aren't as affected as wheat and sunflower oil, the war is still adding to the supply chain troubles.

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Japan has dealt with a potato shortage.

In 2021, reports of severe potato shortages started to crop up from Japan, which imports several food products and is the largest Asian market for frozen U.S. potato products. McDonald’s had to ration french fries amid a potato shortage in the island nation. Now, rival Burger King is offering to replace french fries with dried ramen snacks in its Japanese outlets. Many KFC outlets in Japan have also stopped offering french fries.

There are conspiracy theories on potato exports.

The U.S. has started to export potatoes to Mexico beyond the 26-kilometer border zone. While potato farmers and industry associations have hailed the decision anticipating an increase in U.S. potato exports to Mexico, many see the initiative as ill-timed considering fears of a potato shortage in the U.S.

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Many conservatives think that Biden is threatening U.S. food and energy security. Republican lawmakers also allege that the administration is sending baby formula to the border even though parents across the country have been scrambling to buy formula for their babies.

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Mexico will increase potato imports from the U.S.

As for potatoes, the decision to export potatoes to Mexico beyond the 26-kilometer line was long overdue. After over two decades of impasse, in 2021, the Mexican Supreme Court overturned a previous lower court order limiting potato imports from the U.S. The shipments have now finally started, which will help provide more export opportunities for U.S. potato farmers.

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