Fresh and Processed Potatoes: 

Competitive Conditions Affecting the U.S. 

and Canadian Industries 

Investigation No. 3~2-378 

Publication 3050 

--· 

, ..... 

U.S. International Trade Commission 

Washinglon. DC 20436 
U.S. International Trade Commission 

Washington, DC 20436 

Fresh and Processed Potatoes: 

Competitive Conditions Affecting the U.S. 

and Canadian Industries 

Publication 3050 July 1997 
PREFACE 

· On January 29, 1997, at the request of the United States Trade Representative (USTR),1 and 

in accordance with section 332(g) of the Tariff Act of 1930 (19 U.S.C. 1332(g)), the U.S. 

International Trade Commission (Commission) instituted investigation No. 332·378, Fresh and 

Processed Potatoes: Competitive Conditions Affecting the U.S. and Canadian Industries, for 

the purpose of providing a report on the conditions of competition between the United States 

and Canada in potatoes and potato products. The USTR reported that the U.S. fresh and 

processed potato industries have expressed concerns about increased imports from Canada and 

believe that these imports may be benefiting from Canadian Government policies and industry 

pricing practices. USTR requested that the Commission report on factors affecting trade 

between the United States and Canada in (1) fresh table stock potatoes, (2) seed potatoes, (3) 

raw potatoes for processing, and ( 4) frozen processed potatoes. 

Public notice of the institution of the investigation and hearing was posted in the Office of the 

Secretary, U.S. International Trade Commission, Washington, DC, in the Federal Register of 

February 5, 1997 (97 F.R 5484), and on the Commission's Internet site (www.usitc.gov).2 A 

public hearing on the investigation was held on April 30, 1997, in Washington, DC.3 

The information presented in this report was obtained from a number of sources, including: the 

Commission's files; the public hearing; :fieldwork, which included visits with U.S. and Canadian 

growers and processors and their respective associations, importers, exporters, and processors 

of potatoes and frozen processed potato products in the United States and in Canada, as well 

as Federal, State, and Provincial Government agencies; and academic researchers. The 

Commission was requested to report the results of the investigation as soon as possible, but no 

later than July 15, 1997. 4 

1 The request from the United States Trade Representative is reproduced in appendix A 2 A copy of the Commission's notice of institution and hearing, together with a copy of the Federal 

Register notice, is included in appendix B. 3 A list of witnesses who testified at the hearing is included in appendix C. 4 The information and analysis provided in this report are for the purpose of this report only. 

Nothing in this report should be construed to indicate how the Commission would find in an 

investigation conducted under statutory authority covering the same or similar subject matter. 

CONTENTS 

Preface .................................................................... . 

Abbreviations and acronyms ..................................... . 

Executive Summary ................................................. . 

Chapter 1. Introduction ........................................... . 

Background .................................................................. . 

Production and trade trends .................................................. . 

U.S. industry concerns ...................................................... . 

Products, industries, and market coverage ......................................... . 

Products . . . . . . . . . . . . . . . . . . . . . . . . . . . ,. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Seed potatoes .......................................................... . 

Table stock and processing potatoes ....................................... . 

Processed potato products ................................................ . 

Industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Market coverage ........................................................... . 

Approach .................................................................... . 

Organization of report ......................................................... . 

Chapter 2. U.S. Industry and Market ........................ . 

Structure and operation of the U.S. industry ........................................ . 

Seed, table stock, and raw product growers ..................................... . 

Processors .............................................................. . 

Production, harvesting, and storage practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Seed and table stock potatoes ............................................. . 

Raw potatoes for processing-Frozen processed potato products ................. . 

Raw potatoes for processing-Other processed potato products .................. . 

Domestic production, inventories, consumption, prices, and grading ..................... . 

Production .............................................................. . 

Seed potatoes .......................................................... . 

Fresh potatoes ......................................................... . 

Processed potato products ...................................................... . 

Inventories .............................................................. . 

Fresh potatoes ......................................................... . 

Frozen potato products .................................................. . 

Consumption ............................................................. . 

Seed potatoes .......................................................... . 

Table stock ........................................................... . 

Frozen potatoes ........................................................ . 

111 

l 

xv 

XVII 

1-1 

1-2 

1-2 

1-3 

1-7 

1-7 

1-8 

1-9 

1-9 

1-10 

1-10 

1-11 

1-11 

2-1 

2-1 

2-2 

2-2 

2-3 

2-3 

2-6 

2-6 

2-7 

2-7 

2-7 

2-8 

2-16 

2-19 

2-19 

2-19 

2-19 

2-23 

2-24 

2-24 
CONTENTS-Continued 

Chapter 2. U.S. Industry and Market-Cont. 

Prices: . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-27 

Prices received by growers-Potatoes for all uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-27 

Prices received at retail-Fresh white potatoes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-30 

Prices received by growers-Raw potatoes for processing . . . . . . . . . . . . . . . . . . . . . . . 2-30 

Prices received at retail-Frozen french fries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-30 

Prices received at retail-Other processed products . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-35 

Grading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-35 

Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-38 

Seed and table stock potatoes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-38 

Raw potatoes for processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-42 

Processed potato products ............................................ , . . . . . . . 2-43 

Channels of distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-44 

State potato marketing organization and associations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-46 

U.S. trade and regulatory measures, and tariff treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-4 7 

Trade and regulatory measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-47 

Tariff treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-47 

Federal marketing orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-50 

Perishable Agricultural Commodities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-51 

Government assistance programs affecting the U.S. potato industry . . . . . . . . . . . . . . . . . . . . . . 2-51 

U.S. Federal Government programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-52 

Crop insurance-Federal Crop Insurance Corporation (FCIC) . . . . . . . . . . . . . . . . . . . . 2-52 

Disaster/emergency assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-52 

Credit/financial assistance.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-56 

hrigation/rural development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-57 

Marketing assistance, domestic and foreign market promotion . . . . . . . . . . . . . . . . . . . . 2-59 

Research/extension/information services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-63 

Plant protection and quarantine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-64 

Federal taxes . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-64 

State programs-taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-65 

State and local taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-65 

Tax exemptions ......... " . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-66 

State programs-Idaho . . . . . . .. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-66 

Credit/financial assistance-rural rehabilitation program . . . . . . . . . . . . . . . . . . . . . . . . 2-66 

Marketing Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-66 

State programs-Washington State. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-67 

Tax exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-67 

Inigation assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-68 

Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-69 

iv 
CONTENTS-Continued 

Chapter 2. U.S. Industry and Market-Cont. 

State programs-Maine ........................................ ; . . . . . . . . . . . . . 2-69 

Credit/fmancial assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-69 

Crop development/inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-71 

Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-72 

State programs-North Dakota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-72 

Chapter 3. Trade Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-t 

Overall U.S. trade flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1 

U.S. global trade balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1 

U.S. global imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-5 

U.S. global exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-7 

U.S. trade with Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-11 

Trade balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-11 

Import levels and trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-12 

Export levels and trends... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-12 

U.S.-Canada Regional trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-15 

Regional trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-15 

Trade by Customs Districts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-17 

Imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-17 

Exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-19 

Overall Canadian trade flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-21 

Canadian global trade balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-21 

Canadian global imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-21 

Canadian global exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-23 

Canadian trade with the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-24 

Export levels and trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-24 

Import levels and trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-24 

Chapter 4. Canadian Industry and Market . . . . . . . . . . . . . . . . . 4-t 

Structure and operation of the Canadian industiy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-2 

Growers ..................................... .,. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-2 

Fresh potato inventories . . . . . . . . . . . . . . • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-7 

Processors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-8 

Number of processors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-8 

Production capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-9 

Frozen french fry inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-9 

v 
CONTENTS-Continued 

Chapter 4. Canadian Industry and Market-Cont. 

Potato production, consumption, prices, and grading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-10 

Production . . . . . . . . . . . . . . . . . . . . . . . . • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-10 

Fresh potatoes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 4-10 

Frozen french fries ..............•.................................. " . . . . . 4-13 

Potato chips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-13 

Production costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-14 

Consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-16 

Fresh potatoes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-16 

Frozen french fries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-18 

Potato chips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-18 

Canadian prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-18 

Seed potato certification regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-22 

Canadian grading system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-24 

Channels of distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . .. .. . . . . . . .. . . . . . . . . . . . . 4-24 

Marketing methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-25 

Provincial potato grower organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-25 

Canadian trade and regulatory measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-26 

Tariff treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-26 

Antidumping and countervailing duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-26 

Fresh fruit and vegetables regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-27 

Prohibition on consignment sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-28 

Disinfection requirements to meet European Union standards . . . . . . . . . . . . . . . . . . . . . . . . 4-28 

Canadian Food Inspection Agency ............................................. · 4-29 

Fresh fruit and vegetable, and dairy products inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-29 

Animal and Plant Health Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-30 

Food and Drug Act and regulations ....................................... , . . . . . 4-31 

Provincial potato disinfection programs ........................... , ....... , . . . . . 4-31 

Canadian assistance programs ........................... : . . . . . . . . . . . . . . . . . . . . . . . . 4-32 

Overview ................................................... , ....... , . . . . . 4-32 

Trends in Canadian programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-38 

Canadian Federal Government assistance programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-39 

Safezy-net programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-39 

Credit assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-40 

Economic development assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-43 

Irrigation, infrastructure, and crop development assistance-Prairie Fann 

Rehabilitation Administration (PFRA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-45 

Export promotion, marketing, training, and representation . . . . . . . . . . . . . . . . . . . . . . . 4-47 

Transportation assistance-Atlantic Region Freight Assistance Act (ARF AA)/ 

Maritime Freight Rates Act (MF AA) . . . . . . . .. . . .. . . . . . . . . . . . . . . . . . . . . . . . 4-48 

V1 
CONTENTS-Continued 

Chapter 4. Canadian Industry and Market-Cont. 

Agricultural research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-49 

Disease control-PVYn compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-51 

General programs-wage assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-52 

Provincial programs-Prince Edward Island . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-52 

Safety-net programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-52 

Credit assistance programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-53 

Production/extension programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-54 

Disease control under the Plant Health Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-56 

Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-56 

Trade/enterprise/market development assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-57 

Provincial programs-Manitoba . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-58 

Safety-net programs~nhanced crop insurance................................ 4-58 

Credit assistance-Manitoba Agricultural Credit Corporation (MACC) . . . . . . . . . . . . 4-59 

Irrigation/waste treatment assistance/infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-60 

Tax assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-63 

Research programs .................................................... ·. . . 4-64 

Provincial programs-New Brunswick . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-64 

Credit assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ~ . . 4-64 

Potato Expansion and Land Stewardship Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-66 

Tax assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-67 

Research/extension, and production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-68 

Agribusiness/rural development/market development . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-69 

Provincial programs-Quebec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-71 

Safety-net programs-Quebec Fann Income Stabilization lnsurance Program (FISI) . . 4-71 

Agricultural Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-72 

Tax assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-72 

Agribusiness development/research-Canada-Quebec subsidary agreement on 

agri-food development ........................ , . . . . . . . . . . . . . . . . . . . . . . . 4-73 

Provincial programs-Alberta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-73 

Safety-net programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-73 

Credit assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-7 4 

Irrigation assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-7 6 

Tax assistance-Alberta Farm Fuel Benefit Program (AFFB) . . . . . . . . . . . . . . . . . . . . 4-77 

Research, industry assistance, and market development . . . . . . . . . . . . . . . . . . . . . . . . . 4-77 

Provincial programs-Ontario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-78 

Credit assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-78 

Agricultural research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-78 

Tax and input assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-79 

Agribusiness and rural development-Grow Ontario Investment Program . . . . . . . . . . 4-80 

Provincial programs-Saskatchewan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-80 

Safety-net programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-80 

Credit/Financial Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-81 

Vil 
CONTENTS-Continued 

Chapter 4. Canadian Industry and Market-Cont. 

Irrigation/water supply assistance .......................................... . 

Tax rabates ........................................................... . 

Research and agribusiness development ..................................... . 

Chapter 5. Analysis of Competitive Factors ................ . 

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Supply factors ................................................................ . 

Industry structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . 

Number of producers .................................................... . 

Capacity .............................................................. . 

Concentration ......................................................... . 

Production ............................................................ . 

Location ............................................................... . 

Availability of inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Ownership ; ........................................................... . 

Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

International trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Stocks ........................................................... · ...... . 

Technology ............................................................... . 

Costs ................................................................. . 

Production costs ....................................................... . 

Transportation costs . . . . . . . . . . . . . . . . . . . . . ....... : . . . . . . . . . . . . . . . . . . . . . . . . 

Demand factors ............................................................... . 

Market structure ........................................................... . 

Market size and distribution .............................................. . 

Demand attributes and shifts .............................................. . 

Consumer income ....................................................... . 

Seasonality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Market share .......................................................... . 

· Stocks .................. , ................................................ . 

Prices ................................................................... . 

Fresh potatoes ......................................................... . 

Processed potato products ................................................ . 

Exchange rates ............................................................... . 

Tenns of sale ................ , ................................................ . 

Government assistance, trade, and regulatory programs ............................... . 

Government assistance programs ............................................. . 

Seed certification . . . . . . . .. ,. . . . . . . . . • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . 

Trade policy .............................................................. . 

Fresh potatoes ......................................................... . 

Processed potatoes ..................................................... . 

viii 

4-81 

4-85 

4-85 

5-1 

5-1 

5-2 

5-2 

5-2 

5-2 

5-3 

5-4 

5-4 

5-5 

5-6 

5-7 

5-8 

5-10 . 

5-11 

5-13 

5-13 

5-14 

5-21 

5-21 

5-21 

5-23 

5-24 

5-24 

5-27 

5-33 

5-34 

5-34 

5-40 

5-40 

5-42 

5-43 

5-43 

5-44 

5-44 

5-44 

5-48 
CONTENTS-Continued 

Chapter 5. Analysis of Competitive Factors-Cont. 

Econometric analysis of the U.S. fresh potato and frozen french fry markets . . . . . . . . . . . . . . . . 5-51 

Review of economic literature on potatoes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-51 

Econometric relationships among prices, stocks, market-clearing quantities, and trade: 

the U.S. markets for fresh potatoes and frozen french fries . . . . . . . . . . . . . . . . . . . . . . . 5-54 

Modeling approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-55 

Model simulations and results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-57 

Simulation 1: Effects of a ten percent rise in stocks ofU.S.-produced fresh potatoes . . 5-59 

Simulation 2: Effects of a ten percent rise in U.S. fresh potato price . . . . . . . . . . . . . . . 5-61 

Simulation 3: Effects of a ten percent rise in U.S. frozen 

french fry volume produced and consumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-63 

Simulation 4: Effects of a ten percent rise in U.S. fresh potato imports . . . . . . . . . . . . . . . . 5-64 

Simulation Results: Swmnary and Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-65 

Appendixes 

Appendix A. 

AppendixB. 

AppendixC. 

AppendixD. 

AppendixE. 

AppendixF. 

AppendixG. 

Figures 

Letter ofrequest from US TR .......................................... . 

Commission's notice of institution of investigation and scheduling of hearing ... . 

List of witnesses appearing at the hearing ................................ . 

Supplemental tables ................................................. . 

Excerpts from Canada Customs Tariff Schedule pertaining to potatoes and 

potato products ................................................. . 

Revenue Canada export price and margin of dumping report for potatoes for 

April 20-26, 1997 ........... ; ................................... . 

Technical modeling appendix .......................................... . 

A-1 

B-1 

C-1 

D-1 

E-1 

F-1 

G-1 

Figure 2-1 Potatoes: U.S. production areas, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-12 

Figure 2-2 Frozen french fries: U.S. freezer plants, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-19 

Tables 

1-1 

2-1 

2-2 

2-3 

2-4 

2-5 

Potatoes: World pr6duction, 1992-96 .......................................... . 

Seed potatoes: Certified seed potatoes acreage, by selected states, 1991/92 to 1995/96 ... . 

Potatoes: U.S. per-acre estimated costs of production, by year and by potato type ....... . 

Potatoes: U.S. area planted and harvested, yield, and production, by seasons, 1991/92 to 

1995/96 ................................................•............. 

Potatoes: U.S. area planted and harvested, yield, and production, by region, 1991/92 to 

1995/96 ............................................................. . 

Potatoes: Number of farms, harvested area, and harvested area by farm, by region and 

selected states, 1982,1987, and 1992 ....................................... . 

IX 

1-3 

2-8 

2-9 

2-12 

2-13 

2-14 
CONTENTS-Continued 

List of Tables-Cont. 

2-6 

2-7 

2-8 

2-9 

2-10 

2-11 

2-12 

2-13 

2-14 

2-16 

2-17 

2-18 

2-19 

2-20 

2-21 

2-22 

2-23 

2-24 

2-25 

2-26 

2-27 

2-28 

2-29 

2-30 

2-31 

Potatoes: Number of irrigated fanns, irrigated harvested area, and irrigated harvested area 

per farm, by region and selected states, 1982, 1987, and 1992 .................. . 

Potatoes products: Number of establishments and product shipments, by census year and 

by products, 1982, 1987, and 1992 ........................................ . 

Frozen potato products: U.S. production, by product and style of pack, and by region, 

1992-96 ............. ·~ ......... ~· ...................................... . 

Potato chips: Number of plants and quantity of raw potatoes processed, by region, 

1991-95 ....................... ' ...................................... . 

Fresh potatoes: Stocks on hand, by regions, by certain states, and by selected months, 

1991/92 to 1995/96 .................................................... . 

Fresh potatoes: Stocks on hand, by quantity and share of production, 1991/92 to 1996/97 . 

Frozen potato products: Frozen stocks in cold storage, by product and by region, 1992-96 

Potatoes: Per capita utilization, by end use, 1982-86, 1987-91, and 1992-96 5-year 

averages, and 1992-96 annual ............................................. . 

Seed potatoes: U.S. imports for consumption, domestic production, exports of domestic 

merchandise, apparent consumption, ratio of imports to consumption, and ratio of 

exports to production 1992-96 ............................................ . 

Table stock potatoes: U.S. beginning stocks, imports for consumption, production, 

exports of domestic merchandise, ending stocks, apparent consumption, ratio of 

imports to consumption, and ratio of exports to production, 1992-96 ............. . 

Frozen potato products: U.S. beginning stocks, imports for consumption, production, 

exports of domestic merchandise, ending stocks, and apparent consumption, by 

type, 1992-96 ......................................................... . 

Potatoes: Season average potato prices received by growers, by region and by selected 

states, 1991192 tol995/96 ............................................... . 

Potatoes: Prices received by U.S. growers, by month, 1993-97 ...................... . 

Potatoes: Seasonal and annual average prices received by U.S. growers, 1994-97 ....... . 

Fresh white potatoes: Monthly U.S. retail prices, 1993-97 .......................... . 

Fresh white potatoes: Seasonal and average annual U.S. retail prices, 1994-97 ......... . 

Processing potatoes: Prices received by U.S. growers, by month, 1992-96 ............. . 

Frozen french fries: Monthly U.S. retail prices, 1993-97 ........................... . 

Frozen french fries: Seasonal and average annual U.S. retail prices, 1994-97 ........... . 

Potato chips: Retail prices, by month, 1992-96 .................................. . 

Potato chips: Prices by type of sales outlet, 1992/96 .............................. . 

Potatoes: U.S. standards for grades ofidentity, by product ......................... . 

Fresh-market potatoes: Choice of transport mode for shipments from selected 

growing areas, 1994-96 .................................................. . 

Fresh-market potatoes: Share of arrivals in selected cities from specified growing 

areas, by mode of transportation, 1994-96 ................................... . 

Potatoes: Harmonized Tariff Schedule subheading; descriptions; U.S. col. 1 rate of duty 

as of Jan. 1, 1997; U.S. exports, 1996; U.S. imports, 1996 ..................... . 

Federal potato marketing orders: year established and provisions .................... . 

x 

2-15 

2-16 

2-18 

2-18 

2-20 

2-22 

2-22 

2-23 

2-23 

2-25 

2-26 

2-28 

2-31 

2-32 

2-32 

2-33 

2-33 

2-34 

2-34 

2-36 

2-36 

2-37 

2-40 

2-41 

2-48 

2-50 
CONTENTS-Continued 

Tables-Cont. 

2-32 

3-1 

3-2 

3-3 

3-4 

3-5 

3-6 

3-7 

3-8 

3-9 

3-10 

3-11 

3-12 

3-13 

3-14 

3-15 

3-16 

3-17 

3-18 

3-19 

3-20 

3-21 

3-22 

3-23 

4-1 

4-2 

4-3 

4-4 

4-5 

4-6 

4-7 

Summary of Federal and State programs applicable to potatoes and potato industries .... . 

Potatoes: U.S. exports of domestic merchandise, by principal markets, 1992-96 ........ . 

Potatoes: U.S. imports for consumption, by principal sources, 1992-96 ............... . 

Potatoes: U.S. trade balance, by principal partners, 1992-96 ....................... . 

Potatoes: U.S. global trade balance, by principal items, 1992-96 .................... . 

Potatoes: U.S. imports for consumption, by principal items, 1992-96 ................. . 

Potatoes: U.S. exports of domestic merchandise, by principal items, 1992-96 .......... . 

Frozen french fries: U.S. exports of domestic merchandise, by principal markets, 1992-96 . 

Potato chips: U.S. exports of domestic merchandise, by principal markets, 1992-96 ..... . 

Fresh table stock potatoes: U.S. exports of domestic merchandise, by principal 

markets, 1992-96 ...................................................... . 

PotatQes: U.S. trade balance with Canada, by principal items, 1992-96 ............... . 

Potatoes: U.S. imports for consumption from Canada, by principal items, 1992-96 ...... . 

Potatoes: U.S. exports of domestic merchandise to Canada, by principal items, 1992-96 .. 

Potatoes: Regional trade flows between the United States and Canada, 1992-96 ........ . 

Fresh table stock potatoes: U.S. imports for consumption from Canada, by principal 

Customs Districts, 1992-96 ............................................. . 

Frozen french fries: U.S. imports for consumption from Canada, by principal Customs 

Districts, 1992-96 ..................................................... . 

Fresh seed potatoes: U.S. imports for consumption from Canada, by principal Customs 

Districts, 1992-96 ...................................................... . 

Fresh table stock potatoes: U.S. exports of domestic merchandise to Canada, by principal 

Customs Districts, 1992-96 .............................................. . 

Frozen french fries: U.S. exports of domestic merchandise to Canada, by principal 

Customs Districts, 1992-96 .............................................. . 

Fresh seed potatoes: U.S. exports of domestic merchandise to Canada, by principal 

Customs districts, 1992-96 .............................................. . 

Potatoes: Canadian imports for consumption, by principal items, 1992-96 ............. . 

Potatoes: Canadian imports for consumption, by principal sources, 1992-96 ........... . 

Potatoes: Canadian exports of domestic merchandise, by principal markets, 1992-96 .... . 

Potatoes: Canadian exports of domestic merchandise, by principal items, 1992-96 ...... . 

Potatoes: Canadian, U.S., and world production and area harvested, and the share of 

world production and harvested acreage accounted for by Canada and the 

United States, 1992-96 .................................................. . 

Potatoes: Number of Canadian farms and acreage planted, by region and Province, 

1981, 1986, 1991, and 1996 ............................................. . 

Potatoes: Canadian acreage harvested, by region and Province, crop years 1992-96 ..... . 

Seed potatoes: Acreage approved for certification, by variety and Province, 1992-96 .... . 

Potatoes: Canadian storage holdings, by Province, on November 1, 1992-96 ........... . 

Frozen french fries: Canadian production, exports, imports, beginning stocks, and 

apparent consumption, marketing years 1992-96 ............................. . 

Potatoes: Canadian production, by region and Province, crop years 1992-96 ........... . 

X1 

2-53 

3-2 

3-3 

3-4 

3-5 

3-6 

3-8 

3-9 

3-9 

3-10 

3-11 

3-13 

3-14 

3-16 

3-17 

3-18 

3-19 

3-19 

3-20 

3-21 

3-22 

3-23 

3-24 

3-25 

4-1 

4-3 

4-4 

4-5 

4-8 

4-10 

4-11 
---------------------------

CONTENTS-Continued 

Tables-Cont. 

4-8 

4-9 

4-10 

4-11 

4-12 

4-13 

4-14 

4-15 

4-16 

4-17 

4-18 

4-19 

4-20 

5-1 

5-2 

5-3 

5-4 

5-5 

5-6 

5-7 

5-8 

5-9 

5-10 

Potatoes: Value of Canadian production, by region and Province, crop years 1992-95 .... . 

Potato chips: Canadian production and raw potatoes used, by source, 1992-95 ......... . 

Potatoes: Per acre estimated costs of production, by type, various years ............... . 

Potatoes: Supply and disappearance in Canada, 1992-96 ........................... . 

Fresh potatoes: Average fann price received by Canadian growers, by Province, 1992/93 

to 1995/96 ............................................................ . 

Russet potatoes: Wholesale to retail market prices 80-count cartons, in 

selected markets, by sources, Jan. 1995-Dec. 1996 ............................ . 

Round white potatoes: Wholesale to retail market prices in 50-pound bags 

or sacks, in selected markets, by source, Jan. 1995-Dec. 1996 ................... . 

Summary of Federal and Provincial programs available to potato growers 

and potato industries .................................................... . 

Contributions by the Atlantic Canada Opportunities Agency to potato industries 

in P.E.I. and New Brunswick, 1994-96 ..................................... . 

Federal-Provincial cost-sh~ed programs affecting potato industries administered by the 

Prairie Fann Rehabililition Administration .................................. . 

Potato processing and storage loans and grants, P.E.I., 1994-96 ..................... . 

New Brunswick Department of Agriculture and Rural Development research and 

extension activities . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 

Approved projects for general water supply infrastructure, inigation effectiveness, and 

commerical development affecting the potato sector under the Canada/Saskatchewan 

Partnership Agreement on Water Based Economic Development,as of February 1997 . 

Potatoes: Listing of competitive factors affecting the U.S. and Canadian fresh and 

processed potato industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Frozen french fries: Monthly changes in stocks, January 1992-April 1997, and share of 

monthly stocks to annual production, January 1992-December 1996 .............. . 

Fresh potatoes: Distance between major U.S. and Canadian production areas and markets . 

Fresh potatoes: freight rates between major U.S. and Canadian producing areas and 

markets .............................................................. . 

Fresh table stock potatoes: Arrivals in selected U.S. cities, by major shipping origins, 

1992-96 .............................................................. . 

Frozen potato products: Freight rates, by mode of transportation, between major U.S 

and Canadian producing areas and markets ................................... . 

Fresh table stock potatoes: Share, by source, of monthly arrivals in Boston, by 

principal sources 1992-96 ............................................... . 

Fresh table stock potatoes: Share, by month, of monthly arrivals in Boston , 

by principal sources, 1992-96 ............................................ . 

Fresh table stock potatoes: Share, by source, of monthly arrivals in New York, 

by principal sources, 1992-96 ............................................ . 

Fresh table stock potatoes: Share, by month, of monthly arrivals in New Yark, 

by principal sources, 1992-96 ............................................ . 

Xll 

4-12 

4-13 

4-14 

4-17 

4-19 

4-20 

4-23 

4-33 

4-44 

4-46 

4-54 

4-69 

4-84 

5-1 

5-12 

5-15 

5-16 

5-18 

5-20 

5-25 

5-26 

5-28 

5-29 
CONTENTS-Continued 

Tables-Cont. 

5-11 Fresh table stock potatoes: Share, by source, of monthly arrivals in Philadelphia, 

by principal sources, 1992-96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-30 

5-12 Fresh table stock potatoes: Share, by month, of monthly arrivals in Philadelphia, 

by principal sources, 1992-96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-31 

5-13 Fresh table stock potatoes: Arrivals in selected U.S. cities, by major shipping origins, 

1992-96 .................. " .... , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-32 

5-14 Fresh table stock potatoes: Monthly prices in the Boston market for U.S. and Canadian 

Russet Burbank and round white potatoes, Jan. 1994-Apr. 1997 . . . . . . . . . . . . . . . . . . 5-36 

5-15 Fresh table stock potatoes: Monthly prices in the New York market for U.S. and Canadian 

Russet Burbank and round white potatoes, by year and by month, Jan. 1994-

Apr. 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-38 

5-16 Nominal and real Canadian dollar/U.S. dollar exchange rates, Jan. 1994-Apr. 1997 . . . . . . 5-42 

5-17 Multipliers of simulated responses to selected VAR model shocks . . . . . . . . . . . . . . . . . . . . 5-60 

Xlll 

Abbreviations and Acronyms 

AAFC 

AAFRD 

ACOA 

ADB 

ADC 

ADF 

ADT 

AFFB 

AFSC 

AMS 

APCA 

ARFAA 

ARIF 

BRR 

CAIP 

CARD 

CBSC 

CFBMP 

CFEP 

CFIA 

CITT 

CMAAS 

DFAIT 

EEC 

EU 

FAS 

FCC 

FIDP 

FIMCLA 

FLIP 

FSA 

FTC 

GATT 

GRIP 

HRDC 

!REF 

IRP 

LTL 

MACC 

MCDC 

MEDT 

MII 

Agriculture and Agri-Food Canada 

Alberta Agriculture, Food and Rural Development 

Atlantic Canada Opportunities Agency (Federal Canada) 

Agriculture Development Board (New Brunswick) 

Agricultural Development Corp. (Alberta) 

Agriculture Development Fwid (Sashetchewan) 

Canadian Antidumping Tribwial 

Alberta Fann Fuel Benefit 

Agricultural Financial Service Corp. (Alberta) 

Agricultural Marketing Service 

Advance Payments for Crops Act 

Atlantic Region Freight Assistance Act of 1969 

Agricultural Research Investment Fwid (P.E.I.) 

Bacterial ring rot 

Canada Agri-Infrastructure Program 

Canadian Adaptation and Rural Development Fwid 

Canada Business Service Centre 

Canadian Farm Business Management Program 

Cash Flow Enhancement Program 

Canadian Food Inspection Agency 

Canadian International Trade Tribwial 

Canada-Manitoba Agreement on Agricultural Sustainability 

Department of Foreign Affairs and International Trade (Federal) 

European Economic Community 

European Union 

Foreign Agricultural Service, U.S. Department of Agriculture 

Farm Credit Corporation (Federal Canada) 

Canada/ Alberta Agreement on the Farm Income Disaster Program 

Farm Improvement and Marketing Cooperative Loan Act 

Farm Land Identification Program (New BfWlSwick) 

Farm Service Agency 

Food Technology Centre (P.E.I.) 

General Agreement on Tariffs and Trade 

Gross Revenue Insurance Program 

Human Resources Development Canada 

Irrigation Rehabilitation Endowment Fwid (Alberta) 

Irrigation Rehabilitation Program (Alberta) 

Larger than Largest 

Manitoba Agricultural Credit Corporation 

Manitoba Crop Diversification Centre 

Ministry of Economic Development and Tourism (P.E.I.) 

Matching Investment Iniative 

xv 
Abbreviations and Acronyms-Continued 

MRFAA 

N.B. 

NBAC 

NISA 

NPC 

NPPB 

OMAFRA 

P.E.I. 

PAMWI 

- Maritime Freight Rates Act of 1927 

- New Brunswick 

- New Brunswick Agricultural Council 

- National Income Stabilization Account 

- National Potato Council 

- National Potato Promotion Board 

Ontario Ministry of Agriculture, Food, and Rural Affairs 

Prince Edward Island 

Canada/Manitoba Partnership Agreement on Municipal Water 

Infrastructure 

Canada Sasketchewan Partnership Agreement Rural on Development 

Canada/Sasketchewan Agreement on Water-Based Economic Development 

Program for Export Market Development 

Prairie Farm Rehabilitation Administration (Federal Canada) 

Processed Products Regulations 

Canada/P .E.I. Corporation Agreement on Primary Resource Development 

Potato Spindle Tuber Viroid 

PARO 

PAWBED 

PEMD 

PFRA 

PPR 

PROA 

PSTV 

REDA Regional Economic Development Agreement (Federal Canada/P.E.I.) 

Sask Water - Saskechewan Water Corp. 

SIBED Canada/Sashetchewan Economic and Regional Development Subsidiary 

SIDC 

USDA 

WD 

WGTA 

WGTAF 

WGTPP 

WMS IP 

WTO 

Agreement on hrigation-Based Economic Development 

Sasketchewan Irrigation Development Centre 

U.S. Department of Agriculture 

Western Economic Diversification Canada 

Western Grain Transportation Act 

Western Grain Transportation Adjustment Fund 

Western Grain Transition Payments Program 

Water Management Systems Improvement Program (Alberta) 

World Trade Organization 

XV1 
-------------------·---- -~- -

Executive Summary 

Tue Commission instituted this investigation on January 29, 1997, following receipt of a request 

from the Office of the United States Trade Representative. The investigation was conducted 

under section 332(g) of the Tariff Act of 1930 (19 U.S.C. 1332(g)) to investigate the 

competitive conditions affecting the U.S. and Canadian fresh and processed potato industries. 

More specifically, the Commission report includes information on factors affecting trade 

between the United States and Canada in fresh table stock potatoes, seed potatoes, raw potatoes 

for processing, and frozen potato products. 

Potatoes are the underground tubers of a succulent, nonwoody, temperate zone plant. Potato 

tubers are produced in numerous sizes, shapes, and skin colors, and are often grouped by type 

(russet, red, white, or yellow-flesh) or by variety (e.g., Russet Burbank, Centennial Russet, 

Superior, or Yukon Gold). ·Potatoes or parts of potatoes used to produce new plants are called 

seed potatoes. Potatoes sold for fresh-market use are termed table stock. Potatoes used for 

making frozen french fries and other frozen potato products are termed raw potatoes for 

processing. Potatoes used for making potato chips or other potato-based snack foods are called 

chipping potatoes. 

Potatoes are commercially gro\W in nearly every State, with the bulk of production accounted 

for by about 20 States. In general, fresh potato production is often described as 'fall-harvested' 

or 'summer-harvested,' depending upon the time of year harvest takes place. In. recent years, 

an estimated 90 percent annually of the total U.S. potato crop was fall-harvested. Summerharvested production data generally includes production harvested during the winter, spring, and 

summer months. Potato production is also described in terms of regions where the potatoes are 

grown. fu recent years, an estimated 65 percent of annual production was accounted for by 

growers in the Western region, followed by 22 percent from growers in the North Central 

region. An estimated 7 percent of the total volume of U.S. production was accounted for by 

States in the Northeastern United States region, with the remainder of production distributed 

throughout a number of other States. 

U.S. potato industry representatives have expressed concerns about increased imports of fresh 

and frozen potato products from Canada. Concerns have also been raised about the level and 

type of assistance provided to fresh potato production and processing in Canada by the 

Canadian Federal and Provincial Governments. 

The United States is a larger global exporter of potatoes and potato products than Canada, with 

Japan being our primary market, but significant quantities of U.S.-gro\W potatoes are also 

exported to Canada. Virtually all U.S. imports of fresh and processed potato products are 

supplied by Canada, despite the fact that Canada accounts for only a small share of global 

potato production. U.S. global exports are sometimes greater than total U.S. imports. Total 

U.S. consumption of potatoes has been increasing. However, in recent years consumers have 

been demanding potatoes in different product forms. Until recently, consumption of fresh 

XVll 
-----------------------·· 

potatoes was in a long tenn decline, but has been more than offset by increased consumption 

of processed (principally frozen) potato products. 

Canadian production and marketing of potatoes are believed to have followed trends similar to 

those in the United States, with production in Eastern Canada still the largest by far, but with 

growing production taking place in the Prairie Provinces (Alberta, Saskatchewan, and 

Manitoba) along with increased production of frozen products (especially in New Brunswick 

and Prince Edward Island (P.E.1.)). Overall Canadian production is an estimated one-fifth as 

large as that in the United States. Overall per capita consumption of potatoes in Canada is at 

a higher level than that in the United States, although data on the respective amounts of products 

consumed are not available. 

A tabular profile of the U.S. and Canadian industries and trade is provided at the end of this 

summary. The principal conclusions of the study are highlighted below: 

Background 

• Potatoes are grown commercially throughout the United States, with the commercial 

production of individual types and varieties geographically concentrated in the 

Western, North Central, and Northeastern regions. Potatoes are harvested 

throughout the year, with the bulk of production harvested in the fall. 

• There are several different types and varieties of potatoes, with consumer 

preferences for each. Russet varieties are preferred in most areas of the United 

States for use as table stock. In the Northeastern United States, round white 

varieties are often preferred, and in the Midwest, red varieties are the potato of 

preference. Frozen french fries are made almost exclusively from Russet varieties. 

Certain varieties of round white potatoes are used predominantly in making potato 

chips. 

• Consumption of table stock potatoes in the United States has stabilized or increased 

only slightly in recent years after a long term decline. Consumption of frozen 

processed potato products, however, has been growing, albeit at a much lower rate 

in recent years than during the period 1960-90. 

• U.S. producers of table stock potatoes in the Northeast have been concerned about 

imports of Canadian potatoes into the United States since the early 1980s. 

Recently, increased imports of frozen french fries from Canada have concerned U.S. 

producers of frozen processed potato products and growers of raw potatoes for 

processing throughout the United States. 

XVlll 
Production 

• Entty into the potato industry is very expensive at both the grower and processor 

level. At the grower level, potato production requires machinery which has no other 

uses. It also requires specific skill and knowledge applicable only to potatoes, as 

well as a crop rotation in which potatoes are grown preferably only 1 year out of 3 

or 4 years on the same field. At the processor level, entty involves the purchase and 

operation of expensive machinery together with the need to contract for a suitable 

supply of raw potatoes for processing. 

• There are no apparent, large, cost-of-production advantages between the United 

States and Canada in the growing of potatoes or in the production of frozen 

processed potato products. Growers in both countries raise many of the same 

varieties of potatoes in rotation with similar crops. Some processors in each countty 

own and operate facilities in the other country using much of the same technology 

and equipment. 

• Average prices for potatoes for all uses received by U.S. growers during the last 5 

marketing years (1991/92-1995/96) rose by 36 percent. However, there was 

substantial variation by region as growers in the Western and North Central regions 

experienced increasing prices in both nominal and real or deflated terms while 

Northeastern grower prices fell, or increased slightly faster than producer price 

inflation. 

• The major U.S. growing areas for potatoes include States in the Western, North 

Central, and Northeastern regions. In the past five years, fresh potato production 

has been increasing in the Western region and declining in the Northeastern region, 

but increasing in Maine. Canadian production is largest in the East (New 

Brunswick and P.E.I.), but has been rapidly growing in Manitoba. U.S. frozen 

potato product production is centered in the Western States, with some additional 

production in the North Central States and in Maine. Canadian frozen product 

production is also centered in the East, with growing output in Manitoba. 

• Much of Canada's output of table stock potatoes and frozen processed potato 

products is produced in New Brunswick and P.E.I., from which shippers have a 

transportation cost advantage over the large Western U.S.- producing region in 

certain Northeastern U.S. markets. In these same markets, much of the potatoes 

delivered are grown in the Western United States. 

• Most U.S. and Canadian processed potato producers (freezers and chippers) acquire 

the bulk of their raw product inputs through contracts with growers. Most table 

stock production is not grown under contract. In the Northeastern United States, 

most growers are also shippers; in the Western United States, most fresh potatoes 

are handled by brokers or independent shippers. 

XIX 
Trade 

• The U.S. and Canadian frozen processed potato products industries are dominated 

by a few large multinational companies. Their primary product is frozen french 

fries, for which the primary purchasers are the large-volume quick service restaurant 

chains. Sales to these outlets are mostly through contracts for which price is a 

primary consideration. There were 11 U.S. frozen potato processing companies, 

operating 29 plants in the United States and 2 in Canada, and 4 Canadian 

companies, operating 6 plants in Canada and 3 in the United States, in 1996. 

• U.S. imports of fresh potatoes and frozen processed potato products are almost 

entirely from Canada. Such imports have been increasing for a number of years, but 

they still supply only 6 percent of U.S. consumption and are smaller than U.S. 

exports. 

• U.S. imports of fresh potatoes primarily enter the Northeastern region (especially 

Maine) and primarily affect the growers in that area, and Northeastern U.S. markets. 

• U.S. seed potatoes, table stock potatoes, raw potatoes for processing, and frozen 

processed potato products are believed to compete directly in some situations with 

comparable potatoes and potato products from Canada. 

• U.S. exports of fresh potatoes from Washington, Oregon, and California into British 

Columbia face a long standing antidumping duty order, which results in U.S. 

exports being sold at higher prices than potatoes grown in British Columbia. 

• Canadian regulations require that containers holding food products, such as frozen 

french fries, be packed and labeled in metric increments of 500 grams or more. This 

regulation was modified in December 1995 to require that only the outside of the 

container be so labeled. Following this regulatory modification, U.S. exports of 

french fries increased substantially in 1996. 

• Canadian regulations restrict imports of bulk shipments of fresh potatoes for 

processing or repacking. These regulations also apply to inter-Provincial shipments 

within Canada. To import bulk shipments of fresh potatoes, processors and 

repackers must obtain a ministerial exemption, which is generally granted for such 

imports, but only after Canadian officials have determined that a shortage of 

Canadian potatoes exists. The United States maintains no such restrictions. 

xx 
• Duties on potatoes and potato products imported into the United States from 

Canada and into Canada from the United States were reduced under the US.-

Canada Free Trade Agreement. Most products are currently free of duty and the 

low remaining duties will be removed in 1998. 

• Terms of sale for fresh potatoes and processed potato products may differ 

somewhat within the United States and between the United States and Canada. 

Fresh potato prices usually are quoted on a free-on-board (f.o.b.) origin or a 

delivered basis, with payment specified within a certain period. Sales from Maine 

into the Northeastern U.S. market mostly are sold through brokers or dealers. Prices 

for processed potato products generally are quoted on an f.o.b. origin basis, with 

payment due within a specified time, typically 15-30 days. A discount is usually 

given for early payment, typically 1-2 percent for payment within 10-15 days. 

Neither country appears to hold a significant competitive advantage because of 

terms of sale. Rather, the fmal cost of the product to the buyer is the most 

important factor. 

• Russet Burbank potatoes from P .E.l consistently were priced lower than Russet 

Burbank potatoes from Idaho in the Boston and New York City markets during 

January 1994-April 1997. During the same period and in the same markets, round 

white potatoes from Maine were priced lower than round white potatoes from P .E.I., 

although the differential narrowed during the period until Maine potatoes were 

priced higher than P.E.I. potatoes in Boston during January-April 1997. Prices 

generally have been less of a competitive factor for frozen potato products at the 

tetail level as compared with fresh potatoes, possibly because of price stability 

resulting from annual contracts between processors and quick service restaurants, 

the importance of product specifications, and product differentation. 

• Nominal and real Canadian/U.S. exchange rates have increased since 1988, by 

about 11 percent and I 0 percent, respectively, thereby weakening the Canadian 

dollar relative to the U.S. dollar in both nominal and real terms. Canadian inflation 

appears not to have offset nominal rate increases. Thus, it appears that exchange 

rate movements have accounted for some of the Canadian price advantages over 

comparable U.S. potatoes in Northeast U.S. markets. 

Government Assistance 

• U.S. Federal and State Government assistance to the potato growing and processing 

industries consists of crop insurance; disaster assistance; credit assistance, including 

loans and loan guarantees provided through the U.S. Department of Agriculture, 

business loan guarantees, and community grants for infrastructure; research and 

extension; export promotion; U.S. Government purchases of potatoes and potato 

products for school lunch and other food programs; and past development of 

irrigation projects, which provide current benefits. 

XX1 
• The Canadian Federal and Provincial Governments have facilitated the development 

of potato-growing and processing industries in Canada through a variety of 

programs, including low- or zero-interest loans to processing and packing 

operations, financial assistance for construction of wastewater recovery facilities, 

grants or zero-interest loans to build potato storage facilities, low-cost land leasing 

arrangements, and development of irrigation facilities. 

• Canadian farmers, including potato growers, are eligible for a number of Federal 

and Provincial financial assistance programs such as direct loan and loan guarantee 

programs, as well as crop and disaster insurance. The National Income Stabilization 

Account additionally provides whole farm income insurance to participating 

Canadian growers. These programs provide capital for the high start-up costs 

associated with potato production, as well as reduce the risks associated with 

agricultural production. 

• Owing to the general nature of many government assistance programs both in the 

United States and in Canada, it is not possible to determine an aggregate numerical 

level of support for each country specific to potato production. The Canadian 

programs have had the goal of diversifying Canadian agriculture throughout the 

Provinces and have helped to develop a potato-growing and processing 

infrastructure that can serve both the U.S. and Canadian markets. 

Econometric Model Results 

• Commission staff developed an econometric model to illustrate the competitive 

conditions existing in and between the U.S. fresh table stock and frozen french fry 

potato markets. Simulation results from the econometric model suggest that 

increasing U.S. imports of fresh table stock potatoes appear to have little effect on 

U.S. production and prices nationally, but do appear to directly displace fresh table 

stock potatoes produced and consumed in the Northeastern United States. These 

results are supported by data and evidence which show that nearly 60 percent of 

Canadian potato acreage and production are in Eastern Canada, and that Canadian 

fresh potatoes captured 31 percent of the 1996 share of the Boston market's fresh 

arrivals. U.S. producers supplied nearly 70 percent, with the largest shares captured 

by Idaho and Maine. 

• Simulation results from the econometric model suggest that variations in U.S. prices 

and quantities of fresh table stock potatoes influence the traded volumes of fresh 

table stock potatoes to a greater proportional degree in the Northeastern U.S. 

markets than in other U.S. markets. These results support testimony and record 

evidence from Northeast U.S. growers and lawmakers suggesting that effects of 

variation in fresh prices and fresh quantities are more directly felt in Northeast 

markets than in other major U.S. fall production areas. 

XXll 
• Simulation results from the econometric model suggest that price and quantity 

movements in the U.S. fresh table stock and frozen french :fry markets have some 

modest influences on each other. The model results showing modest degrees of 

fresh table stock/frozen french :fry market interaction may be explained by U.S. 

processor evidence suggesting that only minor portions of fresh potatoes for 

processing are obtained from the fresh noncontracted markets, and that these fresh 

noncontracted markets supply processors only residually. 

Executive Summary Table 1 

Potatoes: U.S. consumption and import penetration, 1992-1996 

Change 

Item 1992 1993 1994 1995 1996 1996 over 

1992 

Percent 

Frozen potato products: 

U.S. consumption1 (1 ,000 6,848,012 7,679,919 8,036,890 8,448,615 8,579,426 25 

1bs) ...................... 

Ratio of total U.S. imports to 

consumption (percent) ... 2.86 3.77 3.84 4.19 5.28 85 

Ratio of U.S. imports from 

Canada to consumption 

2.84 3.76 3.84 4.18 5.27 86 

(percent) .............. 

Table stock potatoes: 

U.S. consumption (1 ,000 lbs.) 12,903,598 13,187,260 12,699,662 13,779,347 13,011,237 

Ratio of total U.S. imports to 

consumption {percent) 2.12 4.11 3.20 3.33 5.31 150 

Ratio of U.S. imports from 

Canada to consumption 

(percent) ............. 2.12 4.10 3.20 3.33 5.31 150 

Seed potatoes: 

U.S. consumption (1,000 lbs.) 2,327,837 2,520,744 2,655,647 2,682,922 2,847,227 22 

Ratio of total U.S. imports to 

consumption (percent) ... 5.50 6.79 8.92 8.42 10.39 89 

Ratio of U.S. imports from 

Canada to consumption 

(percent) ............... 5.50 6.78 8.92 8.42 10.38 89 1 Based on production data from American Frozen Food Institute. 

Source: Based on production data taken from U.S. Department of Agriculture, Economic Research Service, Potato 

Facts, various issues, except as noted. Import and export data compiled from official statistics of the U.S. Department 

of Commerce. 

XXlll 
Executive Summary Table 2 

Potatoes: U.S. and Canadian production of fresh potatoes and frozen trench fries, 1992-96 

Change 

1996 over 

Production 1992 1993 1994 1995 1996 1992 

Percent 

Fresh potatoes (1,000 lb.): 

United States 

Seasons: 

Fall ............. 37,173,000 37,952,500 38,593,500 41,964,500 40,300,900 8 

Winter ........... 260,900 299,800 2.55,200 237,200 247,300 (5) 

Spring ........... 2,063,600 2,153,500 1,965,400 2,264,600 2,019,300 {2) 

Summer ......... 2,264,700 2,130,900 2,055,200 2,239,100 1,793,100 (21) 

Total .......... 41,762,200 42,536,700 42,869,300 46,705,400 44,360,600 6 

United States 

Regions: 

Western ......... 26,945,300 26,462,500 28,831,200 30,859,200 28,682,700 6 

North Central . ' .. 9,275,200 9,398,500 8,190,700 9,923,300 9,879,700 7 

Northeastern ..... 3,017,300 3,909,000 3,368,100 3,154,000 3,073,800 2 

Other ........... 2,524,400 2,766,700 2,479,300 2,768,900 2,724,400 8 

Total .......... 41,762,200 42,536,700 42,869,300 46,705,400 44,360,600 6 

Canada 

Regions: 

Eastern ... ' ..... 5,024,300 4,566,200 4,618,000 5,138,000 5,148,200 2 

Central .......... 2,077,400 1,779,300 2,443,200 2,148,200 2,468,700 19 

Western ......... 851,200 1,074,800 1,049,600 1,146,600 1,011,000 19 

Total .......... 7,952,900 7,420,300 8,110,800 8,433,700 8,627,900 8 

Frozen french fries: 

United States ...... 5,533,254 5,786,395 6,237,047 6,782,243 7,203,402 30 

Canada ........... 573,201 826,732 914,917 1,332,772 1,433,003 150 

Source: U.S. production of fresh potatoes compiled from official statistics of the U.S. Department of Agriculture; 

Canadian production compiled from official data of Statistics Canada, StatsCan Online data base; U.S. frozen french 

fry production compiled from statistics of the American Frozen Foods Institute; and Canadian frozen trench fry 

production compiled from data of the U.S. Department of Agriculture, Foreign Agricultural Service. 

XXlV 
Executive Summary Table 3 

Potatoes: U.S. and Canadian area planted, 1992-96 and number of U.S. and Canadian farms, 1981/82, 1986/87, 

and 1991/92 

Change 

Item 1992 1993 1994 1995 1996 1996 over 1992 

Area planted: (1,000 acres): Percent 

United States 

Seasons: 

Fall .................... 1,203.2 1,151.7 1,189.9 1,213.0 1,224.1 2 

Winter .................. 13.2 13.4 14.3 12.9 13.3 

Spring .................. 90.2 85.3 86.9 91.6 88.3 (2) 

Summer ................ 100.9 88.9 94.1 95.8 72.5 (28) 

Total ................. 1,407.5 1,339.3 1,385.2 1,413.3 1,398.2 (1) 

United States 

Regions: 

Western ................ 739.4 698.3 738.0 771.5 752.9 (2) 

North Central '0 0 o Io o' o. o 395.0 377.6 380.3 378.5 385.2 (2) 

Northeastern ............ 140.0 138.1 137.3 133.2 131.9 (6) 

Other .................. 133.1 125.3 129.6 130.1 128.2 (4) 

Total ................. 1,407.5 1,339.3 1,385.2 1,413.3 1,398.2 (1) 

Canada 

Regions: 

Eastern 0 Io Io 0 0 0 o Io o 0 o o o 184.5 185.7 196.8 215.0 214.1 16 

Central ................. 87.3 86.6 94.4 103.4 112.3 29 

Western ................ 34.6 35.8 38.2 38.9 39.5 14 

Total o o I I I 0 I 0 o 0 o o o Io 0 306.4 308.6 328.4 357.3 365.9 19 

1981/82 1986187 1991/92 

Farms 1,000acres Farms 1,000acres Farms 1,000 acres 

United States 26,928 1,268.2 14,782 1,310.0 14,502 1,351.1 

Canada 7,139 272.7 4,885 275.6 4,692 302.4 

Source: Area planted compiled from official statistics of the U.S. Department of Agriculture and Statistics Canada; 

number of farms and acres compiled from Census of Agriculture and official data of Statistics Canada, StatsCan 

Online database. 

xxv 
Executive Summary Table 4 

Potatoes: U.S. and Canadian trade statistics, 1992-1996 

Change 

Item 1992 1993 1994 1995 1996 1996 over 1992 

U.S. imports of frozen, processed potatoes from: Qyanti~ ( 1,000 e.ounds} Percent 

Canada ................................. 194,822 288,594 308,436 353,493 451,902 132 

All other ................................. 74~ 795 ~50 584 797 7 

Total .................................... l2§,56§ 289,389 308,986 354,077 452699 131 

U.S. imports of table stock potatoes from: 

Canada ................................. 273,288 541,293 405,849 458,832 690,761 153 

All other ................................. ~~ 84 46 89 0 (100) 

Total ................................•... ~~.§1, 541,377 405,895 458,921 690,761 153 

U.S. imports of seed potatoes from: 

Canada ................................. 127,926 170,840 236,789 225,881 295,556 131 

All other .............................•..• 1~ 359 120 59 139 (3) 

Total ......................... · · · ·• · · • · · · lii:§ 07Q 171,199 236,909 225,940 295,695 131 

U.S. exports of frozen, processed potatoes to: 

Canada ................................. 5,181 6,135 6,696 6,815 11,466 121 

All other ................................• 14Q,81~ 156, 109 200,249 263,556 266,415 89 

Total .......•................. · .. · · · · · · · · 14§,99~ 16~,244 206,945 270,371 27'7,881 90 

U.S. exports of table stock potatoes to: 

Canada ................................. 59,522 68,395 75,662 67,823 64,811 9 

All other ................................. §,69~ 7,222 10,771 . 10,651 13,613 139 

Total .................................... 6§,21~ 75,617 86,433 78,474 78,424 20 

U.S. exports of seed potatoes to: 

Canada ................................. 2,957 1,980 2,490 2,742 3,192 8 

All other ................................. §7~ 1,375 1,072 1,876 2,~76 295 

Total ........................... · · · · · · · · · ~.5~ 3,355 3,562 4,618 5,468 55 

Canadian imports of frozen, processed 

potatoes from: 

United States. ............................ 11,734 14,709 16,231 16,629 28,730 145 

All other ................................. 1w 1~ ~12 229 240 102 

Total ....................... ············· 11,8§~ 14,843 16,443 16,858 28,970 144 

Canadian imports of table stock potatoes from: 

United States. ....................... "' ... 461,033 458,917 557,956 474,018 482,960 5 

All other ................................. ~ 1 6 11 ~ 0 

Total .................................... !1§1,0§5 4§§,918 557,962 474,029 482,982 5 

Canadian imports of seed potatoes from: 

United States. ............................ 321)79 22,308 24,030 29,729 29,138 (9) 

All other ................................. 0 0 0 0 227 

Total .......•................ ·. · · · · · · · · · · ~079 22,308 24,030 29,729 29,365 (8) 

Canadian exports of frozen, processed potatoes to: 

United States. ............................ 194,864 288,534 308,348 353,418 466,791 140 

All other ................................. ~.~7 66,946 99,426 161,543 130,740 102 

Total ............................. · · • · · · · ,§9§l1 3§§,480 407,774 514,961 597,531 130 

Canadian exports of table stock potatoes to: 

United States. .......................... ~ . 267,367 528,802 396,224 448,239 674,923 152 

All other ............................ , ..•. 1§9~9 ~§§,102 149,324 272,480 115,259 (32} 

Total ............................ ~· · · · · · · · ~§,9J6 816,904 545,548 720,719 790,182 81 

Canadian exports of seed potatoes to: 

United States. ....................... ,, .... 124,902 166,833 231,320 220,533 288,624 131 

All other ................................. 1,3,1~2 27,106 91,451 136,242 87,781 (29) 

Total ............................. ·· .. ··· 248,044 263,939 322,771 356,775 376,405 52 

XXV1 
Executive Summary Table 4--Continued 

Potatoes: U.S. and Canadian trade statistics, 1992-96 

Change 

Item 1992 1993 1994 1995 1996 1996 over 1992 

Value p,ooo do/larsi Percent 

U.S. imports of frozen, processed potatoes from: 1992 1993 1994 1995 1996 

Canada ............................... 47,624 71,922 78,182 98,231 125,823 164 

All other ............................. , . 2§,§ 262 286 377 484 69 

Total .................................. 47,910 72,184 78,468 98,608 126 307 164 

U.S. imports of table stock potatoes from: 

Canada ............................... 19,710 45,475 42,619 39, 112 63,039 220 

All other ............................... Z4 18 13 46 0 (100) 

Total ................ · · ... · · · · · · · · · · · • · j9,7§4 45,493 42,632 39,158 63039 219 

U.S. imports of seed potatoes from: 

Canada ............................... 8,231 11,963 21,997 17,462 26,907 227 

All other ................................ 57 97 31 25 41 (28) 

Total .................................. 8,~§8 l~,060 ~,028 17,487 2§,948 225 

U.S. exports of frozen, processed potatoes to: 

Canada ............................... 5,181 6,135 6,696 6,815 11,466 121 

All other ............................... l~,8J4 156, 109 200,249 263,556 266,415 89 

Total .................................. 145,~5 16~,244 206,945 270,371 zn,ss1 90 

U.S. exports of table stock potatoes to: 

Canada ............................... 59,522 68,395 75,662 67,823 64,811 9 

All other ............................... 5,~ 7,222 10,771 10,651 13,613 139 

Total .................................. ti5,214 75,617 86,433 78,474 78424 20 

U.S. exports of seed potatoes to: 

Canada ............................. , .. 2,957 1,980 2,490 2,742 3,192 8 

All other ............................•.. §2:6 1,375 1,072 1,876 2,276 295 

Total ..................... · .. · · · · · · • · · · 3,533 3,355 3,562 4,618 5468 55 

Canadian imports of frozen, processed potatoes 

from: 

United States. .......................... 4,963 6,256 7,208 7,224 11,555 133 

All other ............................... ~i 79 125 151 178 158 

Total ...............................•.. §,Q32 6,335 7,333 7,375 11,733 133 

Canadian imports of table stock potatoes from: 

United States. ...................... ''" .. 51,766 63,943 77,386 70,088 66,517 28 

All other ............................•.. ~ 0 4 7 11 267 

Total ............... .' ............... " .. 51 !69 63,943 77,390 70,095 66,528 29 

Canadian imports of seed potatoes from: 

United States. .......................... 2,680 1,856 2,689 2,939 3,380 26 

All other ............................... 0 0 0 0 8 

Total ........................... ······· 2,§80 1,856 2,689 2,939 3,388 26 

Canadian exports of frozen, processed potatoes 

to: 

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,011 78,343 79,981 100,133 131,903 169 

All other ............................... ~190 24,426 ~,557 53,569 45,088 103 

Total .................................. 71~1 102,769 113,538 153,702 176,991 149 

Canadian exports of table stock potatoes to: 

United States. .......................... 20,893 50,600 43,965 40,705 66,197 217 

All other ........... · ................•... ~0,140 ~4,414 16,758 28,8~5 10,381 (48) 

Total .................................. 41 033 75,014 60,723 69,590 76,578 87 

Canadian exports of seed potatoes to: 

United States. . . . . . . . . . . . . . . . . . . . . . . . . . . 8,699 13,295 23,055 18,874 28,694 230 

All other .. .. .. . . .. .. . .. . .. .. .. . . .. . .. .. 15,173 10.796 8,776 19,198 8,649 (43) 

Total .................. , ........ , . . . . . . 23.872 24,091 31,831 38,072 37.343 56 

Source: U.S. imports and exports compiled from official statistics of the U.S. Department of Commerce; Canadian imports/exports 

compiled from official data of Statistics Canada, StatsCan Online database. 

xxvii 

CHAPTERl 

Introduction 

The Office of the United States Trade Representative (USTR), in a letter received at the U.S. 

International Trade Commission (Commission) on January 15, 1997, requested that the 

Commission institute an investigation for the purpose of providing a report on factors affecting 

trade between the United States and Canada in fresh table stock potatoes, seed potatoes, raw 

potatoes for processing, and frozen processed potato products. The USTR requested that, to 

the greatest extent possible, the following information should be provided for each of the four 

product areas: 

1. Production and/or processing volumes and trends in Canada and in the 

United States over the past 5 years; 

2. U.S. imports from Canada over the last 5 years, including market share of 

Canadian imports, with particular emphasis on any increases in U.S. 

imports from Canada; 

3. Consumption trends for raw and finished processed potato products in 

Canada and the United States over the last 5 years; 

4. Federal, Provincial, and municipal aid programs for potato growers and 

processors in Canada, including aid for the construction of storage, water 

treatinent, and processing facilities, together with a compilation of existing 

literature and industry views on the impact of such aid on the 

competitiveness of Canadian producers; 

5. For the last 3 years, prices of Canadian products in Canada and in U.S. 

markets, together with prices of U.S. products in U.S. markets; 

6. The effect of exchange rates and terms of sale factors on Canadian prices; 

7. The cost of production in Canada and in the United States, including raw 

material costs for processed products, over the last 3 years; 

The USTRrequested that the report focus on the most recent 5-year period and that, wherever 

possible, the Commission supplement the national data presented with regional and/or seasonal 

highlights. The USTR also requested that the Commission include an analysis of any other 

factors affecting the conditions of competition between the U.S. and Canadian fresh potato and 

processed potato industries. Finally, the USTR requested that the Commission report the results 

of its investigation on an expedited basis, but not later than 6 months from receipt of the request 

letter, or by July 15, 1997. On May 5, 1997, the USTR also requested that the Commission 

provide information on the comparative market access factors affecting U.S. and Canadian 

exports of potatoes and potato products to Mexico. 

1-1 
Background 

Production and Trade Trends 

The Unit.ed States is a major global producer of potatoes, ranking fourth in world fresh potato 

production and accounting for about 7 percent of world production in 1996 (table 1-1). By 

contrast, Canada is a much smaller global producer, ranking 14th in world production of 

potatoes and accounting for about 1 percent of the world share of production in 1996. The 

share of world production for both countries has remained constant over the 1992-96 period. 

World exports of fresh potatoes follow the same trend as fresh potato production for both the 

United States and Canada. Over the 1992-95 period, 1 the U. S. share of total world exports of 

fresh potatoes remained relatively constant at about 7 percent, while Canada's share remained 

steady at about 1 percent The United States exported $84 million of fresh potatoes (including 

seed and table stock) and $278 million of frozen processed potatoes in 1996. The Canadian 

market absorbed about 81and4 percent, respectively, of those exports. In 1996, Canada 

exported $114 million of fresh potatoes (seed and table stock) and $177 million of frozen 

processed potatoes. The U.S. market received about 83 and 75 percent, respectively, of those 

exports. Although neither countiy supplies a substantial share of world potato exports, almost 

100 percent of total U.S. imports of fresh potatoes (seed and table stock) and frozen processed 

potatoes in 1996 originated in Canada Similarly, almost l 00 percent of total Canadian imports 

of fresh and frozen processed potatoes in 1996 originated in the United States. 

The U.S. domestic potato industry is a capital-intensive, highly competitive industiy that has 

experienced a number of changes in industiy structure during the past few decades. Principal 

changes include substantial increases both in the amount of potatoes processed and in the 

amount of potatoes grown and processed in regions outside of the Northeastern United States, 2 

together with decreases in the amount of planted acreage in the Northeastern region. The size 

of the industry has changed, with the overall number of potato growers throughout the United 

States falling in recent years but the individual size of the remaining farms nearly doubling. 3 

Total U.S. harvested acreage has fluctuated somewhat since 1992, with fall-harvested acreage 

trending upward and harvested acreage in all other seasons trending downward. Acreage 

harvested in the Western U.S. region has risen in recent years, while acreage harvested in all 

other regions and the United States overall has trended downward. Additionally, markets in the 

Eastern United States have been supplied with increased amounts of fresh potatoes from 

1 The most recent years for which data are available. 2 For the purpose of this report, U.S. production regions, together with the respective states 

included therein, have been defined as follows: Northeastern-CT, MA, ME, NH, NJ, NY, PA, RI, and 

VT; North Central-IA, IL, IN, MI, MN, NE, ND, OH, SD, and WI; and, Western-CA, CO, ID, MT, 

NV, OR, UT, WA, and WY. 3 Based on the amount of harvested acreage reported in U.S. Department of Commerce, Bureau of 

the Census, U.S. Cen.sus of Agriculture, 1982: vol. 1, Part 51, AC82-A-51, Oct 1984; 1987: vol. 1, 

Part51,AC87-A-51,Nov.1989;and, 1992:vol. l,Part51,AC92-A-51,0ct. 1994. 

1-2 
Table 1-1 

Potatoes: World production,1 1992-96 

Change 1996 

Country 1992 1993 1994 1995 1996 over1992 

Quantity (In milfions of pounds)2 Percent 

China ............ 83,369 101,255 107,481 100,841 101,458 22 

Russian Federation . 84,479 82,981 74,556 87,940 91,466 8 

Poland ........... 51,547 79,940 50,819 54,860 52,896 3 

United States ...... 42,524 42,863 46,780 44,349 45,843 8 

lndia3 . ' .......... 36,119 33,568 38,333 39,545 39,545 9 

Ukraine ........... 44,690 46,304 35,489 32,463 35,264 -21 

Germany3 •..••••.• 24,812 27,871 23,440 22,881 22,881 -8 

Belarus3 .•••••.•.. 19,801 25,663 18,163 18,888 18,888 -5 

Netherlands3 ...... 16,740 16,968 15,922 16,228 16,228 -3 

United Kingdom3 ••• 17,196 15,571 14,206 13,229 13,229 -23 

France ........... 14,721 12,915 12,042 12,681 13,224 -10 

Turkey3 ••••..••••• 10,138 10,249 9,587 10,469 10,469 3 

Spain 0 0 0 Io 0 0 0 Io 0 o 11,418 8,422 8,507 9,243 8,816 -23 

Canada3 .••..••••. 7,951 7,308 8,109 8,319 8,319 5 

All other .......... 146,218 153,543 143,596 147,652 148,868 2 

Total ............ 611,722 665,422 607,028 619,588 627,394 3 

1 Includes fresh table stock, seed potatoes, and raw product for processing. 2 Data converted from metric tons by multiplying by 2.204 pounds per kilogram. 3 Data are estimated for 1996 based on 1995 levels. 

Source: Food and Agriculture Organization of the United Nations, Rome, Italy, 1996. 

production areas in the Western United States as a result of changes in consumer demand 

toward greater consumption of russet potatoes. There has been a shift throughout the United 

States in consumer demand away from round white potatoes to greater consumption of russettype potatoes. On a regional basis, this has negatively affected production in the Northeastern 

States, where an estimated 30 percent or less of production is russet-type potatoes, as compared 

with production in the Western States of more than 90 percent russets. 

U.S. Industry Concerns 

U.S. potato growers and processors have expressed concerns about imports of fresh potatoes 

and frozen potato products from Canada for many years. According to industry sources, 4 such 

concerns were first publicized in the late 1970s and early 1980s. Such concerns have centered 

upon the alleged expansion of seed, table stock, and processed potato product exports from 

4 See transcript of the hearing, pp. 43-46. 

1-3 
Producers 

Canada to U.S. markets, as well as Western U.S.-grown potatoes being denied access to markets 

in Western Canada.5 More specifically, U.S. potato industry officials have stated that increased 

imports of fresh potatoes from Canada since 1992 have disrupted the U.S. industry and market 

in several ways: (I) they allege that increasing sales oflow-priced Canadian potatoes to U.S. 

processors and sales in the U.S. open market have resulted in U.S. product displacement and 

increased sales ofU.S.-grown potatoes at "distressed" prices; (2) that there has been a shift in 

U.S. processing capacity to Canada, resulting in a lowering of long term demand for 

domestically-grown processing potatoes in the United States; (3) that there has been greater 

accessibility to U.S. markets for Canadian-grown potatoes under the U.S.-Canada Free Trade 

Agreement, but continued restricted access to Canadian markets for U.S.-grown potatoes; and, 

( 4) that the availability of Canadian Federal and Provincial Government assistance to Canadian 

growers affects their supply capabilities, as compared with U.S. Government assistance.6 The 

following tabulation summarizes the concerns of the domestic industries. 

Concerns 

Western U.S. growers British Columbia antidumping duties 

. 

5 lbid. 

6 lbid. 

Imports of Canadian frozen french fries into the United States 

Imports of Canadian table stock potatoes into Northeast U.S. markets (and 

ripple effects of declining table stock & processing sales) 

Recently completed state-of-the-art processing and raw potatoes storage 

facilities in Prince Edward Island. 

Possible expansion of New Brunswick land available for increased potato 

plantings. 

Possible expansion of Canadian frozen french fry operations into Manitoba 

and Saskatchewan 

Purchase of Ore-Ida food service operations by McCain (and resulting 

uncertainty for growers of future raw product needs) 

Restrictions on sale of U.S. product to Canada: 

Provincial marketing boards 

Bilingual, metric, and other packaging regulations 

Retail pack size restrictions 

Bulk easement restrictions 

Prohibition of consignment sales 

1-4 
Producers Concerns 

North Central U.S. growers Possible expansion of Canadian frozen french fry operations into Manitoba 

and Saskatchewan 

Imports of Canadian frozen french fries into the United States 

Purchase of Ore-Ida food service operations by McCain (and resulting 

uncertainty for growers of future raw product needs) 

Start-up of a Dutch-owned frozen potato products producer (AVIKO) in 

Jamestown, ND, In 1997 

Restrictions on sale of U.S. product to Canada: 

Provincial marketing boards 

Bilingual, metric, and other packaging regulations 

Retail pack size restrictions 

Bulk easement restrictions 

Prohibition of consignment sales 

Northeastern U.S. growers Imports of Canadian table stock potatoes into Northeast U.S. markets with 

benefit of alleged subsidies 

Acceptance of U.S. seed certification practices by Canadian officials 

Restrictions on sale of U.S. product to Canada: 

Provincial marketing boards 

Bilingual, metric, and other packaging regulations 

Retail pack slZe restrictions 

Bulk easement restrictions 

Prohibition of consignment sales 

U.S. seed producers Import competition from (alleged.) subsidized Canadian producers-competition 

In export markets, particularly Mexico 

Acceptance of U.S. seed certification practices by Canadian officials 

Short turn-around time during which Canadian officials can restrict U.S. 

exports 

SPS restrictions (nematode) 

Non-comparability of U.SJCanadian testing requirements 

1-5 
Producers Concerns 

U.S. frozen potato product Increased imports of frozen french fries into the United States, particularly 

producers contract sales to Quick Service Restaurant chains 

Purchase of Ore-Ida by McCain (competition) 

Start·up of a Dutch-owned frozen potato products producer (AVIKO) in 

Jamestown, ND, in 1997 

Development of Canadian potato product infrastructure with benefit of 

(alleged) subsidies 

Competition in export markets, particularly Pacific Rim 

Possible expansion of Canadian frozen french fry operations into Manitoba 

and Saskatchewan 

U.S. chipping potato growers Continued availability of chipping-type potatoes from all sources (including 

and potato chip producers Canada) 

Since January 1, 1980, the Commission has conducted four investigations into the 

competitiveness of fresh and frozen potato products from Canada in U.S. markets. 

• The Commission instituted a preliminary countervailing duty investigation, 

effective January 1, 1980, on frozen potato products imported from Canada, 

following receipt of a notice from the Department of Commerce that a 

countervailing duty investigation had been initiated. The Commission made 

a negative injury detennination. As a result, Commerce terminated its 

investigation and no countervailing duty order was issued. 7 

• On April 1, 1982, following receipt of a request from the USTR, the 

Commission instituted an investigation under section 332(g) of the Tariff Act 

of 1930 for the purpose of gathering information on the competitive status of 

major supply regions for fall-harvested, fresh white or Irish potatoes in 

selected markets. The Commission transmitted its report to the USTR in 

August 1982.8 

• On April 30, 1982, as a result of a petition filed by counsel on behalf of 

McCain Foods, Inc., the Commission instituted a preliminary antidumping 

investigation with respect to frozen french fried potatoes imported from 

Canada. This investigation also resulted in a negative Commission injury 

7 U.S. International Trade Commission (USITC), Frozen Potato Products From Canada 

(investigation No. 701-TA-3 (preliminary)), USITCpublication 1035, 1980. 8 USITC, The Competitive Status of Major Supply Regions for Fall-Harvested Fresh White or 

Irish Potatoes in Selected Markets, USITC publication 1282, 1982. 

1-6 
determination. As a result, Commerce terminated its investigation and no 

antidumping duty order was issued. 9 

• On February 9, 1983, following the filing of a petition by the Maine Potato 

Cowicil alleging that fall-harvested, round white potatoes imported from 

Canada were bemg sold in the United States at less than fair value, the 

Commission and Commerce instituted antidumping investigations. The 

Commission made an affirmative determination in its preliminary injury 

investigation. 10 Following preliminary and final determinations by 

Commerce, the Commission made a negative mjury determination in its final 

investigation. 11 As a result, no antidumping duty order was issued. 

Products, Industries, and Market Coverage 

Products 

The primary products in this investigation are fresh table stock potatoes, seed potatoes, raw 

potatoes for processing, and frozen processed potatoes. Also discussed in this study, although 

to a lesser extent, are potato chips and shoestring potatoes, dehydrated potato products 

(including starch and flour), and canned potatoes and other canned products, since all of these 

products are ultimately derived from fresh or processed potatoes. 

As used in this report, the tenn 'fresh potatoes' includes table stock potatoes, seed potatoes, and 

raw potatoes for processing. 'Table stock potatoes' are those that are sold into the fresh market 

for food use, in contrast to those that are used for seed or are processed. 'Seed potatoes' are 

used for planting, whether or not they are certified seed potatoes. 'Raw potatoes for processing' 

(also called 'raw product') and 'chippers' or 'chipping potatoes' are those potatoes that are sold 

for processing use. 

The potato (Solanum tuberosum L.) is a member of the nightshade family, closely related to 

tomatoes, peppers, and eggplant. The potato plant is a succulent, nonwoody, annual, temperate 

zone plant that grows best in world regions with cool summers. The plant develops tubers 

underground at the ends of horizontal sterns. The tuber is an enlarged portion of the 

underground stem and stores surplus carbohydrates not used by the plant for other life 

processes. Tubers normally begin to form about 6 weeks after planting when the plant is in the 

early bud stage. The tuber contains groups of dormant buds together with leaf scars called 

'eyebrows.' The eyebrow together with the bud is termed the 'eye.' The majority of the eyes 

9 USITC, Frozen French Fried Potatoes from Canada (investigation No. 731-TA- 93 

(preliminary)), USITC publication 1259, 1982. 10 USITC, Certain Fresh Potatoes from Canada (investigation No. 731-TA- 124 (preliminary)), 

USITC publication 1364, 1983. 11 USITC, Fall-Harvested Round White Potatoes from Canada (investigation No. 731-TA- 124 

(final)), USITC publication 1463, 1983. 

1-7 
----------------------- --

are generally formed on the upper side of the tuber since they have a tendency to develop in the 

direction of light. The eyes with a piece of flesh attached are often referred to as seed pieces or 

seed and are used for vegetatively propagating (i.e., starting) a new crop. The period of growth 

from planting seed potatoes to tuber maturity and harvest ranges from about 80 to 150 days, 

depending upon the type and variety of potato, the production region, and the time of year when 

grown. 

Potatoes are produced in many sizes, shapes, and colors, with white-fleshed white or Irish 

potatoes the type most commonly grown in the United States.12 Potatoes are often grouped by 

type (e.g., russet, red, white, and yellow-flesh) and by variety (e.g., Russet Burbank, Centennial 

Russet, Norland, Pontiac, Superior, Norchip, and Yukon Gold). In crop year 1995/96 (Oct. 1-

Sept. 30), the five most important fall-harvested varieties13 grown in the United States included 

Russet Burbank, Shepody, Snowden, Superior (round white), and Russet Norkotah. A large 

number of other varieties accounted for the remainder of certified seed acreage planted. The 

number of potato varieties currently in production is large, with plant breeders working to 

develop new varieties with such characteristics as different flesh colors, higher yields, improved 

insect and disease resistance, and better fresh market and processing qualities. 

Seed Potatoes 

Seed potatoes are pieces of fresh potatoes cir small potatoes used to produce new plants. Most 

seed potatoes planted in the United States are certified seed. There is no Federal seed 

certification program currently in the United States similar to the one in place in Canada, 

although all States require that a final shipping point inspection be included and a certification 

tag showing seed class and size must be attached prior to sale and distribution. Approximately 

20 States have seed certification programs in operation. Certification standards vary by State 

but are similar in content. Most State standards require that fields entered for certification be 

planted with seed approved by the respective State certifying agency. In addition, State 

standards usually stipulate the distance that certified seed fields must be from fields of other 

potatoes, along with requirements that samples of seed be grown during the winter in the 

Southern United States (sometimes referred to as a Florida test) to test whether the resulting 

potatoes are free from disease. Potatoes grown to be certified as seed must be inspected, both 

while growing and after harvest, by qualified inspectors employed by the official State 

certification agency. Only potatoes that meet State standards for certification as seed may be 

sold as certified seed. With seed potatoes, a tag is attached to each sack of potatoes with the 

words 'certified seed potatoes' and the name of the certifying agency listed on the tag. The total 

U.S. acreage certified for seed in 1996/97 was an estimated 179,866 acres, up 7 percent from 

12 Sweet potatoes (Ipomoea batatas) are not botanically related to the white or Irish potatoes 

corrunonly grown throughout the United States and Canada, and are not believed to be raised by the 

same growers or used in very many of the same forms (especially processed products) as white, red, 

russet, or yellow-flesh potatoes. 13 Based on the percent of major varieties of fall-harvested potatoes planted in 11 major States as 

reported in National Potato Council (NPC), 1996 Potato Statistical Yearbook (Englewood, CO, 

NPC, 1996) p. 31. 

1-8 
the 1992 leve~ with Idaho accounting for 29 percent, and North Dakota and Maine accounting 

for 18 and 13 percent, respectively, of total certified seed acreage in 1996.14 

Table Stock and Processing Potatoes 

Russet and round white types of potatoes are sold both for table stock use and for processing. 

The Russet Burbank variety is in greater demand than round whites for both the fresh market 

and for processing. It is the most commonly used potato for baking in restaurants and other 

commercial establishments. It is processed primarily into frozen french fries, other frozen 

potato products, and dehydrated potatoes, as opposed to round whites which are not used for 

frozen potato products as much. Retail consumers use it for baking, frying, boiling, and for 

making french fries. Idaho, Washington, and Oregon were the primary States producing this 

variety in 1995, although it is also grown in a number of other States. 

The Kennebec variety is used mainly for processing (especially for potato chips); however, it 

also has good boiling and baking qualities, which allows it to be competitive in the fresh market 

as well. It is primarily grown in North Dakota, Minnesota, and Pennsylvania. Norchip is a 

round white variety used principally for processing. The major areas of production include 

North Dakota, Minnesota, and Michigan. The Superior variety cooks white and is excellent for 

boiling and for making chips. It is grown in Maine, New York, and Wisconsin. Katahdin is a 

late maturing variety considered to be good for processing and boiling. The major producing 

States for this variety include Maine, New York, and Pennsylvania. 

Processed Potato Products 

French fries are the principal frozen potato product. They are produced from washed, peeled, 

raw potatoes that are partially cooked (deep fried) in vegetable oil. Those that are to be 

marketed to the retail market are cooked longer than those that are for the restaurant or 

institutional market Other forms of frozen products include hash browns, formed potato puffs 

or potato tots, and frozen mashed potatoes; these frozen potato products typically are produced 

as by-products of the production of frozen french fries. 

Historically, most potato chips have been prepared from washed, peeled, raw potatoes, which 

are sliced or chipped and then deep fried. The most common potato type used for chipping is 

the round white type, as this type has the characteristics most desired for making potato chips. 

The chips are usually mixed with salt, and sometimes artificial flavorings or colors, prior to 

being sealed in a package. In recent years, increasing amounts of potato-based snack foods have 

been prepared from cooked mashed potatoes; these products are typically baked and called 

potato crisps. 

Dehydrated potato products are made from cooked or uncooked potatoes from which most of 

the moisture has been removed. The most important dehydrated products are potato granules 

and flakes, with other products including dices, slices, strips, flour, and starch. Instant potato 

14 U.S. Department of Agriculture (USDA), Economic Research Service (ERS), Potato FactsSituation and Outlook Report, Apr. 1997, p. 8. 

1-9 
granules are dehydrated individual potato cells or small agglomerates of cells, prepared by 

dehydrating cooked, mashed potatoes in air-lift driers. Potato flakes are cooked, mashed 

potatoes that are dehydrated on a drum drier. Both potato granules and flakes may contain 

vitamins, milk or milk products, and seasoning and preserving ingredients. 

Dehydrated potato dices, slices, and strips consist of blanched or partially cooked potatoes from 

which most of the moisture has been removed. Potato flour is prepared from cooked potatoes 

that are compressed and dried into thin sheets, and then ground and sieved, yielding a flour 

which is used principally in bakery products. Canned potatoes are generally canned small, 

whole or sliced round white or red potatoes. Other canned potato products are products such 

as stews, soups, or hash in which cut potatoes are included. 

Industries 

The industries involved in the growing and processing of potatoes in both the United States and 

Canada are significant in size. The U.S. industry is believed to be significantly larger than that 

in Canada, both in terms of amounts of raw potatoes grO"wn and consumed (fresh and 

processed), and in the number and output of potato freezers. The fresh potato and frozen 

processed potato products industries in both countries are believed to possess extensive and 

comparably developed infrastructures, with the industries of both countries made up of growers, 

handlers, shippers, brokers, wholesalers, and processors. 

There were an estimated 14,500potato growers in the United States in 1991/92,15 as compared 

with an estimated 4,700 growers in Canada in the same period. There were 12 U.S. frozen 

potato processing companies, operating 2·9 plants in the United States and 2 in Canada, and 4 

Canadian companies operating 6 plants in Canada and 3 plants in the United States in 1996.16 

In recent years, U.S. exports of fresh potatoes have been increasing, but were equivalent to less 

than 5 percent of U.S. production. U.S. exports of frozen potato products (mainly french fries 

to Japan) have risen dramatically in recent years and were equivalent to an estimated 5 percent 

or less of U.S. production annually during 1992-96. Canadian exports of fresh potatoes, 

principally to the United States, have been increasing significantly since 1992, and Canadian 

exports of frozen potato products to the United States have risen significantly. In 1996, the 

ratio of U.S. imports from Canada to consumption amounted to 10.4, 5.3, and 5.3 percent for 

seed potatoes, table stock, and frozen potato products, respectively. 

Market Coverage 

Both domestically produced and imported fresh and processed potato products compete in all 

market segments, including wholesale, retail, institutional, and food service. An estimated two15 There were an estimated 10 ,500 conunercial potato grower members of the National Potato 

Council in 1996. See transcript of the hearing, p. 43. 16 O'Melveny & Myers LLP, Counsel to Food Institute of Canada, prehearingbrief, Apr. 21, 1997, 

p. 6. 

1-10 
---------------------------- --

thirds of U.S. table stock potatoes were sold through wholesale terminal markets in 1995/96; 

the remaining one-third of fresh potatoes were sold through retail markets. An estimated 90 

percent ofU.S. frozen processed potato products were sold through the food service sector in 

1995/96, with the remaining 10 percent sold through retail markets. 17 An estimated 50 percent 

of U.S. potato chips were sold in supennarket outlets in 1995. The bulk of all dehydrated potato 

products are sold for institutional and food service use. 

For purposes of this investigation, the major supply regions for the subject fresh potatoes and 

processed potato products on a nationwide basis have been designated as including certain 

Western, North Central, and Northeastern States. These same three U.S. supply regions, 

established on the basis of their large concentration of annual raw product production, have been 

designated as the major marketing regions as well. Canadian supply regions are designated as 

Atlantic, Central, and Western. 18 

Approach 

This report provides information about factors affecting trade between the United States and 

Canada in fresh table stock potatoes, seed potatoes, raw potatoes for processing, and frozen 

processed potato prcxlucts. The information was gathered from written submissions, testimony 

presented at the Commission public hearing, domestic and foreign fieldwork, responses to 

Commission's inquiries, literature searches, U.S. Department of Agriculture and Department of 

State telegrams, telephone interviews, previous Commission studies, official data of the United 

Nations, U.S. Department of Commerce, and Statistics Canada, and other sources. Domestic 

fieldwork included visits with producers in Maine, Idaho, Pennsylvania, and Washington. 

Foreign fieldwork included travel to Alberta, Manitoba, Ontario, New Brunswick, and P.E. I. 

The US TR letter requested that the Commission focus its data collection and analysis on the 

most recent 5-year period (1992-96), with the inclusion of certain data on a 3-year basis (1994-

96). 

Organization of Report 

Chapter 2 provides a basic description of the U.S. fresh and processed potato industry structure, 

together with information on production, consumption, pricing, and grading. It also presents 

current U.S. trade and regulatory measures applicable to the potato industry, along with the U.S. 

tariff treatment of imports. Finally, it includes a discussion of U.S. government programs 

applicable to the fresh and processed potato industry. Chapter 3 provides data on global trade 

flows of fresh potatoes and processed potato products, including bilateral trade between the 

United States and Canada. Import and export levels for both the United States and Canada are 

17See transcript of the hearing, pp. 56-58. 18 For the purpose of this report, Canadian supply regions, together with the respective Provinces 

included therein, have been defined as follows: Atlantic-Nova Scotia, New Brunswick, P.E. I., and 

Newfoundland; Central-Quebec and Ontario; Western-British Columbia, Alberta, Manitoba, and 

Saskatchewan. In certain instances, Prairie Provinces is used to include Manitoba, Saskatchewan, 

and Alberta. 

1-11 
discussed, including changes in import levels. Chapter 4 provides a basic description of the 

Canadian fresh and processed potato industry structure, together with information on 

production, consumption, pricing, and grading. It also presents current Canadian trade and 

regulatory measures, as well as Canadian Government programs applicable to the potato 

industry and Canadian tariff treatment of imports. Chapter 5 provides an analysis of 

competitive factors affecting U.S. and Canadian growers and processors in the U.S. potato 

market, including raw potato and processed product supply, consumption trends, government 

policies, exchange rates and terms of sale, prices of U.S. and Canadian products, and other 

factors. It also presents a summary table describing advantages and disadvantages held by the 

U.S. and Canadian industries in each of these factors. Statistical data are presented throughout 

the report and more detailed data tables are included in appendix D. 

1-12 
CHAPTER2 

U.S. Industry and Market 

Structure and Operation of the U.S. Industry 

The U.S. fresh potato and processed potato products industry is made up of many different 

segments, including the following: seed and table stock growers, growers of raw potatoes 

intended for processing, shippers, repackers, cold storage facility operators, wholesalers, 

terminal market buyers, and processors, among others. Some of these segments overlap, such 

that the distinctions between them are less clear. On the raw production end, many growers 

raise potatoes for a single intended market, such as seed or chipping potatoes. In other 

situations, however, some growers raise potatoes for two different end uses, such as for both 

seed and table stock, or for table stock and for processing.1 

With potatoes, the soil type, day length, and available water supply quite often limit the location 

where potatoes can be grown and the types of potatoes that can be grown there. Also, specific 

potato types and varieties require specific cultivation practices, including such factors as water 

requirements, fertilizer requirements, pest control, and overall management practices. On a 

regional basis, the production area in the Western States ofldaho, Oregon, and Washington is 

described as ideal for potato cultivation because. of the following factors: warm days and cool 

nights; loose, well drained soils of volcanic ash and optimum nutrient levels; low rainfall but 

extensive irrigation capabilities; low daily humidity; and a long growing season (upwards of 160 

days). 2 In the North Central region, the growing area is described as very good for raising 

potatoes. The soil types fowid throughout this region tend to be more variable in terms of soil 

structure, drainage capability, and nutrient content. This region is favored by warm days, but 

has less-favorable warm nights. Rainfall is described as irregular and is usually supplemented 

with irrigation on potatoes for processing. Finally, this region has less desirable levels of high 

humidity and lower natural light intensities, and a shorter growing season (125 days). The third 

U.S. region, the Northeastern United States, is described as less desirable for raising certain 

types of potatoes, including some russets. The soils are more rocky, the nights are sometimes 

unfavorably wami, armual rainfall is less than in the Western United States, humidity is higher, 

and the length of the growing season is the least number of days ( 110 days) of any region. 3 

Once the potato crop is ready for harvest, a number of decisions must be considered, such as 

when and how to remove the vines, the type of harvesting equipment to use, and where to store 

the potatoes. Storage is usually on-farm or in nearby facilities. Properly stored potatoes are 

reported to last 9-12 months without much decline in quality. After examining the costs of 

1 Based on US ITC staff interviews with industry officials, Houlton, ME, May 9, 1997. 2 Lamb Weston, Product and Profitability Guide (Tri-Cities, WA: Lamb Weston, Inc., 1994), pp. 

2.3-2.8. 3 Ibid. 

2-1 
production, harvest, and storage, the next step in the operation is to price the product and decide 

when and what quantities to sell out of storage. Finally, transportation is calculated and 

arrangements made to get the potatoes delivered to their end user. 

Seed, Table Stock, and Raw Product Growers 

Growers include those that raise primarily potatoes as well as those that raise a number of other 

crops in addition to potatoes. According to industry sources, potatoes are the primary source 

of income from all crops raised by some potato growers.4 Most growers raise certain varieties 

of potatoes, based upon such considerations as the overall environmental conditions indigenous 

to their growing area, expected demand for their production at harvest time and throughout the 

months following harvest, and commitments with processors or others to grow and supply 

specific varieties and certain volumes. Many seed potato growers raise both seed and table 

stock potatoes. 

The commercial potato industries of both the United States and Canada have relied heavily in 

recent years on the use of disease-free and genetically-viable certified seed potatoes. The U.S. 

seed potato certification program exists only in certain States and may be controlled by a landgrant university, a State Department of Agriculture, or by certain State-wide grower production 

associations, depending upon the respective State in which the program is located. In Canada, 

by contrast, the Canadian Federal Government controls the seed certification program on a 

national scale, with every Province administering the same Federal regulations. In more recent 

years, improvements in seed certification programs in both countries have helped to alleviate 

many of the easily identifiable disease problems associated with planting noncertified seed. The 

use oflaboratory controlled propagation techniques have been especially beneficial in this area. 5 

Processors 

Potatoes have been processed in the United States since 1831 when the first potato starch plant 

was established. 6 Potato chip and frozen potato product processing both were started by the 

1940s. Historically, frozen and dehydrated potato products processors were located near their 

sources of supply. As a result, most of these plants are currently operating in the production 

areas of the North Central and western region States. Potato chip processors, on the other hand, 

are located near population centers, since potato chips are less dense and very expensive to ship 

in small amounts. 

There were four major U.S. producers of frozen processed potato products in 1996-Lamb 

Weston, Inc. (Tri-Cities, WA), J.R. Simplot Company (Boise, ID), Ore-Ida Foods, Inc. (Boise, 

4 Based on USIT C staff conversations with officials of the fresh and processed potato industry, 

Apr. 1997. 5 The Potato Association of America, Commercial Potato Production in North America (Orono, 

lvffi: Potato Association of America, 1993), p. 23. 6 Ibid., p. 23. 

2-2 
ID),7 and Nestle-Carnation (Moses Lake, WA). Other processors included the following singlefacility producers: AVIKO (ND), a Dutch-owned finn, Katie Foods (ID), Magic West 0N A), 

Northern Star (MN),8 Oregon Potato (OR), and Twin City Foods ry.lA), and multifacility 

producer McCain Foods (ME), a Canadian-owned finn. 9 An estimated 80 percent of annual 

frozen potato products sales in the U.S. market in recent years was accounted for by the four 

largest finns. 10 

The majority of U.S. frozen processed potatoes facilities are located in Idaho, Oregon, and 

Washington. There are 21 production facilities in these States, collectively accounting for an 

estimated 80 percent of total U.S. production capacity. The States of Michigan, Minnesota, 

North Dakota, South Dakota, and Wisconsin in the North Central region account for nearly all 

of the rest of U.S. production capacity. One other processing facility is in Maine. There was 

an estimated 9.5 billion pounds of total U.S. frozen processed potato products production 

capacity in 1996, up from 8.5 billion pounds in 1994 and 9.2 billion pounds in 1995.11 U.S. 

frozenprocessedpotatoproductioncapacityutilization was estimated at 80-85 percent in 1996, 

down from 87 percent in 1994 and 1995.12 

Production, Harvesting, and Storage Practices 

Seed and Table Stock Potatoes 

Seed potatoes make up a small but important part of the fresh potato market 13 However, the 

bulk of table stock growers do not raise seed potatoes. Most U.S. and Canadian growers rely 

heavily on the use of high-quality certified seed potatoes. Most of the seed potatoes produced 

in the United States and Canada are used in each country, with small amounts of seed potato 

production exported to third-cotmtty markets from Canada. Most U.S. seed potato certification 

agencies operate tissue culture laboratories, from which are developed stocks of pathogen-free 

seed stock materials. An estimated 100 percent of all seed stock material produced in the 

United States from tissue culture techniques is tested for the presence of disease-causing 

organisms. Seed certification agencies may test limited amounts of the certified seed stock at 

a later stage of development as well. 

7 In Mar. 1997, part of Ore-Ida Foods, Inc., a subsidiary of H.J. Heinz, Inc., was purchased by 

McCain Foods, Inc., New Brunswick, Canada. The Heinz-owned part of Ore-Ida Foods retained the 

retail side of the business. See transcript of the hearing, p. 77. 8 Michael Foods, Inc. announced in Mar. 1997 that it was closing its Minneapolis subsidiary, 

Northern Star, as of May 31, 1997. 9 Collier, Shannon, Rill & Scott, PLLC, Special Counsel for the National Potato Council (NPC), 

Frozen Processed Potatoes Segment, prehearing brief, Apr. 21, 1997, pp. 6-7. 

lO Ibid., p. 7. 11 Collier, Shannon, Rill & Scott. prehearing brief, Apr. 25, 1997, p. 1. 12 Ibid.p. 7. 13 In recent years, seed use has accounted for about 5 percent of fresh potato utilization. Based on 

data presented in U.S. Department of Agriculture (USDA), National Agricultural Statistics Seivice 

(NASS), Potatoes, 1995 Summary, Pot 6(96), Sept. 1996, p. 14. 

2-3 
The tissue culture process results in the production of tiny immature plants called plantlets. 

These plantlets are produced in large enough quantities to conduct field trials for tuber 

production. Most often, the plantlets are grown in greenhouses or screen houses. From these 

field trials are harvested the minitubers that are stored until the following season for later seed 

production. Seed from these sources is certified for use only for from 5 to 9 years after 

greenhouse production. Once these minitubers are planted in large enough numbers to generate 

a large supply of tubers, the resulting tubers become the certified seed supply from which 

commercial plantings are grown. Both the United States and Canada have a voluntary seed 

generation system, which allows for further disease testing. In some areas, this process is 

mandatory. 14 Certified seed potatoes may be started from minitubers or plantlets grown by 

individual seed growers or on State- or Provincial-operated fanns. Farmers then purchase their 

certified seed for planting directly from these farms. 

Growers of table stock potatoes select certified seed potatoes of varieties which they believe to 

be adapted to their specific growing areas. As with all other field-grown crops, potato 

production is affected directly by the vagaries of weather, along with specific cultivation, 

fertilization, rainfall/irrigation, and insect and disease pest control practices. According to 

industry sources, the availability and timing of water may be the single most important factor 

affecting potato quantities produced and yield per acre. Because potato plants are heavy feeders 

of nutrients and because certain soil-borne pest problems tend to remain in the soil for a few 

years after the plants have been harvested, potatoes are often grown in a 3- or 4-year rotation 

program with such other crops as barley, oats, flax, or broccoli. Pest control is an important 

part of potato growing, with certain especially serious weed, insect, and disease problems 

requiring diligent and often expensive control methods. The use of integrated pest management 

techniques is common throughout the U.S. potato growing industry. With the added 

environmental concerns facing agriculture today, growers are striving to design and implement 

management practices that maximize yields and efficiency, minimize effects to the environment, 

and help sustain available soil and water resources.15 

Depending upon the varieties planted and the growing conditions experienced during the 

growing season, most potatoes are harvested from 110 to 16.0 days after planting. Because 

potatoes are grown in so many States throughout the year, they are harvested every month of 

the year. Potatoes designated as winter, spring, or summer crop potatoes are harvested while 

the vines are still green and the potato tubers still in an immature stage of development. 16 These 

potatoes are generally sold directly after harvesting for fresh market or processing use. Fallharvested potatoes, on the other hand, are harvested when both the vines and tubers are more 

mature. At this development stage, the tubers are somewhat higher in dry matter content and 

the skins more resistant to skinning and bruising during harvest. Such potatoes are usually 

better suited for processing and extended storage. 

Throughout the United States, most potatoes are mechanically harvested directly into bulk 

trucks for transport to packing sheds, warehouses, storage facilities, or to processors. No matter 

what the particular method of mechanical harvesting used, industry officials agree that bruising 

14 Commercial Potato Production in North America, p. 24. 15 Ibid., p. 35. 16 Ibid., p. 40. 

2-4 
of the potatoes dwing these operations is usually very costly. An estimated 20 percent of 

returns may be lost to bruising, usually through reduced prices for the potatoes, reduced storage 

life because of increased shrinkage, and increased processing costs.11 The amount of bruising 

is generally affected by the soil condition at harvest, the overall maturity and temperature of the 

tubers, and certain characteristics of the harvesting operation (such as harvester blade depth and 

alignment, harvester apron pitch, speed, and agitation, harvester traveling speed, blade spill-out 

and blade undersweep, and the amount of padding u.Sed on various parts of the machines during 

the harvesting operation).18 

The bulk of potatoes gro""11 in the United States are stored for some period of time prior to sale. 

Large amounts of potatoes for storage were historically kept in underground pits with no 

temperature, humidity, or ventilation control In recent years, increasing amounts of potatoes 

are being stored in modern, insulated above-ground storage facilities wherein humidity and 

temperature are closely and efficiently controlled. Such storage units typically hold from 5 00 

to 20,000 tons of potatoes and range in size and type of operation from smaller private units on 

individual farms to large, publicly- and privately-owned centrally located facilities miles away 

from the growing areas. With the increase in the use of potatoes for processing in recent years, 

additional larger storage units are being built near processing facilities. 

After the potatoes have been grown and harvested, growers must then get their products to the 

desired markets or into storage. Potato growers in Northeastern States typically act as their own 

shippers and generally have their own packing operations. Growers in the Western region 

usually sell through independent sales agents. Shippers of potatoes from the Western region 

also compete for fresh potatoes at the grower level with processors using potatoes grown in their 

area.19 

Fresh potatoes are typically sold in a variety of containers and different grade specifications. 

At the institutional level, sales are often in 100-pound bags, usually of a mixed lot oflarge- to 

small-sized potatoes. Potato sales at the institutional and retail levels are also common in 50-

pound cardboard boxes, or count cartons, wherein the box is labeled as to the exact number of 

potatoes contained therein. Other bulk-style packs include 50-pound cartons or sacks and 50-

pound baled containers of either 5 10-pound bags or 10 5-pound bags.20 The more common 

retail-size packs include 5-, 8-, 10-, 15-, and 20-pound bags, as well as loose potatoes in bulk 

bins. Through the administration of marketing orders, certain production areas regulate 

inspection for grade standards of all fresh potatoes leaving their area. 

17 Ibid., p. 41. 18 Ibid., p. 41. 19 Ibid., p. 11. 20 "1996 Produce Availability & Merchandising Guide," The Packer (Lenexa, KS: Vance 

Publishing Co., 1996), pp. 344-364. 

2-5 
---- ~-------

Raw Potatoes for Processing-Frozen Processed Potato Products 

In recent years, frozen french fries and other frozen potato products accounted for the largest 

share of potatoes utilized for processing. 21 According to industry sources, 22 the predominant 

processing potato type is the russet type and the most important variety is the Russet Burbank. 

An estimated 90 percent of frozen processed potato products are prepared from Russet Burbank 

potatoes.23 Other important processing varieties include Shepody and Ranger, which do not 

store well and must be processed soon after harvest. In general, an estimated 2 pounds of raw 

potatoes will yield 1 pound of frozen potato product. 

Processors of frozen potato products generally contract for the bulk of their raw potato needs, 

with a single-year contract the most common type. Such contracts typically include the 

following items: the location where the crop will be grown; specific grower obligations covering 

production and harvesting practices; terms of crop evaluation method; contract terms for crop 

valuation, typically including incentives and disincentives for higher or lower crop quality; 

criteria for rejection of product; storage and delivery terms; and, legally binding language for 

the grower and processor.24 For both summer- and fall-harvested potatoes, such contracts 

typically are negotiated with groups of growers during the winter and spring months before 

spring and summer planting occurs. 25 The length of a typical contract is for the production from 

one season's crop. Contracts allow for an orderly system of product procurement by a processor, 

while at the same time allowing for more stable prices to growers. In recent years, an estimated 

7 5 percent of raw product for processing was procured through contracts. 26 

Processors also acquire raw potatoes for processing through the use of multiyear contracts, with 

production quantities specified on an annual basis, and through open-purchase contracts, 

wherein purchases are made throughout the growing season on the open market. In some 

instances, processors have entered into joint-venture agreements with growers, in which part of 

the grower's raw-product production costs are shared by the processor.27 Some processors also 

enter into custom farming agreements with growers, wherein growers are paid agreed-upon rates 

for performing certain cultural practices and the processor assumes all risks and profits 

associated with raising and selling the potato crop. 28 

Raw Potatoes for Processing-Other Processed Potato Products 

Potato chip producers acquire most of their raw product under contract with growers. Some is 

typically purchased on the open market (through brokers). Potato chips are produced close to 

major markets (centers of population) rather than close to the source of raw product. Most chip 

21 USDA, NASS, Potatoes, 1995 Summary, Sept. 1996, p. 4. 22 Collier, Shannon, Rill & Scott, prehearing brief, Apr. 21, 1997, p. 2. 23 Ibid., pp. 2-3. 24 Collier, Shannon, Rill & Scott, prehearing brief, Apr. 25, 1997, pp. 2-3. 25 Ibid., p. 2. 26 Ibid., p. 3. 

27 Ibid, p. 3. 28 Ibid, p. 4 

2-6 
producers do not store raw product and have the potatoes shipped to the factory daily. Raw 

product is typically sourced from nearby growers beginning with the fall harvest and continuing 

until the winter-harvested crop becomes available. For producers in the Northeastern United 

States, supplies are purchased from areas progressively further north as the season progresses. 

A certain potato chip producer reportedly requires in it's contracts with growers that they grow 

a proprietary variety of potatoes exclusively for that company.29 

Dehydrators operate differently from other processors in their raw product acquisition. Some 

growers will not raise potatoes specifically for the dehydration market since grower returns on 

potatoes for dehydration usually are not high enough. As a result, dehydrators purchase fresh 

potatoes both under contract and on the open market. Once their potatoes are delivered, they 

first sort their potatoes and ship the better quality ones to the fresh market. The rest are 

dehydrated. Some· dehydrators also purchase off-grade potatoes directly from fresh packers.30 

Domestic Production, Inventories, Consumption, Prices, and 

Grading 

Production 

Seed Potatoes 

The amount of certified seed acreage planted throughout the United States trended upward from 

173,000 acres in the 1991192 season to 182,193 acres in the 1995/96 season (table 2-1). Since 

1992, the leading States in area of seed potato plantings included Idaho, North Dakota, Maine, 

and Minnesota. The share of acreage represented by each region remained steady at an 

estimated 40 percent each of the total for the Western and North Central regions, followed by 

the Northeastern US. region accounting for an average 17 percent annually. The volume of the 

overall U.S. fresh potato crop used for seed potatoes has increased steadily since the 1992/93 

season and amounted to 2. 7 billion pounds in 1996/97, as shown in the following tabulation (in 

thousands of pounds ):31 

1992/93 

Utilization .... 2,352.9 

1 Estimated by USITC staff. 

1993/94 

2,422.3 

1994/95 

2,461.6 

1995/96 

2,577.0 

29 USITC staff interview with U.S. potato chip producer, Apr. 15, 1997. 

1996/971 

2,662.0 

30 USITC staff conversations with officials of the fresh and processed potato industries, May 1997. 31 Compiled by USITC staff from USDA, NASS, Potatoes, Pot 6 (95), Sept. 6 1995, p. 4, and Pot 

6 (96), Sept. 1996, p. 4. 

2-7 
------------------ ------- --------

Table 2·1 

Seed potatoes: Certified seed potato acreage, by selected States, 1991/92to1995/96 

1991/92 1992193 1993/94 1994/95 1995/96 

In Acres 

Western: 

California ........... 0 1,082 1,036 1,204 

Colorado ........... 9,799 10,038 9,893 10,568 

Idaho Io o 'o'' I 0 o o 0 o 43,315 40,314 44,425 52,908 51,989 

Montana ........... 8,782 7,987 8,576 9,702 1 

Oregon ............ 3,802 2,918 3,057 3,018 

Washington ......... 2278 2 042 2 045 2267 

Subtotal ......... 67,976 64.381 69.032 79.667 51,989 

North Central: 

Michigan ........... 2,750 2,403 2,314 2,820 

Minnesota .......... 21,146 20,690 15,610 19,804 19,727 

Nebraska 6,264 7,095 8,017 8,082 1 '' 0 o Io o 0 o o 

North Dakota ........ 33,421 28,747 25,696 30,111 32,099 

South Dakota ....... 1,867 1,924 1,844 1,437 1 

Wisconsin .......... 10 831 10 825 10 459 10 517 9624 

Subtotal .......... 76.279 71.684 63,940 72.771 61.450 

Northeastern: 

Maine .............. 26,212 29,035 28,279 28,481 25,153 

New York ........... 1,913 1,820 1,840 1,990 1 

Pennsylvania ........ 224 228 244 184 

Subtotal .......... 26.~49 31.083 30.363 30.655 25.153 

All other .............. 396 193 138 172 43.601 

Total ...... ' ...... 173,000 167.341 163.473 183.265 182.193 1 Not yet available. 

Source: USDA, ERS, Potato Facts, PTS-1, Apr. 1997, p. 8, and National Potato Council, Potato Statistics Yearbook(Englewood, Co.: 

NPC, 1992-96). 

Limited data are available on the costs of production far potatoes for all uses, primarily through 

the Cooperative Extension Service programs at certain U.S. land-grant colleges. Such data are 

not directly comparable, on either a product or variety basis, since the data are constructed using 

different production factors, different potato types, and cover different years. Nonetheless, 

recent production cost data show a considerable amount of variation throughout a number of 

States (table 2-2). 

Fresh Potatoes 

Potatoes are grown throughout the United States, with production concentrated in the Western 

United States along the Snake River Basin, in the North Central region along the Red River, and 

in the Northeastern States of Maine, New York, and Pennsylvania (figure 2-1). Significant 

amounts of production also take place in Florida and other Southern States, with much of this 

production intended for processing use. U.S. potato production totaled 44.4 billion 

2-8 
Table 2-2 

Potatoes: U.S. per-acre estimated costs of production, by year and by potato type 

Area Year Type of potato 

ldaho1 •••••••••••••• Not specified Seed 

North Dakota 1 ....... Not specified Seed 

ldaho1 •••••••••••••• 1995 Table stock 

Maine2 o 0 I 0 0 O o 0 0 I 0 Io 1994 Not specified 

ldaho3 ••••••••••.••. 1995 R. Burbank (no storage) 

ldaho4 •••••••••••••• 1995 R. Burbank (no storage) 

ldaho5 ••.••••••.•••• 1995 Shepody (no storage) 

ldaho6 •••••••••••••• 1995 R. Burbank (no storage) 

ldaho7 •••••••••••••• 1995 R. Burbank (on farm storage) 

ldaho8 •••••••••.•••• 1995 Chipping potatoes (on farm storage) 

ldaho9 •••••••••••••• 1995 R. Burbank seed (on farm storage) 

Washington10 ••.••••. 1992 Fall potatoes, center pivot irrigation 

Wisconsin,, ......... 1991/97 Russet Burbank 

Red River Valley11 •••• 1996/97 Russet Burbank 

Oregon11 •••••••••••• 1996/97 Shepody 

Washington 11 ........ 1996/97 Early varieties 

Washington,, ......... 1996/97 Russet Burbank 

'Prehearing submission of National Potato Council, Apr. 21. 1997. 2 Farm Credit of Maine, ACA, Cost of Production Projected Per Acre. 

Costs ($per acre) 

1,428 ($6.08/cwt.) 

1,003 ($5.42/cwt.) 

1,316 

1,932 

2,056 

1,586 

1 ,908 ($4 .15/cwt.) 

1,316 

1,574 ($5.00/cwt.) 

1,721 ($5.22/cwt.) 

1,428 ($6.08/cwt.) 

2,425 

1,921 

1,172 

1,911 

2,126 

2,232 

3 Paul E. Patterson, Mir-M. Seyedbagheri, Darrel G. Bolz, and Robert L. Smathers, 1995 Southwest Idaho Crop Costs and Returns 

Estimate, EBB2-Pol-95, Univ. of Idaho. 

• Paul E. Patterson, Ivan C. Hopkins, C. Wilson Gray, and Robert L Smathers, 1995 Southcentral Idaho Crop Costs and Returns 

Estimate, EBB1-Pol-95, Univ. of Idaho. 5 Paul E. Patterson and Robert L. Smathers, 1995 Southwestern Idaho Crop Costs and Return Estimate, EBB2-P02-95, Univ. of 

Idaho. 

6 Paul E. Patterson, William H. Bohl, and Robert L. Smathers, 1995 Southeastern Idaho Crop Costs and Returns Estimate, EBB4-

P01-95, Univ. of Idaho. 7 Pauj E. Patterson, William H. Bohl, and Robert L. Smathers, 1995 Southeastern Idaho Crop Costs and Returns Estimate, EBB4-

P02-95, Univ. of Idaho. 8 Paul E. Patterson, William H. Bohl, and Robertl. Smathers, 1995 Southeastern Idaho Crop Costs and Returns Estimate, EBB4-

P03-95, Univ. of Idaho. 

•Paul E. Patterson, Jim C. Whitmore, and Robert L. Smathers, 1995 Southeastern Idaho Crop Costs and Returns Estimate, EBB4-

P04-95, Univ. of Idaho. 

'

0 Herbert Hinman, Gary Pelter, Elvin Kulp, Erik Sorenson, and William Ford, 1992 Enterprise Budgets for Alfalfa Hay, Potatoes, 

Winter Wheat, Grain Corn, Silage Com, and Sweet Com Under Center Pivot Irrigation, Columbia Basin, Washington, Farm 

Business Management Reports No. EB1667, Washington State University. 11 Produce Marketing Association of North America, Cost of Production Survey, as supplied by Wisconsin Potato and Vegetable 

Growers Associations, Inc. 

Source: Compiled by USITC staff as noted above. 

2-9 
Figure 2-1 

Potatoes: U.S. production areas. 1996 

Source: Reprinted with permission, from the American Potato Journal, The Potato Association of America, Orono, ME. 
pounds in 1995/96, 6 percent above the level in 1991/92 (table 2-3).32 In 1995/96, 91 percent 

of total production was fall-harvested, with most of the remainder harvested in the spring and 

summer. An estimated 88 percent of both acres planted and harvested were from the fall 

harvest. In recent years, over 90 percent of production was accounted for by growers in the 

Western U.S. region (table 2-4). Idaho leads U.S. production of potatoes (29.7 percent in 

1995), followed by Washington (18.3 percent). Colorado, Oregon, Wisconsin, and North 

Dakota each produce between 5 and 6 percent of total U.S. production. Other major producing 

States in 1995 were Minnesota (4.7 percent), Maine (3.8 percent), Michigan (3.7 percent), and 

California (3.3 percent). Florida, New York, and Nebraska each produced between 1 and 2 

percent of total U.S. production, and all other States produced less than 1 percent each (figure 

2-1). 

There has been a measurable shift in U.S. potato production since the early 1980s, in terms of 

farm size, total harvested acreage, harvested acres per fann, and location of farms. According 

to government sources,33 the number of farms reporting potato production declined from 26, 

928in1982 to 14,502 in 1992,34 a decline of 46 percent (table 2-5). The number of harvested 

· acres and the number of acres harvested per fann, however, has risen considerably since 1982. 

On a regional basis, the same general trends are noted. As with potato acreage and number of 

farms in general, a decreasing nun1ber of potato farmers have grown potatoes under irrigation 

since 1982. However, the amount of irrigated acreage harvested in 1992 was 19 percent greater 

than in 1982. Thenumberofirrigated acres harvested per farm amounted to 190 acres in 1992, 

as compared with only 134 acres in 1982 (table 2-6). The same general trends again are noted 

on a regional basis. 

Data on production costs for fresh potatoes also vary considerably from State-to-State, and by 

variety and use (table 2-2). Data for Maine potato growers showed a projected per-acre 

productioncostof$1,931.73 in recent years, with nearly 50 percent of total costs accounted for 

by interest, labor, management, and chemicals.35 Data on production costs for fall-harvested 

irrigated potatoes in Washington State have trended upward since 1992, as shown in the 

following tabulation (in dollars per acre):1 

1992 1996 1994 

Production costs... $2.243 $2.911 $2,265 1 Data taken from Estimated lmgated Crop Costs of Production, Big Bend Community College, Moses 

Lake, WA, various years. 

32 Data are for all seasons and for all uses. Certain data for limited production seasons are 

available elsewhere. See USDA, ER.S, Potato Facts Nov. 1996, p. 5. 33 Census of Agriculture, 1982, 1987, and 1992 editions. 34 The most recent year for which data are available. These data are collected and reported only 

every 5 years. They are gathered in a different format from data reported elsewhere in this report. 

Hence, data for certain years do not match data reported for the same year but under a different 

format. 35Report from Farm Credit of Maine, ACA, using data collected from 40 farms. 

2-11 
--------------------------- --------

Table2-3 

Potatoes: U.S area planted and harvested, yield, ahd production, by season, 1991/92to1995/96 

1991192 .. 1992193 1993/94 1994/95 1995/96 

Area planted (Acres) 

Season: 

Fall, .............•.... 1,203,200 151,700 1,189,900 1,213,000 1,224,100 

Winter ............... . 13,200 13,400 14,300 12,900 13,300 

Spring ......... ; ..... . 90,200 . 85,300 86,900 91,600 88,300 

Summer .............. ___ ....... 100,9QO ...,......._ ___ 88,900 ......,'""""...._ __ ---""""""' 94,100 ....... ___ ......_......._..._ 95,800 __ _........_ 72,500 ....... 

Total .............. . 1,407.500 1.339,300 1.385.200 11413,300 1,398,200 

Area hawested (Acres) 

Season: 

Fall ....... , .......... . 1,177,400 1,132,600 1,130,400 1,184,700 1,205,200 

Winter ............... . 12,200 13,400 13,600 12,300 11,900 

Spring ............... . 87,500 83,000 83,800 90,400 84,300 

Summer 97,3QO 86,000 89.200 921300 70,700 .............. ----"'-'""""""""----"'""""""""'----~=.i.=""""'----=......,..._--__,__,,_....._ 

Total . . . . . . . . . . . . . . . __ _......._......_.....,._ 1.3741490 __ 1,315,000 .......,"'""""~'------'..,,....""'"""'=---"""""---. 1.317,000 1,379.700...... ---_............,,......--. 1,3721100 

Yield (/Pounds per acre) 

Season: 

Fall .......... , ....... . 31,572 33,509 34,141 35,422 33,439 

Winter .......... , .... . 21,385 22,373 18,765 19,285 20,782 

Spring ............... . 23,584 25,946 23,453 25,051 23,954 

Summer ............. . 23.275 24.778 23.040 241259 25,362 

Average ... , ........ . • ~Q,386 321347 32,551 33,852 32,330 

Production (1, 000 pounds) 

Season: 

Fall.,................. 37,173,000 37,952,500 38,593,500 41,964,500 40,300,900 

Winter . . . . . . . . . . . . . . . . 260,900 299,800 255,200 237,200 247,300 

Spring . . . . . . . . . . . . . . . . 2,063,600 2, 153,500 1,965,400 2,264,600 2,019,300 

Summer . . . . . . . . . . . . . . 2.f264.700 2.130,900 2,055,200 2.239,100 1,793,100 

Total . . . . . . . . . . . . . . . 41 ,762a200 42.536.700 42,869,300 46,705,400 44.3601600 

Note.--Data are believed to cover potatoes for all uses and do not match potatoes for utilization data presented 

elsewhere. 

Source: Compiled by Commission staff from official data presented in USDA, NASS, Potatoes, 1993 Summary: Sept. 

1994, Pot 6(94), pp. 5-7; 1994 Summary: Sept.1995, Pot. 6{95), pp. 5-7; and, 1995 Summary: Sept. 1996, Pot. 6{96), 

pp. 5-7. 

2-12 
Table 2-4 

Potatoes: U.S area planted and harvested, yield, and production, by region, 1991/92 to 1995/96 

1991/92 1992/93 1993/94 1994/95 1995/96 

Area planted (Acres) 

Region: 

Western ............... 739,400 698,300 738,000 771,500 752,900 

North Central .......... 395,000 377,600 380,300 378,500 385,000 

Northeastern ........... 140,000 138,100 137,300 133,200 131,900 

Other ................. 133.100 125.300 129.600 130,100 128.200 

Total ............... 1,407,500 1,339,300 1,385,200 1,413,300 1,398,200 

Area harvested (Acres) 

Region: 

Western ............... 729,000 694,200 734,000 769,200 749,400 

North Central .. ' ....... 380,400 364,500 325,800 355,300 370,700 

Northeastern ........... 136,800 134,800 133,600 128,600 130,300 

Other ................. 128.200 121 ,500 123.600 126.600 121,700 

Total too o 0 o I 0 o o 0 o 0 o o 1,374,400 1,315,000 1 .317.000 1.379.700 1 .372.100 

Yield (Pounds per acre) 

Region: 

Western ............... 36,962 38,119 39,280 40,119 38,274 

North Central .......... 24,383 25,785 25,140 27,929 26,651 

Northeastern ........... 22,056 28,999 25,210 24,526 23,590 

Other ................. 19,691 22,771 20,059 21.871 22.386 

Average ............. 30,386 32,347 32,551 33,852 32,330 

Production (1,000 pounds) 

Region: 

Western ............... 26,945,300 26,462,500 28,831,200 30,859,200 28,682,700 

North Central o o o I Io o 0 o 0 9,275,200 9,398,500 8,190,700 9,923,300 9,879,700 

Northeastern ........... 3,017,300 3,909,000 3,368,100 3,154,000 3,073,800 

Other ................. 2.524.4QO 2.766,700 2.479.300 2,768,900 2,724.400 

Total o 0 0 o o 0 0 o Io o 0 0 o 0 41.762.200 42.536.700 42,869,300 46.705.400 44.360,600 

Note.--Data are believed to cover potatoes for all uses and do not match potatoes for utilization data presented 

elsewhere. 

Source: Compiled by Commission staff from official data presented in USDA, NASS, Potatoes, 1993 Summary: Sept. 

1994, Pot 6(94), pp. 5-7; 1994 Summary: Sept. 1995, Pot. 6(95), pp. 5-7; and, 1995 Summary: Sept. 1996, Pot. 6(96), 

pp. 5-7. 

2-13 
Table2-5 

Potatoes: Number of farms, harvested area, and harvested area per farm, by region and selected States, 1982, 1987, and 1992 

Number of farms Harvested area Harvested area per farm 

Region/states 1982 1987 1992 1982 1987 1992 1982 1987 1992 

Number Acres 

Western: 

Idaho ........ 1,892 1,792 1,616 320,019 352,670 372,028 196 197 230 

Washington .. 533 486 431 104,738 110,157 129,110 197 227 300 

Colorado ..... 389 369 326 54,950 65,420 70,070 141 1n 215 

Oregon ...... 520 448 350 52,297 58,597 48,856 101 131 140 

California .... 313 303 265 49,414 46,976 46,461 158 155 175 

All other ..... 442 306 220 33,086 24,954 25,322 75 82 115 

Subtotal .. 4,089 3,704 3,248 614,504 658,n4 691,847 150 178 213 

North Central: 

Minnesota .... 746 525. 490 78,659 78,268 85,271 105 149 174 

Wisconsin .... 766 470 447 68,340 72,149 78,231 89 154 175 

Michigan ..... 768 564 492 48,703 44,105 47,061 63 78 96 

North Dakota 647 557 453 121,366 136,704 139,511 188 245 308 

Nebraska .... 197 125 92 9,722 10,547 13,010 49 84 141 

All other ..... 1,816 480 827 27,087 28,881 23,331 15 60 28 

Subtotal .. 4,940 3,121 2,801 353,8n 370,654 386,415 72 119 138 

Northeastern: 

Maine ....... 1,134 839 no 99,251 83,261 87,650 88 99 114 

New York ..... 865 602 587 43,644 35,682 28,861 so 59 49 

Pennsylvania 1,631 1, 113 956 20,412 21,707 17,393 13 20 18 

All other ..... 573 360 408 17,395 11,301 8,950 30 31 22 

Subtotal .. 4,202 2,914 2,721 180,702 151,951 142,854 43 52 53 

Other: 

Florida ...... 219 166 200 31,003 36,435 43,499 142 219 217 

North Carolina 2,020 712 857 15,955 17,?81 18,n5 8 24 22 

Texas ....... 698 366 306 15,497 15,468 10,487 22 42 34 

Alabama .... 648 280 262 13,512 13,583 10,355 21 49 40 

All other ..... 10, 112 3,519 4,107 43,170 45,817 46,925 4 13 11 

Subtotal .. 13,697 5,043 5,732 , 19, 137 128,584 129,991 9 25 23 

Grand total .... 26,928 14,782 14,502 1,268,220 1,309,963 1,351,107 47 89 93 

Source: U.S. Department of Commerce, Compiled from Census of Agriculture, 1982, 1987, and 1992 reports. 

2-14 
Table2-6 

Potatoes: Number of irrigated farms, irrigated harvested area, and irrigated harvested area per farm, by region and selected 

States, 1982, 1987, and 1992 

Number of Irrigated farms Irrigated harvested area Irrigated harvested area per farm 

Region/states 1982 11987 11992 1982 11987 11992 1982 11987 11992 

Number Acres 

Western: 

Idaho ........ 1,892 1,792 1,616 320,019 352,670 372,028 196 197 230 

Washington .. 443 451 398 100,074 105,482 122,678 226 234 308 

Colorado ..... 389 369 326 54,950 65,420 70,070 170 177 215 

Oregon ...... 480 433 337 51,538 58,073 48,172 107 134 143 

California .... 313 303 265 49,414 46,976 46,461 158 172 175 

All other ..... 392 273 246 SS.005 24,876 25,248 84 91 103 

Subtotal .. 3,909 3,621 3,188 609,000 653,497 684,657 156 180 215 

North Central: 

Wisconsin .... 241 220 238 50,738 57,508 70,218 211 261 295 

Michigan ..... 237 230 217 26,556 23,866 30,752 112 104 142 

Minnesota .... 85 96 96 18,865 23,081 26,788 222 240 279 

North Dakota 14 22 65 261 3,186 19,570 19 145 301 

Nebraska .... 69 65 58 9,529 10,176 12,669 138 157 218 

All other ..... 129 111 123 6,494 10,169 11,396 50 92 93 

Subtotal .. 775 744 797 112,443 127,986 171,393 145 172 215 

Northeastern: 

New York .... 230 142 114 15,736 . 9,475 7, 110 68 67 63 

Maine ....... 41 34 59 3,175 3,485 5,562 77 103 94 

Pennsylvania 93 122 67 1,717 2,629 2,021 18 22 30 

All other ..... 159 95 96 8,585 5,343 3,242 54 56 34 

Subtotal .. 523 393 336 29,213 20,932 17,935 56 53 53 

Other: 

Florida ....... 149 134 159 25,977 34,750 41,344 174 259 260 

Texas ....... 183 168 109 14,094 14,630 9,871 77 87 91 

New Mexico .. 36 31 31 2,998 9,972 9,543 83 322 308 

Missouri ..... 10 20 35 26 1,709 5,448 3 85 156 

Arizona ...... 27 28 28 3,799 3,618 5,125 141 129 183 

Virginia ...... 76 69 67 4,579 6,354 3,848 60 92 57 

All other ..... 360 340 297 6,712 12,585 9,359 19 37 32 

Subtotal .. 841 790 726 58,185 83,618 84,538 69 106 11 

Grand total .•.. 6,048 5,548 5,047 808,841 886,033 958,523 134 160 190 

Source: Compiled from U.S. Department of Commerce, Census of Agriculture, 1982, 1987, and 1992 reports. 

2-15 
Processed Potato Products 

Table2-7 

Since 1982, the processed potato products industry has experienced significant changes in 

industry structure. Data from the US. Census of Manufactures, although gathered only every 

5 years and often in rather broad categories, are nonetheless useful in presenting trends in an 

agricultural crops. French :fry plants are located principally along the Snake River in 

Washington and Idaho, and near the Red River in North Dakota and Minnesota (figure 2-2). 

In 1992, there were an estimated 13 establishments producing frozen fried potatoes, as 

compared with 21 establishments in 1982 (table 2-7). The number of establishments producing 

other frozen potato products was also down. The value of shipments of frozen french fries and 

other frozen potato products, however, was up in 1992 as compared with 1982. The number 

of establishments processing canned potatoes fell in 1992, with an accompanying 8 percent drop 

in shipments to $48.8 million in 1992. The number of establishments reporting dried potato 

shipments rose to 8firmsin1992, with shipments in 1992 amounting to $153.3 million. There 

were 17 establishments reporting shipments of vegetable flours (including potato flour) in 1992, 

with shipments in that year amounting to $285.2 million. 

Potato products: Number of establishments and product shipments, by census year and by 

products, 1982, 1987, and 1992 

No. of establishments Product shipments (million dollars) 

1982 1987 1992 1982 1987 1992 

Frozen trench fried potatoes ........... 21 15 13 1,167.8 1,465.6 1,841.2 

Other frozen potato products ...... ·-- .. 28 20 21 288.8 387.8 435.0 

Other vegetable flours .............•.. 2 17 NA 3.5 285.2 

Dried potatoes ...................... 6 6 8 NA NA 153.3 

Canned white potatoes o o o o 0 I Io I 0 o 0 0 0 22 16 13 52.8 46.5 48.8 

Source: Bureau of Labor Statistics, U.S. Census of Manufactures, 1982, 1987, and 1992 reports. 

U.S. production of frozen potato products rose steadily from 6.8 billion pounds in 1992 to 8.4 

billion pounds in 1996 (table 2-8). Throughout the 1992-96 period, frozen french fries 

accounted for an average of 85 percent annually of toatl U.S. frozen potato products production, 

with food service packs accounting for about 90 percent of french :fry production. Most of the 

remainder of frozen french fry production was in retail size packages. Production in the 

Western United States accounted for about 80 percent of total production on a regional basis, 

with nearly all other production taking place throughout the rest of the country. 

The number of processing plants in the United States that produced potato chips declined from 

148 in 1992 to 126 in 1995 (table 2-9). In 1995, 44 plants were in the North Central region, 

36 in the Northeastern region, and 22 in the Western region. Within each region, individual 

2-16 
N 

I 

..... 

........ 

Figure2-2 

Frozen trench fries: U.S. freezer plants, 1996 

.Carberry, Manitoba* 

cil 

• Portage La Prarie, Manitoba 

• Lethbrldge, Alberta 

•Moses Lak 

t OtbeUo 

ConneU 

OREGON 

D• 

Hennlston 

Ontario 

0 ca1dwe11 IDAHO ~Nampa 

OAberdeen 

Twin FaUs• Heyburn m 0 • Am lean Falls 

Burle:v 

Source: Provided by Lamb Weston, Inc., with permission. • 

•Lain~West~n(9) 

• ·McCali1(7J 

0 Simplot (6j 

• Carnation (J) 

fl Or:e-lda (l) 

• Twin;City Foods 

'.··:NQrt.heril.S~r­

•G~f'.ci~elidlsb Farm• 

SJ Weiltern Brands 

m York Farms 

• Avlko 

&B Logan International, L'{J). 

"J~lnt Venture Simplot & Carnation Canada 
plants are widely dispersed around population centers. The volume of potatoes used to produce 

potato chips rose from 4.5 billion pounds in 1992 to 4.7 billion pounds in 1995. 

Table 2-8 

Frozen potato products: U.S. production, by product and style of pack, and by region, 1992-96 

1992 1993 1994 1995 1996 

Product and style of pack: 

French fries: 

Food service .............. . 

Retail .................... . 

Bulk ..................... . 

Subtotal ................ . 

Otherfrozen2 •••••••••••••••• 

Total .................. . 

Region: 

5,123,607 

653,401 

9,387 

5,786,395 

1.012.047 

6.798,442 

5,546,454 

701,004 

{10.411)1 

6,237,047 

1.015.727 

7.252.774 

1,000 pounds 

6,048,409 

715,273 

18,561 

6,782,243 

1.152.606 

7,934.849 

6,539,190 

650,175 

14,037 

7,203,402 

1,161,507 

West3 • • • • . • • . • • . • • • • • • • • . . 5,549, 111 5,940,275 6,581,340 6,767 ,082 

East" . . . . . . . . . . . . . . . . . . . . . 1,237,430 1,301,018 1,342,152 1,589,697 

California.................. 11 901 11 481 11 357 8130 

Total . . . . . . . . . . . . . . . . . . . 6.798.442 7.252.774 7.934.849 8,364,909 1 Deficits are attributable to previous years' carry over and imported product repacked in the United 

States. 

2 Includes hash browns and miscellaneous potato products (tater products, water blanched, whole, 

6,540,532 

728,832 

(24,313)1 

7,245,051 

U74.152 

8.419,203 

6,683,060 

1,726,071 

10 072 

8.419,203 

diced, stew, puffs, tasti fries, cottage fries, stuffed, pancakes, Au Gratin, O'Brien, morsels, patties, cubes, home fries, 

oven baked and hash puppies. 3 Includes AZ, CO, ID, MT, NM, OR, UT, WA, and WY. 4 Includes East (CT, DE, ME, MA, MD, NJ, NY and PA), South (AL, AR, FL, GA, KY, LA, MS, 

MO, NC, OK, SC, TN, TX and VA), and Midwest (IL, IN, Ml, MN, NE, ND, OA, SD, and WI). 

Source: Compiled by Commission staff from official data presented in Frozen Food Pack Statistics, 

American Frozen Food Institute, Mclean, VA, various editions. 

Table 2-9 

Potato chi 

Country 

Northeastern ....... 

North Central . , ..... 

Other ............. 

Western ........... 

80 

52 

26 

30 

Total ............ 148 

41 41 

52 44 

26 24 

28 24 

147 141 

re ion, 1991-95 

993 995 

1,000 pounds 

39 36 1,249, 100 1,340,700 1,388,600 1,295, 100 1 , 192,400 

44 44 1,471,600 1,486,900 1,399,300 1,388,400 1,462,900 

24 24 1,035,800 1, 181,300 1,269,800 1,310,400 1,345,700 

24 22 737,400 767,500 777,700 874,400 734,800 

131 126 4,538,900 4,776,400 4,835,400 4,868,300 4,735,800 

Note.--The disignated regions includes the same states as shown in other tables except that, for this tables, the 

Northeastern region also includes Delaware, Maryland Virginia, and the District of Columbia, the North Central region also 

includes Kansas, Missouri, and West Virginia, the Western region also includes Arizona, Hawaii, and New Mexico. 

Source: Compiled by USITC staff from USDA, ERS, Potato Facts, Nov. 1996, p. 16. 

2-18 
Inventories 

Fresh potatoes 

Since 1992, actual volumes of stocks on hand have risen during the months following fall 

harvest (table 2-10). The share of stocks held by month, however, has remained about the same 

for each month. Stocks on hand held by growers, dealers, and processors in December have 

changed eratically by State since 1991/92 (table 2-11). In recent years, greater amounts of 

imports sold especially in the Northeastern U.S. markets during the fall season have led to 

increased competition for fresh market sales, which in tum may result in greater amounts of 

domestically-produced potatoes being held in inventory in Maine in the beginning of the harvest 

season. Unlike many fresh vegetables which are perishable to the point of having to be sold 

within a few weeks or months after harvest, however, potatoes generally may be held for up to 

10-12 months after harvesting. As a result, stocks held in storage may fluctuate up or down 

from year to year because growers and dealers are trying to hedge on market prices turning 

upward some time in the upcoming months. 

Frozen potato products 

Since 1992, 77 percent annually of frozen potato product stocks were frozen french fries. 

During 1992-96, the annual average amount of stocks of frozen french fries held in cold storage 

throughout each year rose steadily from 766 million pounds in 1993 to 895 million pounds in 

1996 (table 2-12). During the 1992-96 period, stocks of other frozen products trended 

downward. On a regional basis, stocks of frozen potato products were always greatest in the 

Western region. Since 1992, stocks of frozen :french fries have risen dramatically in both the 

Western and Northcentral regions, the principal U.S. production areas. 

Consumption 

U.S. per capita utilization (consumption) of potatoes has risen dramatically since 1982, with 

virtually all of the increase noted for processed potato products (table 2-13 ). During the 1992-

96 period, consumption of frozen potato products rose 16 percent from 51 pounds in 1992 to 

59 pounds in 1996, with a downward trend in consumption of potato chips and shoestrings 

during the same period. Consumption of both dehydrated and canned potato products has 

trended upward since 1992. Data for the 1992-96 5-year average show a rise in fresh potato 

consumption over the 5-year averages of 1982-86 and 1987-91. Data on frozen potato product 

utilization over the three most recent 5-year periods show a substantial increase in the 1992-96 

average utilization of frozen potato products as compared with averages for the 1982-86 and 

1987-91 periods.36 

36 These data are estimates of the amount of raw product intended for each respective use. As 

such, they are considered an approximation of actual consumption patterns. 

2-19 
Table 2-10 

Fresh potatoes: Stocks on hand, by regions, by certain States, and by selected months, 1991/92 to 1995/96 

:19SllS2 l992LS3 l993lS4 1994195 ~ 

l995lS6 

1,000 pounds 

Western: 

California: 

December '0 I' o' o o o o o o 420,000 420,000 370,000 420,000 400,000 

January .............. 360,000 360,000 320,000 370,000 350,000 

February .............. 300,000 310,000 270,000 320,000 280,000 

March ................ 250,000 270,000 220,000 270,000 230,000 

April I 0 0 0 0 o o o o o 0 o I 0 0 o' 200,000 190,000 170,000 210,000 170,000 

May 0 o o '0 0 I 0 0 0 0 o I 0 o o I 140,000 120,000 120,000 140,000 110,000 

Colorado: 

December ............ 1,785,000 1,770,000 1,825,000 1,890,000 1,820,000 

January 0 I Io Io o 0 o o o o I 0 1,560,000 1,550,000 1,580,000 1,630,000 1,610,000 

February .............. 1,315,000 1,360,000 1,330,000 1,370,000 1,340,000 

March ................ 1,250,000 1,180,000 1,090,000 1,130,000 1,120,000 

April ................. 875,000 940,000 835,000 850,000 910,000 

May o o I I 0 o' o o o 0 o 0 0 0 0 o 615,000 690,000 610,000 610,000 620,000 

Idaho: 

December o o o o o I 0 0 I I 0 o 8,750,000 9,250,000 9,450,000 10,050,000 9,600,000 

January .............. 7,900,000 8,350,000 8,500,000 8,950,000 8,500,000 

February .............. 6,900,000 7,400,000 7,550,000 7,800,000 7,350,000 

March ................ 5,900,000 6,400,000 6,500,000 6,800,000 6,250,000 

April ................. 5,650,000 5,100,000 5,200,000 5,500,000 4,950,000 

May ................. 3,050,000 3,550,000 3,500,000 3,950,000 3,600,000 

Oregon: 

December ............ 1,800,000 1,650,000 1,900,000 2,030,000 1,720,000 

January o Io o o o o o o o o 0 I I ., ,550,000 1,400,000 1,680,000 1,760,000 1,410,000 

February .............. .1,380,000 1,170,000 1,490,000 1,520,000 1,230,000 

March ................ 1,070,000 90,000 1,210,000 1,300,000 990,000 

April 0 0 0 o 0 I 0 0 Io o o o o o 0' 820,000 700,000 880,000 1,010,000 750,000 

May ................. 600,000 450,000 540,000 700,000 450,000 

Washington: 

December o o' O o o o 0 I I I 0 3,700,000 3,310,000 4,350,000 4,750,000 3,950,000 

January o I I 0 o o o 0 o 0 0 o o o 3,220,000 2,910,000 3,800,000 4,300,000 3,500,000 

February .............. 2,700,000 2,490,000 3,200,000 3,750,000 3,050,000 

March ................ 2,120,000 1,980,000 2,650,000 3,050,000 2,500,000 

April ... ' ............. 1,500,000 1,510,000 2,000,000 2,350,000 1,800,000 

May ................. 960,000 1,040,000 1,350,000 1,700,000 1,250,000 

North Central: 

Michigan: 

December ............ 550,000 700,000 730,000 800,000 960,000 

January I 0 Io o o o 0 0 0 0 o o o 440,000 550,000 580,000 650,000 830,000 

February .............. 340,000 420,000 440,000 500,000 650,000 

March ................ 260,000 290,000 310,000 400,000 480,000 

April .... ' ............ 170,000 170,000 180,000 250,000 270,000 

May ................ ' 60,000 60,000 70,000 120,000 120,000 

2-20 
Table 2-10-Continued 

Fresh potatoes: Stocks on hand, by regions, by certain States, and by selected months, 1991192 to 1995196 

1991/92 1992/93 1993/94 1994/95 1995/96 

1,000 pounds 

Minnestota: 

December ..... ' ...... 1,260,000 1,200,000 860,000 1,250,000 1,350,000 

January .............. 1,130,000 1,050,000 730,000 1,080,000 1,170,000 

February .............. 950,000 880,000 610,000 940,000 1,020,000 

March ................ 760,000 710,000 500,000 800,000 870,000 

April ................. 550,000 510,000 370,000 600,000 680,000 

May 0 I 0 O o' o 0 0 0 0 Io O o o o 340,000 260,000 230,000 410,000 450,000 

North Dakota: 

December ............ 2,280,000 1,900,000 1,480,000 1,930,000 1,700,000 

January 'o o 0 0 0 Io 0 o o o o o 1,850,000 1,600,000 1,260,000 1,620,000 1,400,000 

February .............. t,500,000 1,300,000 1,020,000 1,250,000 1,150,000 

March ................ 1,200,000 1,050,000 790,000 1,040,000 920,000 

April ................. 850,000 670,000 520,000 750,000 700,000 

May ................. 500,000 400,000 230,000 450,000 450,000 

Wisconsin: 

December 0 I 0 0 0 o o I I 0 0 0 1,430,000 1,590,000 1,440,000 1,560,000 1,600,000 

January 0 o 0 0 o 0 o o o o Io o I 1,200,000 1,340,000 1,250,000 1,300,000 1,350,000 

February .............. 960,000 1,090,000 1,020,000 1,030,000 1,050,000 

March ................ 740,000 870,000 820,000 760,000 800,000 

April ................. 540,000 640,000 560,000 490,000 500,000 

May o o o 0 0 I 0 o' 0 0 0 0 0 0' o 345,000 390,000 330,000 280,000 200,000 

Northeastern: 

Maine; 

December ............ 1,220,000 1,790,000 1,470,000 1,340,000 1,380,000 

January o o o o 0 0 0 o o 0 I 0 0 0 1,030,000 1,560,000 1,270,000 1,140,000 1,240,000 

February .............. 810,000 1,310,000 1,030,000 940,000 1,040,000 

March ................ 640,000 1,070,000 820,000 770,000 850,000 

April ................. 410,000 770,000 580,000 520,000 570,000 

May 0 o o o 0 0 I 0 o o 0 0 o 0 0 o 0 200,000 440,000 350,000 280,000 280,000 

New York: 

December ........... ' 360,000 400,000 365,000 420,000 340,000 

January o o o o I 0 0 o o o 0 o 0 0 2eo,ooo 310,000 200,000 300,000 250,000 

February .............. 1$5,000 224,000 120,000 180,000 150,000 

March ................ 114,000 146,500 71,500 92,000 90,000 

April 0 I 0 0 o o o 0 0 o o o o o o o 0 43,500 84,500 43,000 46,500 40,000 

May ................. 10,000 21,000 20,000 10,500 15,000 

Pennsylvania: 

December ............ 190,000 260,000 260,000 220,000 240,000 

January ........ ' ..... 160,000 220,000 180,000 160,000 190,000 

February .............. 140,000 160,000 140,000 110,000 120,000 

March ................ 90,000 110,000 90,000 70,000 80,000 

April o o 0 0 0 0 Io o o o 0 I 0 0 o o 60,000 57,000 40,000 42,000 40,000 

May ................. 30,000 30,000 10,000 13,500 18,000 

Source: USDA, NASS, Potatoes, Pot. 6(§4), Sept. 1994, p. 18; Pot. 6(95), Sept. 1995, p. 18; and Pot 6(96), Sept. 

1996, p. 18. 

2-21 
Table 2-11 

Fresh eotatoes: Stocks on hand, bX: guantity and share of eroduction, 1991/92 to 1996/97 

Year 1991/92 1992193 1993/94 1994195 1995/96 

Stocks on hand as of: 1,000 pounds 

December ................. 24,207 24,682 24,971 27,229 25,631 

January ................... 21,100 21,599 21,780 23,796 22,315 

February .................. 17,851 18,456 18,609 20,187 18,896 

March .................... 14,582 15,279 15,413 16,897 15,572 

April ...................... 10,886 11,578 11,597 12,882 11,625 

May ...................... 6,911 7,504 7,386 8,750 7,617 

Ratio of stocks to production 

as of: Percent 

December ................. 67 67 67 67 65 

January ................... 58 59 58 58 57 

February .................. 49 50 50 49 48 

March •• 4 ••••••••••••••••• 40 41 41 41 40 

April ...................... 30 31 31 32 30 

May ...................... 19 20 20 21 19 

Source: USDA, NASS, Potato Stocks, May 14, 1997. 

Table 2-12 

roducts: Frozen stocks in cold stora e, b roductandb 

Product/Year Western Northeastern 

1,000 pounds 

Frozen trench fries: 

1992 ..................... 560,614 111,035 60,449 54,237 

1993 ..................... 533,390 112,821 71,077 48,681 

1994 ..................... 593,593 122,245 57,481 39,553 

1995 . ~ .......... ' ........ 657,229 138,616 53,157 38,445 

1996 .. -· .................. 653,917 168,825 47,811 24,135 

Other frozen potatoes: 

1992 ... ~ .................. 145,001 54,687 23,122 23,774 

1993 ..................... 145,731 56,985 15,385 24,686 

1994 ..................... 164,092 56,875 22,212 24,475 

1995 o I ' o o a 0 0 > I o a o I I ' < ~ o I a 139,011 49,191 27,492 25,494 

1996 ..................... 126,577 43,647 25,131 9,319 

Frozen potato products: 

1996/97 

29,930 

25,652 

22,046 

18,456 

14,323 

10,078 

66 

58 

50 

42 

32 

23 

786,335 

765,969 

812,871 

887,447 

894,688 

246,585 

242,786 

267,654 

240,787 

204,673 

1992 . . . . . . . . . . . . . . . . . . . . . 705,614 165,722 83,572 78,011 1,032,919 

1993 . . . . . . . . . . . . . . . . . . . . . 679, 121 169,806 86,463 73,367 1,008,756 

1994 ..................... - 757,685 179,120 79,693 64,028 1,080,526 

1995 . . . . . . . . . . . . . . . . . . . . . 796,240 187,807 80,649 63,539 1,128,235 

1996 . . . . • . . . . . . . . . . . . . . . . 780,494 212,472 72,941 33,453 1,099,360 

Source: Compiled by Commission staff from OsOA, NASS, Cold Storage, Co. St. 1 (93), Feb. 1993, pp. 56-51; Co. st. 

1 (94), Feb. 1994, pp. 50-51; and Co. St. 1 (97), Feb. 1997, pp. 52-53. 

2-22 
Table 2-13 

Potatoes: Per capita utilization, by end use, 1982-86, 1987-91, and 1992-96 5-year averages, and 1992-96 

annual 

5-year average Annual 

End use: 1982-86 I 1987-91 I 1992-96 1992 I 1993 I 1994 I 1995 I 1996 

Pounds, fresh-weight equivalents 

Fresh ..................... 48.1 47.9 49.4 48.9 49.7 48.6 50.7 49.2 

Processed:1 

Frozen2 •••••••••••••••••• 42.6 4I.9 . 55.8 51.0 51.0 59.3 55.3 59.0 

Chip & Shoestring ......... 17.7 17.2 17.2 17.5 17.6 17.1 16.9 17.0 

Dehydrated 0 0 o IO O o o o o Io I 0 10.6 11.7 13.6 13.2 13.4 13.5 13.0 15.0 

Canned ................. 1.9 1.9 1.9 1.8 1.7 1.7 2.0 2.1 

Subtotal ............... 72.8 78.8 78.8 83.5 87.2 91.6 87.2 93.1 

Total 0 0 I 0 0 0 0 0 I 0 0 0 0 0 o 0 0 120.9 126.7 137.9 132.4 136.9 140.2 137.9 142.3 1 Excludes starch and flour. 2 Includes french fries and other frozen products. 

Source: Compiled by USITC staff from USDA, ERS, Potato Facts, Nov. 1996, p. 17, and National Potato Council, 

1996 Potato Statistical Yearbook(Englawood, CO: NPC, 1996), p. 36. 

Table 2-14 

Seed potatoes 

Apparent U.S. consumption of seed potatoes rose 19 percent from 2.4 billion pounds in 1992 

to 2.9 billion pounds in 1996 (table 2-14). During the 1992-96 period, U.S. production has 

risen to a greater extent than imports, but the ratio of imports to consumption has risen 

considerably. In 1996, the ratio of imports to consumption was 10 percent. The ratio of U.S. 

exports to production has trended upward throughout the period and was 2 percent in 1996. 

Seed potatoes: U.S. imports for consumption, domestic production, exports of domestic merchandise, 

apparent consumption, ratio of imports to consumption, and ratio of exports to production, 1992-96 

Ratio of Ratio of 

Apparent imports to exports to 

Year Imports Production Exports consumption consumption production 

{1,000 pounds) (Percent) 

1992 ......... 128,070 2,352,900 38,044 2,442,926 5.2 1.6 

1993 ......... 171,199 2,422,300 32,714 2,560,785 6.7 1.4 

1994 ......... 236,909 2,461,600 34,652 2,663,857 8.9 1.4 

1995 ......... 225,940 2,557,000 47,428 2,735,512 8.3 1.9 

1996 ......... 295,695 2,662,000 46,043 2,911,652 10.2 1.7 

Source: Imports and exports compiled from official statistics of the U.S. Department of Commerce; 1992-95 production 

data compiled from USDA, NASS, Potatoes, Pot. 6(96), Sept. 1996; 1996 production estimated by the staff of the U.S. 

International Trade Commission. 

2-23 
Table stock 

Apparent U.S. consumption of fresh table stock potatoes has trended steadily upward since 

1992 am0tmtingto 46.5 billion pounds in 1996 (table 2-15). Most of the rise in consumption 

was because of U.S. production and beginning stocks, both of which rose significantly since 

1992. Both the ratio of imports to consumption and the ratio of exports to production remained 

insignificant at about 1 percent throughout this period. 

Frozen Potatoes 

Annual data for U.S .. stocks (beginning and ending), trade (imports and exports), production, 

and apparent consumption of frozen potato products for the 1992-96 period are shown in table 

2-16. Four facts which readily appear from the data are: (1) frozen french fries dominate U.S. 

frozen potato product markets in volume; (2) total imports are less than seven percent of total 

consumption~ (3) virtually all US. frozen potato product imports are from Canada; and ( 4) there 

is a rising trend in apparent U.S. consumption of frozen potato products. 37• 

38 

Over the 1992-96 period, U.S. production of all frozen potato products rose 24 percent, but the 

growth rate fell to less than one percent for 1995-96 (table 2-16). During the 1992-96 period, 

U.S. production of frozen french fries behaved similarly, expanding 25 percent or by an average 

6.3 percent annually, while the 1995-96 rate of growth dropped to 0.6 percent. U.S. production 

increases for other frozen potato products rose 16 percent for the 1992-96 period, or by an 

average 4 percent annually, while the rate of increase dropped dramatically to 1.1 percent for 

1995-96. The generally increasing 1992-96 U.S. frozen potato products production coincides 

with industry39 :findings of expanding U.S. and foreign markets for frozen potato products. The 

markedly declining rates of increase for the 1995-96 subperiod coincide with testimony by U.S. 

processors of markedly slowing production in 1996 and alleged imminent layoffs in 1997. 40 In 

fact, the 1995-96 U.S. frozen potato products production increases calculated for all frozen 

potato products, frozen french fries, and other frozen potato products were 1.1 percent or less, 

slightly below what U.S. processors projected as depressed growth rates of 2. 0 percent annually 

for the next 3 years.41 

37 J. Guenthner, A. Levi, and B. Lin, "Factors that Affect the Demand for Potato Products in the 

United States," American Potato Journal, vol. 68, No. 9 (Sept. 1991), p. 569. 38 T. Richards, A. Kagan, and X. Gao, "Factors Influencing Changes in Potato and Potato 

Substitute Demand," Agricultural and Resource Economics Review, vol. 26, No. 1 (Apr. 1997), pp. 

52-53. 39 lbid. 

40 Transcript of the hearing, testimony ofM. Coursey on behalf ofU.S. frozen potato processors, 

pp. 54-55. 

41 Collier, Shannon, Rill & Scott, posthearing brief, May 27, 1997, p. 4. 

2-24 
N 

I 

N 

IJl 

Table 2-15 

Table stock potatoes: U.S. beginning stocks, imports for consumption, production, exports of domestic merchandise, ending 

stocks, apparent consumption, ratio of imports to consumption, and ratio of exports to production, 1992-96 

Ratio of 

Vear Beginning Imports Production Exports Ending Apparent imports to 

stocks stocks consumption consumption 

(1,000 pounds) 

1992 .......... 21,100,500 273,512 42,536,700 4 99,890 21,599,000 41,811,822 0.7 

1993 .......... 21,599,000 541,377 42,869,300 506,626 21,780,000 42,723,051 1.3 

1994 .......... 21,780,000 405,895 46,705,400 620,367 23,796,000 44,474,928 0.9 

1995 .......... 23,796,000 458,921 44,360,600 536,505 22,315,000 45,764,016 1.0 

1996 .......... 22,315,000 690,761 49,711,911 564,005 25,652,000 46,501,656 1.5 

Note.--Does not include seed potatoes, bu1 may include potatoes for processing. 

Source: Stocks from USDA, NASS, Potato Stocks, various issues; imports and exports from U.S. Department of Commerce; 

production from USDA, NASS, Crop Production, various issues. 

Ratio of 

exports to 

production 

Percent 

1.2 

1.2 

1.3 

1.2 

1.1 
Table 2-16 

Frozen potato products: U.S. beginning stocks, imports for consumption, production, exports of domestic merchandise, ending stocks, and apparent consumption, by 

type, 1992-96 

Ratio of Imports to Ratio of exports to 

Imports Exports consumption production 

Beginning I Total I Total 

Ending Apparent 

Year and type stocks Canada Production Canada stocks consumption Canada I Total Canada I Total 

( 1,000 pounds) Percent 

Frozen french fries: 

1992 .............. 742,000 188, 119 188,607 5,786,395 13,033 429,162 742,000 5,545,840 3.39 3.40 0.23 7.42 

1993 .............. 742,000 277,786 278,384 6,237,047 15,260 482,538 779,000 5,995,893 4.63 4.64 0.24 7.74 

1994 .............. 779,000 289,227 289,434 6,782,243 16,233 596,019 835,000 6,419,658 4.51 4.51 0.24 8.79 

1995 .............. 835,000 332,252 332,424 7,203,402 16,625 778,558 904,000 6,688,268 4.97 4.97 0.23 10.81 

1996 .............. 904,000 422,950 423,319 7,245,051 28,820 800,820 921,000 6,850,904 6.17 6.18 0.40 11.05 

Other frozen potatoes: 

1992 .............. 228,000 6,751 7,022 1,012,047 3,456 34,659 221,000 991,410 0.68 0.71 0.00 2.01 

N 1993 .............. 221,000 11,528 12,073 1,015,727 2,620 I 45,206 227,000 976,594 1.18 1.24 0.00 1.97 

N 

°' 1994 .............. 227,000 19,769 20,212 1,152,606 391 42,037 261,000 1,096,781 1.80 1.84 0.00 1.77 

1995 .............. 261,000 21,627 22,573 1, 161,507 1,124 55,613 219,000 1,170,467 1.85 1.93 0.00 2.55 

1996 .............. 219,000 30,084 30,939 1,174,152 902 57,084 177,000 1,190,007 2.53 2.60 0.00 2.49 

Frozen potato products: 

1992 .............. 970,000 194,870 195,629 6,798,442 16,489 463,821 963,000 6,537,250 2.98 2.99 0.19 6.61 

1993 .............. 963,000 289,314 290,457 7,252,774 17,880 527,744 1,006,000 6,972,487 4.15 4.17 0.21 6.93 

1994 .............. 1,006,000 308,996 309,646 7,934,849 16,624 638,056 1,096,000 7,516,439 4.11 4.12 0.20 7.77 

1995 .............. 1,096,000 353,879 354,997 8,364,909 17,749 834,171 1,123,000 7,858,735 4.50 4.52 0.20 9.66 

1996 .............. 1,123,000 453,034 454,258 8,419,203 29,722 857,550 1,098,000 8,040,911 5.63 5.65 0.34 9.85 

Source: Beginning and ending stocks taken from USDA, NASS, Cold Storage, various issues; production taken from American Frozen Food Institute, Frozen Food Pack Statistics 

(McLean, VA: AFFI, 1996); imports and exports compiled from official statistics of the U.S. Department of Commerce. 
U.S. levels of frozen potato products stocks, both ending and beginning, have behaved with 

varying patterns for the different frozen potato products. Beginning stocks for total frozen 

potato products over the 1992-96 period increased by nearly 16 percent or by an average 4 

percent annually, while ending stocks for all frozen potato products behaved similarly. U.S. 

beginning and ending stocks of frozen french fries behaved similarly and rose from 22 to 24 

percent (or by 5-6 percent annually) over the same period. Meanwhile, U.S. stocks of other 

frozen potato products behaved differently. Beginning stocks rose by less than 4 percent and 

less than 1 percent annually, while ending stocks declined by nearly 20 percent over the 1992-96 

period or by nearly 5 percent annually. 

Table 2-13 demonstates that U.S. trade in frozen potato products maintained a surplus with the 

world and a deficit with Canada during the 1992-96 period. U.S. frozen potato products 

imports are mostly from Canada. Table 2-16 shows that since 1992, U.S. imports of all 

Canadian frozen potato products increased 132 percent or by an average 33 percent annually. 

These trends for all frozen potato products have been driven by U.S. imports of Canadian frozen 

french fries, which expanded 124.8 percent or by an average increase of 31 percent annually 

over the same period. U.S. exports of frozen potato products increased during the 1992-96 

period. Total U.S. frozen potato product exports increased 85 percent (or by an average annual 

increase of about 21 percent) during 1992-96, while these trends were driven by U.S. frozen 

french :fry exports which rose 8 7 percent or by an average annual increase of about 22 percent 

In volume terms, U.S. export increases have exceeded import increases. 

U.S. frozen potato product exports to Canada during the 1992-96 period were only a small part 

of overall exports. Since most U.S. frozen potato product exports go to countries other than 

Canada, and most U.S. imports of these products arrive from Canada, U.S. frozen potato 

exports to Canada amounted to 6. 6 percent of U.S. imports of Canadian frozen potato products 

in 1996 (table 2-16). The U.S. market shares attributed to Canadian-produced products have 

risen during the 1992 to 1996 period: from 3.4 to 6.2 percent for frozen french fries; from 0.7 

to 2.5 percent for other frozen potato products; and from 3 to 5 .6 percent for total frozen potato 

products. 

Prices 

Prices Received by Growers-Potatoes for all uses 

Table 2-17 provides annual season average prices received by U.S. growers during the 1991/92-

1995/96 period for potatoes sold for all uses. 42 Generally, overall U.S. prices received by 

growers rose 36 percent from $4.96 per hundredweight (cwt) in 1991/92 to $6.77 in 1995/96. 

This increase exceeds the cumulated increase of about 10 percent in U.S. producer prices as 

measured by a nearly 10 percent rise in the U.S. producer price index for all items. 43 On a 

regional basis, grower prices in the Western and North Central regions rose in nominal tenns, 

as well as in real terms, since these nominal price increases exceeded the nearly 10 percent rise 

42 USDA, ERS Potato Facts, Nov. 1996, p. 12. 43 U.S. producer prices rose by about 9.6 percent to an index value of 109.8 (I00.0=1990) during 

1991-1996. This producer price increase includes 1996 to reflect trends of that year embedded in the 

1995/96 market year. See International Monetary Fund (Ilv.tF), International Financial Statistics 

(Washington, DC: IMF, Apr. 1997), p. 708. This 9.6 percent estimate of inflation relevant to potato 

growers is based on movements in a very aggregate price index and should be taken with caution. 

2-27 
in the U.S. producer price index for all items. Grower prices in the Western and North Central 

regions not only rose nominally for all listed States during the last five marketing years, but such 

price increases all noticeably exceeded the 1991/92 to 1995/96 cumulated increase of about 10 

percent in U.S. producer prices. Northeastern U.S. grower price trends, on the other hand, were 

mixed. Maine's grower prices rose just over 10 percent and barely kept up with producer price 

inflation. New York's grower prices fell 14 percent over the last 5 marketing years. 44 

Table 2-17 

Potatoes: Season average potato prices received by growers, by region and by selected States, 

1991/92to1995/96 

1991/92 1992/93 1993194 1994/95 1995/96 

Per cwt 

Western: 

California .................. $9.90 $9.85 $12.40 $10.60 $13.10 

Colorado 0 Io o O o I I I' I 0 0 Io o o o 2.25 4.20 6.05 3.75 6.25 

Oregon o o o 0 0 0 I I 0 0 I I 0 I I I I I I 3.95 5.50 5.70 4.75 6.70 

Idaho ..................... 4.0Q 5.15 4.65 4.95 6.20 

Washington ................ 3.80 5.00 5.30 4.75 6.85 

North Central: 

Michigan .................. 6.11 6.40 7.20 6.70 6.90 

Minnesota ................. 4.10 4.55 5.65 4.90 5.25 

North Dakota ............... 3.95 4.55 6.25 4.55 5.40 

Wisconsin o o o Io I 0 0 0 0 Io o o I 0 I 420 4.90 6.60 5.00 6.40 

Northeastern: 

Maine ..................... 5.80 5.10 6.95 6.10 6.40 

New York .................. 8.70 6.65 8.20 9.75 7.45 

Other: 

Delaware I I IO I Io o o o I 0 0 0 I I 0 7.30 7.65 10.10 8.80 8.40 

Florida .................... 20.40 9.90 17.00 11.90 9.40 

North Carolina .............. 7.50 4.35 5.80 7.40 6.55 

Texas ..................... 9.00 12.90 10.70 12.20 11.00 

Virginia .................... 15.00 8.80 11.50 14.10 10.80 

United States ................. 4.96 5.52 6.17 5.58 6.77 

' State marketing year average prices were computed by we1ghmg State monthly prices by estimated sales for the 

month. 

Note.--These prices are averages of potatoes sold for all uses, including fresh market, processing, seed, and livestock 

feed. 

Source: USDA, ERS, Potato Facts, Nov. 1996, p. 12. 

Northeastern U.S. grower prices changed the least of the three major U.S. fall production 

regions during the last 5 marketing years. Northeastern U.S. grower prices did, however, either 

fall, or matched producer price inflation, while grower prices in the Western and North Central 

regions grew noticeably in both nominal and real terms. Slack or negative growth rates for U.S. 

Northeast grower prices relative to prices in other major U.S. fall production areas are consistent 

with both testimony and Commission staffs empirical modeling results. Maine growers and 

44 USITC staff cannot explain the fall in New York prices. These prices are aggregated across all 

uses (see table 2-17 notes). 

2-28 
lawmakers testified that fresh potato imports from Canada, particularly from New Brunswick 

and P.E.I., enter in significant volumes through Northeastern U.S. ports; that such imports 

compete more directly and more severely with U.S. production in the Northeast areas than in 

other production areas such as the U.S. West; and that such imports are depressing U.S. potato 

· prices.45 Further, the Commission staff's empirical modeling results46 suggest that fresh table 

stock potato imports (primarily from Canada) displace U.S. volumes produced and consumed 

more in the Northeastern U.S. region than elsewhere in the United States, and that the effects 

of variations in price and quantities from such events as increased U.S. imports of fresh 

Canadian potatoes are more directly and severely felt in the Northeastern United States than in 

other U.S. fall production areas. In fact, Canada captured 31 percent of the 1996 share of 

Boston's fresh potato arrivals (table 5-13). And while combined U.S. regions supplied at least 

43 percent of Boston's 1996 fresh potato arrivals, Canada's 31 percent share exceeded shares 

of any single U.S. State, including Maine's 20 percent and Idaho's 16 percent. 47 

In addition to increased U.S. imports of fresh Canadian potatoes, the slower 1992-96 all-use 

potato price growth in the U.S. Northeast relative to price increases in the North Central and 

Western regions may have arisen from demand factors. In recent years, U.S. demand for 

processed potato products has been increasing, while growth in demand for fresh table potatoes 

has been relatively flat. 48 With larger shares of Northeastern production directed towards the 

fresh table market than in the U.S. West and North Central States, part of New York's price 

decline and part of the slow Maine price growth in table 2-14 may have arisen from the stagnant 

U.S. demand for fresh table potatoes. 

U.S. prices received for potatoes for all uses by month are reported in table 2-18.49 Seasonal 

influences quite often characterize U.S. potato markets. 50 Hence, discerning whether variations 

in monthly potato prices across seasons are affected more from seasonal influences (e.g. climatic 

variation's effects on supply and prices) or more from specific market developments is not clear. 

Consequently, Commission staff swnmarized monthly prices of fresh potatoes for all uses 

shown in table 2-18 into season averages, nominal annual averages, and constant dollar or 

deflated annual averages as reported in table 2-19. A number of conclusions emerge from these 

analyses. First, grower prices in each season have fluctuated significantly, and without obvious 

patterns since 1994. Second, nominal annual prices rose 5.7 percent to $6.44 per cwt during 

the 1994-1996 period (table 2-19). Third, while annual prices have risen nominally, deflated 

annual prices have declined slightly (by less than one percent) from 1994-96. Fourth, limited 

data available for 1997 suggest that season average prices have dropped even further. The 1997 

winter season average of $4.33 per cwt is down nearly 35 percent from the 1996 winter season 

45 Transcript of the hearing, testimonies ofG. Smith, pp. 46-48; National Potato Council, pp. 145-

147; Olympia Snowe, U.S. Senator from Maine, pp. 9-19; and Susan Collins, U.S. Senator from 

Maine, pp. 20-28. 46 See chapter 5 for a detailed discussion of modeling results. 47 See table 5-13. This 43 percent represents the combined shares ofBoston's 1996 fresh potato 

arrivals from Idaho, California, Washington, Oregon, Colorado, Wisconsin, North Dakota, and 

Maine. 48 G. Zepp, C. Plununer, and B. McLaughlin, "Potatoes: A Comparison of U.S. Canadian 

Structure," Canadian Journal of Agricultural Economics, special 1995 issue, pp. 165-176. 49 USDA, ERS, Vegetables and Specialties-Situation and Outlook Report, VGS-271, Apr. 

1997, p. 53. 50 Such seasonal influences were addressed as an important modeling issue in M. Miranda and J. 

Glauber, "Intraseasonal Demand for Fall Potatoes Under Rational Expectations," American Journal 

of Agricultural Economics, vol. 75 (Feb. 1993), pp. 108-110. Examples of such influences include 

climatic variation's effects on supply and prices. 

2-29 
levels. If the deflated winter average for 1997 approximates real year-long trends, the real 

grower price is likely to drop further during the remainder of 1997. 

Prices Received at Retail-Fresh White Potatoes 

Monthly retail price data for fresh white potatoes are presented in table 2-20.51 Commission 

staff summarized this monthly data into nominal season averages, nominal annual averages, and 

deflated averages in table 2-21. A number of points concerning the retail prices of fresh white 

potatoes emerge from analysis of these data. First, retail fresh prices in nominal terms have not 

moved much, either annually across time or seasonally, since 1994. Second, retail fresh prices 

in deflated dollars declined by 3. 6 percent during 1994-1996, with this decline continuing into · 

1997. 

Prices Received by Growers-Raw potatoes for processing 

According to industry sources,52 grower prices received for raw potatoes intended for processing 

are less senitive than grower prices for fresh table stock potatoes because of negotiated contracts 

between grower and processor. During the 1992-95 period, season average grower prices of 

raw potatoes for processing trended upward, from 4.5 cents per pound to 5 .2 cents per pound, 

although the 1996 average was domi slightly (table 2-22). Since 1993, monthly prices received 

have fluctuated within a narrower range of high and low than in previous years. 

Prices Received at Retail--Frozen French Fries 

Monthly retail price data for frozen french fries are presented in table 2-23. Commission staff 

summarized the monthly data into nominal seasonal averages, nominal annual averages, and 

deflated annual averages in table 2-24.53 Retail prices of frozen french fries have been rising in 

both nominal and deflated terms. Nominal seasonal averages of retail fry prices have risen since 

1994 for all seasons. Nominal annual retail fry prices increased nearly 4 percent during the 

1994-1996 period. While deflated retail fry prices declined over the 1994-96 period, these 

prices fell2.9percentto $0.738 in 1995, and recovered somewhat by 1996 (table 2-12). Based 

on the partial 1997 deflated price, this recovery may be continuing into 1997. Relative to fresh 

prices, retail fry prices have been increasing more in nominal terms, and dropping less, in real 

terms. Since 1995, there has been a slight increase in annual deflated fry price at the retail level. 

51 Monthly fresh and french fry prices were converted to seasonal averages, and the Dec. price of 

the year previous to 1994 (Dec. 1993) were included in calculating the Winter 1994 seasonal 

average prices. Data were taken from USDA, ERS, Potato Facts, Apr. 1997. 52 Transcript of the hearing; p. 52. 53 Monthly retail french fry prices were converted to seasonal averages, and the Dec. price of the 

year previous to 1994 (Dec. 1994) was included in calculating the Winter 1994 seasonal average 

price. Data were taken from USDA, ERS, Potato Facts, Apr. 1997. 

2-30 
Table 2-18 

Potatoes:1 Prices received by U.S. growers, by month, 1993-97 

Year Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec. 

U.S. dollars per cwt 

1993 .... 2 2 2 6.12 

1994 .... 6.01 6.42 7.65 6.68 6.59 6.67 7.50 6.28 5.04 4.58 4.75 4.87 

1995 .... 4.88 4.90 5.39 5.54 5.77 6.97 8.66 6.69 5.76 6.30 6.42 6.29 

1996 .... 6.65 6.92 7.51 7.83 8.09 8.14 8.09 5.79 4.83 4.75 4.46 4.22 

1997 .... 4.23 4.55 2 2 

1 Potatoes for all uses. 2 Not applicable. 

Source: USDA, ERS, Vegetables and Specialties Situation and Outlook Report, VGS-271, Apr. 1997, p. 53. 
Table 2-19 

Potatoes:1 Seasonal and annual average prices received by U.S. growers, 1994-97 

Vear Winter 

1994 .. .. .. .. . 6.18 

1995 . . . . . . . . . 4.88 

1996 . . . . . . . . . 6.62 

1997......... 4.33 

1 Potatoes for all uses. 2 Not applicable. 

Spring 

6.97 

5.57 

7.81 

2 

Summer Fall 

Dollars per cwt 

6.82 4.79 

7.44 6.16 

7.34 4.68 

Nominal 

annual 

6.09 

6.13 

6.44 

2 

Deflated 

annual 

5.88 

5.71 

5.87 

3.89 

Note.--Winter prices are the simple average of the year's January and February values, as well as the previous year's 

December value. Spring prices are simple averages of the March, April, and May values, while Summer prices are 

the simple averages of the June, July, and August values. Autumn prices are simple averages of September, 

October, and November prices. Annual nominal averages are simple calendar year averages of the year's 12 

monthly data points. The 1994-1996 deflated annual prices are in constant 1990 dollars, and were calculated by 

Commission staff by deflating the nominal annual averages by the following U.S. all-item producer price index (PPI) 

values; 1.036 for 1994; 1.073 for 1995; and 1.098for1996. The deflated 1997 price is only a partial price, whereby 

Commission staff divided the 1997 Winter average price by the PPI of 1.112, which is the simple average of the 

monthly PP ls for December 1996 and January 1997 - - the two most recently available PPls published. 

Sources: Calculated by USITC staff using monthly price data obtained from USDA, ERS, Vegetables and 

Specialties--Situation and Outlook Report, VGS-271, Apr. 1997, p. 3, and with U.S. producer price index data from 

International Monetary Fund, International Financial Statistics, Apr. 1997, pp. 706-713. 

Table 2-20 

Fresh white potatoes: Monthly U.S. retail prices, 1993-97 

Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. 

Dollars per pound 

1993 

1994 . .369 .373 .395 .413 .389 .390 .401 .389 .355 .340 .339 

1995 . .339 .337 .348 .359 .357 .396 .439 .425 .399 .396 .377 

1996 . .385 .385 .392 .394 .392 .401 .408 .403 .375 .359 .343 

1997 . .335 .331 .330 

1 Not applicable. 

Source: USDA, ERS, Potato Facts, Apr. 1997, p. 13. 

2-32 

Dec. 

.364 

.335 

.380 

.335 
Table 2-21 

Fresh white otatoes: Seasonal and avera e annual U.S. retail rices 1994-97 

Product, Annual, Annual, 

year Winter Spring Summer Fall nominal deflated 

Dollars per pound 

1994 ... 0.370 0.399 0.393 0.345 0.374 0.330 

1995 ... 0.337 0,355 0.420 0.391 0.379 0.325 

1996 ... 0.383 0.393 0.404 0.359 0.381 0.318 

1997 ... 0.334 0.274" 

1 Not applicable. 

Notes.--'Winter" prices are the simple average of the year's January and February values, as well as the previous 

year's December value. "Spring" prices are the simple averages of the March, April, and May values, while "Summer'' 

prices are the simple averages of the June, July, and August values. "Autumn" prices are the simple averages of the 

September, October, and November prices. Annual averages are the simple January-December calendar year 

averages of the monthly prices and these simple averages are published by the USDA source below as the annual 

nominal price. The deflated annual prices are the constant 1990 dollar annual (calendar year) average of the monthly 

prices. The deflated retail prices are the 1994-1996 calendar year averages divided by the following all-item 

consumer price indices (CPls): 1.134 for 1994; 1.166 for 1995, and 1.20for1996. The 1997 deflated "annual" 

average prices, those superscripted with asterisks in the table, are the 1997 Winter averages divided by the CPI 

deflator of 1.22 which is the simple average of Dec. 1996 and Jan. 1997 deflators, as the Feb. 1997 is not published 

yet. 

Sources: USDA. ERS, Potato Facts, Apr. 1997, p. 13. Deflators were the U.S. CPl's, all items, published by the 

International Monetary Fund, International Financial Statistics, Apr. 1997, pp. 706-713. 

Table 2-22 

Processing potatoes: Prices received by U.S. growers, by inonth, 1992-96 

1992 1993 1994 

Cents per pound 

January .......... 4.3 4.9 5.1 

February .......... 4.1 4.9 5.1 

March ............ 4.2 5.1 5.4 

April ............. 3.7 6.3 5.0 

May ............. 3.9 7.1 4.8 

June ............. 3.9 5.4 5.5 

July .............. 3.9 5.4 4.9 

August .......... ' 5.1 5.0 4.9 

September ........ 4.6 4.6 4.9 

October .......... 4.3 4.6 4.5 

November ........ 4.8 4.7 4.6 

December ........ 4.8 5.0 4.7 

1995 

5.0 

4.8 

4.8 

4.8 

4.8 

5.0 

5.7 

5.0 

4.9 

4.7 

5.2 

5.4 

1996 

5.4 

5.4 

5.7 

5.9 

6.6 

6.5 

6.0 

4.9 

4.7 

4.7 

4.9 

4.9 

Season average . . . 4.5 5.0 4.8 5.2 4.8 

Source: Compiled by USlTC staff from USDA, NASS, data as reported in USDA, ERS, Vegetables and 

Specialties--Situation and Outlook Report, VGS-271, Apr. 1997, p. 53. 

2-33 
Table 2-23 

Frozen french fries: Monthly U.S. retail prices, 1993-97 

Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 

Dollars per pound 

1993 .871 ' 

1994 .887 .881 .877 .845 .871 .871 .844 .856 .870 .853 .846 .838 

1995 .847 .839 .854 .841 .863 .879 .869 .876 .864 .852 .886 .864 

1996 .854 .896 .866 .868 .904 .906 .899 .921 .909 .908 .912 .897 

1997 .924 .926 .914 

1 Not applicable. 

Source: USDA, ERS, Potato Facts, Apr. 1997, p. 13. 

Table 2-24 

Frozen french fries: Seasonal and average annual U.S. retail prices, 1994-97 

Product, Annual, Annual, 

year Winter Spring Summer Fall Nominal Deflated 

Dollars per pound 

1994 ... 0.880 0.864 0.857 0.856 0.862 0.760 

1995 ... 0.841 0.853 0.875 0.867 0.861 0.738 

1996 ... 0.871 0.879 0.909 0.910 0.895 0.746 

1997 ... 0.916 0.751" 

1 Not applicable. 

Notes.--'Winter" prices are the simple average of the year's January and February values, as well as the previous 

year's December value. "Spring" prices are the simple averages of the March, April, and May values, while 

"Summer'' prices are the simple averages of the June, July, and August values. "Autumn" prices are the simple 

averages of the September, October, and November prices. Annual averages are the simple January-December 

calendar year averages of the monthly prices and these simple averages are published by the USDA source 

below as the annual nominal price. ihe deflated annual prices are the constant 1990 dollar annual (calendar year) 

average of the monthly prices. The deflated retail prices are the 1994-1996 calendar year averages divided by the 

following all-item consumer price indices (CPls): 1.134 for 1994; 1.166 for 1995, and 1.20 for 1996. The 1997 

deflated "annual" average prices, those superscripted with asterisks in the table, are the 1997 Winter averages 

divided by the CPI deflator of 1.22 which is the simple average of Dec. 1996 and Jan. 1997 deflators, 

as the Feb. 1997 is not published yet. 

2-34 
Prices Received at Retail-Other Processed Products 

Average monthly retail prices for potato chips trended upward since 1993, amounting to 

$3.06 perpmmd in 1996 (table 2-25). During 1992-96, retail prices received for all potato 

chips sold in all major outlets were up considerably (table2-26). In 1996, prices ranged from 

$2.56 per pound for grocery store sales to $3.42 per pound for sales through convenience 

stores. The share of total sales through various outlets has remained about the same since 

1992. In 1996, sales through supennarkets and convenience stores accounted for 46 and 13 

percent, respectively, of total sales that year, followed by sales through mass merchandisers, 

warehouse clubs stores, and grocery stores at 9, 8, and 7 percent, respectively. 

Grading 

The Food Production Act of 1917 established and encouraged the use of grades for food 

products. Potatoes were the first farm product with Federal grade standards.54 Both the 

inspection and grading of potatoes are administered by the U.S. Department of Agriculture. 

For fresh table stock potatoes, grades include U.S. Extra No. 1, U.S. No. 1, U.S. 

Commercial, and U.S. No. 2 (table 2-27). U.S. standards for grades of seed potatoes include 

one grade, U.S. No. 1 Seed Potatoes. The standards for each grade are specific as to such 

factors as maturity, size, color, shape, fmnness, texture, and freedom from defects. Except 

in those States where potatoes are covered by marketing orders, grading is voluntary and 

grading activities are funded by industry user fees. Potatoes need not be inspected and 

certified to be labeled with a USDA grade. However, potatoes labeled with a USDA grade 

must meet the standards of the marked grade or may result in the suspension of a packer's 

license to deal in potatoes. The produce industfY. sometimes uses private grades to specify 

quality. Although Federal regulations do not apply to state or region grades, such grades 

frequently are more stringent than USDA grades. 

54 See USDA, Agricultural Marketing Service (AMS), United States Standards for Grades of 

Potatoes and United States Standards for Grades of Seed Potatoes, various issues. 

2-35 
Table 2-25 

Potato chips: Retail prices, by month, 1992-96 

1992 1993 1994 1995 1996 

Per pound 

January .......... $2.94 $2.83 $2.87 $3.08 $3.00 

February .......... 2.91 2.93 3.02 3.01 2.96 

March ............ 2.94 2.84 2.97 2.97 3.03 

April 'o o 0 o o o 0 o 0 0 0 I 2.86 2.84 3.01 3.05 3.07 

May 0 0' 0 o Io o 0 o I 0 o 2.87 2.90 3.00 2.95 2.99 

June ............. 2.91 2.83 2.97 2.99 2.98 

July .............. 2.94 2.89 2.90 2.97 3.11 

August ........... 2.97 2.97 2.99 3.03 3.07 

September ........ 2.86 2.89 2.96 2.97 3.07 

October .......... 2.94 2.91 2.92 3.02 3.15 

November ........ 2.84 2.84 3.02 2.98 3.10 

December 0 Io Io 0 o o 2.84 2.92 3.01 3.03 3.12 

Average1 .•••..• 2.90 2.88 2.97 3.00 3.06 

1 Simple annual average of 12 months. 

Source: USDA, ERS, Potato Facts, Apr. 1997, p. 14. 

Table 2-26 

Potato chips: Prices, by type of sales outlet, 1992-961 

Sales outlet 1992 1993 1994 1995 1996 

Per pound 

Supermarket ...... $2.49 $2.55 $2.56 $2.61 $2.78 

Grocery store ...... 2.38 2.49 2.44 2.52 2.56 

Mass merchandiser . 2.44 2.47 2.46 2.42 2.66 

Drug store ........ 2.44 2.73 2.78 2.82 2.90 

Warehouse club ... 2.32 2.10 2.14 2.46 2.69 

Convenience store 3.06 3.19 3.11 3.37 3.42 

, The most recent year for which data are available. 

Source: Snack Food Association, State-of-the-lndustl}' Report, various issues. 

2-36 
Table 2-27 

Potatoes: U.S. standards for arades of identitv, by product 

Product Effective Date Standards 

Potatoes (i.e. table stock) Mar. 27, 1991 Grades: U.S. Extra No. 1, U.S. No. 1, U.S. Commercial, 

U.S. No. 2, Unclassified' 

Sizes: A, B, Small, Medium, Large 

Other: tolerances, samples, skinning, and defintions 

Potatoes for processing April 14, 1983 Grades: U.S. No. 1 Processing, U.S. No. 2 Processing 

Sizes: minimum, maximum, or range specified in diameter or weight 

Other: usable price, unusable material, definitions, and defects 

Seed Potatoes Mar. 6, 1987 Grades: U.S. No. 1 Seed Potatoes 

Other: tolerances, samples, definitions, and classlfication of defects. Identified 

as certified seed by the state of origin on blue tags fixed to the containers or 

official State or Federal State certificates accompanying bulk loads, which 

identify the variety, size, class, crop year, and grower or shipper of the potatoes, 

and the State certification agency. 

Frozen trench fried Feb.8, 1967 Grades: U.S. Grade A, U.S. Grade A Short, U.S. Grade B, 

potatoes Substandard 

Types: Retail type, Institutional type 

Fry color types: Extra light, light, medium light, medium, dark 

Styles: General, strips, slices, dices, rissole, and other 

Length designations: Extra long, long, medium, short 

Flavor: Good flavor, Reasonably Good Flavor 

Peeled potatoes Aug. 11, 1986 Grades: U.S. Grade A, U.S. Grade B, Substandard 

Grading: color (A, B, Sstd), size (whole, whole and cut, cut and whole, sliced, 

diced, French style or shoestring, and cut), defects, and texture 

Frozen hash brown Nov. 15, 1976 Grades: U.S. Grade A, U.S. Grade B, Substandard 

potatoes Grading: color (A, B, Substandard), style (shredded, diced, chopped), defects, 

and texture 

Canned white potatoes Aug.24, 1987 Grades: U.S. Grade A, U.S. Grade B, Substandard 

Grading: Styles (whole, sliced, diced, shoestring, pieces, and julienne), sizes 

(tiny, small, medium, and large), quality factors, fill of contanier, drained weights, 

and sample sizes 

1 Not a true grade but rather a designation for showing that no grade has been applied. 

Source: USDA, AMS, United States Standards for Grades of Potatoes, various issues. 

2-37 
--------------

Transportation 

Potatoes are shipped in both fresh and processed forms great distances throughout the United 

States. Modes of transportation commonly used by shippers include both boxcar and 

piggyback by rail, as well as by truck. 55 Types of carrier generally vary depending upon such 

factors as the production area from which the potatoes are being shipped, the overall 

distances traveled, the locations of the purchasers, and whether any discounts or special 

pricing might be available for bulk shipments or shipments into certain areas. The 

transportation mode also varies depending upon the product form (i.e., chips, fresh, or 

frozen) and whether the product needs specific refrigeration or frozen-storage handling 

during transit. Finally, the mode of transportation selected is also a factor of the costs of the 

respective transportation modes available. 

Seed and Table Stock Potatoes 

Seed potatoes are often shipped great distances from production areas to planting areas. 

Historically, over 50 percent of seed potatoes purchased by growers in Washington State 

were sourced from Montana. 56 In recent years, seed potatoes grown in the Red River Valley 

region of North Dakota and Minnesota have been sold in Washington, Oregon, and parts of 

Idaho.57 Also, seed potatoes from Canada and Northeastern Idaho have been sold in these 

same states. Seed potatoes grown in the Upper Peninsula of Michigan have been sold· 

throughout Michigan and Wisconsin, but also sold into Minnesota and North Dakota. 

Maine-grown seed potatoes have been sold throughout the New England states, New York, 

Pennsylvania, and Ohio, and even to Florida.58 Most of these seed potato shipments are 

believed to have been made by truck. 

Fresh table stock potatoes have been shipped even greater distances than seed potatoes. In 

recent years, the share of shipments from certain states have varied by production region. 

In the Northeastern region, 100 pereent of table stock potato shipments from Maine and New 

York were shipped by truck in 1994-96 (table 2-28). Shipments from North Central region 

States varied by State, with 100 percent of shipments from Wisconsin shipped by truck. 59 

During the same period, nearly 90 percent of shipments from Minnesota and about 55 

percent of shipments from North Dakota were by truck, respectively, with the share of 

shipments by truck from both states rising since 1994 (table 2-28). In the Western region, 

the share of shipments by truck reported for selected states have been rising since 1994. In 

1996, the share of shipments by truck from Washington, California, and Idaho were 92, 7 6, 

and 66, respectively. Limited data reported for shipments from Canada showed 100 percent 

55 Little if any shipments of potatoes are believed to be transported by water or air. 56 Transcript of the hearing, pp. 141-142. 57 Commission staff conversations with officials of the U.S. potato industry, May 6, 1997. 

58 Ibid. 

59 Ibid. 

2-38 
-

of shipments by truck during 1994-96. Data were examined for the arrivals of fresh-market 

potatoes in three Eastern United States markets from selected States in the three major U.S. 

supply regions (table 2-29). 

During 1994-96, 100 percent of arrivals from both Maine and New York in Boston, New 

York City, and Baltimore were delivered by truck. Arrivals in Baltimore from the North 

Central region states of Minnesota, North Dakota, and Wisconsin were essentially 100 

percent delivered by truck, with 90 percent or better of arrivals from these same States 

delivered in Boston also by truck. Arrivals in New York City from Minnesota were also 

principally by truck, but arrivals from North Dakota and Wisconsin were predominately by 

rail. Finally, arrivals in these same three markets from States in the Western United States 

region varied by market as to the type of transport mode used. In Baltimore, most arrivals 

from Washington were by truck, as compared with 68 and 61 percent by truck from Idaho 

and California, respectively. About one-third of arrivals in New York from the Western 

Region were by truck. Arrivals by truck in Boston accounted for 9 to 44 percent of total 

arrivals. 

The initial loading costs are reported to be higher for rail than for truck, but shipping greater 

distances by rail tends to average out the costs in favor of rail transport. The total distance 

shipped, however, is not the only factor involved in transport selection. Shipments in a 

North to South direction in the Eastern United States typically are transported by truck, 

whereas shipments of similar distance but in a West to East direction typically go by rail. 

One of the major reasons for the preference for truck shipments in the Eastern United States 

may be the greater accessability of trucks into distribution centers or stores. Shipments by 

rail, on the other hand, generally have to be off-loaded from the nearest rail head and then 

transported some additional distance by truck. 

Another important reason for the preference of truck to rail shipments is the total travel time 

involved. Rail shipments typically may take from two to three times as long to travel 

comparable distances. In the Northeastern United States, in particular, truck shipments from 

producing areas in Maine, New Brunswick, and P.E.1. may be landed in Boston and New 

York City the next working day, and into Philadelphia or the Baltimore/Washington area 

within 24 to 36 hours ofloading. 60 Also, shipping by rail throughout the Eastern United 

States often may take longer because it involves travel over rails owned and operated by a 

number of different railroads. By contrast, shipments from Idaho to Chicago or New York 

City may involve two or three railroads at the most. 

None the less, significant am01.mts of fresh table stock potatoes are shipped by rail. 

According to industry sources, Idaho growers are reported to be the largest user of 

refrigerated rail cars used throughout the United States.61 Idaho shippers use rail 

transportation for about one-third of their total shipments annually, principally to Eastern 

United States markets. Idaho shippers report that they can ship by rail from Idaho into New 

60 USITC staff conversations with officials of the New Brunswick, P .E.I., and Maine potato 

industries, May 6-9, 1997. 61 Transcript of the hearing, p. 113. 

2-39 
Table 2-28 

Fresh-market potatoes: Choice of transport mode for shipments from selected growing areas, 1994-

96 

Share (percent) of shipments delivered byTruck Rail 

Growing area 1994 j 1995 I 1996 1994 j 1995 I 1996 

Percent 

United States: 

Northeastern: 

Maine .......... 100 100 100 0 0 0 

New York ........ 100 100 100 0 0 0 

North Central: 

Minnesota ....... 87 82 90 13 18 10 

North Dakota ..... 53 53 58 47 47 42 

Washington 88 89 92 12 11 8 

Western: 

California ........ 77 80 76 23 20 24 

Idaho ........... 54 60 66 46 40 34 

Wisconsin 0 0 o' o 0 I 100 100 100 0 0 0 

Canada ............. 100 100 100 0 0 0 

Source: Compiled by USITC staff from data supplied by the USDA, AMS, Market News Branch, June 

1997. 

2-40 
Table 2-29 

Fresh-market potatoes: Share of arrivals in selected cities from specified growing areas, by mode of 

transportation, 1994-96 

Share (!'ercent) of arrivals delivered by--

Truck I Rail 

Destination/growing Area 1994 I 1995 I 1996 I 1994 I 1995 I 1996 

Percent 

Boston: 

United States: 

Maine ............. 100 100 100 0 0 0 

New York .......... 100 100 100 0 0 0 

North Central: 

Minnesota ......... 69 64 90 31 36 10 

North Dakota ....... 54 86 90 46. 14 10 

Wisconsin ......... 95 96 90 5 4 2 

Western: 

California .......... 8 6 9 92 94 91 

Idaho ............. 16 21 31 84 79 69 

Washington ........ 31 27 44 69 73 56 

Canada ................ 100 100 100 0 0 0 

New York: 

United States: 

Maine ............. 100 100 100 0 0 0 

New York .......... 100 100 100 0 0 0 

North Central: 

Minnesota ......... 84 84 88 16 16 12 

North Dakota ....... 35 19 10 65 81 90 

Wisconsin ......... 85 100 24 15 4 76 

Western: 

California .......... 44 32 33 56 68 67 

Idaho ............. 36 22 27 64 78 73 

Washington ........ 48 48 38 52 52 62 

Canada ........... 100 100 100 0 0 0 

Baltimore: 

United States: 

Northeastern: 

Maine ............. 100 100 100 0 0 0 

New York .......... 100 100 100 0 0 0 

North Central: 

Minnesota ......... 100 100 100 0 0 0 

North Dakota ....... 100 100 100 0 0 0 

Wisconsin ......... 100 99 98 0 2 

Western: 

California .......... 76 66 61 24 34 39 

Idaho ............. 43 55 68 57 45 32 

Washington ........ 67 94 93 33 6 7 

Canada .................. 100 100 100 0 0 0 

Source: Compiled by USITC staff from data supplied by the USDA, AMS, Market News Branch, June 1997. 

2-41 
York City for around $5. 00 per cwt of potatoes, as compared with an estimated cost of about 

$9.40 per cwt by truck. 62 Rail shipments may take from 10-14 days by rail, as compared 

with 3-4 days by truck. Many of the refrigerated rail cars still used today, however, are 

described as old and are being taken out of service. Estimated costs for shipping fresh 

potatoes by rail from Idaho to various U.S. markets are shown in the following tabulation 

(in dollars per cwt):63 

Market Cost Market Cost 

Boston $5.17 Miami $5.08 

Chicago 2.98 Montreal 5.01 

Houston 3.24 Toronto 5.27 

LosAnseles 1.95 Washin~n, DC 4.90 

Industry sources have reported that transportation costs affect competitive conditions 

between U.S. and Canadian growers. 64 According to industry sources, transportation costs 

are not cost prohibitive for potatoes that were grown in one region from being shipped and 

sold in other regions. 65 In recent years, fresh potatoes are reported to have been sold all over 

the United States in spite of increasing transportation costs. 66 Growers in the Eastern United 

States in particular report that transportation costs in the East are the same for all 

Northeastern suppliers.67 

Raw potatoes for processing 

In general, processors of frozen potato products attempt to source raw potatoes for 

processing as close to the processing plant as possible, which is why most of the processing 

operations in the United States are located near the extensive production areas in North 

Central and Western States.68 Industry sources consider it a definite cost disadvantage to 

have to source their potatoes from any further away.than 100-150 miles from the processing 

plant. 69 All raw potatoes for processing are believed to be transported from field or cold 

storage to processing plant by truck since the distances traveled are relatively short. 

Processors of potato chips and related potato products are believed to source their raw 

product from great distances, although most regional chip processors usually purchase a 

share of their raw potatoes from sources within their region. 7

° Chipping potatoes processed 

62 lbid. 

63 NPC, posthearing brief, May 27, 1997, p. 10. 64 Transcript of the hearing, p. 110. 65 NPC, posthearing brief, p. 3. 66 Ibid., p. 10. 67 Transcript of the hearing, p. 146. . 68 Commission staff conversations with officials of the U.S. potato growing and processing 

industries, Mar.-May 1997. 69 Transcript of the hearing, p. 114 7

° Commission staff conversations with officials of the potato chipping industry, Mar. 1997. 

2-42 
in the Mid-Atlantic region (e.g., Pennsylvania) have been procured from as far away as 

Florida, Maine, Canada, while chip processors in the Western United States have regularly 

purchased fresh potatoes for chipping from North Dakota to Texas. 71 Industry sources state 

that, while it is desirable, it is not always possible to source their chipping potatoes close to 

their processing facility. 72 The industry has often had to source raw potatoes from Canada 

in recent years due to an inadequate supply available in the United States.73 In 1996, an 

estimated 50 percent of U.S. chip producers sourced as least some of their raw potatoes for 

chipping from Canada. although in most cases the share of raw potatoes from Canada was 

usually less than 5 percent of their total purchases. 74 One major U.S. chip processor is 

reported to have shipped raw potatoes from the United States to Canada for processing in 

its own processing plants there. 75 Chip processors prefer not to store their raw potatoes for 

any significant length of time and therefore have to source potatoes from additional areas as 

production in other areas becomes available. 76 This allows their plants to operate throughout 

the entire year. All of their potatoes are believed to be transported from field or cold storage 

to chipping plant by truck. 

Raw potatoes for dehydration are transported by truck from field or cold storage to 

processing plant. Truck transport allows for easier access to grower fields and easier 

unloading at the dehydration facility. Truck availability is also reported to be greater than 

rail transport and in all cases cheaper to use for short hauls. 

Processed potato products 

Frozen potato products are processed as close to their raw potato supply as possible. As a 

result, processing takes place principally in the major production areas of the Western and 

North Central regions of the United States. Most frozen processed potato products are 

transported from these areas throughout the United States by rail from the Western United 

States and by truck from North Central States and Maine. Industry sources report that the 

use of rail transport has allowed processors in the Pacific Northwest to minimize their 

transportation costs to distant markets in a number of ways. 77 First, distribution centers have 

been set up in various regions of the United States to allow processors to make bulk 

deliveries to those centers. This helps to keep down processors' freight costs by allowing 

them to make fewer shipments to the centers oflarger volumes of products. Second, some 

processors have pmchased their own rail cars which are used for making the bulk shipments. 

Industry sources state that rail transport is generally more advantageous than truck 

transportation for distances in excess of 1,000 miles and not economical for short distance 

71 See transcript of the hearing, p. 153. 72 Grocery Manufacturers of America, posthearing brief, May 13, 1997, p. 1. 73 Ibid. 74 Transcript of the hearing, p. 156. 75 Ibid., p. 158. 76 Ibid., p. 154. 77 Ibid., p. 112. 

2-43 
hauls. 78 They also state that they benefit from certain cost efficiencies with rail as opposed 

to truck shipments in that a 1,000 mile delivery in the Eastern United States would be more 

than a delivery of the same length from the Western United States.79 Finally, U.S. industry 

sources have stated that although transportation costs are important, they are not the only 

consideration when comparing costs and prices in various U.S. markets for domestic and 

Canadian processors from various regions.so Further, U.S. processors state that they have 

been successful in competing in past years in spite of any alleged cost disadvantage due to 

transportation. Also, that manufacturing costs generally differ from region to region, which 

may help processon; overcome any transportation disadvantages specific to their individual 

locations.s1 U.S. frozen potato products processors have stated that Boston is currently the 

only U.S. market wherein products from Canadian processors appear to have any freight 

advantage. 82 

Channels of Distribution 

The channels of distribution for seed potatoes are similar to those for table stock potatoes. s

3 

Seed potatoes, both certified and other, are purchased from both individual growers and 

State-operated seed farms. In the United States, State-supported seed farms are located in 

Maine, New York, and Wisconsin.84 Seed potato producers usually perform all the functions 

of growing, storing, packing, and selling their own products. Sales are usually direct sales 

to growers of table stock and raw potatoes for processing. Seed potato growers generally 

keep some of their own seed stock to use for planting the following year's seed crop. 

The channels of distribution for table stock potatoes vary somewhat depending on the region 

of the country in which the potatoes are grown. In general, growers in the Northeastern 

United States are also shippers. They wash, pack, and ship their own product. Some of the 

smaller-volume growers may have these services performed for them by a larger operation 

nearby, at a cost to the grower. Also, Northeastern U.S. growers tend to store more of their 

crop on their own fann, while the handler/shippers in the West perform this function. In the 

Western United States, growing and shipping are usually separate businesses, with the 

shipper purchasing potatoes from growers and performing the washing, packing, storing, and 

shipping operations themselves. In Washington State, for example, there are 435 potato 

growers and 42 fresh packers. 85 Growers of table stock potatoes seldom produce their crop 

under contract. Sales through terminal markets, especially in the larger cities in the Eastern 

United States, are an important but declining part of the marketing channel for table stock 

potatoes. 

78 Collier, Shannon. Rill & Scott, posthearing brief, p. 18. 79 Ibid., p. 19. 80 Ibid. 81 Transcript of the hearing, p. 113. 82 Collier, Shannon. Rill & Scott, posthearing brief, p. 18. 83 Potato Association of America, Commercial Potato Production in North America. 84 Ibid, p. 25. 85 Transcript of the hearing, p. 65. 

2-44 
The freezing and dehydration industries are located close to the sources of raw product and 

generally source their raw product needs within a certain distance from the processing plant. 

The chipping industry, on the other hand, is widely dispersed near population centers. The 

production of chipping potatoes is spread throughout the United States, with virtually all of 

the growing of chipping varieties being performed under contract with the chippers. 

Growers typically store the potatoes and deliver them to the chippers, who maintain minimal 

storage facilities. Most of the production of potatoes for freezing and dehydration are grown 

under contract with the processors. However, there is a significant open or spot market for 

processing type potatoes and recently some of the processors have contracted for a much 

smaller part of their supplies of raw potatoes for processing. Contracts usually specify 

variety, price, and include incentives/disincentives for quality (size, specific gravity, defects, 

etc.). 

Potato chips are typically distributed by the potato chip producers, who typically sell to a 

limited geographic area. Potato chips are usually one of several snack food products 

produced by the chipper, with pretz.cls and com chips and other products rounding out a line 

of snack food products that are shipped by the producer directly to chain stores or to the 

producer's regional distribution warehouses. Potato chips are usually distributed 

immediately after being produced and are not stored. Typically, potato chips have a shelf 

life of 60 days or less. 

Frozen processed potato products (mostly frozen french fries) are sold to quick service 

restaurant chains, institutional outlets, and to grocery stores. The products sold to quick 

service restaurants are sold under contract between the producer and the chain. The contracts 

typically are for a year and specify price, quantity, type and size of packaging, delivery, and 

quality (length of cut, specific solids, type of oil to be used, etc.). These contracts are of 

major importance to the typical frozen processed potato products producer since they cover 

the major share of the market and allow the producer to know and schedule his production 

and shipments (and contract for raw product) accordingly. The producer can schedule his 

production so that he optimizes his output and storage costs. These contracts also allow the 

producer to lower his costs of production by avoiding stoppages in production to make costly 

changes in product specifications. 

The frozen processed potato products producer also typically packs products for institutional 

users and sells these products directly to such users or through food brokers. Not all 

processors produce products for retail (grocery store) sale. Brand name recognition is 

significant, with the Ore-Ida brand dominating the retail market. Other producers sell private 

label products which compete primarily on price. Sales of retail products are typically 

through food brokers. 

2-45 
State Potato Marketing Organizations and Associations 

There are a number of State potato organizations that participate in market development, 

advertising, research, education, standards and grade setting, and representation. Such 

organizations include the Washington State Potato Commission, which is funded through 

an assessment of a 4 cents per cwt on all potatoes sold, and the Washington Potato and 

Onion Association.86 Additionally, the Maine Potato Board collects a 5-cent tax on each cwt 

of potatoes sold which goes towards research, promotion, education, and issues that arise 

that threaten growers' ability to raise potatoes. The Board receives no Federal or State 

money and is a public board separated from the State Government.87 

The Idaho Potato Commission (IPC) collects a levy of 8 cents per cwt of Idaho potatoes that 

go into human consumption, of which 60 percent is paid by growers, 20 percent by shippers, 

and 20 percent by processors. The 1996-97 budget is approximately $9 million.88 The 

money is used for advertising, promotion, research, and education. An important function 

of the IPC is to promote and protect the use of the "Grown in Idaho" seal, and to ensure that 

the trademark is properly used. The IPC also has contracts with agencies located in Chicago 

and New York City which handle retail trade advertising, public relations, and foodservice 

trade advertising. 

The Idaho Crop Improvement Association (!CIA) inspects crops, including potatoes, for 

varietal purity and freedom from pests and diseases. It assesses an inpection fee of $17. 7 5 

per acre and an additional $10 per acre for each additional potato variety, with a $25 

membership fee for each application submitted under a different applicant name.89 The 

Potato Growers of Idaho represent grower interests in legislation, marketing, and in 

negotiations with processors. About half of the Idaho potato growers are members and pay 

a fee of one-sixth of one percent of all potato revenues as dues, up to a maximum cap of 

$1,920 per farm. 90 The Idaho Growers and Shippers Association is also funded through 

member dues, and is concerned with legislative, regulatory, transportation, and packaging 

issues. 

86 Based on infonnation supplied to USITC staff, dated May 27, 1997, by the Washington State 

Potato Commission. 87 Information provided by the Maine Potato Board through a memorandtun dated June 2, 1997. 88 Idaho Potato Commission, informational facsimile sent to USITC staff on June 25, 1997. 89 ICIA, Inc., Rules of Certification for Seed Potatoes (Meridian, Idaho: ICIA, Jan. 1997), p. 7. 90 Potato Growers ofldaho official, telephone conversation with USITC staff, June 25, 1997. 

2-46 
U.S. Trade and Regulatory Measures, and Tariff 

Treatment 

Trade and Regulatory Measures 

U.S. imports of fresh seed and table stock potatoes, dried or dehydrated potato products, and 

processed potatoes and potato products are subject to import duties as provided for under 

the Harmonized Tariff Schedule of the United States (HTS). Quotas on imports of fresh 

potatoes are no longer in existence. All fresh potatoes and processed potato product imports 

are subject to Federal health and sanitary regulations, administered by the Food and Drug 

Administration. Such imports are also subject to Federal grading and packaging regulations, 

as administered by the USDA. There are no antidumping duties or countervailing duty 

orders currently in existence on imports of fresh potatoes or processed potato products, nor 

have there ever been any in existence. Also, there are no State-administered regulations 

governing the movement of imported Canadian potatoes or potato products into or through 

States, unlike such regulations that exist on a Provincial basis in Canada. 

Tariff Treatment 

Potatoes and processed potato products are provided for principally in chapters 7 and 20 of 

the HTS. Table 2-30 shows the current rates of duty applicable to imports, including the 

reduced rates applicable to imports of products of Canada. The general (column 1) rate 

applicable to imports of fresh potatoes (seed, tablestock, or raw potatoes for processing) is 

0.6 cent per kilogram; imports of Canadian potatoes (entered under general note 12 of the 

Goods of Canada Provision of the North American Free Trade Agreement) are duty free. 

U.S. imports of frozen cooked (steamed or boiled) potatoes are dutiable at the general rate 

of 15.8 percent ad valorem, but only at the rate of 1.7 percent if products of Canada. 

Imports of dried whole, cut, or sliced potato products are dutiable at the general rate of 2. 6 

cents per kilogram, but free if products of Canada. Potato flour, meal, and powder are 

dutiable at 0 .2 cent per kilogram if products of Canada, but otherwise dutiable at 2.2 cents 

per kilogram. Potato flakes, granules, and pellets are dutiable at 0.2 cent per kilogram if 

products of Canada and at the general rate of 2.1 cents per kilogram if from other countries. 

Potato starch is dutiable at the general rate of 0.72 cent per kilogram and 0.1 cent per 

kilogram if product of Canada. The general duty rates for frozen prepared or preserved 

potatoes (including french fries) are 8.2 percent ad valorem for yellow potatoes and 9 percent 

for other potatoes; the rates for these products if products of Canada is 1 percent ad valorem. 

The column 1 rate for other (not frozen) prepared or preserved potatoes is 8.2 percent ad 

valorem. The rate for products of Canada is 1 percent ad valorem. 

2-47 
N 

Table 2-30 

Potatoes: Harmonized Tariff Schedule subheading; description; U.S. col.1 rate of duty as of Jan. 1, 1997; U.S. exports, 1996; U.S. imports, 1996 

Col. 1 rate of duty Bound duty, U.S. U.S. 

HTS as of Jan. 1. 1997 Uruguay exports imports 

subheading Description General Special1 Round2 1996 1996 

0701 

0701.10.00 

0701.90 

0701.90.10 

0701.90.50 

0710.10.00 

Potatoes, fresh or chilled: 

Seed .................................... 

Other: 

Yellow (Solano) potatoes .................... 

Other ................................... 

Potatoes (uncooked or cooked by steaming 

or boiling in water), frozen ................... 

0.6¢/kg 

0.6¢/kg 

0.6¢/kg 

15.8% 

---Thousand dollars---

Free (CA,E,IL,J, 1.7¢/kg 5,468 26,948 

MX) 

Free (A,CA,E,IL,J, 1.7¢/kg (3) 

MX) 

Free (CA,E,IL,J) 1.7¢/kg 78,424 63,039 

0.1 ¢/kg (MX) 

Free (E,IL,J) 35% 7,849 755 

1.7% (CA) 

3.5% (MX) 

J,. 0712 Dried vegetables, whole, cut, sliced, broken 00 or in powder, but not further prepared: 

0712.90.30 Potatoes, whether or not cut or sliced .......... 2.6¢/kg Free (A,CA,E,IL,J) 6¢/kg 7,205 204 

0.5¢/kg (MX) 

1105 Flour, meal, powder, flakes, granules and 

pellets of potatoes: 

1105.10.00 Flour, meal and powder ...................... 2.2¢/kg Free (A,E,IL,J,MX) 5.5¢/kg 43,223 1,993 

0.2¢/kg (CA) 

1105.20.00 Flakes, granules and pellets .................. 2.1¢/kg Free (E,IL,J,MX) 6.1¢/kg 2,067 199 

0.2¢/kg (CA) 
Table 30-Continued 

Potatoes: Harmonized Tariff Schedule subheading; description; U.S. col. 1 rate of duty as of Jan.1, 1997; U.S. exports, 1996; U.S. imports, 1996 

Col. 1 rate of duty Bound duty, U.S. U.S. 

HTS asofJan.1, 1997 Uruguay exports imports 

subheading Description General Special1 Round2 1996 1996 

1108.13.00 

2004 

2004.10 

2004.10.40 

2004.10.80 

2005.20.00 

Potato starch ................................ 0.72¢/kg Free (CA,E,IL,J) 5.5¢/kg 

Other vegetables prepared or preserved 

otherwise than by vinegar or acetic acid, 

frozen, other than products of heading 2006: 

Potatoes: 

Yellow (Solano) potatoes ................... 8.2% 

Other..................................... 9°/o 

Potatoes, prepared or preserved otherwise 

than by vinegar or acetic acid, not frozen . . . . . . 8.2% 

0.1 ¢/kg (MX) 

Free (A,E,IL,J,MX) 35% 

1% (CA) 

Free (E,ll,J) 35% 

1% (CA) 

2% (MX) 

Free (A,E,IL,J,MX) 35% 

1% (CA) 

---Thousand dollars---

2,083 19,941 

277,881 126,307 

188,659 2,663 

1 Programs under which special tariff treatment may be provided, anct the corresponding symbols for such programs as they are indicated in the 

"Special" subcolumn, are as follows: Generalized System of Preferences IA or A*); Automotive Products Trade Act IB); Agreement on Trade in Civil 

Aircraft IC); North American Free-Trade Agreement, goods of Canada (CA) and Mexico (MX); Caribbean Basin Economic Recovery Act (El; United 

States-Israel Free-Trade Agreement (IL); and Andean Trade Preference Act (J). 2 Uruguay Round bound rates of duty are published by the office of the U.S. Trade Representative, Results of the Uruguay Round Market Access 

Negotiations, GATT Schedule XX, United States of America, Vol. 1, General Notes, Agriculture, Washington, DC; U.S. Government Printing Office, Apr. 

1994. . 3 Data are included in 0701.90.50. 4 Data are included in 2004.10.80. 

Source: Subheadings, product descriptions, and rates of duty compiled from the Harmonized Tariff Schedule of the United States; U.S. exports and Imports 

compiled from official statistics of the U.S. Department of Commerce. 
Federal Marketing Orders 

Federal marketing order regulations are authorized by the Agricultural Marketing Agreement 

Act of 1937. The stated purpose of this Act is to (1) provide orderly marketing; (2) enhance 

producer prices (but not above parity); (3) protect consumer interests; and, ( 4) provide for 

the orderly intra seasonal flow of agricultural commodities. Federal marketing orders 

regulate the selling of21 fruits and 6 vegetables (including potatoes). Marketing orders are 

regulated by USDA's Agricultural Marketing Service (AMS). 

Marketing orders are initiated by the industry, implemented through Federal rulemaking and 

producer referenda, and administered by committees of growers or growers and handlers (the 

first buyers of the commodity). Marketing orders typically specify shipping and handling 

regulations, seed certification, varieties that may be sold, grade and size standards, packing 

standards, and container regulations. In addition, some marketing orders, particularly those 

that are national in scope, may promote potatoes through advertising, trade shows, and 

demonstration projects. Funds to cover administration of the orders are usually acquired by 

levying an assessment on each first handler of potatoes. All handlers of potatoes in the area 

covered by the order must abide by a marketing order's rules or face stiff penalties. 

Five Federally-regulated marketing orders for U.S.-grown potatoes cover Irish potatoes 

grown in certain cotmties in Idaho and Malheur County in Oregon; Washington; Modoc and 

Siskiyou Counties, California and in all counties in Oregon except Malheur; Colorado; and 

certain Southeastern States (Virginia and North Carolina) as shown in table 2-31. A sixth 

marketing order existed at one time in Maine, but was voted out of use over 30 years ago, 

and was finally dropped from the books in 1996.91 Regulations for marketing orders are 

periodically updated. 

Table 2-31 

F d e era I potato mar k etin~ or d ers: year esta bl' IS h d d e an prov1s1ons 

Marketing order Year established Provisions 

Idaho-Eastern Oregon 1941 Package and container requirements 

Size and grade requirements 

Colorado 1941 Generic advertising and promotion 

Production and research 

Package and container requirements 

Size and grade requirements 

Southern Oregon-Northern California 1942 Generic advertising and promotion 

Production and research 

Size and grade requirements 

Virginia-North Carolina 1948 Size and grade requirements 

Washington State 1949 Size and grade requirements 

Source: 7 CFR parts 945-953. 

91 USITC staff conversations with officials of the USDA, AMS, Feb. 1997. 

2-50 
Perishable Agricultural Commodities Act (PACA) 

The PACA of 1930,92 administered by USDA's Agricultural Marketing Service (AMS), 

promotes fair trading in the fruit and vegetable industry by requiring buyers and sellers of 

fresh and frozen fruits and vegetables to live up to the terms of their contracts. The PACA 

provides informal and formal procedures to resolve disputes outside the civil court system 

and regulates the buying and selling of fresh and frozen fruits and vegetables, including 

potatoes, to prevent unfair or fraudulent trade and to assure that sellers will be paid 

promptly. Federal law requires that ahnost everyone who deals in fresh and frozen fruits and 

vegetables hold a PACA license. One exception is growers who only sell their own produce. 

A party found to have committed repeated and flagrant unfair practices faces license 

suspension or revocation, which severely restricts future operations in fruit and vegetable 

trade. Operation without a valid license may result in stiff penalties. 

Dealer license fees of $550 per year in 1997 entirely cover the estimated $7 .2 million cost 

of operating PACA in FY 1997,93 The maximum annual fees for firms with multiple 

locations is $3,000. Current fees are at the statutory maximum permitted by law. On 

November 15, 1995, Public Law 104-48 was passed which sought to restructure and 

strengthen P ACA. The new law provides that license fees may be raised if reserve funds fall 

below 25 percent of the projected operating cost for the following year. While there were 

about 16,000 licenses granted for all agricultural commodities in 1996, there are no separate 

statistics on the number of P ACA licenses granted for potatoes. The number of licenses 

varies from year to year since the license must be renewed every year. The number of 

licenses granted in recent years for all agricultural commodities has varied between 15,000 

and 17,000.94 

Government Assistance Programs Affecting the U.S. Potato 

Industry 

U.S. potato producers are believed to benefit from a number of Federal, State, and local 

programs which help to stabilize production costs and prices, and enhance returns. Potato 

producers have benefited directly from production-related programs, such as Federallysupported irrigation, agricultural credit, crop insurance, and disaster assistance. Domestic 

and foreign market promotion programs help to enhance both market prices and sales. 

Agricultural research programs support a variety of activities that assist the long-run 

competitiveness of the potato industry. In addition, potato producers are generally eligible 

for Federal and State tax provisions that apply to farming operations and exemptions from 

92 Jwie 10, 1930, C. 436 § 1 46 Stat. 531. 93 USDA, .AM.S,Highlights of the 1995 PACA Legislation, as revised Sept. 1996. 94 Based on USITC staff conversation with officials of the USDA, .AM.S, May 6, 1997. 

2-51 
excise taxes on purchases of inputs used in agriculture. A summary table of U.S. assistance 

programs is provided in table 2-32. 

U.S. Federal Government Programs 

Crop Insuranc~Federal Crop Insurance Corporation (FCIC) 

The FCIC provides voluntary crop insurance to agricultural producers which covers crop 

losses in the event of a natural disaster. Participating growers may choose coverage at 50, 

65, or 75 percent of the farm's 10-year average yield. For example, a producer who has a 

10-year average potato yield of 400 cwt per acre and chooses 75-percent coverage would 

receive an indemnity payment for each cwt that his/her actual yield fell below 300 cwt per 

acre. Two-thirds of the premium is paid by the farmer and one-third by the Federal 

Government. 

In the 1996 crop year, 822,986 acres grown in potatoes were covered by Federal crop 

insurance for a total insured value of $513 million, or about $623 per acre. 95 This indicates 

a participation rate of about 58 percent since there were 1.4 million acres of potatoes planted 

in 1996.96 As recently as 1991, the participation rate was only 20 percent.97 The FCIC paid 

out about $17 million in premiwns for potato growers and an additional $28 million in 

indemnity for potato crop losses in 1996.98 

Disaster/Emergency Assistance 

Ad hoc disaster assistance 

In the past, the USDA has provided ad hoc disaster assistance to reimburse farmers for 

uninsured losses caused by natural disasters. Potato producers received $13 million, $34 

million, and $24 million in such disaster payments in 1992, 1993, and 1994, respectively. 99 

To receive this assistance, potato growers had to suffer a 35-40 percent loss and then were 

awarded a percentage of the market price for the loss above 40 percent (35 percent if the 

grower had crop insurance).100 

95Based on information supplied to USITC staff by the Field Undern'riting Services Branch, FCIC, 

Apr. 1997. 96 USDA, ERS, Potato Facts, Nov. 1996, p.5. 97 According to USDA, ERS, only 283,000 acres of potatoes out of 1.4 million were insured in 

1991. USDA, ERS, "Public Programs for U.S. Potato Growers," unpublished study, 1997. 98 Based on information supplied to USITC staff by Field Underwriting Services Branch, FCIC. 99 Canadian Embassy, prehearing brief, Apr. 28, 1997, p. 5 . 100 Based on information supplied to USITC staff by the Maine Potato Board, dated June 2, 1997. 

2-52 
Table 2-32 

Summary of Federa and State programs annl1ca . bl e to potatoes an d Potato industries 

Type of program Federal program State program 

Farm-level programs: 

Crop insurance • Federal Crop Insurance Corporation (FCIC) insures about 58 percent of . 

potato acres 

Farm disaster assistance . Ad hoc disaster assistance provided to potato growers 1992-94 

• Noninsured Crop Disaster Assistance Program (NAP) reimburses 

farmers who are not covered by crop insurance since 1996 

• Emergency Loan Assistance (EM) covers production and physical 

losses in counties declared disaster areas 

• Emergency ConsaNation Program (ECP) provides emergency funds for 

farmers to rehabllltate farmland damaged by wind erosion, floods, 

hurricanes, or other natural disasters, and for water conseNation 

Credit/financial assistance • Farm SeNice Agency provides direct loans and guaranteed loans up to • Potato Marketing Improvement Fund, Maine 

$400,000. • Finance Authority of Maine (FAME), 

Agricultural Marketing Loan Fund, Maine 

• Idaho Department of Agriculture Rural 

Rehabilitation Loans 

Rural development • Rural Business-Cooperative SeNice (RBS) provides programs to assist 

development of rural businesses and farmer cooperatives 

Irrigation infrastructure • Department of Interior, Bureau of Reclamation provides water to about 

22 percent of U.S. potato acreage. Between 1902 and 1992 Federal 

investments in water reclamation reached $11 billion 

Marketing assistance/ . Agricultural Marketing SeNice (AMS) administers Federal marketing • Activities of State Departments of 

promotion orders and provides market assistance through grants to States Agriculture may include market promotion 

• National Potato Promotion Board (NPPB), administered by AMS, and assistance to farmers, food processors, 

promotes potato sales and shippers 

• Section 32 program purchases of surplus commodities 

• Market Access Program administered by USDA's Foreign Agricultural 

SeNlce (FAS) promotes exports 

• GSM Export Credit Guarantees (allocations) 
Table 2-32-Continued 

Summary of Federal and State programs aoolicable to potatoes and potato industries 

Type of program Federal program State program 

Research, extension, and . Federal funding provided through the Agricultural Research • State programs provide research funding and 

information services Service and the Cooperative State Research, Education, and matching extension funds 

Extension Service 

. Data and information provided through the Economic Research 

Service, National Agricultural Statistics Service, FAS, and AMS 

Plant Quarantine and Protection . USDA's Animal and Plant Health Inspection Service checks 

products entering the United States for diseases and pests 

Production assistance/tax incentives . Special use valuation provides for lower tax valuation of • Farm use valuation provides for lower State and 

farmland local property taxes 

. Unified Credit allows couple to pass on $1.2 million in farmland . Retail sales tax exemption on business inputs 

to heirs with no tax . Seed potato production programs, Maine 

. Federal fuel tax exemptions for off-road use 

Infrastructure, procenlnglegribwlness aaistance: 

Rural development • Federal grants support community and infrastructure 

development in rural areas 

Research and market promotion . NPPB programs, include Market Access Funds for frozen • Activities of State Departments of Agriculture 

programs potato products may assist marketing of processed potato 

. Section 32 purchases of surplus commodities products 

. Export credit guarantee allocations 

Financial assistance • RBS Loan Guarantees and Intermediary Relending Loan • State and local business and community 

programs development programs may promote rural 

businesses 

Source: U.S. International Trade Commission. 
Noninsured Crop Disaster Assistance Program 

In 1996, Congress passed the Agricultural Marketing Transition Act (AMTA) which 

contained provisions for a new disaster insurance program, the Noninsured Crop Disaster 

Assistance Program (NAP), to replace the ad hoc programs which had been provided in the 

past. The NAP, which is administered by the Farm Service Ageny (FSA), only applies to 

farmers who are not covered by crop insurance. However, in contrast to crop insurance, 

where individual farmers in a given area know in advance the conditions under which 

indemnities will be paid, growers do not lrnow whether they will receive NAP payments until 

a widespread disaster occurs. 

Significant changes in NAP distinguish it from previous ad hoc disaster legislation. First, 

NAP does not require emergency Congressional legislation, but is funded on a fiscal year 

basis in anticipation of need. Claim requirements for farmers are more stringent. Farmers 

must file an acreage and production report with the local FSA office prior to the crop 

reporting date in order to be eligible.101 NAP crops, including potatoes, are eligible when the 

expected "Area Yield" is less than 65 percent of normal. In the event of a natural disaster 

they must present proof of loss, and an FSA claims adjuster must verify the actual loss. 

NAP payments are made to eligible producers when individual crop losses are in excess of 

50 percent of the individual's approved yield at 60 percent of the crop's average market price 

(determined by FSA). Payments to any one producer under NAP cannot exceed $100,000 

for any given crop year. 102 

Because of these more stringent requirements, budgetary outlays for disaster assistance have 

fallen since the enactment ofNAP. 103 Funds allocated in the year ending June 30, 1997, 

amounted to $200 million for all crops, of which only $41. 7 million had been utilized as of 

May 15, 1997.104 

Emergency Loan Assistance 

Emergency Loan Assistance (EM) is sponsored by the FSA to provide loans to help cover 

production and physical (property) losses in counties declared as disaster areas by the 

President or designated by the Secretary of Agriculture, for up to $500,000 per disaster, or 

80 percent of the actual loss, whichever is less. For physical losses only, the FSA 

Administrator may authorize EM assistance. Loans for crop losses are normally repaid in 

over 1 to 7 years, depending upon the loan purpose, repayment ability, and collateral 

available as loan security. The current annual interest rate is 3.75 percent.105 Although 

separate amounts for potato growers are not tracked, the total amount of loans in FY 1996 

101 USDA, FSA, Noninsured Crop Disaster Assistance Program, Fann Program Fact Sheet, May 

1996. 102 Ibid. 103 Based on USITC staff conversation with FSA official, May 22, 1997. 104 USDA, FSA. "Status of 1996 NAP Funds as of May 15, 1997," facsimile data, May 15, 1997. 

ios USDA, FSA. Emergency Loan Assistance, Farm Program Fact Sheet, May 1996. 

2-55 
for all crops was $17 6 million, and the amount for FY 1997, through April 30, 1997, was 

$77 million. 106 

Emergency Conservation Program 

The Emergency Conservation Program (ECP) provides emergency funds, appropriated by 

Congress, for farmers to rehabilitate farmland damaged by wind erosion, floods, hurricanes, 

or other natural disasters, and to carry out emergency water conservation measures during 

periods of severe drought. The natural disaster must have created new conservation 

problems which, if not treated, would impair or endanger the land, materially affect the 

productive capacity of the land, represent unusual damage which, except for wind erosion, 

is not the type likely to recur frequently in the same area, and be so costly to repair that 

Federal assistance is or will be required to return the land to productive agricultural use. 

Conservation problems existing prior to the disaster involved are not eligible for cost-sharing 

assistance. The ECP is administered by State and County Agricultural Stabilization and 

Conservation (ASC) committees.107 In 1996, the ECP provided $26 million in cost-sharing 

funds to 6,555 farms in the United States at an average of $19 per acre. There are no 

separate statistics by crop. 

Credit/Financial Assistance 

Farm Service Agency 

The FSA, formerly the Farmers Home Administration (FmHA), is the lender of last resort 

for family farmers who cannot obtain credit elsewhere. FSA provides credit assistance to 

family-size farmers through both direct loans and loan guarantees. Direct loans are made 

and serviced exclusively by the FSA while guaranteed loans are made and serviced by 

commercial lenders. Applicants must be unable to obtain credit elsewhere to be eligible. 108 

Data are not available on the number of potato growers who are FSA borrowers. 

FAS Farm Ownership loans assist beginning farmers to establish themselves in agriculture 

or help existing owner-operators make improvements to their operations or restructure debt. 

Direct loans for these purposes may not exceed $200,000 and guaranteed loans may not 

exceed $300,000, and may be repaid over 40 years. Farm Operating loans may be made 

to assist beginning and existing family farmers to purchase essential operating inputs in 

amounts up to $400,000. As noted above, Emergency Disaster loans are made available 

106 USDA, FSA, "Status of Loan and Grant Obligations/Allotments or Distribution Fiscal Year 

1996, and Fiscal Year 1997, as of April 30, 1997." Form FSA 389-175-1297222, Emergency 

Loans. 107 USDA, FSA. Emergency Consetvation Program, Fann Program Fact Sheet, Oct. 1996, 

revised Nov. 1996. 108 USDA, FSA. "Farm Loan Programs, Explanation of Programs," and "Fann Credit Programs 

Obligations Report," as of Sept. 30, 1996. 

2-56 
in designated counties where property damage or severe production losses occurred as a 

result of a natural disaster. In FY 1996 total FSA obligations were $2. 7 billion. 

Rural Business-Cooperative Service (RBS) 

RBS provides commercial lending services, including Business and Industrial (B&l) 

Guaranteed Loans. The B&I program guarantees loans made by commercial lenders against 

a portion of loss resulting from borrower default. Loans may be used to finance working 

capital, machinery and equipment, buildings, real estate, and certain types of debt refinancing 

for rural business or integrated production and processing projects for which no more than 

50 percent of the loan guarantee is for agricultural production.109 Another RBS program is 

the Intermedia,ry Relending Loan Program, which provides direct loans at 1 percent interest 

to establish revolving loan funds for businesses and community development projects in 

rural areas. In addition to USDA, RBS direct loan and guarantee programs, States and 

localities may also provide their own :financial assistance programs for rural businesses. 

Irrigation/Rural Development 

Federal grants-infrastructure and community development 

Rural areas received roughly $6 billion in Federal grants for infrastructure and community 

development in 1994, with most of these grants provided for highway planning and 

construction, Conununity Development Block Grants, and public works.11° Additionally, 

USDA's Rural Utilities Service is a major source of grant funds for water and wastewater 

disposal facilities. 

Cooperatives assistance 

The Cooperative Service (CS) under the RBS promotes the understanding and use of the 

cooperative form of business by providing information, technical assistance, and related 

services to farmer cooperatives. The CS spent approximately $3.2 million in FY 1996.111 

In 1995, there were 241 fruit and vegetable farmers' cooperatives with over 49,000 

members, although there are no separate statistics for potatoes.112 

109 RBS official, telephone interview by USITC staff, June 19, 1997. Data on the number and 

amount of RBS guaranteed loans for U.S. potato processors was not available from USDA, RBS. 110 USDA, ERS, Credit in Rural America, Agricultural Economic Report No. 7 49, Apr. 1997. 111 Based on USITC staff conversation with the Budget Office of the RBS, June 20, 1997. 112 USDA, RBS, Farmer Cooperative Statistics 1995. Report 52, Nov. 1996, p. 3. 

2-57 
Irrigation programs 

Many Western U. S. potato producers and processors receive water and water services from 

projects sponsored by the Bureau of Reclamation (Reclamation) of the U.S. Department of 

the Interior (DOI). In 1992, the most recent year for which data are available, Reclamation 

water irrigated about 9 .2 million acres of land. Potatoes accounted for approximately 3 

percent of this land area and 6 percent of the value of crops grown.113 The decision of how 

to equitably divide water between agricultural and nonagricultural uses such as urban, 

wildlife habitat preservation, and aesthetic and recreational river uses arises during years of 

short supply. The current law allows 960 acres to be irrigated with Reclamation water.114 

The Snake River in Idaho is a Reclamation project which supplies much of the irrigation to 

potato farmers in Idaho, Oregon, and Washington. Farmers and processors pay the same 

prices as other users for water from the Snake River, which varies according to the amount 

of hydroelectrically generated electricity needed to pump the water from the river to fields.11 5 

Additionally, the Columbia Basin Project in Washington provides irrigation to potato 

growers in that State.116 

It is difficult to compute the exact benefit to potato growers and processors of Federal water 

projects because maey of the capital-intensive projects, such as dams, were built with money 

that was borrowed at below-market or zero interest rates under the Reclamation Act of 1939, 

but have since been repaid. Also, the water is available to other users besides farmers and 

potato processors. The Reclamation Act of 193 9 added the stipulation that irrigation costs 

beyond the irrigators' ability to pay may be shifted to other project beneficiaries such as 

hydroelectric power users. Reclamation estimates the amount an irrigator is able to pay 

based on developed farm budgets typical of an area, and water rates for each district are set 

accordingly. 117 

In 1992, the most recent reporting period, a total of 269,000 irrigated acres planted in 17 

Western States, or 22 percent of 1.3 million total acres planted in potatoes in the United 

States, benefited from Reclamation irrigation projects. 118 The total value of crops grown on 

Reclamation irrigated land in 1992 was $2.3 billion, of which potatoes accounted for $222 

million or about 10 percent By 1992, Federal investments going back 90 years in completed 

Reclamation project facilities reached $11.0 billion, including $2.2 billion in specific 

irrigation facilities, $1.9 billion in electric power facilities, and the rest in other facilities. 

113 DOI, Bureau of Reclamation, 199 2 Summary Statistics, Water, Land, and Related Data 

(Denver, CO: Bureau of Reclamation, 1993), p. I and pp. 55-56. 114 43 CFR 426.6, p. 561. 115 Based on USITC staff conversation with the Idaho Water Users Association, Apr. 15, 1997. 

u6 DOI, Bureau of Reclamation, The Story of the Columbia Basin Project (Washington, DC: 

GPO, 1978). 117 Richard Wahl, Markets for Federal Water: Subsidies, Property Rights, and the Bureau of 

Reclamation, (Washington, DC: Resources for the Future, 1989), p. 39. 

us DOI, 1992 Summary Statistics, Water, Land, and Related Data, p. 22. 

2-58 
Marketing Assistance, Domestic and Foreign Market Promotion 

Agricultural Marketing Service 

As noted earlier, Federal marketing orders for potatoes are regulated by USDA, AMS. Of the 

roughly $4 million spent by AMS in 1996 in administerin~ the 37 Federal marketing orders, 

approximately 10 percent ($400,000) was spent on the five marketing orders for potatoes.119 

AMS also provides research and technical assistance aimed at improving the efficiency of food 

distribution facilities that help fanners market fruits, vegetables, and other perishable crops. 

Its transportation activities seek to improve transportation systems and policies as they pertain 

to farm products, and to provide technical assistance and information to producers and shippers 

for rural development and export shipping. The Federal-State Marketing Improvement Program 

provided $1.2 million in grants to States (on a 50-percent matching basis) in FY 1996 for 

projects intended to improve the marketing of agricultural products, including potatoes.120 

National Potato Promotion Board (NPPB) 

Federal legislation, including the Potato Research and Promotion Act,121 currently authorizes 

several freestanding generic promotion programs not tied to marketing orders. Similar to 

marketing orders, however, such programs are operated by a producer board. The NPPB is one 

of five programs for fruits and vegetables designed to expand sales. Jn addition to the goal of 

expanding export markets, a stated goal of the NPPB is to "improve the perception of the potato 

through an integrated marketing plan." There are approximately 2,000 handlers, 6,000 

producers, and 105 importers covered by the program.122 

The NPPB operates at the national level and is administered by the USDA, AMS. 123 Federal 

costs are minimal because potato growers pay about $6 million annually in assessments. The 

NPPB collects an assessment of 2 cents per cwt from all US. growers who produce five or more 

acres of potatoes handled for hwnan consmnption or seed planting.124 Assessments apply to any 

potatoes produced in the 50 States. A comparable assessment is collected on imported table 

stock and seed potatoes, and the fresh weight equivalents of imported frozen or processed 

potatoes for human consumption. The importer pays the assessment at the time of product entry 

into the United States. The Board receives the assessments from the U.S. Customs Service, 

119 Estimated by USITC staff based on conversations with officials of the USDA, AMS, Mar. 24, 

1997. 120 Based on USITC staff conversation with USDA, AMS official, June 20, 1997. 121 Title III, Public Law 91-670, 84 Statute 2041-2047, Jan. 11, 1971. 122 USDA, AMS, "Research and Promotion Programs for Fruits, Vegetables, and Specialty 

Crops," memorandwn dated Apr. 3, 1996. 123 In June 1997, a group of Idaho's potato growers petitioned for the abolishment of the NPPB, 

stating that promotion by the NPPB was too generic and contradictory to the Idaho growers' 

contention that Idaho potatoes were superior table stock potatoes. President of the 

Idaho/Growers/Shippers Association, conversation with USITC staff, June 19, 1997. 124 7 U.S.C. 2611-2627, Section 308. 

2-59 
under an agreement with the AMS. 125 Proceeds from the assessments go towards research, 

development, advertising, and promotion of potatoes in a manner prescribed by the plan.126 The 

NPPB reimburses AMS, the Department's Office of General Counsel, and U.S. Customs for 

costs incurred in administering the program. 

The NPPB's approved budget for the period July 1, 1996, through June 30, 1997, is $8.1 

million, a 15 percent decline from the 1996 budget of $9.552 million. 127 Projected assessment 

income is $7.8 million (96 percent from domestic production and 4 percent from imports). 

Interest income of $245,000 will augment assessments to fund the Board's programs. 128 The 

NPPB also received $585,000 from USDA's Foreign Agricultural Service (FAS) under the 

Market Access Program to promote U.S.-grown potatoes in foreign markets (see below). 

The NPPB, with the cooperation of the National Cancer Institute and the endorsement of the 

USDA, is ctuTently participating in a national promotional campaign aimed at boosting fruit and 

vegetable conswnption. The NPPB works in partnership with the Snack Food Association to 

promote chips and other potato-based snack foods. The NPPB also sponsors market research, 

both domestically and internationally, to find the best marketing opportunities and to ensure that 

promotional activities are working. 129 

The NPPB is classified an instrwnentality of the United States Government by the Internal 

Revenue Service under Internal Revenue Service Code Section 115(a) and therefore is not 

subject to income taxation. 130 Pennanent mandatory assessments are not usually imposed until 

approved in a producer referendum. The Potato Research and Promotion Plan (PRPP) is 

authorized by the Potato Research and Promotion Act (Act) [U.S.C. 2611-2627], which was 

signed into law on January 11, 1971, and became effective on March 9, 1972.131 The Act has 

been amended three times. 

125 57 FR 40083, Sept. 2, 1992, as amended at 58 FR 3359, Jan. 8, 1993; 59 FR 63696,Dec. 9, 

1994. 126 7 U.S. C. 261 I-2627, Section 304. 127 USDA, AMS, "Approval of Amendment of the National Potato Promotion Board's FY-97 

Marketing Plan and Budget," memorandum dated Jan. 23, 1997. 

128 Ibid. 129 NPPB, information package, received May 27, 1997. 130 NPPB, 1995Annua!Report(Denver, CO: NPPB, 1996),p. IO. 131 USDA, AMS, "Research and Promotion Programs for Fruits, Vegetables, and Specialty 

Crops." 

2-60 
Market Access Program (MAP) 

The MAP is administered by the USDA, FAS to help U.S. producers, private companies, and 

other trade organizations finance promotional activities for U.S. agricultural exports. Activities 

financed include consumer promotions, market research, technical assistance, and trade 

servicing. The Export Incentive Program (EIP), which is part of the MAP, helps U.S. 

commercial entities conduct new promotion activities including advertising, trade shows, instore demonstrations, and trade seminars.132 

The MAP program has primarily assisted in the promotion of U.S. exports of frozen french 

fries; funding is provided through the NPPB. In the 1997 program year (July 1997-June 1998), 

the MAP will provide $1.3 million to promote processed potato exports.133 MAP allocations 

for processed potato products declined during program years 1992/93 to 1996/97, as shown in 

the following tabulation (in millions of dollars): 

1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 

Allocations 5,600 2,670 1,020 1,110 585 1,291 

The MAP for potato products initially targeted Pacific Rim countries, but the program has more 

recently included markets in China and Latin America. The NPPB has recently formed a task 

force to assist the seed potato industry in developing an export promotion program. In 1996, 

research was conducted to identify potential markets and recommend marketing strategies for 

seed potatoes.134 

Export Credit Guarantee Programs 

The Export Credit Guarantee Program (GSM-102), administered by USDA, FAS, assists 

commercial sales of U.S. agricultural products to countries that may not be able to purchase 

U.S. commodities without credit. GSM-102 guarantees repayment of short-term commercial 

· credit (up to 3 years). A new program, the Supplier Credit Guarantee Program (SCGP), covers 

short-term :financing extended directly by U.S. exporters to foreign buyers and requires that the 

importers sign a promissory note in case of default on the loan guarantee. 

In FY 1997, GSM and Supplier Credit Guarantees for fresh and processed potatoes have been 

authorized for Brazil, Central America, China, Czech Republic, East Africa, Egypt, Indonesia, 

Jamaica, Mexico, Poland, Russia, Southeast Asia, and Southern Africa. However, exporters 

have never applied for any export credits for potatoes or processed potato products under these 

programs.13s 

132 USDA, FAS, Market Access Program, FAS Fact Sheet, June 1996. 133 USDA, FAS News Release, "USDA Announces Market Access Program Allocations for Fiscal 

1997," No. 0075.97, Mar. 6, 1997, found at http://www.usda.gov. release. 134 USITC staff conversations with USDA, FAS officials, Feb. 18, 1997. 135 USDA, FAS official, telephone conversation with USITC staff, June 27, 1997. 

2-61 
Section 32 program 

Section 32 of the Agricultural Adjustment Act of 1935 authorizes a permanent appropriation 

of funds to encourage exports of frum products, to reestablish farmers' purchasing power, and 

to encourage domestic consumption of farm products by diverting surpluses from normal 

channels and expanding their use by low-income groups. The Section 32 appropriation is equal 

to 30 percent of total annual U.S. customs receipts from the prior year, along with up to $300 

million in any mobligated prior-year carryover funds. The Food and Nutrition Service (FNS), 

AMS, and FSA admiirister the program. Currently, a large share of the revenue (about $8.7 

billion in FY 1997, up from $8.3 billion in FY 1996) is transferred to a cash account to pay 

most of USDA's child nutrition program costs.136 USDA uses a significant amount of the 

remaining funds to directly purchase perishable farm products, including vegetables. 

The USDA, AMS purchased 65 million pounds of potatoes and potato products at a value of 

about $19 million in FY 1996 as sho'Ml in the following tabulation of AMS data: 

Potato product Quantity (1000 pounds) Value ( 1000 dollars) 

Fresh potatoes 18,160 2,953 

Canned potatoes 2,607 847 

Frozen potato rounds 16,592 5,065 

Dehydrated potatoes 2,850 2,346 

Frozen oven-fried potatoes 24,790 7,380 

Total 64,999 18,591 

Most purchases under Section 32 are processed rather than fresh items. The potato products 

purchased are typically french fries, rounds, and wedges. Similar USDA data for potato and 

potato product purchases were $18.8 million in FY 1993, $30.6 million in FY 1994, $20.8 

million in FY 1995.137 USDA recently announced that it would purchase $23.5 million of 

processed potato products for donation to child nutrition and other feeding programs in FY 

1997.138 

The U.S. Government has also announced crop diversion programs for potatoes under Section 

32. In 1992, a National Diversion program paid potato growers to divert excess potatoes to 

136 Based on USITC staff conversation with officials at FNS, Apr. 18, 1997. 137 USDA, AMS, facsimile data received by USITC staff, Apr. 18, 1997. 138 USDA News Release, "USDA Armounces Plans for $23.S Million Potato Purchase," Release 

No. 0150.97, May 5, 1997. 

2-62 
cattle feed. 139 On May 9, 1997, the USDA announced plans to pay potato growers to divert 

1996-crop fresh Irish round white and russet potatoes to charitable institutions through the FNS. 

This program will be effective from May 29, 1997, to July 28, 1997. Producers diverting 

potatoes will receive $1.50 per cwt.140 

Research/Extension/Information Services 

Research and extension 

Federal potato research is sponsored by USDA's Agricultural Research Service (ARS) and the 

Cooperative State Research Education and Extension Service (CSREES). ARS conducts 

ongoing potato research at 13 ARS laboratories throughout the country, staffed by ARS 

personnel, and cooperative research in 12 States. CSREES covers many of the same areas of 

research as ARS, but differs in that it only provides funding to land-grant universities that do 

the actual research. Much of the CSREES research is driven by research needs in the particular 

States, while ARS research is national in scope. 

ARS funding for all agricultural research in FY 1997 is $717 million, of which $12.9 million 

went to potato research.141 ARS research topics include late blight, ring rot, early dying, aphids, 

potato beetle, weeds, variety development, soils, agricultural engineering, and potato storage.142 

CSREES funding on all agricultural research in FY 1997 was $489 million, or which $5.4 

million was spent on potato research. 143 It is also estimated that the U.S. industry spends $3 to 

$4 billion on agricultural research each year. If true, this would indicate that Federal funding 

on agricultural research is less than 30 percent of the total. In 1994, a $1.4 million CSREES 

demonstration project for potatoes was provided to develop information on late blight. The 

information from this project was published and used nationally. 

CSREES also spent $428 million on agricultural extension in FY 1996, which was matched by 

about $1 billion at the State, County and private levels. CSREES requires that its extension 

spending be matched, while there is no such requirement for research spending. 

139 This program is cited by the Canadian Embassy in appendix 2 of their prehearing brief as 

awarding Maine potato growers $4. l million. According to information supplied by the Maine Potato 

Board, a similar program also operated in a number of potato-growing Provinces in Canada with such 

assistance amounting to about $7 million. Maine Potato Board, memorandwn dated June 2, 1997. 140 62 F.R. 29649, Jwie 2, 1997. 141 Based upon USITC staff interview with ARS official on June 24, 1997. 142 Based on information provided to the USITC by USDA, ARS Information Staff. May 12. 1997. 143 Based on USITC staff interview with CSREES official on June 24, 1997. 

2-63 
Information services 

U.S. potato growers benefit from USDA-sponsored market news and economic information. 

The Economic Research Service (ERS), National Agricultural Statistics Service (NASS), FAS, 

and AMS gather, analyze, and disseminate information that assists growers to produce and 

market their crops. The AMS uses a portion of its annual market news budget to gather and 

disseminate sales, supply, inventory, and other market statistics on 415 fruits, vegetables, and 

related commodities iii 800 markets. NASS has offices in 45 States. ERS prepares monthly, 

quarterly, and annual outlook and situation reports on potato production, earnings, trade, and 

other data, and conducts studies of the industry's structure and performance. FAS prepares 

monthly reports on tropical and horticultural products, potential export markets, and recent trade 

flows to and from selected markets and suppliers. 

Plant Protection and Quarantine 

USDA's Animal and Plant Health Inspection Service (APHIS) is charged with controlling and 

eradicating plant and animal pests and diseases threatening U.S. production. Its programs 

include inspecting travelers, particularly for species with no natural enemies in the United 

States, and detecting and eliminating pests and diseases that do enter the country. They also are 

charged with controlling the interstate movement of pests and diseases such as citrus and potato 

nematodes, and providing scientific and support services. APHIS has a total fiscal year 1997 

budget of nearly $435 million, of which about $98 million is paid by user fees, but large 

portions go for controlling animal as well as plant diseases and pests. Among the FY 1997 

funds devoted primarily to potato producers were $444,000 for work against the golden 

nematode. 144 

Federal Taxes 

Property/estate taxation 

Farmers are taxed at the Federal, State, and local levels. About two-thirds of taxes paid by 

farmer sole-proprietors are Federal, including taxes for income and self-employment, capital 

gains, and estate and gift taxes. 145 While Federal estate taxes paid by farm sole proprietors are 

small relative to other Federal taxes, $500 million versus about $18 billion, they play a crucial 

role in intergenerational transfers of farmland. Two provisions in the Federal tax law which are 

available to all taxpayers, the 'unified credit' and 'special use valuation,'are particularly 

beneficial to farmers. 146 

144 Based on information provided by officials of the Budget and Accounting Division, USDA, 

APHIS. 145 Statement of Keith Collins, Chief Economist, USDA, before the Committee on Agriculture, 

Nutrition, and Forestry, United States Senate, Feb. 25, 1997, p. 2. 146 lbid. 

2-64 
The unified credit is one of the most important provisions for farmers of the Federal tax system 

because it provides an exemption from the estate tax for many estates. The unified credit was 

increased substantially in 1981 to effectively exempt the first $600,000 of an estate. Through 

the credit, a married couple should be able to transfer a minimum of $1.2 million in assets to 

their heirs without incurring Federal estate and gift taxes. Only about 5 percent of U.S .. farms 

have anet worth in excess of $1.2 million. 147 To illustrate the impact, in 1981, based on U.S. 

average values for farm real estate, the unified credit allowed 214 acres of farm real estate to 

be transferred tax-free. In 1997, because of the substantial increase in the credit, about 675 

acres may be transferred tax-free, even as the value of farm land has gone up. 

It was precisely the concern of farmers to be able to transfer the farming operation to the next 

generation that led to the enactment of the "special use valuation" provision available to farmers 

and other small businesses. This provision allows farmers to value their farmland at its farm 

value rather than its fair market value, which may reflect development potential for non-farm 

use. While savings from the special use valuation provision reportedly vary, the value of the 

real estate portion of the estate in many instances can be cut in half. While the total reduction 

in the value of the farmer's estate is limited to $750,000, relatively few farm estates are affected 

by this limit. Based on 1994 IRS data, the average reduction in value for Federal estate tax 

purposes for those electing special use valuation was $343,000.148 

Fuel tax exemptions 

Fuel may be exempt from the Federal excise tax if it is for "off-road" use, which includes 

agricultural pmposes. In 1995, the latest year for which information exists, 3.6 billion gallons 

of diesel fuel, 1.4 billion gallons of gasoline, and 0.8 billion gallons ofliquefied natural gas used 

in agriculture were exempted from the Federal excise tax.149 These taxes are 24.3 cents per 

gallon for diesel fuel, and 18. 3 cents per gallon for gasoline and liquefied natural gas. 

State Programs-Taxation 

State and Local Taxes 

As ofl 991, there was wide variation in the taxation of agricultural real estate.150 State and local 

taxes account for about one-third of the taxes paid by sole proprietor farmers. This has 

amounted to savings of about $3.5-$4.0 billion per year in State and local income taxes on a 

national basis, and another $4 billion in real estate and other property taxes.151 The primary 

147 Ibid. 

148 lbid. 

149 USDA, NASS, Farm Production Expenditures Survey Data, table 2, as updated by USITC 

staff, June 19, 1997. 150 J. Peter DeBraal, Taxes on U.S. Agricultural Real Estate, 1890-1991, and Methods of 

Estimation, ERS, USDA Statistical Bulletin No. 866, Sept. 1993, p. 15. 151 Ibid, p. 2. 

2-65 
-------------------~- ---

State taxes are income and sales taxes, while at the local level it is primarily the property tax 

which is derived principally from real estate. Ninety-six percent of revenues from property 

taxes go to local govemments. 152 The use-valuation laws are regulated at the State level and 

allow farm and ranch lands to be assessed for their current use and not their market value. 

These laws are designed not only to reduce agricultural real estate taxes but also to encourage 

the protection of farm and ranch land for such aesthetic reasons as open space.153 

Tax Exemptions 

Most States fully exempt or refund State fuel taxes for agriculture. Other States partially 

exempt or refund fuel taxes or credit them towards State income taxes.154 State gasoline taxes 

vary from 7.5 cents per gallon in Georgia to 39 cents in Connecticut, with similar or slightly 

different rates for diesel fuel, liquefied petroleum gas, and gasohol. 155 Weighted-average State 

taxes for fuels as of April 1, 1997, were 18.73 cents per gallon for gasoline, 19.10 cents for 

diesel fuel, 13.50 cents forliquefied petroleum gas, and 19.62 cents for gasohol. 156 Farmers in 

most States also do not pay retail sales taxes on business purchases for farm operations. 

State Programs-Idaho 

Credit/Financial Assistance-Rural Rehabilitation Program 

Rural Rehabilitation Program loans are sponsored by the Idaho Department of Agriculture and 

provide loans to farmers, including potato farmers, up to $35,000.157 To be eligible, an 

individual or organization in Idaho must have an agricultural project or effort which will provide 

for rural economic development in Idaho and must not obtain credit from conventional sources. 

Special consideration is given to projects which show a high level of innovation and initiative. 

Marketing Programs 

Idaho State Department of Agriculture 

The Idaho State Department of Agriculture has several marketing programs that stimulate 

economic diversification in Idaho agriculture. It provides U.S. and international marketing 

152 Ibid. 153 Ibid. p. ii. 154 Only V ennont and the District of Columbia have no agricultural exemption or refund. 155 DOT, Office of Highway Information Management, Tax Rates on Motor Fuel -April 1, 1997, 

and Exemption and Refund Provisions of State Gasoline Taxation, status as of January 1, 1995. 156 DOT, Office of Highway Information Management, Tax Rates on Motor Fuel -April 1, 1997. 157 Idaho Department of Agriculture, information sent via facsimile June 20, 1997. 

2-66 
assistance to Idaho fanners, food processors, and shippers.158 Domestic business development 

services may include workshops, domestic market information, "how to" publications, trade or 

consumer directories, in-state and U.S. promotions, buyer and supplier contacts, and individual 

consulting. Consumer education is done through promotions and special events. 

The collection and distribution of produce market news is handled through the Federal-State 

Market News office and provides daily market information on price, supplies, movement, 

demand, and quality of Idaho potatoes to assist growers and shippers with market decisions. 

Exporter education provides market information, buyer contacts, and technical assistance from 

marketing specialists. fudividual export counseling may include foreign packaging and labeling 

requirements, additive restrictions, phytosanitary documentation, food consumption preferences 

and trends, food distribution systems, and transportation issues. A variety of export seminars 

and market specific workshops are held throughout the year to provide exporters with up-to-date 

market intelligence. Exporters may participate in state-sponsored trade missions or exhibits in 

Idaho pavilions at industry-specific trade shows in foreign markets. The Department has led 

delegations to a number of countries around the world in recent years. The Department also 

hosts foreign buying teams and industry representatives to Idaho. 

Trade offices 

The State ofldaho has four trade offices strategically located in key markets to assist exporters 

with their marketing efforts. The offices, located in Mexico, Taiwan, Japan, and Korea, develop 

business contacts, analyze market opportunities, assist with Idaho promotional activities, and 

educate Idaho companies on business practices, cultural preferences, distribution, and 

government regulations. The Idaho-Mexico Trade Office is managed by the Idaho State 

Department of Agriculture in cooperation with the Idaho Department of Commerce and several 

Idaho agricultural organizations. 

State Programs-Washington State1-59 

Tax Exemptions 

All agricultural production enterprises in the State of Washington are exempted from the 

provisions of the Business and Occupations (B&O) tax on the value of agricultural commodities 

they produce. Businesses providing goods and services to agricultural producers are subject to 

158 lbid. 159 A number of programs discussed in the preheating brief of the Embassy of Canada are not 

included in this section because information provided by the Washington State Potato Commission 

indicated that the programs were not operational or were not used by potato growers or processors. 

The programs excluded include Crop Credit Associations, Washington Land Bank, National Small 

Business Loan Program, Economic Development Authority programs, International Trading Partners 

Program, International Marketing Program for Agricultural Commodities, Sale or Pledge of Bonds to 

the U.S. Government, and Receipt of Aid from the Federal Government for Diking and Drainage. 

2-67 
the tax. 160 Inventories of agricultural products produced for sale, as well as inventories 

produced for resale by businesses, are exempt from property tax. 161 

Irrigation assistance 

Irrigation water 

According to the Washington State Potato Commission, irrigation water is supplied to potato 

and other growers by direct diversion of surface water, pumping of groundwater, or delivery by 

local inigation Districts. Farmers who divert or pump water bear all the costs associated with 

delivery of that water to cropland. Irrigation Districts deliver water to land within the District's 

boundaries through a system of canals or pipes. Districts get their water either by direct 

diversion from surface water or from irrigation works constructed and operated by the Bureau 

of Reclamation. Irrigation District patrons repay the cost of construction on the works 

developed by the Bureau of Reclamation, as well as the costs associated with the maintenance 

and operation of the District's systems.162 

Income from sale of electricity 

Three of the· irrigation Districts that operate within the boundaries of the Columbia Basin 

Project have hydroelectric generating facilities. Revenue generated by these facilities is used 

to partially offset the cost of lifting water from behind the Grand Coulee Dam at the project's 

source. 

General infrastructure capital costs 

The Columbia Basin has benefited from water control provided by dams on the Columbia River. 

The cost of the dams and other related infrastructure has been born by the U.S. and Canadian 

Federal Governments, partially under the Columbia River Treaty.163 These dams prevent 

flooding during the spring and provide irrigation water during the summer and fall. According 

to the Washington State Potato Commission, growers with lands within the Columbia Basin 

Project are repaying the capital costs of project construction over a SO year repayment period.164 

160 Information received via facsimile from the Washington State Potato Commission, May 27, 

1997. 

161 Ibid. 

162 Ibid. 163 Canadian Embassy, prehearing brief. 164 Information received via facsimile from the Washington State Potato Commission, May 27, 

1997. 

2-68 
Research 

The State of Washington sponsored 12 ongoing potato research programs and began 12 new 

ones in the FY 1995/96, with a total spending level of $534,000. Some of the larger projects 

were for storage research, testing clones and cultivars, nematode management, integrated pest 

management, and nitrogen management. Most of this research is through Washington State 

University. 165 

State Programs-Maine 

Credit/Financial Assistance 

Potato Marketing Improvement Fund 

The Potato Marketing Improvement Fund (PMIF) provides direct, fixed rate loans to potato 

growers and packers to help finance the construction of new storage or packing facilities, the 

modernization of existing facilities, or the acquisition and installation of packing equipment.166 

The PMIF started from a State bond of $5,000,000 in 1980 and operates as a revolving loan 

:fimd with :financing from local banks ( 45 percent), from the State of Maine through the Finance 

Authority of Maine (FAME) ( 45 percent), and from participating growers ( 10 percent).167 Any 

individual or entity storing or packing Maine potatoes is eligible. Currently, all loans for new 

facilities and packing equipment must be repaid over 15-20 years, while loans for storage 

retrofit must be repaid over 10 years. All loans carry a fixed interest rate of 5 percent.168 PMIF 

may finance up to 45 percent of total project costs for new facilities (50 percent for projects 

owned by two or more growers) and 55 percent for storage retrofit. All funded storages must 

meet strict standards set by the Potato Marketing Improvement Committee. 

By end 1996, the PMIF had financed 242 projects, including 18 new projects in that year. 169 

Of these total projects, 125 were for new storages, 26 were for packing equipment, 18 were for 

packing sheds, and 73 were for retrofitting storage and packing facilities. By end 1996, total 

PMIF financed storage capacity amounted to 7. 9 million cwt. 

Provisions under the P~ allow grants from interest earned on cash balances to individuals and 

organizations for research on potato storage and handling technologies. In 1994 a grant was 

approved for the Maine Seed Potato Board for research on packing techniques and construction 

165 Information received via facsimile from the Washington State Potato Commission, Mar. 3, 

1997. 166 PMJF, 1996 Annual Report (Augusta: Maine Department of Agriculture, Food, and Rural 

Resources, 1997). 167 Based on information supplied to USITC staff by the Maine Potato Board, dated June 2, 1997. 168 PMJF, 1996 Annual Report (Augusta: Maine Department of Agriculture, Food and Rural 

Resources, 1997). 

169 Ibid. 

2-69 
of a new packing shed at the Porter Seed Fann. Disbursement was spread equally over FY s 

1994 and 1995.170 

Agricultural Marketing Loan Fund 

.An Agricultural Marketing Program bond issue was passed by voters in the State of Maine in 

November 1996. The bond issue supported the creation of the Agricultural Marketing Loan 

Fund (AMLF), a revolving loan fund for agricultural enterprises which will be administered 

through F AME.111 The AMLF provides direct loans for design, construction, or improvement 

of storage, packing, and marketing facilities; renovation or acquisition ofland, buildings and 

equipment used in COilllection with agricultural enterprises; and for purchase and installation of 

machinery or equipment. The AMLF will provide loans for a term of up to 25 years an interest 

rate equal to the prime rate less 2 percent, provided that rate is no less than 5 percent or greater 

than 8 percent. 172 

Since the AMLF has just recently been approved, there is. no information on its use by 

individual growers or processors.173 McCain Foods in Easton, Maine is planning to provide 

matching low-interest loans to participating potato growers that produce raw potatoes on 

contract to McCain.114 The purpose of McCain's program is to provide matching assistance 

for purchase of irrigation equipment similar to the type of assistance it currently provides to 

New Brunswick potato growers (see the section on New Brunswick Provincial programs in 

chapter 4). 175 

Processor assistance 

Financial assistance has been recently provide.d to a potato processing plant, "Naturally 

Potatoes" in Maine.176 This company is building a $14 million plant for production of chilled 

potato products. The plant received an 80-percent loan guarantee on $8.6 million of the $14 

million plant cost through the USDA. The plant also received $400,000 through a Community 

grant, and $1.4 million in tax investment financing.177 The plant owners paid $2.0 million for 

their own wastewater treatment system. The plant will use 5,000-10,000 acres of potatoes. 

m~ . 171 Information on the AMLF was provided to USITC staff by the Maine Department of 

Agriculture, Food and Rural Resomces on June 19, 1997. 172 Ibid. 173 It was reported that I loan was approved dming the month of June, but not to a potato grower. 

FAME official, telephone conversation with USITC staff, June 24, 1997. 174 O'Melveny & Myers, LLP, Counsel to McCain Foods, posthearing brief, May 27, 1997. The 

information supplied in this posthearing brief indicates that efforts by McCain Foods in Easton, Maine 

were instrumental in the creation of the AMLF. 175 Ibid. 

176 Interview with Naturally Potatoes officials by USITC staff, May 9, 1997. 177 Under the tax investment financing, the owners pay taxes on the valuation of the plant, but part 

of the taxes are dedicated to paying off the $1.4 million. 

2-70 
Finance Authority of Maine 

FAME is an independent State agency that provides both direct loans and loan guarantees 

covering up to 90 percent of loans up to $7 million. Direct loans are provided at interest rates 

higher than conventional commercial rates (prime plus 4 percent) to encourage borrowers to 

seek other modes of financing. 178 The Linked Investment Program provides operating loans to 

Maine farmers for purchase of production inputs at 2 percent below current deposit rates. 

Potato growers have used 80-90 percent of the $4 million provided by the State of Maine 

annually for this program.179 

Crop Development/Inspection 

Potato Quality Inspection 

The Maine Bag Program is a trademark program for potatoes packed as better than U.S. #1 

grade potatoes.180 Growers using the program are charged 2 cents per cwt of potatoes less for 

inspection to encourage growers to pack in this pack which has the outline of the State of Maine 

in its trademark:. The State of Maine absorbs the 2-cent difference in the inspection cost through 

a State appropriation of $150,000 -$200,000 per year. The rest of the cost is born by growers 

not packing in this bag. 

Since August 1996 all Maine potatoes must be inspected whether the bags are packed in the 

trademark program bag or in another brand. Potato growers are required to pay for this 

mandatory inspection. 

Division of Plant Industry 

The Division of Plant Industry in the Maine Department of Agriculture, Food and Rural 

Resources enforces statutes relating to the certification of seed potatoes, and it operates 

programs to ensure that Maine seed producers have an adequate supply of foundation seed 

potatoes for commercial use.181 1be Division provides rouging services, a Florida test for virus 

levels at a State-owned farm in Homestead, Florida, and a seed certification program, all of 

which are financed through grower fees. 182 

The Division of Plant Industry operates the Porter Seed Farm, a State-owned farm producing 

nuclear seed which is sold to commercial seed potato farmers for further propagation. The farm 

178 Telephone interview with FAME official by USITC staff, June 24, 1997. The official indicated 

that FAME direct loans and loan guarantees have been used by potato growers and processors. 179 Based on infonnation supplied to USITC staff by the Maine Potato Board. 180 Ibid. 181 Canadian Embassy, prehearing brief. 182 Based on information supplied to USITC staff by the Maine Potato Board. 

2-71 
is :financed through its sales of seed to farmers as well as through an annual State appropriation 

of about $235 ,000.183 

Aroostook Water and Soil Management Board 

This Board received Federal research grants of $182,909 and $252,000 in 1992/93 and 

1993/94, respectively, for research into the proper construction of and feasibility of irrigation 

in Aroostook County.184 

Research 

The University of Maine conducts irrigation research benefiting potatoes and other crops. This 

research also benefits from a grant from McCain Foods. The University also sponsors, through 

the State of Maine, the State of Maine Breeding Program for seed potatoes, which also benefits 

from a contribution from McCain Foods.185 

State Programs-North Dakota 

The North Dakota Agricultural Products Utilization Commission (APUC) made a number of 

grants benefiting the potato industry in 1997. These include, $83,000 for agricultural research 

and marketing grants, $45,000 to American Gold Grower Cooperative to complete feasiblity, 

engineering and environmental studies for a proposed potato processing plant, $5,000 to Valley 

Pocket Foods to explore the market feasibility of producing perogies, and $18,840 for the High 

Value Irrigated Crops Task Force to partially fund a coordinator.186 

183 Division of Plant Industry official, telephone interview by USITC staff, JlUle 19, 1997. 184 Canadian Embassy, prehearing brief and ibid. 185 McCain Foods, posthearing brief. 186 Canadian Horticultural Council, posthearing brief, Apr. 21, 1997, exhibit 34. 

2-72 
CHAPTER3 

Trade Flows 

Overall U.S. Trade Flows 

U. S. imports and exports of fresh potatoes and processed potato products both increased over 

the 1992-96 period. Although exports were more than double the value of imports, imports 

grew at a faster rate. Canada and Japan have remained the primary U.S. trading partners for 

such products over the 1992-96 period, with Japan accounting for 35 percent, by value, of U.S. 

exports or $212millionin 1996 (table 3-1) and Canada supplying 91 percent, by value, of U.S. 

imports or $220 million in 1996 (table 3-2). Canada, the second-leading export market in terms 

of value, accounted for an average of 20 percent of the value of U.S. exports or $120 million 

in 1996. Japan's share of the total value of U.S. exports was higher than Canada's share over 

the period, due in part to the composition of exports being mainly value-added processed potato 

products. Canada accounted for a greater share of the total quantity of U.S. exports, with most 

of the volume accounted for by fresh potatoes. A notable trend in U.S. exports to these trading 

partners was that while absolute quantity and value of exports to each country have been 

increasing, Canada,s share ofU.S. exports has been declining, both in quantity and value, while 

Japan's share has been increasing. 

Over the 1992-96 period, total U.S. imports have been supplied primarily by Canada. Exports 

have been principally to Japan and Canada, with significant amounts also exported to a number 

of other countries. The number of U.S. export markets has increased over the period, with 

Japan, Canada, and Mexico, together, accounting for 63 percent of total export value in 1992 

but falling to 59 percent in 19%. Although Mexico was the third-largest market for U.S. 

exports over the period, it represented only 5 percent of total U.S. exports in 1996. By 

comparison, the top four Asian markets (after Japan) together accounted for 15 percent of the 

value of U.S. exports over the 1992-96 period (table 3-1). 

U.S. Global Trade Balance 

The United States has maintained a global trade surplus in fresh potatoes and processed potato 

products since 1992. The total trade balance in all products rose by nearly two-thirds from 

$264 million in 1992 to $437 million in 1995, before dropping back to $371millionin1996 

(table 3-3). The U.S. trade surplus was greatest with Japan, improving by 93 percent from the 

1992 level of $110 million to $212 million in 1996 (table 3-3). The U.S. trade balance with 

Canada, by comparison, fell steadily from a surplus of$26 million in 1992 to a deficit of $100 

million in 1996. Other important U.S. trading partners in 1996 included Belgium, Mexico, 

South Korea, the Philippines, Hong Kong, and Taiwan. 

3-1 
Table 3-1 

Potatoes:1 U.S. exports of domestic merchandise, by principal markets, 1992-96 

Market 

Japan ........... . 

Canada ........... . 

Belgium ........... . 

Mexico ............ . 

South Korea ........ . 

Philippines ......... . 

Hong Kong ......... . 

Taiwan ............ . 

All other ........... . 

Total ........... . 

Japan ............. . 

Canada ........... . 

Belgium ........... . 

Mexico ............ . 

South Korea ........ . 

Philippines ......... . 

Hong Kong ......... . 

Taiwan ............ . 

All other ........... . 

Total ........... . 

1992 

327,228 

544,984 

4 

69,377 

36,979 

16,543 

30,194 

26,304 

141.809 

1.193.423 

109,800 

104,193 

4 

16,937 

14,891 

10,875 

10,571 

17,947 

79.84, 

365.060 

1993 1994 1995 

Qyf!ntity (1.000 pounds) 

351,262 429, 185 504,393 

540,059 646,798 566,633 

71 24,063 28,526 

86,441 113,759 78,018 

39,679 44,328 49,536 

20,526 29,651 36,575 

39,580 43,747 57,785 

33,968 38,903 44,210 

167.453 206.242 363.671 

1279.039 1,576.678 658,321 

'.ialue ( 1,000 dollars) 

124,621 191,183 212,024 

110,622 120,128 111,040 

85 37,949 48,536 

21,797 36,782 16,755 

17,119 16,820 19,990 

13,188 17,583 17,794 

17,266 20,413 21,273 

26,893 27,094 22,178 

103,480 141.573 196.575 

434.987 571 ,575 617.630 

Unit yalue ( dollars per pound) 

1996 

521,106 

588,050 

33,833 

116,345 

66,296 

45,388 

65,060 

48,642 

251.554 

627,118 

212,274 

119,608 

49,903 

29,951 

28,027 

23,542 

22,630 

20,177 

156.650 

612.860 

Change 

1996 over 

1992 

Percent 

59 

8 

(2) 

68 

79 

174 

116 

85 

77 

45 

93 

15 

(2) 

77 

88 

117 

114 

12 

96 

68 

Japan I I I. I I. I •• I I I. $0.34 $0.35 $0.45 $0.42 $0.41 21 

Canada . . . . . . . . . . . . .19 .20 .19 .20 .20 5 

Belgium . . . . . . . . . . . . 1.10 1.20 1 .58 1.70 1.45 32 

Mexico . . . . . . . . . . . . . .24 .25 .32 .21 .26 8 

South Korea . . . . . . . . . .40 .43 .38 .40 .42 5 

Philippines . . . . . . . . . . .66 .64 .59 .49 .52 (21) 

Hong Kong . . . . . . . . . . .35 .44 .47 .37 .35 o 

Taiwan . . . . . . . . . . . . . .68 .79 .70 .50 .41 (40) 

All other . . . . . . . . . . . . .56 .62 .61 .50 .55 (3) 

Average... . . . . . . . .31 .34 .36 .36 .35 13 

, Schedule B codes 0701.10, 0701.90, 0710.1 o, oi12.10, 0712.90.30, 1105.10, 1105.20, 1108.13, 2004.1 o, and 

2005.20. 2 Change greater than 5,000 percent. 

Note.-Because of rounding, figures may not add to the totals shown. Unit values and percent changes calculated 

using unrounded data. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

3-2 
Table3-2 

Potatoes: 1 U.S. imports for consumption, by principal sources, 1992-96 

Source 

Canada 111 1 1 11 ........ . 

The Netherlands ........ . 

Germany .............. . 

Denmark .............. . 

All other ............... . 

Total .............. . 

Canada .. 1 ••••••••••••• 

The Netherlands ........ . 

Germany .............. . 

Denmark .............. . 

All other ............... . 

Total .............. . 

1992 

602,149 

44,627 

16,552 

29,618 

716Q6 

700.552 

78,163 

8,485 

2,906 

3,993 

7.192 

1993 1994 1995 

Quantity ( 1 ,000 pounds) 

1,008,224 955,587 1,044,754 

60,945 56,086 51, 136 

28,306 24,694 33,850 

25,942 15,465 13,720 

11 A98 5.744 5.639 

111341915 1 ,057,576 111491098 

Value (1,000 dollars) 

131,357 143,984 156,521 

9,401 7,599 9,326 

4,017 4,127 8,734 

3,022 2,020 2,341 

61005 3.975 3,794 

153,S01 161 .705 1801716 

Unit value (dollars per pound) 

Change 

1996 over 

1996 1992 

Percent 

1,447,087 140 

42,483 5 

27,128 64 

15,220 (49) 

5A58 (28) 

115371377 119 

219,690 181 

9,543 12 

6,973 140 

3,240 (19) 

21603 (63) 

2421049 140 

Canada . . . . . . . . . . . . . . . . $0.13 $0.13 $0.15 $0.15 $0.15 15 

The Netherlands . . . . . . . . . .19 .15 114 .18 .22 16 

Germany . . . . . . . . . . . . . . . .18 .14 .17 .26 .26 44 

Denmark .. . .. .. .. .. .. .. .13 .12 .13 .17 .21 62 

All other . . . . . . . . . . . . . . . .93 ,52 .69 .67 .48 (48) 

Average . . . . . . . . . . . . . .14 ,14 .15 .16 .16 14 1 HTS numbers 0701.10, 0701.90, 0710.10, 0712.10, 0712.90.30, 1105.10, 1105.20, 1108.13, 2004.10, and 

2005.20. 

Note.-Because of rounding, figures may not add to the totals. shown. Unit values and percent changes calculated 

using unrounded data. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

3-3 
Table 3-3 

Potatoes: 1 U.S. trade balance, by principal partners, 1992-96 

Change 

1996 over 

Partner 1992 1993 1994 1995 1996 1992 

Quanti!l ( 1,000 e,ounds} Percent 

Japan ............ 327,151 351,176 429,019 504,274 520,958 59 

Belgium .......... (154) (627) 23,277 28,258 32,840 (2) 

Mexico ........... 65,277 84,282 112,772 77,465 116,345 78 

South Korea ....... 36,953 39,626 44,311 49,527 66,254 79 

Philippines ........ 16,543 20,526 29,644 36,575 45,388 174 

Hong Kong ........ 30,173 39,440 43,627 57,716 64,936 115 

Taiwan ........... 26,217 33,828 38,811 44,035 48,468 85 

Germany ......... (5,510) (27,611) (24, 115) (32,652) (26,555) (382) 

The Netherlands ... (41,753) (57,992) (36,758) (14,035) (39,694) 5 

Canada o I 0 I 0 0 o Io o (57,165). (468,164) (308,789) (478,121) (859,037) (1,403} 

All other .......... 9§,139 129,641 167,302 307,206 2~8,996 141 

World .......... 492,871 144,124 519,101 580,248 198,897 (60) 

Value ( 1,000 dollars} 

Japan . . . . . . . . . . . . 109,694 124,467 190,882 211,800 212,044 93 

Belgium . . . . . . . . . . (55) (12) 37,817 48,435 48,632 (

2

) 

Mexico . . . . . . . . . . . 11,158 17,635 34,588 15,569 29,951 168 

South Korea....... 14,881 17,081 16,810 19,983 27,998 88 

Philippines . . . . . . . . 10,875 13,188 17,579 17,794 23,542 116. 

Hong Kong........ 10,560 17,209 20,357 21,219 22,556 114 

Taiwan . . . . . . . . . . . 17,889 26,762 27,039 22,067 20,071 12 

Germany . . . . . . . . . 434 (3,368) (3,686) (8, 184) (6,719) {1,647) 

The Netherlands . . . (7,626) {7,852) 1,055 3,697 (8,412) (10) 

Canada . . . . . . . . . . 26,030 {20,735) (23,856) (45,482) (100,082) (484) 

All Other.......... 70,570 96,810 91,285 130.015 101.229 43 

World.......... 264.410 281.186 409.871 436,914 370,811 40 1 HS codes 0701.1 O, 0701.90, 0710.1 o, 0712.1 O, 0712.90.30, 1105.10, 1105.20, 1108.13, 2004.1 o, and 2005.20. 2 Change greater than 5,000 percent. 

Note.-Because of rounding, figures may not add to the totals shown. Percent changes calculated using unrounded 

data. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

On an individual commodity basis, the United States held a global trade surplus in value for all 

major potato categories, except fresh seed potatoes and potato starch, during 1992-96. The 

surplus was greatest for other processed potatoes (mainly potato chips) at $186 million in 1996, 

followed by frozen processed potatoes (mainly french fries) at $152 million and potato flour and 

meal at $43 million (table 3-4). The surplus increased for each of these categories during the 

1992-96 period. On a commodity basis, the largest declines in the U.S. global trade balance 

during the period occurred for fresh table stock potatoes and fresh seed potatoes. 

3-4 
Table 3-4 

Potatoes:1 U.S. global trade balance, by principal items, 1992-96 

Change 

1996 over 

Item 1992 1993 1994 1995 1996 1992 

Quant~ (1,000 g,ounds} Percent 

Primary products: 

Frozen processed potatoes 2 253,944 213,122 307,396 454,098 376,977 48 

Fresh table stock potatoes ..... 226,377 (34,751) 214,472 77,584 (126,756) (156) 

Fresh seed potatoes .......... (90,025) (138,485) (202,256) (178,513) (249,653) (177) 

Other: 

Other processed potatoes 3 ••.• 95,354 128,619 193,540 183,656 160,796 69 

Potato flour and meal 4 •••••••• 71,923 60,244 75,195 103,833 82,786 15 

Other frozen potatoes ......... 14,248 24,165 21,015 25,076 26,314 85 

Dried potatoes ................ 13,228 14,264 8,293 14,150 13,208 (5) 

Potato starch ................ '96,1Z7l (123,054) (98,553} (99,636} (84,776} 8 

Total o o' 0 0 0 I 0 o o o o o' 0 o 0 0 o o 4i~,871 144,124 519,101 580,248 198,897 (60) 

Value {1,000 dollars} 

Primary Products: 

Frozen processed potatoes .... 98,085 90,060 128,477 171,763 151,574 55 

Fresh table stock potatoes ..... 45,430 30,125 43,801 39,316 15,386 (66) 

Fresh seed potatoes .......... (4,755) (8,704) (18,467) (12,869) (21,480) (352) 

Other: 

Other processed potatoes . . . . . 102,734 142,292 225,086 198,763 185,996 81 

Potato flour and meal . . . . . . . . . 25,284 26,202 31 ,426 42,887 43,098 70 

Other frozen potatoes . . . . . . . . . 4,625 8,152 7,302 8,263 7,094 53 

Dried potatoes . . . . . . . . . . . . . . . 7,768 9,543 5,530 6,544 7,001 (10) 

Potato starch . . . . . . . . . . . . . . . . (14,761) (16,483) (13,284} (17,752} (17,858}. 21 

Total . . . . . . . . . . . . . . . . . . . . 264.410 281,186 409,871 436,914 370,811 40 1 HTS 0701.10, 0701.90, 0710.10, 0712.10, 0712.90.30, 1105.10, 1105.20, 1108.13, 2004.10, and 2005.20. 2 HTS number 2004.1 O; other potatoes, prepared or preserved, frozen (includes frozen trench fries). 3 HTS number 2005.20; other potatoes, prepared or preserved, not frozen (includes potato chips). 4 HTS number 1105; also includes flakes, granules, and pellets. 5 Decrease of less than 0.5 percent. 

Note.-Because of rounding, figures may not add to the totals shown. Percent changes calculated using unrounded 

data. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

U.S. Global Imports 

Principal fresh potatoes and processed potato products imported into the United States in 1996 

included frozen processed potatoes (mainly frozen french fries) valued at $126 million or 52 

percent of total potato import value, table stock potatoes valued at $63 million or 26 percent of 

the total, and fresh seed potatoes at $27 million or 11 percent (table 3-5). U.S. imports of these 

products rose dramatically during 1992-96, with frozen processed potatoes rising 131 percent 

in quantity and 164 percent in value, fresh table stock potatoes rising 153 percent in quantity 

and 219 percent in value, and fresh seed potatoes increasing 131 percent in quantity and 225 

percent in value during the period. 

3-5 
Table3-5 

Potatoes: 1 U.S. imports for consumption, by principal items, 1992-96 

Change 

1996 over 

Item 1992 1993 1994 1995 1996 1992 

Quant~ { 1,000 gpunds) Percent 

Primary products: 

Frozen processed potatoes 2 .. 195,565 289,389 308,986 354,077 452,699 131 

Fresh table stock potatoes .... 273,512 541,377 405,895 458,921 690,761 153 

Fresh seed potatoes ......... 128,070 171,199 236,909 225,940. 295,695 131 

Other: 

Potato starch ............... 95,597 125,764 100,435 103,220 89,816 (6) 

Other processed potatoes 3 •••• 5,770 3,489 2,055 1,349 3,013 (48) 

Potato meal and flour 4 ....... 1,699 2,412 2,349 4,405 3537 108 

Other frozen potatoes ........ 64 1,068 660 920 1,559 2,348 

Dried potatoes .............. 277 217 288 266 297 7 

Total potatoes ............ 700,552 1,134,915 11057,576 1,149,098 1,537,377 119 

Value {1,000 dollars) 

Primary products: 

Frozen processed potatoes 47,910 72,184 78,468 98,608 126,307 164 

Fresh table stock potatoes .... 19,784 45,493 42,632 39,158 63,039 219 

Fresh seed potatoes ......... 8,288 12,060 22,028 17,487 26,948 225 

Other: 

Potato starch ............... 16, 191 17,532 14,047 19,289 19,941 23 

Other processed potatoes .... 7,570 5,065 3,032 1,919 2,663 (65) 

Potato flour and meal ........ 717 1,007 1,098 3,573 2192 205 

Other frozen potatoes ........ 30 347 173 470 755 2,421 

Dried potatoes .............. 160 115 226 211 204 28 

Total potatoes ............ . t00,6SO 1S3,801 161 z705 180z716 242,049 140 

Unit Valu~ (dollars g_er g_ounf!i 

Primary products: 

Frozen processed potatoes $0.24 $0.25 $0.25 $0.28 $0.28 14 

Fresh table stock potatoes .... .07 .08 .11 .09 .09 26 

Fresh seed potatoes ......... .06 .07 .09 .08 .09 41 

Other: 

Potato starch ............... .17 .14 .14 .19 .22 31 

Other processed potatoes .. 1.31 1.45 1.48 1.42 .88 (33) 

Potato flour and meal 0 I 0 o' o o o .41 .41 .41 .61 .54 32 

Other frozen potatoes ........ .47 .32 .26 .51 .48 3 

Dried potatoes .............. .58 .53 .79 .79 .69 19 

Average all products ....... .14 .14 .15 .16 .16 14 1 HTS numbers 0701.10, 0701.90, 0710.10, 0712.10, 0712.90.30, 1105.00, 1108.13, 2004.10, and 2005.20. 2 HTS number 2004.1 O; other potatoes, prepared or preserved, frozen {includes frozen trench fries). 3 HTS number 2005.20; other potatoes, prepared or preserved, not frozen (includes potato chips). 4 HTS number 1105; also includes flakes, granules, and pellets. 

Note.-Because of rounding, figures may not add to the totals shown. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

3-6 
U.S. Global Exports 

Total U.S. exports of fresh potatoes and processed potato products rose 46 percent in quantity 

and 68 percent in value during 1992-96, reaching 1.7 billion pounds, valued at $613 million, 

in 1996 (table 3-6). The increase was paced by substantial increases in exports of value-added 

processed potato products such as frozen french fries and milled potato products. 1 U.S. exports 

of fresh potatoes and processed potato products went to 135 different markets during 1992-96, 

with exports to the top two markets together accounting for over 55 percent of the total export 

value. The top two export markets in 1996 included Japan, which accounted for 35 percent by 

value of the total, and Canada, which accowited for 20 percent (table 3-1). During the 1992-96 

period, Asian markets exhibited the highest growth rate of all markets for U.S. exports. The 

Philippines and Hong Kong each expanded by over 100 percent during the period, followed by 

Japan and South Korea which expanded 93 and 88 percent, respectively (table 3-1). 

The top three potato exports by value over the 1992-96 period included frozen processed 

potatoes, (mainly :french fries) other processed potatoes (especially potato chips) and fresh table 

stock potatoes. Over the 1992-96 period, frozen processed potatoes grew in value by 90 percent 

to $278 million in 1996, other processed potatoes grew 71 percent to $189 million, and table 

stock potatoes grew by 20 percent to $78 million (table 3-6). Other product categories showing 

significant growth included potato flour and meal2 and other frozen potatoes, both of which 

outpaced the 68-percent average growth rate for all fresh potatoes and processed potato 

products during the period. 

Exports of frozen french fries, the leading processed potato product exported from the United 

States ID. recent years, were valued at $265 million in 1996, an increase of 93 percent over the 

1992 level (table 3-7).3 The principal U.S. export markets for frozen french fries in 1996 

included Japan, 53 percent, South Korea, 7 percent, Hong Kong, 6 percent, and Taiwan, Canad~, 

and the Philippines with 4 percent each. Growth in such exports was fueled primarily by rising 

consumer incomes, expanding demand in fast-food and other restaurants located in those 

countries, and by assistance provided by the Market Access Program of the U.S. Department 

of Agriculture. 4 

Potato chips are the second leading processed potato product exported by the United States. 

Potato chip exports totaled $159 million in 1996, an increase of 68 percent since 1992 (table 

3-8).5 The primary U.S. export markets for potato chips in recent years were Belgium and 

Japan, with growth in each country rising over 1,000 percent in value from 1992 to 1996. 

1 Includes flour. meal, flakes, granules, pellets, and starches. 

2 Includes flour, meal, flakes, pellets, and granules. 

3 An expanded version of table 3-7, including quantity and unit value data, appears in appendix D. 4 U.S. Department of Agriculture (USDA), Foreign Agricultural Service (FAS), World 

Horticultural Trade and U.S. Export Opportunities, Jan. 1997. 5 An expanded version of table 3-8, including quantity and unit value data, appears in appendix D. 

3-7 
Table3-6 

Potatoes:1 U.S. exports of domestic merchandise, by principal items, 1992-96 

Change 

1996 over 

Item 1992 1993 1994 1995 1996 1992 

Quantity ( 1,000 pounds) Percent 

Primary products: 

Frozen processed potatoes 2 449,509 502,511 616,382 808,175 829,677 85 

Fresh table stock potatoes ...... 499,890 506,626 620,367 536,505 564,005 13 

Fresh seed potatoes ........... 38,044 32,714 34,652 47,428 46,043 21 

Other: 

Other processed potatoes 3 •.•••. 101,123 132,109 195,595 185,005 163,809 62 

Potato flour and meal 4 •..•••.•. 73,620 62,656 77,544 108,237 86,322 17 

Other frozen potatoes I 0 o o 'I I 0 o I 14,312 25,233 21,674 25,996 27,873 95 

Dried potatoes ................ 13,505 14,482 8,581 14,416 13,505 0 

Potato starch ................. ~.4~0 ~l09 1,882 3,584 5,040 47 

Total ...................... 1,19~,4~3 1,279,039 1,576,677 1,729,346 1,736,273 46 

Valu!i! ( 1,000 dollars} 

Primary products: 

Frozen processed potatoes 145,995 162,244 206,945 270,371 277,881 90 

Fresh table stock potatoes ...... 65,214 75,617 86,433 78,474 78,424 20 

Fresh seed potatoes ........... 3,533 3,355 3,562 4,618 5,468 55 

Other: 

Other processed potatoes o' I Io o 110,303 147,356 228, 118 200,682 188,659 71 

Potato flour and meal o 0 Io I I I 0 0 t 26,000 27,208 32,524 46,460 45,290 74 

Other frozen potatoes .......... 4,655 8,499 7,474 8,733 7,849 69 

Dried potatoes ..•............. 7,928 9,658 5,756 6,754 7,205 (9) 

Potato starch ................. J ,430 1,049 763 1,537 2,083 46 

Total ....................... ~6§,Q60 434,987 571,575 617,630 612,860 68 

Unit value {dollars e.er e.ouncfJ. 

Primary products: 

Frozen processed potatoes $0.32 $0.32 $0.34 $0.33 $0.33 3 

Fresh seed potatoes ........... .09 .10 .10 .10 .12 28 

Fresh table stock potatoes ...... .13 .15 .14 .15 .14 7 

Other: 

Other processed potatoes . . . . . . 1.09 1.12 1 .17 1.08 1.15 6 

Potato flour and meal . . . . . . . . . . .35 .43 .42 .42 .52 49 

Other frozen potatoes . . . . . . . . . . .33 .34 .34 .34 .28 {13) 

Dried potatoes . . . . . . . . . . . . . . . . .59 .67 .67 .47 .53 (9) 

Potato starch . . . . . . . . . . . . . . . . . .42 .39 .41 .43 .41 (1) 

Average.................... .31 .34 .36 .36 .35 15 

, Schedule B codes 0701.10, 0701.90, 0710.10, 0712.10, 0712.90.30, 1105.10, 1105.20, 1108.13, 2004.10, and 

2005.20. 2 HTS number 2004.1 O; other potatoes, prepared or preserved, frozen (includes frozen french fries). 3 HTS number 2005.20; other potatoes, prepared or preserved, not frozen (includes potato chips). 4 HTS number 1105; also includes flakes, granules, and pellets. 

Note.-Because of rounding, figures may not add to the totals shown. Unit values and percent changes calculated 

using unrounded data. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

3-8 
Table3-7 

Frozen trench fries: 1 U.S. exports of domestic merchandise, by principal markets, 1992-96 

Market 1992 

Japan ..................... 84,578 

South Korea ................ 10,917 

Hong Kong ................. 6,373 

Taiwan .................... 4,419 

Canada ................... 5,181 

Philippines ................. 3,289 

Malaysia ................... 3,660 

Mexico 0 0 0 0 I' 0 0 o 0 0 o'' o o 0 0 0 0 4,751 

All other Io o o 0 I 0 o' o o o' 0 0 0 o o 0 14,06~ 

Total ................... 137.236 

, Schedule B number 2004. 10.8020. 

1993 1994 1995 

Value ( 1 ,000 dollars) 

88,975 104,222 124,069 

10,592 12,797 14,673 

7,428 9,250 13,447 

5,924 7,372 9,352 

6,135 6,696 6,815 

4,634 7,275 9,681 

4,275 7,166 11,228 

6,204 9,609 5,440 

gQ,089 34,489 64,396 

154,255 198,876 259,101 

1996 

139,892 

18,442 

15,932 

11,666 

11,466 

10,683 

8,743 

8,405 

40,082 

265.310 

Change 

1996 over 1992 

Percent 

65 

69 

150 

164 

121 

225 

139 

77 

217 

93 

Note.-Because of rounding, figures may not add to the totals shown. Unit values and percent changes calculated 

using unrounded data. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

Table 3-8 

Potato chips: 1 U.S. exports of domestic merchandise, by principal markets, 1992-96 

Change 

Market 1992 1993 1994 1995 1996 1996 over 1992 

Valpe (1,000 dollars) 

Belgium . . . . . . . . . . . . . . . 4 80 37,914 48,105 45,289 

Japan . . . . . . . . . . . . . . . . . 2,010 6,795 52,442 49,437 36,502 

Canada . . . . . . . . . . . . . . . 25,487 22,087 21, 128 19,653 24,401 

Philippines . . . . . . . . . . . . . 5,529 6,793 6,998 5,234 6,743 

South Korea . . . . . . . . . . . . 3,064 5,824 3,277 4,21 O 6,259 

Taiwan . . . . . . . . . . . . . . . . 12,298 19,355 17,743 10,336 5,980 

Mexico . . . . . . . . . . . . . . . . 4,538 5,626 15,332 200 5,430 

All other . . . . . . . . . . . . . . . 41,689 63,949 45, 113 31 , 190 28,245 

Total . . . . . . . . . . . . . . . 94,618 130,509 199,947 168,365 158,849 1 Schedule B number 2005.2020 in 1992 through 1995; changed to 2005.20.0020 in 1996. 2 Greater than 5,000 percent. 

Percent 

(2) 

1 ,716 

(4) 

22 

104 

(51) 

20 

(32) 

68 

Note.-Because of rounding, figures may not add to the totals shown. Unit values and percent changes calculated 

using unrounded data. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

3-9 
U.S. potato chip exports to Canada, accounting for about 15 percent of total export value in 

1996, declined steadily during 1992-95 before rebounding somewhat in 1996. 

U.S. exports of fresh table stock potatoes, the third-leading category of U.S. potato exports, rose 

20 percent from $65 million in 1992 to $78 million in 1996 (table 3-9).6 Canada was the 

primary market for U.S. exports of fresh table stock potatoes throughout the 1992-96 period, 

accounting for 83 percent of the total in 1996. Mexico was the second-leading market but 

accounted for only 12 percent of the total in 1996. Export growth in table stock potatoes has 

been greatest in the traditionally smaller Asian markets of Singapore and Hong Kong, the Latin 

American markets of Barbados, the Dominican Republic, and Jamaica, and in Russia. 

Table 3-9 

Fresh table stock potatoes: 1 U.S. exports of domestic merchandise, by principal markets, 1992-96 

Change 

Market 1992 1993 1994 1995 1996 1996 over 1996 

Value ( 11000 dollars} Percent 

Canada o o 0 0 o' I 0 0 Io o o o 0 0 I Io o' o Io O I I 59,522 68,395 75,662 67,823 64,811 9 

Mexico ............................ 4,270 5,531 6,486 6,215 9,524 123 

Singapore o o Io I I 0 I I 0 0' Io 0' o o 0 o o o • 0 0 45 225 339 586 928 1,982 

Hong Kong ......................... 291 641 614 615 617 112 

Russia .......................... ._. 42 0 2,204 275 542 1,193 

Barbados .................. ' ...... ' 51 172 110 127 371 623 

Dominican Republic ............ ·-· ... 0 0 0 3 273 (2) 

. Jamaica 0 o 0 I 0 o o o o 0 Io o o o o 0 Io o Io o o Oto 35 68 45 129 . 256 639 

All other 0 I 0 o I I 0 0 Io Io I I Io o o o 0 o o o o-. I 0 960 586 973 2?03 11

103 15 

Total ......................•.... 65,214 75,617 861433 78z474 78,424 20 1 Schedule 8 number 0701.90. 2 Not meaningful. 

Note.-Because of rounding, figures may not add to the totals shown. Unit values and percent changes calculated 

using unrounded data. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

6 An expanded version of table 3-9, including quantity and unit value data, appears in appendix D. 

3-10 
U.S. Trade With Canada 

Trade Balance 

The U.S. trade deficit with Canada in fresh potatoes and processed potato products increased 

from the 1992 surplus of $26 million to a deficit of $100 million in 1996 (table 3-10). This 

decline has been due primarily to decreases in the trade balances of frozen processed potatoes 

(mainly french fries), fresh table stock potatoes, and seed potatoes. The U.S. trade balance with 

Canada in each of these categories worsened substantially during the period, with a deficit in 

frozen processed potatoes increasing from $42 million in 1992 to $114 million in 1996 and a 

deficit in fresh seed potatoes increasing from $5 million to $24 million during the same period. 

These were the two largest absolute deficits in 1996. The largest surplus with Canada was in 

other processed potatoes (mainly potato chips), at $33 million in 1996. However, the trade 

balance remained relatively constant or declined for most of those categories holding a surplus 

during the 1992-96 period. 

Table 3-10 

Potatoes:1 U.S. trade balance with Canada, by principal items, 1992-96 

Item 

Other processed potatoes 2 .•••••••.• 

Dried potatoes .................•.. 

Fresh table stock potatoes ......... . 

Potato flour and meal 3 .•••.••••••.• 

Potato starch .................... . 

Other frozen potatoes ............. . 

Fresh seed potatoes ............•.. 

Frozen processed potatoes 4 •••••••• 

Total .......................•.. 

1992 

29,467 

3,166 

186,486 

550 

(2,368) 

3,408 

(96,085) 

1181.789) 

. (57.165) 

1993 1994 1995 

Quantity (1,000 pounds) 

32,244 37, 168 37 ,341 

3,758 4,012 3,014 

(82,410) 153,805 15,018 

1, 136 2,263 3,048 

(2,914) (859) (4,080) 

1 ,900 (169) 738 

(148,545) (212,807) (196,330) 

(273.335) (292.203) (336,868) 

(468. 164) (308.789) (478. 121) 

Value ( 1 .000 dollars) 

1996 

36,107 

3,266 

(207,887) 

1,458 

(2,094) 

(229) 

(266,546) 

(423.0lli 

(859,0ill 

Change 

1996 over 

1992 

Percent 

23 

3 

(211) 

160 

12 

(107) 

(177) 

(133) 

(1,403) 

Other processed potatoes . . . . . . . . . . 30,525 28,731 28,934 28,249 33,132 9 

Dried potatoes . . . . . . . . . . . . . . . . . . . . 1,873 2,229 3,567 2,225 1,994 6 

Fresh table stock potatoes . . . . . . . . . . 39,812 22,920 33,043 28,711 1,772 (96) 

Potato flour and meal . . . . . . . . . . . . . . 232. 564 1,516 1,776 1,139 391 

Potato starch . . . . . . . . . . . . . . . . . . . . . {250) (300) 50 (643) 101 141 

Other frozen potatoes . . . . . . . . . . . . . . 1,556 892 25 336 (147) (109) 

Fresh seed potatoes . . . . . . . . . . . . . . . (5,27 4) (9,983) (19,507) (14,720) (23,715) (350) 

Frozen processed potatoes . . . . . . . . . (42.444) (65.787) (71.486) (91.416) (114.3511. (169) 

Total . . . . . . . . . . . . . . . . . . . . . . . . . . 26.030 (20.735) (23,856) (45.482) (100,082) (484) 1 HTS codes 0701.10, 0701.90, 0710.10, 0712.10, 0712.90.30, 1105.10, 1105.20, 1108.13, 2004.10, and 2005.20. 2 HTS number 2005.20; other potatoes, prepared or preserved, not frozen (includes potato chips). 3 HTS number 1105; also includes flakes, granules, and pellets. 4 HTS number 2004.1 O; other potatoes, prepared or preserved, frozen (includes frozen trench fries). 

Note.-Because of rounding, figures may not add to the totals shown. Percent changes calculated using unrounded 

data. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

3-11 
Import Levels and Trends 

As stated previously, Canada accounted for 94 percent by quantity and 91 percent by value of 

total U.S. imports of fresh potatoes and processed potato products in 1996. During 1992-96, 

imports from Canada rose by 140 percent in quantity and 181 percent in value, reaching 1. 4 

billion pounds valued at $220 million in 1996 (table 3-11 ). Frozen processed potatoes were the 

leading U.S. import category from Canada in 1996 at $126 million, followed by fresh table 

stock potatoes at $63 million and fresh seed potatoes at $27 million (table 3-11). The value of 

these three product categories together grew an average of 286 percent during 1992-96. 

Quantity trends followed a similar pattern as value trends. 

Average unit values for U.S. imports of most fresh potatoes and processed potato products from 

Canada increased during 1992-96, particularly for frozen processed products, fresh table stock, 

and seed potatoes. The overall average unit value for all fresh potatoes and products rose 17 

percent during the 1992-96 period. Fresh seed potatoes exhibited the highest individual product 

growth in unit value at 42 percent during the period. Fresh table stock potatoes and frozen 

processed potatoes followed at 27 percent and 14 percent growth, respectively. The average 

unit value for other processed potatoes, potato flour and meal, and potato starch all declined 

from 1992 to 1996 (table 3-11). 

Export Levels and Trends 

Since 1992, the leading U.S. potato export to Canada has been fresh table stock potatoes, which 

amounted to $65 million in 1996 and accounted for 54 percent of the total value of exports to 

Canada in that year (table 3-12). U.S. exports of table stock potatoes to Canada rose 9 percent 

by value during 1992-96. Exports of other processed potatoes (mainly potato chips) were 

valued at $35 million in 1996, amounted to 29 percent of total exports in 1996, and rose 10 

percent from 1992 to 1996. U.S. exports of frozen processed potatoes (mainly french fries) rose 

121 percent from $5 million in 1992 to $11 million in 1996, but still only accounted for a 10 

percent share of total potato export value in 1996. The increase was facilitated by the 

liberalization of Canadian packaging regulations in December 1995 that allowed the import of 

food service packages larger than standard retail packs.7 Fresh seed potatoes exported to 

Canada amounted to $3 million in 1996, up 8 percent from the 1992 level but accounting for 

only 3 percent of total 1996 exports. The average unit value for U.S. exports of all fresh 

potatoes and processed potato products to Canada remained fairly stable between during 1992-

96, varying between 19 and 20 cents per pound. 

7 USDA, FAS, "Frozen French Fry Annual," U.S. Embassy, Ottawa, No. CA6064, Oct. 18, 

1996. 

3-12 
Table 3-11 

Potatoes:1 U.S. imports for consumption from Canada, by principal items, 1992-96 

Item 1992 1993 1994 1995 1996 

Quantity (1,000 pounds) 

Frozen processed potatoes 2 1.94,822 288,594 308,436 353,493 451,902 

Frozenfrenchfries .......... 188,119 277,786 289,227 332,252 422,950 

Fresh table stock potatoes . . . . . . . 273,288 541,293 405,849 458,832 690,761 

Otherthan russet or yellow . . . 198,716 371,197 278,161 356,299 551,961 

Russet.................... 73,177 167,837 123,641 95,268 121,426 

Fresh seed potatoes . . . . . . . . . . . . 127,926 170,840 236,789 225,881 295,556 

Other processed potatoes 3 • • • • • • • 1,211 685 51 o 294 2,222 

Potato flour and meal 4 • • • • • • • • • • 1,397 2,019 1,570 1, 177 1,894 

Potato starch . . . . . . . . . . . . . . . . . . 3,324 3,986 1,873 4,690 3,488 

Frozen potatoes . . . . . . . . . . . . . . . 48 720 560 386 1, 132 

Dried potatoes . . . . . . . . . . . . . . . . . 132 87 O O 132 

Total ....................... -------------------------------------------------------------------------------~ ($02,149 1,008,224 955,587 1,044,754 1,447,087 

Value (1,000 dolfars) 

Frozenprocessedpotatoes ...... 47,624 71,922 78,182 98,231 125,823 

Frozen trench fries . . . . . . . . . . 45,895 68,841 72,252 91, 187 116,890 

Fresh table stock potatoes . . . . . . . 19,710 45,475 42,619 39,112 63,039 

Otherthan russet or yellow . . . 13,713 29,437 27,881 31,144 50,978 

Russet . . . . . . . . . . . . . . . . . . . . 5,860 15,788 14,138 7,114 10,320 

Fresh seed potatoes . . . . . . . . . . . . 8,231 11,963 21,997 17,462 26,907 

Other processed potatoes . . . . . . . 1,321 316 135 257 2,007 

Potato flour and meal . . . . . . . . . . . 598 846 620 470 808 

Potato starch . . . . . . . . . . . . . . . . . . 611 669 307 862 544 

Frozen potatoes . . . . . . . . . . . . . . . 1 8 134 124 127 508 

Dried potatoes . . . . . . . . . . . . . . . . 51 34 O O 53 

Total . . . . . . . . . . . . . . . . . . . . . . . 78,163 131,357 143,984 156,521 219,690 

~-------------------------------------------------------------------- Un it value (dollars per pound) 

Change 

1996 over 1992 

Percent 

132 

125 

153 

178 

66 

131 

83 

36 

5 

2,261 

(5) 

140 

164 

155 

220 

272 

76 

227 

52 

35 

(11) 

2,768 

6 

181 

Frozen processed potatoes . . . . . . $0.24 $0.25 $0.25 $0.28 $0.28 14 

Frozen trench fries . . . . . . . . . . .24 .25 .25 .27 .28 13 

Fresh table stock potatoes . . . . . . . .07 .08 .11 .09 .09 27 

Other than russet or yellow . . . .07 .08 .1 O .09 .09 34 

Russet . . . . . . . . . . . . . . . . . . . . .08 .09 .11 .07 .08 6 

Fresh seed potatoes . . . . . . . . . . . . .06 .07 .09 .08 .09 42 

Other processed potatoes . . . . . . . 1.09 .46 .26 .88 .90 (17) 

Potato flour and meal . . . . . . . . . . . .42 .42 .39 .40 .32 (24) 

Potato starch . . . . . . . . . . . . . . . . . . .18 .17 .16 .18 .16 (15) 

Frozen potatoes . . . . . . . . . . . . . . . .37 .19 .22 .33 .45 21 

Dried potatoes . . . . . . . . . . . . . . . . . .38 .39 .40 6 

Average . . . . . . . . . . . . . . . . . . . . .13 .13 . 15 .15 .15 17 1 HTS numbers 0701.10, 0701.90, 0710.10, 0712.10, 0712.90.30, 1105.10, 1105.20, 1108.13, 2004.10, and 

2005.20. 2 HTS number 2004.1 O; other potatoes, prepared or preserved, frozen (includes frozen trench fries). 3 HTS number 2005.20; other potatoes, prepared or preserved, not frozen (includes potato chips). 4 HTS number 1105; also includes flakes, granules, and pellets. 5 Change of less than 0.5 percent. 

Note.-Because of rounding, figures may not add to the totals shown. Unit values and percent changes calculated 

using unrounded data. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

3-13 
Table 3-12 

Potatoes:1 U.S. exports of domestic merchandise to Canada, by principal items, 1992-96 

Item 1992 1993 1994 1995 1996 

Quantity ( 1 ,000 pounds) 

Fresh table stock potatoes . . . . . . . . . . 459,774 458,884 559,655 473,850 482,874 

Other processed potatoes 2 ••• • • • • • • • 30,679 32,929 37,678 37,635 38,329 

Frozen processed potatoes 3 • . . • • • • • 13,033 15,260 16,233 16,625 28,820 

Fresh seed potatoes . . . . . . . . . . . . . . . 31,841 22,295 23,982 29,550 29,01 O 

Dried potatoes . . . . . . . . . . . . . . . . . . . . 3,298 3,846 4,012 3,014 3,398 

Potato flour and meal 4 • • • • • • • • • • • • • 1,947 3,154 3,833 4,225 3,322 

Change 

1996 over 

1992 

Percent 

5 

25 

121 

(9) 

3 

71 

Potato starch . . . . . . . . . . . . . . . . . . . . . 956 1,072 1,014 609 1,394 46 

Frozen potatoes .................. _ _.;.3 ..... 4.-5 .... 6 __ -=2•.6-=2:,.;0 ___ 3_9_1'-----'-'1 ..... 1=24..__ ___ 9_0=-2 (74) 

Total .......................... ..-5-44..,.""98-..4...__...-5_4o.::;.J.""os._9--..--6....:.46.::;.J . .._7""'9B"----=5-66_,.""63-3"----"'5""'88::.i . ..:.o5""o.__ __ --8 __ 

Value ( 1.000 dollars) 

Fresh table stock potatoes . . . . . . . . . . 59,522 68,395 75,662 67,823 64,811 

Other processed potatoes . . . . . . . . . . 31,846 29,046 29,070 28,506 35,139 

Frozenprocessedpotatoes ......... 5,181 6,135 6,696 6,815 11,466 

Fresh seed potatoes . . . . . . . . . . . . . . . 2,957 1,980 2,490 2,7 42 3, 192 

9 

10 

121 

8 

Dried potatoes . . . . . . . . . . . . . . . . . . . . 1,924 2,263 3,567 2,225 2,047 6 

Potato flour and meal . . . . . . . . . . . . . . 1,459 2,542 3,689 4, 194 2,919 100 

Potato starch . . . . . . . . . . . . . . . . . . . . . 361 368 357 219 646 79 

Frozen potatoes .................. __ 1 ... 5.._7...,4 __ .... 1_0 .... 2 ... 5 ___ .... 14 .... 9..__ __ _.4...,63..__ __ _.3 ... 6 ...... 1 (77) 

Total ................................. 1 .... 04 ......... 1.... 93...__...1 ... 1.... o ..... 62=2---_....1 ... 2.... o ..... 1=28..___...1 .... 1...,1 . ._04 ..... o..____.1.....,19 ..... ._60.-8..._ ____ 1__ 5__ 

Unit value {dollars per pound) 

Fresh table stock potatoes . . . . . . . . . . $0.13 $0.15 $0.14 $0.14 $0.13 4 

Other processed potatoes . . . . . . . . . . 1.04 .88 .77 .76 .92 (12) 

Frozen processed potatoes . . . . . . . . . .40 .40 .41 .41 .40 (

5

) 

Fresh seed potatoes ... ~ . . . . . . . . . . . .09 .09 .10 .09 .11 19 

Dried potatoes . .. .. . .. .. . . . .. . .. .. .58 .59 .89 .74 .60 3 

Potato flour and meal . . . . . . . . . . . . . . .75 . 81 .96 .99 .88 17 

Potato starch . . . . . . . . . . . . . . . . . . . . . .38 .34 .35 .36 .46 23 

Frozen potatoes ........... ; .. . . . . .46 .39 .38 .41 .40 (12) 

Average . . . . . . . . . . . . . . . . . . . . . . .19 .20 .19 .20 .20 6 1 Schedule B numbers 0701.10, 0701.90, 0710.10, 0712.10, 0712.90.30, 1105.10, 1105.20, 1108.13, 2004.10, and 

2005.20. 2 HTS number 2005.20; other potatoes, prepared or preserved, not frozen; and potato chips. 3 HTS number 2004.1 O; other potatoes, prepared or preserved, frozen, and frozen trench fries. 4 HTS number 1105; also includes flakes, granules, and pellets. 5 Increase of less than 0.5 percent. 

Note.-Because of rounding, figures may not add to the totals shown. Unit values and percent changes calculated 

using unrounded data. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

3-14 
U.S.-Canada Regional Trade 

Regional Trade 

Since 1992, regional trade in fresh potatoes and processed potato products has primarily moved 

north-south between the United States and Canada. In the Northwestern United States, potato 

trade flows are pnrnarily north into British Columbia from the United States. In the 

Northeastern United States, trade flows are primarily south through Maine and New York from 

New Brunswick, Prince Edward Island (P.E.I), and Quebec. Primarily due to transportation 

costs, significant amounts of trade between Eastern and Western U.S. or Canadian regions have 

been limited to certain products, with a much greater share of Western U.S. production sold in 

Eastern U.S. markets. Most of the U.S.-Canada trade in the Northeastern United States, is 

directed toward markets in Boston, New York, and Philadelphia. 

In 1996, the largest share of U.S.-Canada trade occurred in the Northeastem8 United States 

where 58 percent of the value ($119 million) of total imports of potatoes and processed potato 

products from Canada were entered (table 3-13).9 Of those imports, 89 percent originated in 

the Atlantic region of Canada.10 The second-highest value of trade in 1996 occurred in the 

Northwestern United States where Canada imported $57 million , or 66 percent of the value of 

its imports of fresh potatoes and processed potato products, from the United States. Of those 

imports, 78 percent entered through British Columbia and the Atlantic region. Before 1996, the 

second-highest value of trade originated in the U.S. South, with imports primarily entering 

Canada in the Central region. The third-highest value of trade between the United States and 

Canada in 1996 occurred in the Central region, where Canada exported $32 million from the 

Central and Prairie regions, collectively, to the U.S. Midwest, accounting for 83 percent of the 

Canadian exports to that region. 

8 In the Regional trade section, United States regions are defined as Northeast: CT, DE, ME, 

MD, MA, NH, NJ, NY, OH.PA, RI, VT; Midwest: IL, IN, :MI, MN, ND, WI; South: AL, AR, AZ, 

~~~~~~n~~~~~~~~m~~~~ 

Northwest: AK, CO, HW, ID, MT, NV, OR SD, UT, WA, WY. 9 Includes HTS munbers 0701.10, 0701.90, 0710.10, 1105.20, 2004.10, and 2005.20. Data not 

available for the retnai.ning HTS numbers. 10 In the Regional trade section, Canadian regions are defined as Atlantic: Newfoundland, P .E.L, 

Nova Scotia, and New Brunswick; Central: Quebec and Ontario; Prairies: Manitoba, Saskatchewan, 

and Alberta; and BC and Territories: British Columbia, Northwest Territories, and Yukon Territory. 

3-15 
Table3-13 

Potatoes: 1 Regional trade flows between the United States and Canada, 1992-96 

1992 1993 1994 1995 1996 

Canadian Canadian Canadian Canadian Canadian Canadian Canadian Canadian Canadian Canadian 

imports 2 exports 2 imports exports imports exports imports exports imports exports 

from: to: from: to: from: to: from: to: from: to: 

In thousands of dollars 

U.S. Northeast 3

: 

Atlantic4 ••••... 3,617 51,927 2,022 73,314 3,422 75,198 2,665 75,836 2,281 106,205 

Central4 ••••••• 17,614 3,853 16,351 7,961 12,217 4,993 11,219 4,999 0 12,383 

Prairies4 ...... 528 306 719 280 95 690 203 487 492 867 

BC4 •••••••••• 366 0 195 8 182 0 89 0 310 0 

Total ........ 22,125 56,085 19,287 81,565 15,917 80,880 11,778 81,322 3,084 119,455 

U.S. Midwest3

: 

Atlantic ........ 143 13,558 96 2,144 87 4,387 12 2,981 62 6,727 

Central ........ 8,354 3,624 6,419 14,311 6,132 17,818 7,280 30,633 7,015 8,570 

Prairies ... ' ... 3,676 520 2,485 1,434 2,637 2,426 2,188 3,770 3,355 24,553 

BC ........... 161 0 51 9 42 0 73 5 147 0 

Total ........ 12,335 17,702 9,051 17,899 8,898 24,630 9,554 37,390 10,580 39,850 

U.S. South3

: 

Atlantic ........ 3,451 5,716 3,319 9,395 3,583 9,488 3,028 8,299 2,094 19,164 

Central ........ 20,333 237 24,882 333 36,017 832 32,612 818 0 1,908 

Prairies ....... 3,963 463 5,611 6,356 7,295 1,305 7,042 1,679 6,399 3,975 w BC ........... 5047 208 6949 283 6 011 479 5 231 605 6 416 682 I 

- Total ........ 32,795 6,625 40,761 16,366 52,907 12,104 47,913 11,400 14,908 25,730 0-. 

U.S. Northwest3: 

Atlantic ........ 175 1,310 69 1,707 249 2,051 54 372 21,459 393 

Central ........ 5,886 147 7,032 238 1,347 471 7,864 8 6,476 2 

Prairies ....... 2,063 2,820 2,378 4,274 4,022 10,631 3,939 10,865 6,077 17,305 

BC ........... 18,206 11,965 20,636 2,218 20,096 2,558 18,125 2,689 22,519 4,104 

Total ........ 26,330 16,242 30,115 8,436 25,715 15,711 29,981 13,933 56,531 21,803 

Total trade ...... 93,585 96,654 99,214 200,266 103,437 133,325 99,226 144,045 85,175 206,838 1 Includes Candian Import and Export Classification numbers 0701.10, 0701.90, 0710.10, 0712.10, 1105.20, 2004.10 and 2005.20; 0712.10 deleted in 1996 and 

included in 0712.90. 2 Figures converted from Canadian dollars to U.S. dollars by dividing by average annual exchange rate in Canadian dollars per U.S. dollars. Average annual 

exchange rates from IMF International Financial Statistics, rl exchange rate, p. 156, Feb. 1997. 3 United States regions defined as Northeast: CT, DE, ME, MD, MA, NH, NJ, NY, OH, PA, RI, VT; Midwest: IL, IN, Ml, MN, ND, WI; South: AL, AR, AZ, CA, DC, 

FL, GA, IA, KS, KY, LA, MO, MS, NC, NE, NM, OK, SC, TN, TX, VA, WV; Northwest: AK, CO, HW, ID, MT, NV, OR, SD, UT, WA, WY. 4 Canadian regions defined as: Atlantic: Newfoundland, Prince Edward Island, Nova Scotia, and New Brunswick; Central: Quebec and Ontario; Prairies: 

Manitoba, Saskatchewan, and Alberta; BC and Territories: British Columbia, Northwest Territories, and Yukon Territory. 

Source: Compiled from official statistics of Trade Data Onllne at http://strategis.ic.gc.ca/sc_mrktVtdsVengdoc/tr_homep.html. 
Table 3-14 

Trade by Customs Districts 

Imports 

The flow of fresh potatoes and frozen processed potato products from Canada into the United 

States is concentrated among a few Customs Districts. In general, most U.S.-Canada trade in 

potatoes consists of U.S. imports of fresh potatoes and processed potato products from Canada 

destined for the Northeastern United States and entered through the Portland, Maine Customs 

District. Imports of:fresh potatoes and processed potato products through the Portland District 

amounted to $116 million and accounted for 54 percent the value of total imports in 1996. The 

second-leading district of entry in 1996 was Pembina, North Dakota with imports amounting 

to $38 million and accounting for 17 percent of total value, followed by San Juan, Puerto Rico 

at $21 million and 9 percent of total value. 

Fresh table stock potato imports from Canada have also entered primarily through Portland in 

recent years. In 1996, imports entered through Portland were valued at $34 million, an increase 

of 162 percent over the 1992 level. hnports through Portland accounted for 54 percent of the 

total value of table stock imports in 1996 (table 3-14).11 Russet potatoes accounted for 71 

percent of the total value of table stock imports through Portland in that year. Significant 

amounts of table stock imports from Canada also entered through San Juan, and were 190 

percent greater in value in 1996 than in 1992. Imports entered through Ogdensburg, New York, 

intended principally for the New York market, rose 460 percent from 1992 to 1996. 

Fresh table stock potatoes: 1 U.S. imports for consum'ption from Canada, by principal Customs 

Districts, 1992-96 

Customs District 

Portland, Maine ............... . 

San Juan, Puerto Rico ......... . 

Buffalo, New York ............. . 

Ogdensburg, New York ......... . 

Pembina, North Dakota ......... . 

Detroit, Michigan .............. . 

Great Falls, Montana ........... . 

All other ..................... . 

Total ..................... . 

, Includes HTS number 0701.90. 2 Change greater than 5,000 percent. 

1992 

12,901 

3,255 

1,246 

843 

483 

149 

17 

814 

19,710 

1993 1994 1995 

Value (1.000 dollars> 

30,019 28,633 23,505 

5,322 5,779 4,845 

4, 159 2,460 1,960 

3,262 1;816 2,361 

1,229 1 ,870 3,309 

574 587 1,301 

44 610 1,172 

864 865 658 

45.475 42.619 39, 112 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

1996 

33,844 

9,451 

6,617 

4,725 

3,847 

2,054 

1,840 

662 

63,039 

Change 

1996 over 1992 

Percent 

162 

190 

431 

460 

697 

1,276 

(2) 

(19) 

220 

11 An expanded version of table 3-14, including quantity and unit value data, appears in 

appendixD. 

3-17 
Table 3-15 

In 1996, 60 percent of the value of U.S. imports of frozen french fries from Canada entered 

through Portland, 28 percent entered through Pembina, and 10 percent entered through San 

Juan. hnports through Portland reached $70 million in 1996, an increase of 81 percent over the 

1992 level (table 3-15). 12 hnports through Pembina rose 747 percent from 1992 to 1996, 

reaching $33 million. The value of :frozen french fry imports entered through San Juan reached 

$11 million in 1996, an increase of 3 3 2 percent. Industry officials have attributed the rise in 

imports through San Juan to low transportation costs associated with shipping over water 

instead ofland.13 

Frozen trench fries:1 U.S. imports for consumption from Canada, by principal Customs Districts, 

1992-96 

Change 

1996 over 

Customs District 1992 1993 1994 1995 1996 1992 

Vi!lue (1, 000 dollars} Percent 

Portland, Maine ....... 38,638 42,543 44,643 46,184 69,867 81 

Pembina, North Dakota . 3,841 20,599 20,091 32,388 32,554 747 

San Juan, Puerto Rico 2,579 4,104 5,199 10,245 11,154 332 

Detroit, Michigan ...... 55 475 1,429 1,018 1,324 2,307 

Buffalo, New York ..... 231 363 392 841 1,084 369 

Ogdensburg, New York . 449 576 321 443 636 42 

All other ............. 103 182 177 67 270 162 

Total ............ 45,895 68,841 72,252 91,187 116,890 155 1 HTS number 2004.10.8020. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

Fresh seed potatoes from Canada have primarily entered through Great Falls, Montana since 

1992. In 1996, imports of fresh seed potatoes through this District were valued at $16 million, 

up 492 percent from 1992 levels and accounting for 59 percent of the total value in 1996 (table 

3-16) .

14 Such imports entered through Portland and Seattle also rose significantly from 1992 

to 1996. Although imports entered through the Detroit Customs District amounted to only 4 

percent of total seed potato imports in 1996, the value of those imports increased over 1,000 

percent during 1992-96. 

12 An expanded version of table 3-15, including quantity and unit value data, appears in 

appendixD. 

13 Transcript of the hearing, p. 12. 

14 An expanded version of table 3-16, including quantity and unit value data, appears in 

appendixD. 

3-18 
Table 3-16 

Fresh seed potatoes: 1 U.S. imports for consumption from Canada, by principal Customs Districts, 

1992-96 

Change 

Customs District 1992 1993 1994 1995 1996 1996 over 1992 

Va lye ( 1000 dollars} Percent 

Great Falls, Montana ....... 2,660 4,419 9,490 9,182 15,743 492 

Portland, Maine ........... 4,146 5,136 7,399 5,452 7,021 69 

Seattle, Washington ....... 1,163 1,742 2,139 2,216 2,569 121 

Detroit, Michigan .......... 104 366 2,299 207 1,195 1,049 

Pembina, North Dakota ..... 140 225 608 244 295 110 

All other ................. 18 75 62 161 85 370 

Total .......... ' ..... 8.231 11,963 21.997 17.462 26,907 227 1 HTS number 0701.10. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

Exports 

Although U.S. exports were reported through 13 Customs Districts during 1992-96, about onethird of the total value of U.S. fresh potato and processed potato product exports to Canada 

were shipped through Detroit Other important Districts for export included Seattle (16 percent 

of total value), Great Falls (14 percent), and Buffalo, New York (10 percent). In the Western 

United States and Canada, most potato trade consists of U.S. exports of fresh potatoes and 

processed potato products shipped from the United States through the Seattle Customs District 

to British Colwnbia. 

On an individual product basis, exports to Canada of fresh table stock potatoes were primarily 

through the Customs Districts of Detroit and Seattle. In 1996, exports through these two 

Districts totaled $17 million and $12 million, respectively, and accounted for 45 percent, 

collectively, of total exports of table stock potatoes (table 3-17).15 Significant amounts also 

were shipped through Great Falls and Buffalo. · 

Table 3-17 

Fresh table stock potatoes: 1 U.S. exports of domestic merchandise to Canada, by principal 

Customs Districts, 1992-96 

Change 

Customs District 1992 1993 1994 1995 1996 1996 over 1992 

V!lue (1,000 dollarsl Percent 

Detroit, Michigan ............ 11,727 15,154 17,687 19,333 16,710 42 

Seattle, Washington ..... ' ... 10,264 11,821 9,436 10,135 12,297 20 

Great Falls, Montana ......... 7,169 10, 118 11,367 9,078 9,400 31 

Buffalo, New York ........... 10,477 9,204 11,408 8,854 7,268 (31) 

Ogdensburg, New York ....... 6,534 7,869 8,755 7,010 6,266 (4) 

Portland, Maine ............. 3,971 4,114 5,819 3,918 2,916 (27) 

Pembina, North Dakota ....... 2,293 3,828 3,133 2,113 1,889 {18) 

All other ................... 7,Q87 ~.gs? 8,057 7,381 8,065 14 

Total ...... , ............ ~9.~g~ 6§,395 75,662 67,823 64,811 9 1 HTS number 0701.90. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

15 An expanded version of table 3-17. including quantity and unit value data, appears in 

appendixD. 

3-19 
Table 3-18 

In 1996, exports of frozen :french fries to Canada valued at $4 million were shipped through the 

Seattle Customs District, accounting for 32 percent of total frozen french fries export value in 

1996 (table 3-18).16 Shipments through Great Falls, valued at $3 million, accounted for 27 

percent of the total. A significant share of exports also were exported through the Pembina 

District. From 1992 to 1996, the rise in shipments through these three Customs Districts was 

substantial. 

Frozen french fries: 1 U.S. exports of domestic merchandise to Canada, by principal Customs 

Districts 1992-96 

Change 

1996 over 

Customs District 1992 1993 1994 1995 1996 1992 

Value (1,000 dollars} Percent 

Seattle, Washington ........... 1,431 1,894 2,433 2,442 3,720 160 

Great Falls, Montana ........... 395 1,040 1,004 739 3,044 671 

Pembina, North Dakota ......... 732 746 810 994 2,529 245 

Detroit, Michigan .............. 1,635 1,487 1,030 930 742 (55) 

Buffalo, New York ............. 87 35 162 152 632 627 

All other ..................... 901 934 1.257 1 558 800 (11) 

Total ..................... 5.181 6.135 6.696 6.815 11.466 121 1 HTS number2004.10.8020. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

About45 percent of the U.S. exports of fresh seed potatoes to Canada in 1996 were exported 

through the Pembina Customs District. Exports of seed potatoes through Pembina totaled about 

$1.4 million in 1996, followed by $706,000 through Portland and $420,000 through Detroit 

(table 3-19).17 The total value of U.S. exports of fresh seed potatoes, relative to exports of table 

stock and french frozen fries, was small. 

The overall growth of U.S. exports of fresh potatoes and processed potato products to Canada 

during 1992-96 through all major Customs Districts was moderate as compared with imports 

through the same Districts. Export value through Detroit rose 35 percent by value during the 

1992-96 period and included mainly potato chips and fresh table stock potatoes. Exports 

through Seattle rose 11 percent (mainly frozen french fries and fresh table stock potatoes), Great 

Falls rose 61 percent (mainly frozen french fries and fresh table stock potatoes), and exports 

through Ogdensburg rose 8 percent (with a rise in potato chips and a drop in fresh table stock 

potatoes). Exports of mainly potato chips and fresh table stock potatoes through Buffalo, 

however, fell 28 percent during the period. 

16 An expanded version of table 3-18, including quantity and unit value data, appears in 

appendixD. 

17 An expanded version of table 3-19, including quantity and unit value data, appears in 

appendixD. 

3-20 
Table 3-19 

Fresh seed potatoes:1 U.S. exports of domestic merchandise to Canada, by principal Customs 

districts 1992-96 

Change 

Customs District 1991 1993 1994 1995 1996 1996 over 1992 

V§lue ( 1,000 dollars) Percent 

Pembina, North Dakota ...... 239 287 800 486 1,432 500 

Portland, Maine ............ 1,350 721 913 1,044 706 (48) 

Detroit, Michigan ........... 743 612 412 481 420 (44) 

Great Falls, Montana ........ 130 46 177 237 403 210 

Ogdensburg, New York ...... 74 84 57 223 58 (22) 

Buffalo, New York .......... 89 30 0 19 50 (44) 

All other .................. ~~~ 2Q2 131 252 124 (63) 

Total .................. ~.~§7 1,980 2,490 2,742 3,192 8 1 HTS number 0701.1 o. 

Note.-Because of rounding, figures may not add to the totals shown. Percent changes calculated using unrounded 

data. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

Overall Canadian Trade Flows 

Canadian Global Trade Balance 

Canada has maintained a trade SUiplus in fresh potatoes and processed potato products over the 

1992-96 period, yet remains a net importer in certain product categories. During 1992-96, 

Canada was a net exporter of fresh seed potatoes and frozen processed potatoes, and became 

a net exporter of fresh table stock potatoes in 1995. During the 1992-96 period, Canada was 

a net importer of dried potatoes, potato starch, and other processed potatoes (mainly potato 

chips), and became a net importer of potato flour and meal. 18 

Canadian Global Imports 

In 1996, Canadian imports of fresh potatoes and processed potato products amounted to $116 

million, an increase of 19 percent since 1992 (table 3-20)19• The leading Canadian potato 

import in 1996 was fresh table stock potatoes valued at $59 million, followed by other 

processed potatoes at $36 million and frozen processed potatoes valued at $11 million. The 

three products of greatest import value each grew in value during 1992-96, with the greatest 

increase noted for frozen processed potatoes at 107 percent. This increase is attributable to an 

18 Also includes flakes, granules, and pellets. 

19 An expanded version of table 3-20, including quantity and unit value data, appears in 

appendixD. 

3-21 
Table 3-20 

Potatoes:1 Canadian imports for consumption, by principal items, 1992-96 

Change 

1996 over 

Item 1992 1993 1994 1995 1996 1992 

Value ( 1 ,000 dollars) 2 Percent 

Fresh table stock.............. 51,769 59,909 68,499 61,734 58,975 14 

Other processed potatoes3 • • • • • • 30,915 28,157 28,271 27,820 35,594 15 

Frozen processed potatoes 4 • • • • 5,032 5,935 6,490 6,495 10,401 107 

Potato starches . . . . . . . . . . . . . . . 3,264 4,047 5,089 4,827 3,943 21 

Fresh seed potatoes . . . . . . . . . . . 2,680 1,739 2,380 2,588 3,003 12 

Dried potatoes s.s . . . • . . . • . . . . . 1,890 2,294 3,564 2,301 1 ,782 (6) 

Potato flour and meal . . . . . . . . . . . 835 1,436 2,086 2, 173 1,911 129 

Other frozen potatoes . . . . . . . . . . 1,509 965 154 595 784 (48) 

Total . . . . . . . . . . . . . . . . . . . . . . 97,89§ 104A82 116.535 108.535 116.392 19 1 Canadian Import Classification numbers 0701.10, 0701.90, 0710.10, 0712.10, 1105.10, 1105.20, 1108.13, 

2004.10, and 2005.20. 2 Data converted from Canadian dollars to U.S. dollars by dividing by average annual exchange rate, in Canadian 

dollars per U.S. dollars. Average annual exchange rates from the International Monetary Fund (IMF) International 

Financial Statistics, Feb. 1977, rf exchange rate, p. 156. Average annual exchange rate not available for 1996. 

Estimated by USITC staff by averaging the quarterly rates for 1996. 3 CIC number 2005.20; other potatoes, prepared or preserved, not frozen (includes potato chips). 4 CIC number 2004.1 O; other potatoes, prepared or preserved, frozen (includes and frozen french fries). 5 Data not available in 1996; Canadian code 0712.1 O was discontinued and collapsed into 0712.90 (dried 

vegetables). Data estimated by USITC staff using an average of the ratio of dried potatoes to dried vegetables in 

category 0712.90 between 1992 and 1995 and multiplying the 1996 data for 0712.90 by that ratio. 6 1996 total will not match 1996 total in table 3-21 because 3-21 does not include dried potatoes. 

Note.-Because of rounding, figures may not add to the totals shown. Percent changes calculated using unrounded 

data. 

Source: Compiled from official statistics of Statistics Canada, StatsCan Online database. 

increase in frozen frcnch fried potato imports, which increased in quantity by 56 percent during 

the 1995/96 marketingyear. 20 

The United States has been by far the only significant supplier of fresh potatoes and processed 

potato products to Canada since 1992. In 1996, Canadian imports from the United States 

amounted to $109 million (table 2-21)21 . Over the 1992-96 period, the value of Canadian 

imports from the United States rose only 17 percent. Canadian imports from nearly all other 

countries rose considerably more over the 1992-96 period, but together accoWJted for less than 

5 percent of the total value of imports in 1996. 

20 "Canadian French Fries Go Down Very Well in USA," Foodnews, Nov. 22, 1996, p. 3. 

21 An expanded version of table 3-21, including quantity and unit value data, appears in 

appendixD. 

3-22 
Table 3-21 

Potatoes:1 Canadian imports for consumption, by principal sources, 1992-96 

Change 

1996 over 

Source 1992 1993 1994 1995 1996 1992 

Value ( 1,000 dollars) 2 Percent 

United States . . . . . . . . 94,251 100,062 110,989 102,808 108,626 15 

The Netherlands . . . . . 1,020 1,274 1,063 1,285 1,618 59 

Germany . . . . . . . . . . . 1,858 2,393 3,606 3,373 1,501 (19) 

Belgium . . . . . . . . . . . . 203 233 168 253 1, 160 471 

United Kingdom...... 195 174 223 296 429 120 

Jamaica . . . . . . . . . . . . O O O 145 412 (3) 

Japan . . . . . . . . . . . . . . 28 27 48 57 27 4 880 

Allother ............ 340 318 354 317 592 74 

Total . . . . . . . . . . . . . 97,896 104,48~ 116,535 108,535 114,611 17 

, Canadian Import Classification numbers 0701.10, 0701.90, 0710.10, 0712.10, 1105.10, 1105.20, 1108.13, 2004.10, 

and 2005.20. 2 Data converted from Canadian dollars to U.S. dollars by dividing by average annual exchange rate, in Canadian dollars 

per U.S. dollar. Average annual exchange rates from the IMF, International Financial Statistics, Feb. 1997, r1 exchange 

rate, p. 156 . Average annual exchange rate not available for 1996. Estimated by USITC staff by averaging the quarterly 

rates for 1996. 3 Not meaningful. 

Note.-Because of rounding, figures may not add to the totals shown. Percent changes calculated from unrounded data. 

Source: Compiled from official statistics of statistics Canada, StatsCan Online database. 

Canadian Global Exports 

Canadian exports of fresh potatoes and processed potato products were valued at $303 million 

in 1996, an increase in of 115 percent over the 1992-96 period (table 3-22)22• The United 

States has remained the primary market for Canadian exports of fresh potatoes and processed 

potato products dming the 1992-96 period, accounting for 75 percent of total Canadian potato 

exports. Other important markets for Canadian exports include Japan, Venezuela, and Cuba. 

The highest value export in 1996 was frozen processed potatoes, valued at $177 million, 

followed by fresh table stock potatoes at $77 million and fresh seed potatoes at $3 7 million 

(table 3-23)23• Exports of frozen processed potatoes increased 149 percent in value from 1992 

to 1996 and accounted for 67 percent of the total in 1996. This increase can largely be 

accounted for by Canada's expanding frozen french fried potatoes industry. Industry sources 

stated that, in the 1995/96 marketing year, the rise in exports was in large part due to sales into 

the United States, which in tum were favored by the Canadian/U.S. exchange rate and by tariff 

reductions negotiated under the North American Free Trade Agreement.24 

22 An expanded version of table 3-22, including quantity and unit value data, appears in 

appendixD. 

23 An expanded version of table 3-23, including quantity and unit value data, appears in 

appendixD. 

24 "Canadian French Fries Go Do\m Very Well in USA," Foodnews, Nov. 22, 1996, p. 3. 

3-23 
--------------------------- --

Table3-22 

Potatoes:1 Canadian exports of domestic merchandise, by principal markets, 1992-96 

Market 1992 1993 1994 1995 

Value (1,000 do/lars) 2 

1996 

Change 

1996 over 1992 

UnitedStates ............. 81,274 135,013 148,226 161,506 230,922 184 

Japan . . . . . . . . . . . . . . . . . . . 12,984 12,973 12,768 11,881 12,486 (4) 

Venezuela . . . . . . . . . . . . . . . 14,108 16,949 13,645 10,707 6,030 (57) 

Cuba ................ :... 3,790 4,401 4,484 3,610 4,945 30 

Brazil . . . . . . . . . . . . . . . . . . . 468 605 4,019 6,067 3,875 727 

Trinidad . . . . . . . . . . . . . . . . . 6,368 4,448 4,796 5,985 3,788 (41) 

Barbados . . . . . . . . . . . . . . . . 2,245 1,809 1,927 2,971 2,455 9 

Norway . . . . . . . . . . . . . . . . . . 3 o 980 3,690 2,299 (3) 

All other . . . . . . . . . . . . . . . . . 19.919 18.712 41.194 64,688 36.445 83 

Total . . . . . . . . . . . . . . . . 141.159 194,910 232.039 271.105 303.245 115 1 Canadian Export Classification numbers 0701.10, 0701.90, 0710.10, 0712.1 O, 1105.10, 1105.20, 1108.13, 2004.10, 

and 2005.20. 2 Data converted from Canadian dollars to U.S. dollars by dividing by average annual exchange rate, in Canadian dollars 

per U.S. dollars. Average annual exchange rates from IMF, International Financial Statistics, Feb. 1997, rf exchange rate, 

p. 156. Average annual exchange rate not available for 1996. Estimated by USITC staff by averaging the quarterly rates 

for 1996. 

3 Change greater than 5,000 percent. 

Note.-Because of rounding, figures may not add to the totals shown. Percent changes calculated on the unrounded 

data. 

Source: Compiled from official statistics of Statistics Canada, StatsCan Online database. 

Canadian Trade with the United States 

Export Levels and Trends 

Total exports of fresh potatoes and processed potato products to the United States increased by 

116 percent between 1992 and 1996, reaching $305 million in 1996 (table 3-23). The highest 

value export to the United States in 1996, frozen processed potatoes at $13 2 million, accounted 

for 7 5 percent of all Canadian exports of frozen processed potatoes in that year (Executive 

Summary table 4). The next leading items exported to the United States in tenns of value 

included fresh table stock potatoes ($66 million) and fresh seed potatoes ($29 million), 

accounting for 86 and 77 percent, respectively, of total Canadian exports of those commodities. 

Exports to the United States in all three leading categories increased substantially over the 

1992-96 period. 

Import Levels and Trends 

In 1996, the United States supplied 95 percent of the value of total Canadian imports of fresh 

potatoes and processed potato products. Such imports totaled $114 million in 1996, an increase 

of 15 percent during 1992-96 (table 3-21). The leading imports from the United States included 

fresh table stock potatoes at $66 million, frozen processed potatoes at $12 million, and fresh 

3-24 
Table3-23 

seed potatoes at $3 million in 1996 (Executive Summary table 4). In each of these categories, 

U.S. imports represented about 99 percent of the total import value of each commodity. hnports 

of frozen processed potatoes from the United States showed the highest growth at 133 percent 

over the 1992-96 period, while table stock potatoes and seed potatoes grew by 28 and 26 

percent, respectively. 

Potatoes:1 Canadian exports of domestic merchandise, by principal items, 1992-96 

Change 

1996 over 

Item 1992 1993 1994 1995 1996 1992 

Value (1.000 dollars)2 Percent 

Frozen processed potatoes3 • • • • 71,201 96,317 113,538 153,702 176,991 149 

Fresh table stock potatoes . . . . . 41,033 70,304 81,390 69,590 76,578 87 

Fresh seed potatoes . . . . . . . . . . 23,873 22,579 31,831 38,072 37,343 56 

Other processed potatoes4 • • • • • 1,842 639 1,393 5,424 6,729 265 

Potato flour and meal 5 • • • . . . • • 2,497 4,140 3,279 3,238 4,026 93 

Other frozen potatoes . . . . . . . . . 22 211 272 163 989 4,438 

Potato starches . . . . . . . . . . . . . . 640 688 321 896 589 (8) 

Dried potatoes6

•

7 • • . • • • • • . • • • • 52 34 16 20 1,776 243 

Total..................... 14U59 194,910 232,039 271.105 305.021 88 1Canadian Export Classification codes 0701.1 O, 0701.90, 0710.10, 0712.10, 1105.10, 1105.20, 1108.13, 2004.10, and 

2005.20. 2 Data converted from Canadian dollars to U.S. dollars by dividing by average annual exchange rate, in Canadian dollars 

per U.S. dollar. Average annual exchange rates from the IMF, International Financial Statistics rt exchange rate, p. 156, 

Feb. 1997. Average annual exchange rate not available for 1996. Estimated by USITC staff by averaging the quarterly 

rates for 1996. 3 CEC number 2004.1 O; other potatoes, prepared or preserved, frozen (frozen trench fries). 4 CEC number 2005.20; other potatoes, prepared or preserved, not frozen (includes potato chips). 5 CEC number 1105; also includes flaKes, granules, and pellets. 6 Data not available in 1996; Canadian code 0712.1 O was discontinued and collapsed into 0712.90 (dried vegetables) 

in 1996. Data estimated by USITC staff using an average of the ratio of dried potatoes to dried vegetables in category 

0712.90 between 1992 and 1995 and multiplying the 1996 data for 0712.90 by that ratio. 7 1996 total does not match 1996 total in table 3-22 because table 3-22 does not include dried potatoes in that year. 

Note.-Because of rounding, figures may not add to the totals shown. Percent changes calculated using unrounded data. 

Source: Compiled from official statistics of Statistics Canada, StatsCan Online database. 

3-25 

CHAPTER4 

Canadian Industry and Market 

Canada was the 14th-largest world producer of potatoes in 1996. Canada's share of world 

production decreased from 1.3 percent in 1992 to 1.1 percent in 1993 as a result of poor weather 

in Canada and record world production (table 4-1). Canada's share has risen to 1.4 percent of 

world production following three consecutive years of record output. 

The potato industry is the most important segment of Canada's vegetable sector, accounting for 

about 40 percent of all vegetable farm cash receipts in 1995 (Can$586 million). 1 Potatoes are 

Table4-1 

Potatoes: Canadian, U.S., and world production and area harvested, and the share of world 

production and harvested acreage accounted for by Canada and the United States, 1992-96 

Location 1992 1993 1994 1995 1996 

Production (million pounds) 

Canada ......... 7,953 7,310 8,110 8,434 8,628 

United States ..... 42,536 42,869 46,705 44,361 49,712 

World ........... 611,889 665,604 607,193 619,757 631,4021 

Share of world production (percen~ 

Canada o o 0' o 0 0 Io 1.3 1.1 1.3 1.4 1.4 

United States ..... 7.0 6.4 7.7 7.2 7.9 

Area harvested (acres) 

Canada ......... 306,400 308,600 328,000 355,400 354,600 

United States ..... 1,315,100 1,317,000 1,379,700 1,372,100 1,424,600 

World ........... 45,430,299 45,026,513 44,585,983 45,334,968 45,568,180 

Share of world harvested acreage (percen~ 

Canada 0 0 o 0 o o 0 I 0 0.7 0.7 0.7 0.8 0.8 

United States ..... 2.9 2.9 3.1 3.0 3.1 

, Total world production revised to include final U.S. production data for 1996. 

Source: United Nations Food and Agriculture Organization (FAO) Website, FAO Commodity Code 116, Fresh 

Potatoes. 

1 John Vandenberg and Gilbert Parent, "1996/97 Canadian Potato Crop Situation and Trends," 

Agriculture andAgri-Food Canada (AAFC), Mar. 4, 1997. 

4-1 
produced in every Province in Canada. Although potato production was concentrated in the 

Atlantic Provinces and Central Canada2 in recent years, Provinces in Western Canada have 

increased in importance as new markets for potatoes for processing have developed. Industry 

sources estimated that nearly one-half of Canadian potato production is processed. 3 About 40 

percent of Canadian potato output is processed into frozen french fries and other frozen potato 

products, and 10 percent into potato chips. 

Structure and Operation of the Canadian Industry 

The Canadian potato industry consists of potato growers producing for table stock, seed, and 

processing uses, shippers of table stock and seed, and processors of potato products. 

Consumers of potatoes and potato products include retailers (primarily grocery stores), hotels, 

restaurants, institutions, and food service providers that prepare food for consumption. In 

general, growers in the Atlantic Provinces and in Central Canada produce a greater share of their 

potatoes for table stock Growers in Western Canada produce a greater share of their product 

for processing, primarily frozen french fries. 

Growers 

The Canadian potato growing industry has undergone a restructuring in recent years similar to 

that which occurred in U.S. agriculture in which small, inefficient growers were replaced by 

large, highly efficient growers that are able to take advantage of economies of scale. Lower 

production costs and higher production in W estem Canada has offset higher transportation costs 

required to move the finished product from these areas to market. 

From 1981to1991, the number of potato growers in Canada declined from 7,139 with 272,728 

acres planted in 1981to4,692 with 302,435 acres planted in 1991 (table 4-2). The number of 

farms increased to 4 ,989 with 3 71,441 acres planted in 1996. The average number of acres 

planted per grower increased by 95 percent, from 38 acres in 1981to74 acres in 1996.4 In 

1996, the average potato farm size was largest in Manitoba (257 acres), followed by Prince 

Edward Island (P.E.I.) (166 acres). In 1991 (the latest year for which data are available), the 

298 largest potato farms (having at least 278 acres of potatoes each), or 6.4 percent offarms 

producing potatoes, accounted for 47 percent of the area planted to potatoes.5 

2 As noted in chapter 1, Atlantic Canada includes the Provinces of Nova Scotia, New Brunswick, 

Prince Edward Island (P.E.I.), and Newfoundland; Central Canada includes the Provinces of Quebec 

and Ontario; and Western Canada includes the Provinces of Manitoba, Saskatchewan, Alberta, and 

British Columbia. 3 O'Melveny & Myers LLP, Counsel to the Food Institute of Canada, prehearing brief, Apr. 21, 

1997,p. 1. 4 Statistics Canada, Census Overview of Canadian Agriculture: 1971-1991 and Census Overview 

of Canada Agriculture 1996. 5 Ibid. 

4-2 
Table4-2 

Potatoes: Number of Canadian farms and acreage planted, by region and Province, 1981, 1986, 

1991 and 1996 

Region and Province 1981 1986 1991 1996 

Farms Acres Farms Acres Farms Acres Farms Acres 

Atlantic Canada: 

P.E.11 ............ 823 63,878 656 64,219 613 77,809 652 108,158 

New Brunswick ... 740 53,793 547 48,466 442 50,621 439 54,064 

Other Atlantic2 •••• 538 4,796 310 4,619 314 5,053 360 5,592 

Subtotal ........ 2,101 122,467 1,513 117,304 1,369 133,483 1,451 167,814 

Central Canada: 

Quebec ......... 2,170 42,432 1,254 42,673 994 43,280 864 46,283 

Ontario .......... 1,711 39,115 1,165 34,940 1,113 35,070 , ,218 39,592 

Subtotal ........ 3,881 81,547 2,419 77,613 2,107 78,350 2,082 86,180 

Western Canada: 

Manitoba ........ 271 40,916 204 46,417 227 49,478 272 70,063 

Saskatchewan .... (3) (3) (3) (3) (3) (3) 

232 6,888 

Alberta .......... 277 16,628 267 22,450 362 28,339 456 31,488 

British Columbia .. 450 8,673 335 7,862 451 8,324 496 9,000 

Subtotal ........ 998 66,217 806 76,729 1,040 86,141 1,456 117,441 

All other .......... 159 2,497 147 3,943 176 4,461 

Total Canada ...... 7,139 272,728 4,885 275,589 4,692 302,435 4,989 371,441 

1 Prince Edward Island 2 Includes Newfoundland and Nova Scotia. 3 Included in data for total Canada. 

Source: Compiled by USITC staff from Statistics Canada, Census Overview of Canadian Agriculture: 1971-1991, Cat. 

93-348, and Census Overview of Canada Agriculture 1996, Cat. 93-356-XPB. 

The predominant types of ownership among farms producing potatoes in Canada are individuals 

and partnerships.6 In 1991, 80 percent of all fanns reporting potato production were so owned. 

Large farms (15 percent of all farms producing potatoes) are more likely to be incorporated~ 

however, most of these farms are family-owned corporations.7

•

8 

During 1992-96, Canadian acreage harvested in potatoes increased steadily from 306,000 acres 

in 1992 to 355,000 acres in 1996 (table 4-3). Acreage harvested in Atlantic Canada in 1996 

6 Glenn Zepp, Charles Plummer, and Barbara McLaughlin, "Potatoes: A Comparison of Canada -

U.S. Structure," Canadian Journal of Agricultural Economics, 1995 Special Issue, p. 168. 7 Ibid. 

8 USITC staff conversations with industry representatives. 

4-3 
Table 4-3 

Potatoes: Canadian acreage harvested, by region and Province, crop years 1992-96 

{ 1 iooo acres} 

Region and Province 1992 1993 1994 1995 1996 

Atlantic Canada: 

P.E.I. .................. 84.8 87.0 95.0 108.0 104.0 

New Brunswick ......... 50.0 51.0 52.7 55.0 53.0 

Other Atlantic 1 'o o' 0 o o' I 0 5.2 5.2 5.6 6.0 6.0 

Subtotal . ' ............ 140.0 143.2 153.3 169.0 163.0 

Central Canada: 

Quebec o I 0 0 0 Io o o 0 0 o o o o 44.5 42.5 42.5 45.2 45.0 

Ontario ................ 35.0 34.3 35.1 38.1 35.0 

Subtotal .............. 79.5 76.8 77.6 83.3 80.0 

Western Canada: 

Manitoba .............. 47.5 48.0 54.5 60.0 67.5 

Saskatchewan .......... 4.8 4.3 4.8 4.8 5.3 

Alberta 0 o 0 0 o I Io 0 I 0 0 o o 0 0 26.1 27.7 29.0 29.5 30.0 

British Columbia 0 0 0 0 o o o I 8.5 8.6 8.8 8.8 8.8 

Subtotal .............. 86 .. 9 88.6 97.1 103.1 111.6 

Total Canada ............ 306.4 308.6 328.0 355.4 354.6 

1 Newfoundland and Nova Scotia. 

Source: Compiled by USITC staff from official statistics of Statistics Canada, StatsCan Online database. 

accounted for 46 percent of the total acreage and ranged from 140, 000 acres in 1992 to 169 ,000 

acres in 1995. Owing 1992-96, acreage in Central Canada ranged from 77,000 acres in 1993 

to 83,000acresin1995. Acreagebarvested in Western Canada increased steadily from 87,000 

acres in 1992 to 112,000 acres in 1996. Central and Western Canada accounted for 22 and 32 

percent, respectively, of 1996 acreage. 

Data are not available on the acres of potatoes produced by variety in Canada. However, data 

are available on the number of acres of potatoes planted for and passing inspection for use as 

seed potatoes (table 4-4). It is estimated that 90 percent or more of the commercial potato 

4-4 
Table4-4 

Seed potatoes: Acreage approved for certification; by variety and Province, 1992-96 

New 

Alberta Manitoba Brunswick P.E.I. Quebec Saskatchewan Other Total 

1992: 

Russet Burbank ..... 2,337 4,131 2,500 22,329 60 607 31,964 

Superior ........... 24 2,351 12,530 3,142 173 18,220 

Shepody ........... 1,468 328 2,235 7,341 146 11 522 12,051 

Kennebec .......... 1,995 8,Q10 481 8 316 10,811 

All other ........... 1,608 1,799 10,167 9,129 685 322 2,037 25,747 

Total ............ 5,437 6,259 19,248 59,339 4,454 401 3,655 98,793 

1993: 

Russet Burbank ..... 2,547 3,905 2,948 6,688 89 502 16,679 

Superior ........... 4 2,270 6,276 2.408 73 11 ,031 

~ Shepody ........... 1,328 719 2,559 1,450 152 21 558 6,787 I 

Vl 

Kennebec .......... 1,663 6,215· 548 5 186 8,617 

All other ........... 1,732 2,097 11,903 10,891 544 384 1,954 29,505 

Total ............ 5,611 6,721 21,343 31,520 3,652 499 3,273 72,619 

1994: 

Russet Burbank ..... 2,277 3,616 1,505 5,044 102 449 12,993 

Superior ........... 7 1,636 7,153 2,542 66 11,440 

Shepody ........... 2,148 1,228 2,088 2,112 131 305 592 8,604 

Kennebec .......... 1,399 4,576 548 196 6,719 

All other ........... 2,520 2,396 13,359 13,704 672 820 2,221 35,656 

Total ............ 6,952 7,240 19,987 32,589 3,893 1,227 3,524 75,412 
Table 4-4-Continued 

Seed potatoes: Acreage approved for certification, by variety and Province, 1992-96 

New 

Alberta Manitoba Brunswick P.E.I Quebec Saskatchewan Other Total 

1995: 

Russet Burbank ..... 1,690 3,689 1,407 6,294 261 349 13,690 

Superior ........... 8 1,216 8,280 2,831 141 12,476 

Shepody ........... 2,031 1,495 2,385 3,101 193 342 646 10,193 

Kennebec .......... 11 1,411 4,312 514 2 145 6,395 

All other ........... 3,306 2,815 14,036 12,423 941 1,911 2,622 38,054 

Total ............ 7,046 7,999 20,455 34,410 4,479 2,516 3,903 80,808 

1996: 

Russet Burbank ..... 2,097 5,506 1, 121 4,744 457 308 14,233 

Superior ........... 10 868 4,080 2,7-46 106 8,610 

~ _Shepody ........... 2,280 2,132 2,359 2,750 390 478 538 10,927 I 

0\ 

Kennebec .......... 2 1,608 5,211 614 163 7,599 

All other ........... 3,750 2,378 12,371 10,567 963 1,476 2,331 33,836 

Total ............ 8,139 10,016 18,327 28,152 4,713 2,412 3,446 75,205 

1 Less than 0.5 acre. 

Sources: MFC, Potato Market Review, various issues, National Potato Council, 1996 Potato Statistical Yearbook (Englewood, CO: NPC, 1996); and Potato 

Certification Association of Nebraska. 
growers use certified or foundation seed when planting potatoes for commercial production. 9 

Hence, the number of acres of seed potatoes being certified is indicative of the importance 

that variety plays in overall production. In 1996, the four leading varieties-Russet 

Burbank, Shepody, Superior, and Kennebec-accounted for 55 percent of the acreage (table 

4-4). 

It is estimated that three varieties (Russet Burbank, Shepody, and Superior) accounted for about 

45 percent of Canadian potato production in 1996 (based on acreage accepted for seed 

certification in 1995). Other varieties of note were Atlantic, Chieftain, and Russet Norkotah. 

Although Kennebec is one of the top four seed varieties produced in Canada, its relative 

importance in Canadian potato production is most likely less, since it is believed that a 

significant portion of the certified Kennebec seed is exported to Europe, Cuba, Central America, 

and South America. Also, Kennebec does not have as long a storage life as Russet Burbank, 

Superior, or Shepody, and thus does not lend itself to the long-term storage and processing 

needs of manufacturers. Russet Burbank and Shepody are the main frying varieties; Snowden, 

Norchip, and Superior are the main chipping varieties; and Russets, Superior, Norland, 

Kennebec, and Yukon Gold are the leading table stock varieties.10 

The sharp drop in the number of acres of potatoes approved for certification after 1992 reflects 

the implementation by the Canadian Government of cost-recovery fees based on acres certified. 

Prior to 1993, there were no fees based on certified acreage and growers would have their entire 

producing acreage certified. 

Fresh Potato Inventories 

Fresh potato inventories may be held in on-f¥1Il storage facilities, in commercial storage 

facilities, or in processor-owned facilities. These facilities can range from simple wood or metal 

sheds to specialized storage facilities with automated handling systems and a controlled 

environment that ensures the availability of high quality potatoes. According to industry 

sources, the majority of the fresh potato inventories in Canada are held by potato growers. In 

recent years, shippers, brokers, dealers, and processors have reduced their storage holdings to 

minimum levels to reduce costs and risk from losses and spoilage. 

Canadian fresh potato inventories are at their highest levels in November (immediately after 

harvest). Inventories decline steadily each month thereafter and by June are generally nil. Fresh 

potato inventories as of November 1 decreased from 5.5 billion pounds in 1992 to 5.2 billion 

pounds in 1993, as a result of the poor harvest in that year (table 4-5). Inventory levels 

increased each year thereafter to a record 6.6 billion pounds on November 1, 1996. The 

majority of the potato stocks are held in Atlantic Canada. However, the share has been 

declining irregularly since 1992, ranging from a high of 62 percent in 1992 to a low of 51 

percent in 1996, as production has expanded in Western Canada. 

9 See the discussion of "Seed Potato Certification Regulations" for additional information on 

potato seed classes. 10 Vandenberg and Parent, "1996/97 Canadian Potato Crop Situation," p. 1. 

4-7 
Table 4-5 

Potatoes: Canadian storage holdings,1 by Province, on November 1, 1992-96 

p,ooo e,ounds~ 

Province 1992 1993 1994 1995 1996 

P.E.I. ................ · · · · · · · · · · · · · 2,059,900 1,919,800 1,895,700 2,425,900 2,209,500 

Nova Scotia ....................... 48,300 42,200 39,800 44,900 41,500 

New Brunswick • • 0 I 0 0 0 o 0 o •I 0 0 Io I Io o 1,277,500 1,074,700 1,025,900 1,028,300 1,097,800 

Quebec O I' 0 I I I I I 0 I I 0 I 0 I 0 I 0 I Io-. I,-, 672,400 578,900 567,100 621,400 676,600 

Ontario ........................... 384,900 319,700 377,100 421,100 428,300 

Manitoba ......................... 455,400 689,300 1,098,000 936,100 1,359,500 

Saskatchewan ..................... 61,800 53,900 88,000 131,300 106,900 

Alberta ........................... 402,300 415,600 506,700 540,500 550,900 

British Columbia ................... 135,300 111,000 98,400 110,700 119,700 

Total .......................... 5,497,800 5,205,100 5,696,700 6,260,200 6,59'0,700 

1 Potato holdings include both table stack and seed, and cover total stocks in P.E.I. and New Brunswick. 

Source: Compiled from official statistics of Statistics Canada, lnfoHort database. 

Processors 

Number of Processors 

The number of processors of frozen potato products is believed to be fewer than 12 firms. 

Three firms dominate the Canadian industry-McCain Foods Ltd. (McCain), Cavendish Farms 

(Cavendish), and Midwest Food Products Inc. (Midwest), formerly Nestle-Simplot.11• 12 

McCain has processing plants in Florenceville, New Brunswick, and Portage la Prairie, 

Manitoba. McCain is a multinational corporation with worldwide potato-processing facilities, 

including facilities in the United States (Washington, South Dakota, and Maine). 13 Cavendish 

operates plants in Dieppe, New Brunswick, and New Amman, P.E.I. Midwest has a single 

plant in Carberry, Manitoba A fourth processor, York Fa:rms, has a midsized processing plant 

in Lethbridge, Alberta. There are about six smaller processors in Canada serving the local 

markets. 

11 USDA, Foreign Agriculture Service (FAS), "Frozen French Fry Annual," U.S. Embassy, 

Ottawa, No. CA6064, Oct 18, 1996, p. 3. 12 Food Institute of Canada, posthearing brief, May 27, 1997, p. I. 13 USDA, FAS, "Frozen French Fry Annual," Oct. 18, 1996, p. 2. 

4-8 
All of these facilities produce frozen french fried potatoes. Most of these facilities also produce 

other frozen potato products such as hash browns, potato patties, croquettes, dehydrated potato 

flakes, and other specialty items, as coproducts. 14 On March 14, 1997, McCain armounced that 

it had reached an agreement with Ore-Ida Foods, Inc., a subsidiary of the H.J. Heinz Co., to 

purchase the assets of the Ore-Ida food service business. The Ore-Ida food service business 

includes frozen french fry and potato specialties as well as other appetizer and stuffed pasta 

specialties.15 

Production Capacity 

Frozen french fry production capacity has increased dramatically over the last 5 years. In mid1996, Canadian french fry production capacity was estimated at 1. 6 billion pounds. From mid1996 to the end of the year, an additional 449 million pounds of capacity was scheduled for 

completion, an increase of over 25 percent. About 60 percent of the increased capacity is 

located in Central and Western Canada, with the remainder in Atlantic Canada. Production 

capacity for the major frozen french fry producers in early 1996 and year-end 1996 are shown 

in the following tabulation (in million pounds).16 . 

Company Production capacity 

Mid-1996 Year-end 1996 

McCain 774 954 

Cavendish 452 637 

Midwest 338 422 

York Farms 74 74 

Total 1,638 2,087 

Frozen French Fry InventOries 

Canadian inventories of frozen french fries have declined steadily from 198 million pounds in 

1992 to 110 million pounds in 1996 (table 4-6). Canadian consumption and export sales have 

grown faster than expansion in the Canadian production sector. However, frozen french fry 

inventories are expected to increase 10 percent by the end of the 1996 marketing year, as 

production is expected to exceed growth in demand. 17 

14 Food Institute of Canada, prehearing brief, p. 1. 15 Ore-Ida Foods Inc. has frozen french fry plants in Ontario, Oregon; Burley, Idaho; and Plover, 

Wisconsin. 16 Presentation by the National Potato Council (NPC), Ore-Ida Foods, Inc., and Lamb Weston. 

Inc., Sept. 1996. 17 USDA, FAS, "Frozen French Fry Annual," Oct. 18, 1996. 

4-9 
Table4-6 

Frozen trench fries: Canadian production, exports, imports, beginning stocks, and apparent 

consumption, marketing years 1992-96 · 

(1,000 pounds2 

Beginning 

Market year1 stocks Production Exports Imports 

1992 ....... ' ....... 198,414 826,725 320,787 12, 191 

1993 ........ ' ... ' .. 176,368 914,909 366,482 16,479 

1994 ' ... ' ... ' ... ' .. 165,345 1,322,760 482,272 16,413 

1995 ' .............. 121,253 1,432,990 504,893 25,644 

19962 •••••••••••••• 110,230 1,543,220 584,219 35,274 

1 Marketing year begins July 1 of year indicated and ends June 30 of the following year. 2 Preliminary. 

Apparent 

consumption 

540,175 

575,929 

900,993 

964,764 

983,252 

Note.-Data prior to 1994 are not comparable to later years. Production in 1992 and 1993 is believed to be 

underestimated. 

Sources: USDA, FAS, World Horticultural Trade and U.S. Export Opportunities, Dec. 1995; USDA, FAS, "Frozen 

French Fry Annual," U.S. Embassy, Ottawa, No. CA4068, Oct. 24, 1994; and USDA, FAS, "Frozen French Fry 

Annual,'' Oct. 18, 1996. 

Potato Production, Consumption, Prices, and Grading 

Production 

Fresh Potatoes 

Table 4-7 shows total Canadian potato production for all uses, by region and Province, for 

1992-96. Canadian production of potatoes declined from 8.0 billion pounds in 1992 to 7.3 

billion pounds in 1993 because of poor weather. Production increased steadily thereafter to a 

record 8.6 billion pounds in 1996 (table 4-7). The value of Canadian potato production 

increased from Can$377 million in crop year 1992 to Can$597 million in crop year 1994 before 

declining to Can$586 million in 1995 (table 4-8). 

4-10 
Table4-7 

Potatoes: Canadian production, by region and Province, crop years 1992-961 

{Million e,ounds~ 

Region and Province 1992 1993 1994 1995 1996 

Atlantic Canada: 

P.E.I.. ............... 2,459.2 2,262.0 2,327.6 2,862.0 2,600.0 

New Brunswick 1,425.1 1,326.1 1,317.5 1,210.0 1,404.5 

Other Atlantic2 121.6 107.4 108.5 121.1 118.1 

Subtotal ............ 4,005.9 3,695.5 3,753.6 4,193.1 4,122.6 

Central Canada: 

Quebec ............. 1,018.5 870.8 864.4 945.9 1,025.3 

Ontario2 824.5 703,0 789.6 807.7 693.0 

Subtotal o 0 0 o 0 0 0 I 0 0 0 I 1,843.0 1,573.8 1,654.0 1,753.6 1,718.3 

Western Canada: 

Manitoba 0 0 o 0 0 0 0 o I 0 0 I 1,140.0 984.0 1,526.0 1,230.0 1653.8 

Saskatchewan ........ 112.9 92.3 127.2 110.4 121.9 

Alberta .............. 600.3 745.1 805.7 878.2 804.2 

British Columbia I 0 0 o 0 0 250.8 219.3 246.5 268.4 206.8 

Subtotal ............ 2,104.0 2,040.7 2,705.4 2,487.0 2,786.7 

Total Canada .......... 7,952.9 7,310.0 8,113.4 8,433.7 8,627.6 

1 Crop year beginning Nov. 1 of year indicated. 2 Includes Newfoundland and Nova Scotia. 

Note.-Totals may not add because of rounding. 

Source: Compiled from official statistics of Statistics Canada, StatsCan Online database. 

4-11 
Table4-8 

Potatoes: Value of Canadian production, by region and Province, crop years 1992-951 

( 1 ,ooo Canadian dollars~ 

Region and Province 1992 1993 1994 19952 

Atlantic Canada: 

P.E.I. ......................... 82,923 170,688 188,014 166,823 

New Brunswick ................. 54,054 92,517 86,799 77,258 

Other Atlantic3 .•••.••••••••••••• .. 9,115 8,562 9,159 10,069 

Subtotal ...................... 146,092 271,767 283,972 254,150 

Central Canada: 

Quebec ....................... 49,863 79,941 66,880 72,557 

Ontario 'o o o o I I I I 0 0' o 0 o o 0 P 0 0 O_I 0 -42,021 55,607 64,232 54,020 

Subtotal o o o o 0 o o I 0 0 0 0 0 Io 0 0 I 0 0 :> 0 91,884 135,548 131,112 126,577 

Western Canada: 

Manitoba ...................... 56,399 54,380 81,153 79,010 

Saskatchewan o o 0 0 0 0 Io 0 I 0 0 0 0 0-. 0 13,456 13,046 15,138 14,758 

Alberta ..................... ·-. 46,561 59,314 53,713 73,435 

British Columbia ................ 22,134 24,054 32,196 38,554 

Subtotal ...................... 138,550 150,794 182,200 205,757 

Total Canada ................... 376,526 558,109 597,284 586,484 

1 Crop year beginning Nov. 1 of year indicated. 2 Data for 1996 are not available. 3 Includes Newfoundland and Nova Scotia. 

Source: Compiled from official statistics of Statistics Canada, StatsCan Online database. 

Prcxluction in Atlantic Canada ranged from a low of 3. 7 billion pounds in crop year 1993 to a 

high of 4 .2 billion pmmds in 1995. Prcxluction in this region in 1996 totaled 4 .1 billion pounds, 

accounting for 48 percent of Canada's prcxluction. P.E.I. is the leading producing area in 

Canada, accounting for 30 percent of prcxluction in 1996. New Brunswick was the third-largest 

producing area in that year, accounting for 16 percent of production. 

Prcxluction in Central Canada ranged from a high of 1.8 billion pounds in 1992 to a low of 1.6 

billion pounds in 1993. Production in 1996 totaled 1.7 billion pounds, accounting for 20 

percent of Canada's prcxluction. Western Canadian production rose irregularly over the period 

from a low of 2,041 million pounds in 1993 to a peak of2,787 million pounds in 1996, or 32 

percent of production Manitoba is the second-largest producing Province in Canada and the 

largest prcxlucer in Western Canada. In 1996, Manitoba accounted for 19 percent of Canadian 

production. 

4-12 
Table4-9 

Data are not separately available on the production of potatoes for seed, table stock, or 

processing uses in Canada. Industry sources estimated that seed accounts for 13 percent of 

production; table stock, 27 percent; processing, 50 percent (40 percent frozen potato products, 

10 percent chips); and culls, 10 percent. Cull potatoes are used to produce other processed 

potato products (e.g., hash browns, sliced, and diced potatoes), potato flakes, dehydrated 

potatoes, cattle feed, and fertilizer. 

Frozen French Fries 

Canadian production of frozen french fries increased steadily from 826. 7 million pounds in 

1992 to an estimated 1.5 billion pounds in 1996, an increase of more than 80 percent (table 4-

6). Production will most likely continue to increase over the next couple of years as a result of 

increases in production capacity during 1996. According to USDA, FAS, "Processors in 

Canada have expanded their production capacity to satisfy robust demand for frozen french fries 

in both the domestic and international markets."18 

Potato Chips 

Canadian potato chip production has increased steadily over the period 1992-95 from 185 

million pounds to 194 million pounds (table 4-9). 19 Substantial quantities ofU.S.-produced 

potatoes are used by Canadian chip processors. During 1992-95, imported potatoes used in the 

manufacture of potato chips ranged from a high of 142 million pounds in 1994 to a low of 86 

million pounds in 1995. Because product quality is adversely affected when potatoes have been 

held in storage for an extended time, Canadian chip processors use imported potatoes in the 

spring and early summer when Canadian fresh potato quality is low. Data are not available on 

production in Canada of other processed potato products. 

Potato Chips: Canadian production and raw potatoes used by source, 1992-951 

Year 

Imports 

1992 ................ 108.0 

1993 ............... ' 114.5 

1994 . ' .............. 141.9 

1995 ..... ' .. ' ... ' ... 86A 1 Data are not available for 1996. 2 All sources. 

Million ounds 

Raw potatoes used Total chips manufactured 

Total2 

694.4 184.8 

701.8 191.7 

734.5 194.2 

1,342.3 194.4 

Source: Canadian Snack Food Association, Statistical Suwey Results, various issues. 

18 USDA, FAS, World Horticultural Trade and U.S. Export Opportunities, Jan. 1997, p. 14. 19 Data based on information from Nielsen Marketing Research covering the period May 1, 1994-

Apr. 30, 1995. 

4-13 
The Canadian snack food industry includes a number of foreign-ovrned multinationals, such as 

Hostess Frito-Lay, Humpty Dumpty Foods, LTD, Nabisco Brands, Nalley's Canada, and Old 

Dutch Foods Ltd. Canadian snack food companies include Murphy's Snack Foods and Small 

Fry Snack Foods Inc.20 

Production Costs 

Fresh potatoes 

The data on the cost of producing potatoes in various Provinces in Canada that are available 

from various studies are not directly comparable since these studies use constructed data that 

may include different factors, and they cover different types of potatoes and different years 

(table 4-10). However, the data indicate that the costs of producing seed potatoes are higher 

than the costs for producing table stock or processing potatoes. 

Table 4-10 

Potatoes: Per acre estimated costs of production, by type, various years 

Area Year Type of Potato 

Saskatchewan 1 0 0 0 Io 1997 Seed 

Alberta2 •••••••••••• Not specified Processing potato 

New Brunswick3 ••••• 1991 Processing potato 

New Brunswick3 ••••• 1992 Processing potato 

New Brunswick3 •.••• 1993 Processing potato 

New Brunswick3 ••••. 1994 Processing potato 

New Brunswick3 ••••• 1991 Seed 

New Brunswick3 ••••• 1992 Seed 

New Brunswick3 ••••• 1993 Seed 

New Brunswick3 ••••. 1994 Seed 

Saskatchewan4 1997 Seed 

Saskatchewan4 1997 Table stock (red) 

Saskatchewan4 1997 Processing (Alberta) 

Ontario5 ........... 1996/97 Chipping Potatoes 

Alberta5 •..•••••••.. 1996/97 Russet Burbank, grower storage 

Costs ($ per acre) 

2,077 

1,236 

1,285 

1,329 

1,440 

1,507 

1,390 

1,458 

1,430 

1,459 

1,860 

1,478 

1,495 

1,379 

1,180 

Manitoba5 • • • • • • • • • • 1996/97 Russet Burbank, grower storage 821 1 http://eru.usak.ca/agec/Potatoes/-prodeco.htm. 

2 httpJ/www.agric.gov.ab.ca/economic/product/97cpirr2.htm. 

3 http://www.gov.nb.ca/agricult/fbm/potcop.htm#Processing. 

4 httpJ/www .agr.ca/pfra/sidcpub/icrop97 .htm. 5 Produce Marketing Association of North America, Cost of Production Survey, as supplied by Wisconsin Potato 

and Vegetable Growers Associations, Inc. 

Source: Compiled by the staff of the U.S. International Trade Commission as noted above. 

20 Rosearme Hall, "All About Canada's Snack Food Industry," AAFC, Feb. 14, 1997, p. 1. 

4-14 
There are also significant startup costs for potato production, whether it be for the production 

of seed, table stock, or processing potatoes. Many of the capital costs associated with beginning 

potato production are for buildings and equipment that can only be used for potato production. 

According to a Saskatchewan report, 21 1997 startup costs for potato farmers are estimated at 

Can$1,240,000 for new equipment and Can$1,065,500 for used equipment. The same report 

also estimates that profits from a well managed potato farm can be up to Can$2,600 per hectare 

(Can$1,053 per acre). 

Another Saskatchewan report22 on expected irrigated crop returns in 1997 indicates that while 

total costs per acre to produce potatoes are higher than those for any other crop, expected 

returns per acre to land, management, and investment are at least double those of any other crop 

· (except spearmint). A similar report on crop production costs and returns on irrigated land in 

Alberta23 indicates that the costs per acre for producing raw potatoes for processing greatly 

exceed the costs per acre for producing alternative crops, such as dry beans and sugar beets. 

However, the expected returns from sugar beets are 20 percent higher than those from producing 

raw potatoes, while the expected returns for raw potatoes are 25 percent higher than those for 

beans. 

Based on a random sample of 1,625 potato farms, Canadian potato farms reportedly had 

average total operating expenses of Can$261,246 in 1994, with average total revenues of 

Can$320,975.24 Crop expenses accounted for about one-third of the total, with fertilizer and 

lime accounting for 13.3 percent, seed and plants for 9.1 percent, and pesticides for 8. 7 percent. 

Machinery costs, at 13.6 percent of total operating expenses, labor, at 18. 8 percent, and interest 

costs, at 6.8 percent, were also important expense items. Net farm income for the 1,625 

Canadian potato farms averaged Can$59,728 in 1994, up 48 percent from that in 1993. The 

operatingmarginofCan$0.19 per dollar ofrevenue in 1994 is significant. Potatoes are by far 

the most important product sold by Canadian potato farms, with revenues from the sale of 

potatoes accounting for 81.5 percent of total revenues in 1994. The share of total revenues 

accounted for by the sale of potatoes ranged from 70.6 percent in Manitoba to 84.3 percent in 

P.E.I. Direct program payments and insurance proceeds accounted for 2.9 and 1.3 percent of 

the total revenues, respectively, in 1994. This ranged from 7.4 and 3.8 percent in Quebec to 1.8 

and 0.6 percent in P.E.I. 

21 Saskatchewan Agriculture and Food and the College of Agriculture and Extension Division, 

University of Saskatchewan, Economics and Agronomics of New Crops-Seed Potatoes, Sept. 24, 

1996, found athttp://eru.usask.ca/agec/Potatoes/-prodeco.htm. 22 Saskatchewan Irrigation Development Centre, found at 

http://www.agr.ca/pfra/sidcpub/icrop97 .htm. 23 Alberta Agriculture, Food and Rural Development, found at 

http://www.agric.gov.ab.ca/economic/ product/97cpirr2.html. 24 AAFC, An Economic Overview of Fann Incomes, by Fann Type, Canada, 1994, AAFC 

Working Paper, Economic and Industry Analysis Division, found at 

http://www.agr.ca/policy/farnrlin/english/toc.htm, May 1997. The random sample was obtained from 

Statistics Canada's Taxation Data Program. 

4-15 
Processed potatoes 

Cost of production data are not available for Canadian processed potato products.25 However, 

general information was obtained by USITC staff during fieldwork regarding the cost structure 

for frozen potato products. The cost structure for such products appears to be similar for 

producers both in Canada and in the United States. 26 A 1996 Canadian study has indicated that 

the costs of doing business in Canada in the frozen foods industry in general were 5. 9 percent 

lower than costs in the United States due primarily to lower construction, labor, and energy 

costs, and smaller employer-sponsored benefits, in Canada.27 

Consumption 

Fresh Potatoes 

During 1992-95, Canadian potato disappearance (consumption) for all uses (fresh basis) 

increased from 4.4 billion pounds in 1992 to 4.8 billion pounds in 1993 before declining 

steadily to 4.6 billion pounds in 1995, the last year data are available (table 4-11). Strong 

domestic and export demand for processed potato products, primarily frozen french fries, is 

believed to have accounted for the decline in Canadian consumption of fresh potatoes as 

processors out-bid purchasers of table stock potatoes. U.S. food service companies have 

increased their imports of Canadian french fries. Good product quality and greater Canadian 

manufacturing capacity are the reasons for higher exports.28 U.S. grower interests indicate that 

favorable exchange rates are another reason for U.S. imports of Canadian french fries. 29 During 

1992-95, per capita disappearance of potatoes ranged from a low 153 pounds in 1992 to a high 

of 167 pounds in 1993. Per capita disappearance totaled 156 pounds in 1995. Consumption 

of french fries continues to increase while fresh usage slowly declines.30 

25 Food Institute of Canada, posthearing brief, appendix B, p. 6. 26 Canadian and U.S. frozen potato products producers, interviews by USITC staff, Apr. 8-18, 

1997. 27 KPMG, The Competitive Alternative: A Comparison of Business Costs in Canada and the 

United States (Ottawa: Prospectus Inc., 1996). The study was sponsored by Canada's Department of 

Foreign Affairs and International Royal Bank of Canada and the Economic Developers Association of 

Canada. 28 USDA, FAS, World Horticultural Trade & U.S. Export Opportunities, Jan. 1997, p. 13. 29 NPC, prehearing brief, Apr. 21, 1997; transcript of the hearing, testimony of G. Smith, NPC, p. 

108. 30 VandenbergandParent, "1996/97 CanadianPotatoCrop Situation." 

4-16 
Table4-11 

Fresh potatoes: Supply and disappearance in Canada, 1992-96 

(Million pounds) 

Year Beginning stocks Production Imports Total supply Exports Manufacturing 1 Waste2 Ending stocks Net supply 

1992 .... 3,530.9 7,952.9 564.3 12,048.1 1,366.5 541.9 964.9 4,809.0 4,364.9 

1993 .... 4,809.9 7,310.0 638.4 12,758.3 2,009.5 547.8 1,287.5 4,071.5 4,842.0 

1994 .... 4,071.5 8,113.4 729.9 12,914.8 2,110.4 578.7 1,192.8 4,362.7 4,670.2 

1995 .... 4,362.7 8,433.7 665.5 13,461.9 2,414.4 620.6 978.8 4,841.2 4,606.9 

1996 .... 4,841.2 8,627.6 3 

1 Manufacturing data Includes potatoes used for seed. 2 Waste data includes potatoes used for animal feed. 3 Not available. 

Note.-Processed potato import and export data have been converted to fresh equivalent. 

Source: Compiled from official statistics of Statistics Canada. 
Frozen French Fries 

Canadian consumption of frozen french fries has risen steadily from 540 million pounds in 1992 

to an estimated 983 million pounds in 1996 (table 4-6). The rise in frozen french fry 

consumption reflects changes in dietary lifestyles and the rapid expansion of fast food outlets 

in Canada. 31 Dietary trends have resulted in a shift from table stock consumption to 

consumption of processed potatoes. 32 Per capita consumption of frozen french fries in Canada 

at 33 pounds is substantially higher than that in the United States of about 25 pounds. 

Potato Chips 

Potato chips are the most important salty snack food in Canada accounting for 62 percent of 

sales of such snacks in 1994. Potato chip sales were valued at Can $507 million in 1994.33 Data 

are not available for other years covered by this study for potato chips. However, data on the 

value of sales of all salty snack foods in Canada increased from Can $718 million in 1992 to 

Can $959 million in 1996. During the last several years, an increasing volume of imports have 

been found in the Canada potato chip market. Imports amount to more than 10 percent of 

domestic manufactured volumes. They are either distributed by Canadian based firms or 

shipped into the market by U.S. firms. 34 

Canadian Prices 

The average farm prices received by Canadian potato growers by Provinces for 1992'."95 are 

shown in table 4-12. In general, farpi prices are highest in those Provinces that are deficit 

production areas with the majority of the output being marketed as table stock (Newfoundland 

and British Columbia) and in Saskatchewan which markets a greater portion of its production 

as high-value seed potatoes. Prices in Manitoba, New Brunswick, and P .E.I. are generally the 

lowest. These three Provinces are surplus production areas and market a substantial share of 

their output to processors, to other Provinces, and to export markets. 

31 USDA, FAS, "Frozen French Fry Annual," Oct. 24, 1994, p. 6. 32 Ibid. 33 Data based on infonnation from Nielsen Marketing Research covering the period May 1, 1994-

Apr. 30, 1995. 34 Hall, "All About Canada's Snack Food Industry," p. l. 

4-18 
Table 4-12 

Fresh potatoes: Average farm price received by Canadian growers, by Province, 1992/93 to 

1995/961 

(Canadian dollars per pounci) 

Province 1992193 1993194 1994195 1995/96 

Newfoundland 0 0 I 0 0 I 0 o • O o t IO o $0.176 $0.182 $0.172 $0.172 

P.E.I. ....................... .041 .092 .088 .069 

Nova Scotia ................. .076 .089 .082 .087 

New Brunswick .............. .049 .080 .085 .073 

Quebec I Io o Io o o Ito o Io o 0 0 0 I I .057 .088 .100 .082 

Ontario ..................... .059 .089 .087 .076 

Manitoba 0 I I I 0 Ito o 0 o o Io o o o o I .062 .085 .070 .077 

Saskatchewan ............... .137 .134 .166 .152 

Alberta 0 Io 0 0 0 o 0 o o o o o o o o 0 I I 0 0 .087 .076 .091 .091 

British Columbia ............. .114 .147 .142 .165 

Average Canada ............. .057 .085 .090 .080 

1 Crop year beginning Nov. 1 of year indicated. 

Source: Official statistics of Statistics Canada, lnfoHort database. 

Prices of potatoes in Canada vary according to the type of potato (russet, red, yellow, or round 

white), the origin, and the type of container (count carton, bags, or sacks). Table 4-13 provides 

1995-96 data for wholesale to retail market prices for russet potatoes in 80-count cartons in 

Montreal and Toronto. During 1995-96, prices in the Montreal market for russet potatoes from 

Canadian sources remained relatively stable over the first 6-month period of each year. Prices 

rose in the July-September period reflecting the availability of new potatoes in the market place. 

However, in the fourth quarter of 1995, prices for new crop russet potatoes increased sharply 

as production in the United States was smaller than anticipated and competition increased for 

processing stock in the Western United States.35 On the other hand, prices for russet potatoes 

in the fourth quarter of 1996 were substantially lower than those for the corresponding period 

of 1995. Record production of fall-harvested potatoes in both the United States and Canada 

was responsible for the decline. 

No price data were reported for russet potatoes in the Montreal market from non-Canadian 

sources in the first two quarters of either 1995 or 1996. However, prices for russet potatoes 

from the United States were quoted in both the third and fourth quarters of 1995. Prices for 

U.S.-sourced potatoes were higher than those sourced from Canada in every instance during the 

third quarter of 1995 in the Montreal market. There was only one instance in the third quarter 

of 1996 (August 1996) when price comparisons were available. U.S. -sourced potatoes were 

priced the same as those from Quebec and were higher than those from P .E.I. 

35 John Vandenberg, "1995/96 Canadian Potato Crop," AAFC, May 8, 1996. 

4-19 
Table 4-13 

Russet potatoes: Wholesale to retail market prices, 80-count cartons, in selected markets, by sources, Jan. 1995-Dec. 1996 

(Canadian dollars per carton) 

Market/source Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec. 

1995: 

Montreal: 

P.E.I. ......... 11.84 11.64 12.46 13.99 (1) 13.50 (1) (1) (1) 15.62 15.00 16.56 

Quebec (1) (1) (1) 12.00 12.85 (1) ...... 16.25 14.25 14.33 14.30 13.70 12.65 

Idaho (1) (1) (1) (1) (1) (1) (1) (1) (1) ........ 15.12 15.55 15.25 

Texas ........ (1) (1) (1) (1) (1) (1) (1) 21.12 23.10 22.12 18.25 (1) 

California ..... (1) (1) (1) (1) (1) (1) 28.95 20.75 (1) (1) (1) (1) 

Alberta ....... (1) (1) (1) (1) (1) (1) 29.50 (1) (1) (1) (1) (1) 

Toronto: 

P.E.I. ......... 12.25 12.30 13.50 13.25 14.93 17.75 18.50 (1) (1) (1) (1) 14.56 

Idaho (1) (1) (1) (1) 17.88 22.12 (1) (1) (1) (1) (1) (1) ........ 

~ California . , ... (1) (1) (1) (1) (1) 30.00 (1) (1) (1) (1) (1) (1) 

I 

IV Wisconsin 11.75 12.34 13.71 13.25 16.09 (1) (1) (1) 0 .... 20.74 19.89 19.40 19.25 

Washington' ... (1) (1) (1) (1) (1) (1) (1) 23.18 20.85 21.21 (1) 19.75 

Nebraska ..... (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) 

1996: 

Montreal: 

P.E.I. ......... 14.68 13.00 12.60 14.25 14.65 16.90 17.38 17.08 18.00 11.81 10.32 9.09 

Quebec o I 0 0 0 I 11.75 10.93 11.53 13.31 14.87 17.87 18.00 18.00 16.92 14.52 12.40 11.06 

Idaho (1) (1) (1) (1) (1) (1) (1) 18.00 (1) (1) (1) (1) o 0 IO I I 0 o 

Texas ........ (1) (1) (1) (1) (1) (1) (1) 18.00 (1) (1) (1) (1) 

Texas ........ (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) 
Table 4-13-Continued 

Russet potatoes: Wholesale to retail market prices, SO-count cartons, in selected markets, by sources, Jan. 1995-0ec. 1996 

(Canadian dollars e,er carton} 

Market/source Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec. 

1996-Continued: 

Toronto: 

P.E.I. ......... 14.35 14.25 14.25 13.75 14.15 14.95 14.50 (1) (1) (1) (1) (1) 

Idaho (1) (1) (1) (1) (1) (1) (1) 17.68 (1) (1) (1) (1) o' o 0 I I I 0 

California ..... (1) (1) (1) (1) (1) (1) 20.85 21.00 (1) (1) (1) (1) 

Wisconsin (1) (1) (1) (1) (1) (1) (1) (1) 12.00 (1) (1) (1) o o 0 I 

Washington ... 20.00 21.50 22.00 (1) (1) (1) 21.00 (1) 15.50 (1)' (1) (1) 

Nebraska ..... (1) (1) (1) (1) (1) (1) (1) (1) 13.00 12.50 10.45 (1) 

Texas ........ (1) (1) (1) (1) (1) (1) (1) 14.00 (1) (1) (1) (1) 

1 Nothing reported. 

Note.-When a range of prices were reported, a simple average of the prices was reported. If the range of prices was not evenly divisible, the average was 

~ rounded down to the nearest cent. I 

N 

..... Source: Compiled from official statistics of Statistics Canada, lnfoHort database. 
The Toronto market allowed for a significant number of instances to compare Canadian-sourced 

and U.S.-sourced russet potatoes over the 1995-96 period. In every month where comparison 

could be made, U.S.-sourced potatoes were priced higher except for January 1995 when 

Canadian-sourced potatoes were priced higher. Prices in the Toronto market followed the same 

general price movements that occurred in the Montreal market over the January 1995 to 

December 1996 period. 

Wholesale to retail prices in the Montreal and Toronto markets for round white potatoes in 5 0-

pound bags or sacks are presented in table 4-14. Prices in both Montreal and Toronto were 

substantially lower for potatoes from Canadian sources when compared to those of U.S. origin. 

Potatoes from Florida were the most :frequently quoted U.S.-sourced potatoes. Califomiasourced potatoes were the only other U.S.-sourced potatoes quoted. The high prices for Florida 

potatoes and California potatoes are indicative of the premium the market places on new 

potatoes in the spring and early summer months. 

Seed Potato Certification Regulations 

Canadian seed potato producers are regulated under a Federal certification program, 

administered by Agriculture and Agri-Food Canada (AAFC). Because potatoes are vegetatively 

propagated, diseases are easily spread. Once a disease is present in the seed, it can quickly 

spread. The certification program is a way to provide varietal purity and disease-free planting 

stock to breeders and growers. 

Seed certification starts with tissue-cultured plantlets that are tested for the presence of any 

disease pathogens. After the plantlets are found to be pathogen-free they are propagated in a 

protected environment. The resulting tubers from these plants are referred to as nuclear stock. 

Nuclear stock is planted in the field for multiplication. There are seven classes of field grown 

seed potatoes; pre-elite, elite 1, elite 2, elite 3, elite 4, foundation, and certified. Each class 

represents one generation in the field (e.g., the seed produced from the foundation class is 

certified seed). In the higher classes (nuclear stock, pre-elite, and elite 1 ), there is zero tolerance 

for disease and varietal mix. In other classes; the tolerance for disease and varietal mix 

increases slightly. 36 

Canadian Grading System 

Although potatoes come in various sizes, shapes, and colors of skins or flesh, they are generally 

classified in Canada as one of five types: round white, russet (a long white), round red, yellow 

flesh, or long white. Potatoes within each classification are subject to quality regulations 

(grades). 

36 Economics andAgronomics of New Crops, Seed Potatoes. 

4-22 
Table 4-14 

Round white potatoes: Wholesale to retail market prices, 50-pound bags or sacks, in selected markets, by source, Jan. 1995-Dec. 1996 

(Canadian dollars e_er bag) 

Market/source Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec. 

1995: 

Montreal: 

P.E.I. ......... 8.53 9.09 10.14 9.95 9.10 10.98 11.98 13.12 9.40 6.54 6.45 6.70 

Quebec (1) (1) (1) (1) (1) 9.25 8.50 (1) ...... 6.83 6.18 5.71 5.74 

New Brunswick (1) (1) (1) (1) (1) 10.87 11.75 (1) (1) (1) (1) (1) 

Monitoba (1) (1) (1) (1) (1) 12.75 12.75 (1) (1) (1) (1) (1) 

California ..... (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) 33.50 32.30 

Toronto: 

P.E.I. ......... 8.96 9.25 9.53 10.12 10.48 11.25 11.50 6.66 7.20 7.17 

Ontario (1) (1) (1) (1) (1) (1) 9.47 7.25 5.02 4.84 7.00 (1) 

Florida {1) 33.00 29.35 23.12 19.54 16.31 16.50 (1) (1) (1) (1) (1) 0 0 I 0 0 I I 

~ 1996: I 

N 

w Montreal: 

P.E.I .......... 6.24 6.08 6.55 6.69 7.73 11.93 11.86 (1) (1) 5.55 5.23 5.26 

Quebec ...... 5.87 5.50 5.31 5.50 6.77 19.01 12.00 4.75 4.53 5.63 5.31 5.36 

Florida 17.00 (1) 28.28 24.79 19.55 15.44 13.15 (1) (1) (1) (1) (1) ....... 

Toronto: 

P.E.I. ......... 7.15 6.75 6.90 6.80 7.58 11.65 12.90 12.50 (1) (1) 6.12 (1) 

Ontario ....... (1) (1) (1) (1) (1) (1) (1) 9.55 8.04 6.70 6.25 (1) 

Florida (1) 27.00 22.72 22.10 18.69 14.68 14.25 (1) (1) (1) (1) (1) ....... 1 Nothing reported. 

Note.-When a range of price, were reported, a simple average of the prices were reported. If the range of prices was not evenly diversible, the average was 

rounded down to the nearest cent. 

Source: Compiled from official statistics of Statistics Canada, lnfoHort database. 
In Canada, there are two grades of potatoes defined as Canada No. 1 grade and Canada No. 2 

grade.37 Potatoes of both grades must meet certain minimum quality standards, including being 

properly packed and being free from various diseases and insects. Canada No. 2 grade permits 

a greater range of permissible defects than Canada No. 1 grade. The regulations have also 

established certain minimum and maximum size requirements for potatoes: (1) Canada No. 1 

grade of rmmd varieties must have a minimum diameter of 2 lf.i inches and a maximum diameter 

of3'l2 inches or a weight of 5 to 12 ounces; (2) Canada No. 1 grade oflong varieties must have 

a minimum diameter of 2 inches and a maximum diameter 3'l2 inches or weight of 4 to 12 

ounces, with the additional requirement that at least 60 percent of the lot have a diameter of at 

least 2lf.i inches, or a weight of more than 5 ounces; and (3) Canada No. 2 grade must have a 

minimum of 1% inches and a maximum diameter of 4'l2 inches or a weight of less than 18 

ounces. Potatoes that do not meet either the Canada No. 1 grade or Canada No. 2 grade may 

be used by dehydrators or used as cattle feed. 

Canadian regulations also cover imported potatoes. Specifically, the regulations state that 

potatoes imported from the United States meeting the U.S. Extra No. 1 grade or U.S. No. 1 

grade can be imported. In addition, imported potatoes of long varieties must have a minimum 

diameter of 2 inches and a maximum diameter of 3 'l2 inches, and at least 60 percent of the lot 

must have a diameter of more than 2 lf.i inches; likewise, imported potatoes of round varieties 

must have a minimum diameter of 2'l2 inches. Thus, imports of U.S. potatoes into Canada 

generally meet the same size and quality standards as Canada No. 1 grade. Canadian 

regulations do permit imports of other U.S. grades when there is insufficient supply of domestic 

product. Importers must apply for a ministerial exemption that allows imports of bulk potatoes 

for processing that do not meet the U.S. Extra No. 1 or U.S. No. I grade. 

Channels of Distribution 

The Canadian market for potatoes generally consists of many sellers (growers) and few buyers 

(brokers, handlers, packers, and processors). Growers may sell potatoes for use as table stock, 

seed, or for processing. About one-half of the potatoes in Canada go to processing. Growers 

producing potatoes for processing usually do so under contract. The contract would normally 

stipulate the variety of potato to be planted, planting and harvesting dates, disease control 

programs, horticultural practices, and delivery schedules. Processors of potatoes sell to food 

brokers, food service distributors, wholesalers, grocery chainstores, fast food outlets, 

restaurants, and institutional users. Processors may produce a single potato product line such 

as frozen french fries or they may have multiple potato product lines. Processors may produce 

branded products or they may produce private label products. 

Growers producing potatoes for tabl.e stock sell their production to handlers, brokers, and 

shippers or they market their production directly to retail and institutional outlets. These 

growers have a greater latitude in the potato varieties and horticultural practices they use. 

37 Fresh Frnit and Vegetables Regulations (C.R.C. 1978, C. 285) pursuant to the Canada 

Agricultural Products Act (R.S.C. 1985, c. 20 (4th Supp.). 

4-24 
However, the markets they service may in part dictate the varieties they plant (e.g., consumers 

in the Manitoba market prefer red potatoes). 

Seed potato growers sell directly to growers or through dealers or brokers. Most seed potatoes 

are marketed in SO-pound or 100-pound bags. Seed potatoes are usually sold sized. Some 

growers prefer to plant small, uncut tubers (1 Yz-2 ounces) because of the reduced risks of 

disease and better stand of plants in the field. Large size potatoes are marketed to growers that 

cut the tuber to produce seed pieces that range in size from 1.5 - 3 ounces. Some seed potatoes 

may also be cut commercially and marketed to growers as cut seed pieces. Cut seed pieces 

require special handling since they are more susceptible to disease, shriveling, and decay. 

Marketing Methods 

Potatoes can be sold either in the fresh market (table stock) or in the processing market. 

Potatoes for the fresh market are marketed in a wide variety of containers. Potatoes can be 

marketed in individual bags weighing 5, 10, 15, 20, 50, 75, or llO pounds. Potatoes are also 

sold in bales with a number of bags of potatoes wrapped together in clear plastic wrap. The two 

most common types of bales arc a 5/10 pound bale, which consist of 5 10-pound bags, and a 

10/5 pound bale, which contains 10 5-pound bags. The bags can be made out of paper, mesh, 

polyethylene, or jute. 

Potatoes can also be sold in 20-pound or 50-pound cartons. Count-size potatoes are those of 

uniform size and shape that are sold in 50-pound cartons. For example, an 80-count size means 

that there are 80 potatoes in a carton. The higher the count size, the greater the number of 

potatoes in a carton and the smaller the size of each individual potato. 

Provincial Potato Grower Organizations 

Provincial potato boards or agencies (boards) exist in each major producing Province. The 

boards are funded through fees paid by growers. In Ontario, fresh potato packers are also 

assessed fees. New Brunswick requires a license fee to be paid by shippers and growers, in 

addition to fees paid by producers. 38 The boards have authority to collect fees for marketing, 

promotion, and potato disposal. All of the boards exist pursuant to the Canadian Agricultural 

Products Marketing Act. These grower organizations, formed under Provincial farm product 

marketing legislation, have limited powers. 

Most of the boards are indirectly involved in the negotiation of contracts between growers and 

processors of potatoes. They also evaluate requests for bulk easements, and provide 

recommendations on the granting of bulk easements (see below). AAFC makes the final 

determination of whether fresh potatoes are imported into a Province. 

38 Canadian Horticultural Council, posthearing brief, appendix pp. 1-8. 

4-25 
The potato boards in British Columbia and Ontario are involved in the orderly marketing of 

intra-Provincial potato production by establishing market prices. Table stock potatoes grown 

in Manitoba are sold through a central selling desk. 39 However, the boards in these Provinces 

do not have any control over the price or marketing of potatoes in inter-Provincial or 

international trade. 

Canadian Trade and Regulatory Measures 

Tariff Treatment 

Canadian imports of potatoes and potato products are subject to import duties as provided under 

the Canadian Customs Tariff Schedule. The tariff rates applicable to potatoes and potato 

products imported into Canada from the United States range from free to 1.2 percent ad 

valorem. Imports of dried potatoes, whether or not cut or sliced but not further prepared enter 

free of duty. Fresh or chilled potatoes are dutiable at 77 .2 Canadian cents per metric ton; frozen 

potatoes, potato :flakes, granules, and pellets, and frozen or unfrozen prepared or preserved 

potatoes are dutiable at 1 percent ad valorem; and potato flour, meal, and powder and potato 

starch are dutiable at 1.2 percent ad valorem. All of the dutiable items are scheduled to be 

reduced to free on January 1, 1998 (see appendix E). 

Antidumping and Countervailing Duties· 

On June 4, 1984, the Canadian Antidumping Tribunal (Inquiry No. ADT-4-84) found that the 

dumping of whole potatoes with netted or russeted skin, excluding seed potatoes, in non-size 

A., also commonly knows as strippers, originating or exported from the State of Washington, 

for use or consumption· in the Province of British Columbia was the cause of material injury. 

In a second investigation in April 1986 (CIT 16-85), the Canadian International Trade Tribunal 

(CITT), successor to the Antidumping Tribunal, found that dumping in Canada of whole 

potatoes from the United States exported to British Columbia was the cause of material injury. 

Antidumping duty orders were issued in both instances. 

On September 14, 1990, the CITT, in review No. RR-89-010, gave notice that it had continued, 

without amendment, the :findings in Inquiry Nos. ADT-4-84 and CIT-16-85. On September 14, 

1995, the CITT, in review No. RR-94-007 under subsection 76(2) of the Special Import 

Measures Act, gave notice that it continued the above findings pursuant to subsection 7 6( 4) of 

the Special Import Measures Act, but with an amendment to exclude imports during the period 

from May 1 to July 31, inclusive, of each calendar year. 

39 Ibid, appendix p. 7. 

4-26 
As part of Canada's administration of the antidumping :finding, Revenue Canada has established 

normal values for imports of potatoes from the United States.40 When the U.S. market price for 

a particular potato pack is less than the applicable normal value as determined by Revenue 

Canada, the normal value, rather than the U.S. market price, is used as the basis for determining 

a landed Vancouver, British Columbia cost. Adjustments are made for freight, the CanadaUnited States exchange rate, and the regular tariff In other words, the normal value sets a 

"floor" for the price of U.S. potatoes in British Columbia. 41 See appendix F for the dumping 

duties applied to U.S. imports for the period April 20-April 26, 1997. 

Fresh Fruit and Vegetables Regulations 

Under Canadian law, potatoes must be marketed in "standard containers" to facilitate consumer 

trade. Potatoes sold at the retail level can be sold only in 5, 10, 20, 50, 75, and 110 pound 

packages. There are no comparable requirements for wholesale containers, except for bulk 

containers, i.e. over 110 pounds. 42 

Inter-Provincial and import shipments of bulk shipments of potatoes for repackaging and 

processing are regulated under the Fresh Fruit and Vegetable Regulations of the Canada 

Agricultural Products Act (CAPA). If a processor intends to import bulk potatoes, whether 

from another Province, or from another country, a Ministerial Exemption (Easement) to the 

Fresh Fruit and Vegetable Regulations is required. Imports of potatoes into Canada from the 

United States under an easement require a "Memorandum of Inspection for Canadian 

Destinations" issued by USDA An easement is granted to an importer only when a shortage 

in Canada exists. The easement is good for a certain period of time and for a specific amount 

of product. 

These regulations are designated to facilitate the orderly marketing of bulk potatoes when there 

is a shortage in Canada. 43 According to information supplied by the Canadian Horticultural 

Council, requests for ministerial exemptions are virtually never rejected, whether they involve 

potatoes from Canadian Provinces or from the United States. 44 

The Larger-than-Largest (LTL) size requirement under the Processed Products Regulations 

(PPR) of the CAP A implemented in November 1993 required that all food products be sold in 

bags labeled in 500 gram incremental metric units rather than in pounds. U.S. and Canadian 

processors whose labels were registered with AAFC were granted a 2-year exemption. 

On December 8, 1995, AAFC revised the PPR labeling requirements for L TL-size products. 

If the shipping container is the unit sold to end users, a common situation in the case of products 

40 There are currently normal values for 11 different packs of potatoes from Washington, 

California, Oregon, and Idaho, for a total of 44 different normal values. CITT, Review No. RR-94-

007, Sept. 14, 1995, p. 5. 41 Ibid. 42 Canadian Horticultural Council, prehearing brief, pp. 19-20. 43 Canadian Horticultural Council, prehearing brief, p. 19. 44 Ibid, p. 20. 

4-27 
shipped to hotels, restaurants, institutions, etc., individual inner packages will not be subject to 

the labeling-on-packaging requirements of the PPR However, the outside container must bear 

an approved label and meet the L TL requirements respecting package size. 

Prohibition on Consignment Sales 

The CAP A prohibits sales of produce without a prearranged buyer (consignment sales). 45 This 

law applies to domestic product traded between Provinces and imported product. The CAP A 

also prohibits Canadian producers from selling on consignment to the United States.46 Product 

that is traded within a Province is not covered by the law. Processed products, such as frozen 

french fries, are ~ot covered by the law. 

Disinfection Requirements to Meet European Union Standards 

The European Union (EU) prohibits the importation of seed potatoes, except when permitted 

under specific exemption (or derogations), Since 1977, Canada has had derogations to the EU 

discipline for seed potatoes. These derogations have allowed Canada to ship seed potatoes from 

Bacterial Ring Rot (BRR) and Potato Spindle Tuber Viroid (PSTV)-free zones in P.E.L and 

New Brunswick. These two Provinces are the only areas in North America which have BRRfree and PSTV-free zones. 47 

In order for New Bnmswick48 and P .E.I. 49 to maintain their status for shipping seed potatoes to 

the EU, New Brunswick and P.E.I. have put in place special measures to comply with the EU 

derogation. The planting in P.E.I. or New Brunswick of seed potatoes from areas outside of 

designated disease-free zones in these two Provinces would result in the immediate loss of 

eligibility to ship seed potatoes to the European Union. Thus, the planting of U.S. seed potatoes 

in the disease free zones of P .E.I., for example, would results in the loss of disease-free status 

for the zone. 50 Table stock and processing potatoes are permitted to enter the disease-free 

zones. 

45 USDA, FAS, Review of Canadian Support Programs for the Potato Sector, FAS Staff Paper 

1-96,_July 1996, p. 13. 46 Canadian Horticultural Council, posthearing brief, p. 3. 47 Canadian Horticultural Council, prehearing brief, pp. 6 and 7. 48 All trucks entering New Brunswick that are intended for potato transport must be disinfected by 

private companies at a cost of Can$20 -30 per inspection. 49 All trucks entering P.E.I. that are intended for potato transport are disinfected at the border. 50 See Official Journal of the European Communities, Commission Decision of 24 January 1997. 

authorizing certain member States to provide for derogations from certain provisions of Council 

Directive 77 /93/EEC in respect of seed potatoes originating in Canada. 

4-28 
Canadian Food Inspection Agency 

In April 1997, the Canadian Food Inspection Agency (CFIA) was created. The CFIA 

consolidates food inspection and animal and plant health service of AAFC, Health Canada, and 

Fisheries and Oceans Canada. All inspection and associated activities related to food safety, 

economic fraud, trade-related requirements, and animal and plant health programs, are provided 

by this agency. The following section provides a summarization of fees and charges pertaining 

to potatoes by the precursor agencies to the CFIA. 

Fresh Fruit and Vegetable and Dairy Products Inspection 

Fresh fruit and vegetables and dairy products that are imported, exported, or moved interProvincially under Federal standards are inspected and monitored by AAFC. Produce is 

monitored for safety, grade, and quality. Produce labels and packaging are reviewed to avoid 

fraud 51 Shippers, dealers, and brokers are licensed and may apply to have marketing disputes 

settled by an independent Board of Arbitration. 

The fresh fruit and vegetable industry pays a portion of the Federal Government's costs of 

delivering inspection and certification services for fresh produce marketed in import, export, or 

inter-Provincial trade as well as for registration of packing establishments. As of July 8, 1996, 

users are required to pay a larger share of what it costs the government to provide services. Fees 

will also apply to services that were previously provided at no charge, such as pennits for 

exports and inter-Provincial shipments.52 

Fees are outlined below: 

1. Inspectionsa. at shipping point--inter-Provincial and export: Can$0.27 per cwt 

inspected. A minimum inspection free of Can$3 0 for export 

inspections of onions, potatoes, and field tomatoes to the United States, 

which ever is greater. In all other cases the minimum fee is Can$68. 

b. at destination--market condition inspections: Can$0.5325 per cwt 

inspected or a minimum fee of Can$68, which ever is greater. 

2. Registration of a Produce Warehouse: Can$7 5 0 per year. 

3. Release Permits: Can$15. 

51 AAFC Press Release, "Cost Recovery Fees for Fresh Fruit and Vegetable and Dairy Products, 

Inspection," Jul. 8, 1996, p. 30. 52 Ibid. 

4-29 
4. Ministerial Exemptions: Regulated produce shipments which do not meet 

quality, packaging, and labeling standards set out in regulations for interProvincial or international trade can be marketed under ministerial 

exemptions: Can$20 per load, upon approval by AAFC. 

5. Label Reviews: For voluntary label reviews by an AAFC official, Can$ I 00 

per label. 

6. Special Contracted Inspection and Monitoring Service: Can$68 per hour or 

Can$0.27 per cwt inspected, whichever is chosen by the applicant. 

7. Grading of produce at a produce establishment: Can$68 per hour or 

Can$17 per quarter hour, which ever is greater. Charge will be rounded off 

to the nearest quarter hour for fee assessment purposes. 

8. Federal Produce Licenses: All Canadian dealers operating in the interProvincial or international marketing of fresh produce are required to 

possess a valid license to operate at a charge of Can $750 per year. For 

registered charitable organizations, the Federal produce license is Can$50 

per year. 

9. Dump Certificate: Dump certificates are issued to demonstrate produce has 

been irretrievably discarded in a dumpsite and has no market value. The 

charge is Can$50 per certificate issued or Can$0.27 per cwt, which ever is 

greater. 

10. Board of Arbitration Filing Fee: The Board of Arbitration acts as an· 

impartial judicial body which renders binding decisions and orders on loads 

which are the subject of inter-Provincial and international disputes between 

produce buyers and sellers. The filing fee is Can$400 per registered 

complaint. 

Animal and Plant Health Service 

The Animal and Plant Health Service provides inspection under the Seeds Act (inter-Provincial 

shipments) and the Plant Protection Act (international). The Seeds Act provides for inspection 

of seed potatoes moved inter-Provincially for prohibited plant pests. In particular, movement 

of potatoes from areas that are infested with certain types of nematodes are prohibited to noninfested areas. Movement of potatoes from Newfoundland and Vancouver Island are prohibited 

owing to the presence of Golden nematode in those areas. Growers are charged an inspection 

fee of Can$8 per acre for seed certification plus a Can$50 fee. 

Imported seed potatoes are required to have a phytosanitary certificate if they are·from areas of 

the United States that are known to have prohibited plant pests. hnported seed potato lots must 

also be laboratory tested for ring riot at the importers expense (approximately Can$ I 00). 

4-30 
The Plant Protection Act provides for inspection and issuing of phytosanitary certificates and 

pennits for imports and exports of seed potatoes and potatoes for consumption and processing. 

A fee of Can$ l 7 to Can$34 is changed for an import permit. An additional fee of Can$ I 0 is 

accessed if a permit is amended or requires modification by an inspector. In addition, an import 

inspection fee of Can$30 per lot is accessed plus Can$10 fee for verification of import 

docwnents. 

Fees for export certification of each lot of potatoes, including the issuance, if applicable, of the 

:first Canadian Phytosanitary Certification is Can$30 for bulk shipments of seed potatoes, and 

potatoes for consumption or processing; Can$50 for bagged seed potatoes and bagged potatoes 

for consumption or processing. Additional Phytosanitary Certificates issued for a single lot 

inspection are Can$5. 

Food and Drug Act and Regulations 

Health Canada administers the Food and Drug Act and Regulations. Health Canada inspectors 

routinely inspect facilities in Canada where processed food products are manufactured. 53 

Inspection may entail taking samples to detennine if a product meets required standards for 

health and safety. Inspectors also sample and inspect products on importation. Health Canada 

does not charge for these services. however, a fee schedule is being developed by the CFIA. 

Provincial Potato Disinfection Programs 

P .E.I. has funded a program to disinfect warehouses, storages, truck trailers, equipment, and 

ocean vessels as required by the Province's Plant Health Act.54 Additionally, all trucks and 

truck trailers coming into the Province to pick up potatoes must carry Provincial certification 

of disinfection. A fee of Can$ I 0 per vehicle has been charged starting in the 1997 /98 fiscal 

year for the disinfection service for trucks coming into the Province. 55 

For several years, New Brunswick has provided a disinfection service for trucks so that potatoes 

can safely be loaded. The service is provided through five privately owned stations that are 

licensed to disinfect vehicles. Fees are Can$20-$30 per inspection. The cost of the disinfection 

is split between the truck owner/shipper and the grower. The New Brunswick (N.B.) Potato 

Agency, which is entirely grower funded, supervises the operation and pays the grower portion 

on behalf of the growers. The N.B. Potato Agency also provides a disinfection service for 

potato storage facilities and equipment. This service is funded by the growers on a user-pay 

basis. 

53 Hall, "All About Canada's Snack Food Industry," p. 2. 54 P .E.I. Agriculture official, telephone interview by USITC staff, May 14, 1997. 55 Canadian Embassy, prehearing brief, Apr. 28, 1997, p. 8. 

4-31 
Canadian Assistance Programs 

Overview 

This section provides information on Federal and Provincial assistance programs available to 

the fresh potato and processed potato products industry in Canada. An overview of such 

programs is provided in table 4-15. Table 4-15 includes programs that currently are, or have 

been, utilized by potato growers, handlers, and processors in Canada, as well as programs that 

are available to a nwnber of agricultural sectors, including the potato industry. Provincial 

programs are discussed for the top six potato-producing Provinces in 1996-P .E.I., Manitoba, 

New Brunswick, Quebec, Alberta, Ontari~and for Saskatchewan.56 

In addition to the nmnber of acres planted to potatoes in each of these Provinces, the importance 

of potato growing as an econnomic activity also varies. For instance, in 1996, potatoes 

accounted for 48.8 percent offann cash receipts in P .E.I., 2. 8 percent in Manitoba, 24. 0 percent 

in New Brunswick, 1.7 percent in Quebec, 0.8 percent in Alberta, 0.7 percent in Ontario, 0.2 

percent in Saskatchewan, and 1.8 percent in Canada as a whole. 57 

At the USITC hearing, Canadian interests suggested that the Canadian programs for the fresh 

potato and processed potato products industry are either producer funded, paid for through costrecovery measures, or provide nonspecific support that is of the "GATT Green" type. 58 The 

issue of whether or not Canadian programs are "green," i.e., exempt, under the World Trade 

Organization's (WTO's) Agreement on Agriculture is not discussed here.59 Under WTO 

procedures, member countries notify the WTO as to whether or not their agricultural programs 

are "green."60 These notifications are reviewed by the WTO members, and the classification 

of programs may change as a result. A country can also challenge another country's 

classification of programs through a WTO Dispute Settlement Panel. 

56 Saskatchewan, the eighth largest potato-producing Province in 1996, is included due to concerns 

raised by U.S. growers about potato expansion activities in that Province. 57 Statistics Canada, "1996 Farm Cash Receipts" facsimile data received July 11, 1997. Cash 

receipts include receiptS from all crop and livestock sales. 58 Transcript of the hearing, p. 227. 59 Annex 2 of the WTO Agreement on Agriculture provides the criteria under which domestic 

support measures are considered to be exempt from reduction requirements under the WTO 

Agreement on Agriculture. According to these criteria, such support measures must (1) be provided 

through a publicly-funded government program not involving transfers from consumers, and (2) must 

not have the effect of providing price support to producers. Additionally, policy-specific criteria are 

set out for specific types of support measures. 60 WTO agriculture official, telephone interview by USITC staff, May 16, 1997. 

4-32 
.j::.. 

I 

w 

w 

Table 4-15 

S ummaryo f F d e era an d P . • I ., bl t rovmc1a programs ava1 a e o po t t a o growers an d po1a tt'dt' om us nes 

Type of program Federal program Provincial programs 

Farm-level programs: 

Income support National Income Stabilization • Enhanced NISA: P.E.I., Saskatchewan (potatoes eligible 1996 only); 

Account {NISA) Federal-only contribution, Alberta 

0 Quebec Farm Income Stabilization Insurance, Quebec 

Crop insurance Federal crop insurance • Enhanced crop insurance: Manitoba, Saskatchewan, Alberta 

guidelines require that farmers 

pay no more than 50 percent of 

crop insurance premium 

Farm disaster insurance • P.E.I. and Alberta 

Western Grain Transportation Payments to Alberta potato and 

Payments other growers under Arable 

Acres Companion Agreement 

Credit assistance/direct loans/loan Advance Payments for Crops • Enterprise P.E.l. loan programs, P.E.I. 

guarantees Act • Manitoba Agricultural Credit Corporation (MACC) loans and 

guarantees, Manitoba 

Farm Credit Corporation (FCC) • Agricultural Development Board programs (Farm Machinery Loans 

direct loan programs Act canceled Mar. 1996; interest rebate program canceled 1992); 

New Brunswick 

Farm Improvement and • N.B. Debt Refinancing Program, New Brunswick 

Marketing Loans Act guarantees • Office du Credit Agricole du Quebec, interest rate assistance for 

agricultural operations, Quebec 

• Agricultural Financial Services Corp (AFSC), direct loans and 

guarantees, Alberta 

• Operating credit programs, Ontario 

• Agricultural Credit Corporation of Saskatchewan, Saskatchewan 

Diversification loan guarantees • MACC, target groups include cattle feedlots, potato growers, and hog 

producers; Manitoba 
Table 4-15-Continued 

Type of program Federal program Provincial programs 

Land lease/purchase programs FCC Family Farm Loans • P.E.I. Land Development Corporation Land/Lease Purchase Program, 

FCCAgri-Land Investment Lease operated over fast 20-25 years, ended 1995; P.E.I. 

• Agricultural Development Board Land/Lease Purchase Program, ended 

Mar. 1996, folded into Potato/Agricultural Crop Expansion Programs, New 

Brunswick 

. Crown Land Leasing and Sales, Saskatchewan 

Irrigation infrastructure/crop Prairie Farm Rehabilitation PFRA cost-shared programs: 

developmenVwater supply Administration (PFRA) . Canada-Saskatchewan Partnership Agreement on Water-Based Economic 

• Rural Water Development Development (PAWBED) 

Projects • Canada/Saskatchewan Economic and Regional Development Subsidiary 

. Cost-shared programs with Agreement on Irrigation-Based Economic Development (SIBED) (ended FY 

Manitoba, Alberta, and 1995/96) 

Saskatchewan • Saskatchewan Irrigation Development Centre 

Canada-Manitoba Agreement on . Manitoba Crop Diversification Centre 

Agricultural Sustainability • Canada Agri-lnfrastructure Program (CAIP), Manitoba 

(CMAAS) (cost-shared) Provincial programs: 

• CMASS implementation, Manitoba 

• Souris Valley Irrigation Centre, Manitoba 

• SoiVwater assessment grants for irrigation, Manitoba 

• Alberta Irrigation Districts, Alberta 

' • Saskatchewan Water Corporation, Saskatchewan 

Potato expansion programs • Potato Expansion and Land Stewardship Program, New Brunswick 

• Surplus Water Irrigation Initiative, Manitoba 

• Saskatchewan Water Corporation, potato expansion initiatives, 

Saskatchewan 

Potato disinfection PVYn Compensation (P.E.I., • Potato Quality Program provides disinfection services and grants for potato 

New Brunswick, Ontario) cull burial, user fees for trucks instituted Apr. 1997, P .E.I. 
Table 4-15-Continued 

Type of program Federal program Provincial programs 

Production assistance/tax incentives • Limestone Rebate Program (terminated 1992), P .E.I. 

• Potato Seed Incentive Program (terminated 1995), P.E.I . 

• Plant Propagation Centre, New Brunswick 

• Bon Accord Seed Farm, New Brunswick 

• Irrigation equipment grants, New Brunswick 

• Farm Land Identification Program, provides for tax deferred status of land in 

agricultural use, New Brunswick 

• Provincial fueVinput tax rebates, P.E.I., Manitoba, New Brunswick, Quebec, 

Alberta, Ontario, Saskatchewan 

• Provincial property tax rebates, Quebec, Ontario 

Extension/training Canadian Farm Business • Provincial implementation of CFBMP initiatives 

Management Program (CFBMP) • Extension, farm business management, and market development initiatives 

supported through Provincial Departments of Agriculture 

Agricultural research programs: 

Research and demonstration programs Charlottetown Research Centre . Soil and Feed Testing Laboratory, P.E.l. 

benefiting agricultural producers and Fredericton Research Centre . Plant Health and Research Laboratory, P.E.I. 

agribusinesses Lethbridge Research Centre . Food Technology Centre, P.E.I. 

Matching Investment Initiative . Food Technology Centre, Manitoba 

. N.B. Department of Agriculture and Rural Development, analytical laboratory 

services, New Brunswick 

. N.B. Horticulture Centre, New Brunswick 

• Potato Centre, research and extension, New Brunswick 

. Crop Diversification Centre, Alberta 

. Food Processing Development Centre, Alberta 

• Ontario Ministry of Agriculture, Food, and Rural Affairs (OMAFRA) funding 

tor various research and demonstration centers, Ontario 
Table 4-15-Continued 

Type of program Federal program Provincial programs 

Programs providing grants to individuals, Business Planning for Agri-Ventures • Agricultural Research Investment Fund, P.E.I. 

businesses, and organizations for adaptive Program (MFG/FCC) • Manitoba Agri-Ventures Initiative, Manitoba 

research, market studies, marketing, and Western Diversification (WO) • Sustainable Development Innovations Fund, Manitoba 

industry development Canadian Adaptation and Rural • Strategic Partnership Development Fund, New Brunswick 

Development Fund (CARDF) • Canada-Quebec Subsidiary Agreement on Agri-Food Development, Quebec 

• Processing Industry Division Programs, Alberta 

• Grow Ontario Investment Program, Ontario 

• Canada/Saskatchewan Partnership Agreement on Rural Development 

• Agri-Food Innovation Fund, Saskatchewan 

• Agriculture Development Fund, Saskatchewan 

• Agri-Food Equity Fund, Saskatchewan 

• Agriculture Industry Assistance program, Sasktachewan 

• Saskachewan Department of Economic and Co-operative Development 

(SECD), Business Investment Program, Saskatchewan 

Market development assistance and representation: 

Foreign market development Department of Agriculture and Agri- • Provincial Departments of Agriculture, foreign market development 

food (MFG) programs: assistance and programs 

. Agri-Food Trade 2000 • ACOA REDAs and Direct Programs-Provincial implementation, New 

. Program for Export Market Brunswick, P.E.1. 

Development • P.E.I. Trade Development Centre. P.E.I 

• Info Hort • Strategic Partnership Development Fund, New Brunswick 

. Agri-Food Trade Service • SEGO, Diversification Program, Saskatchewan 

Atlantic Canada Opportunities 

Agency (ACOA) 

. Direct programs 

• Regional Economic 

Development Agreements 

(AEDAs) 

Representation MFG assistance for the Canadian 

Horticultural Society 
Table 4-15-Continued 

Type of program Federal program Provincial programs 

Transportation assistance: 

Rail and truck rate assistance within Atlantic Atlantic Region Freight Assistance • ARFAA/MFRA replaced with Can$326 million fund for road improvements 

Canada Act (ARFAA)/Maritime Freight Rates 

Act (MFRA) ended FY 1995/96 

Processing/agribusiness assistance: 

Wage assistance programs Targeted Wage Subsidy Program • Wage assistance for farm and other labor, Ontario 

Job Opportunities for Youth-Wage 

Subsidy Program 

Transitional Jobs Fund 

Loans/other assistance for storage and ACOA, Direct Programs and • Provincial implementation, ACOA programs, P.E.I. and New Brunswick 

packing operations REDAs, P.E.I., New Brunswick • PAWBED, Saskatchewan 

PFRA-cost shared programs 

Energy assistance/tax assistance • Electrical Rate Relief Program, P.E.I . 

• Energy initiatives for manufacturers/processors, P.E.I. 

• Provincial tax exemption on electricity used in manufacturing; 10 percent 

manufacturing investment tax credit, Manitoba 

Processor loans and grants, contributions ACOA, Direct Programs and REDA • Ministry of Economic Development and Tourism loan programs, P.E.1. 

for wastewater treatment and infrastructure, contributions, P.E.I. and New • Enterprise P.E.I. Development Assistance Program, P.E.I. 

and other assistance Brunswick • Enterprise P.E.I. Small Business Support Program, P.E.I. 

PFRA, Canada/Manitoba • PAMWI, Manitoba 

Partnership Agreement on • CAIP, Manitoba 

Municipal Infrastructure (PAMWI) • Rural Economic Development Initiative, Manitoba 

CAIP • Ministry of Economic Development and Tourism loan and contribution 

Agricultural Value-Added Loan programs, New Brunswick 

Fund, WD • Small Entrepreneur Capital Assistance Program, New Brunswick 

• AFSC direct loans and guarantees for agribusiness, Alberta 

. Saskatchewan Opportunities Corporation, Saskatchewan 

Source: U.S. International Trade Commission. 
Trends in Canadian Programs 

A number of important changes to both Federal and Provincial agricultural programs in Canada 

have occurred since 1995 that have affected a wide variety of agricultural activities, including 

potato production, handling, and processing. First, in Canada's 1995 Federal budget, the 

Canadian Government eliminated most transportation assistance payments, including payments 

made under the Western Grain Transportation Act (WGTA),61 which had primarily been applied 

to grains moving west for export. To assist producers and processors in making the transition 

to market transportation rates, the Federal Government announced that it would provide 

Can$300 million to the four Western Provinces-Manitoba, Saskatchewan, Alberta, and British 

Columbia-under the W estem Grain Transportation Adjustment Fund (WGT AF), as well as 

a Can$1.6 billion capital payment to owners of prairie fannland affected by the elimination of 

theWGTA. 

Second, FY 1995/9662 was the last year of the Gross Revenue Insurance Program (GRIP) in 

most Provinces. The GRIP was a revenue insurance program for certain eligible crops that 

allowed participating Canadian farmers to achieve a certain target revenue through its crop 

insurance and revenue protection components. The termination of GRIP required the 

distribution of financial surpluses to the Provinces in many cases, which have resulted in the 

funding of new Provincial programs assisting all agricultural producers, including potato 

growers, handlers, and processors. Additionally, the Canadian Government has been working 

with the Provincial Governments to develop Province-specific companion programs to replace 

the GRIP. These have included enhancements to exiting Safety Net Programs (such as the Crop 

Insurance Program and the Net Income Stabilization Account (NISA)), disaster assistance, the 

introduction of new market development and adaption programs, as well as the continuation of 

some Province-specific programs.63 

Both the GRIP and the WGTA were discontinued because of concerns that these two programs 

would not meet the criteria for "GATT Green" status under the WTO Agreement on 

Agriculture, and thus be subject to reductions under WTO rules. 64 Although potatoes were not 

directly covered by the GRIP ,

65 or by the WGTA, potato growers, handlers, and processors have 

been affected by the elimination of these programs and the subsequent policy changes. Potato 

production, particularly in the Prairie Provinces, is a high-value crop providing an opportunity 

for agricultural producers to diversify from grain-dependent economies. Many of the new 

Provincial programs are currently being used to assist current potato production, to develop 

61 The WGTA committed the Canadian Government to sharing the costs ofrail transportation of 

Western grain destined for specified Canadian ports (primarily Thwider Bay and Vancouver). The 

WGTA benefit was paid directly to the railroads on behalf of Canadian producers. 62 The Canadian fiscal year runs from Apr. 1 to Mar. 31. 63 AAFC, 1996-97 Estimates Part Ill Expenditure Plan (Ottawa: AAFC, 1996), p. 16. 64 A.AFC, Peifonnance Report for the Period Ending March 31, 1996 (Ottawa: Minister of 

Public Works and Government Services, 1996), p. 1. 65 Potatoes were not included in the GRIP because of variability in prices and quality, which make 

it difficult to devise an adequate price support program. Interview with AAFC official by USITC 

staff, May 5, 1997. 

4-38 
new opportunities for an expansion in potato acreage, and to attract agricultural processing 

industries. 

Canadian Federal Government Assistance Programs 

Safety-net Programs 

Net Income Stabilization Account (NISA) 

The NISA,66 established in 1991, is a voluntary program designed to help participating 

agricultural producers stabilize their farm income. Under this program, agricultural producers 

can deposit a percentage of their eligible sales into a NISA account and receive a matching 

contribution from the Federal and Provincial Governments. In years of low income, producers 

are allowed to make withdrawals from their NISA accounts. Income from all primary 

agricultural commodities (including potatoes), except for dairy, poultry, and eggs, is eligible for 

this program. 67 

Emolled farmers cwrently contribute up to 3 percent of eligible net sales to an individual NISA 

account, with the Federal and Provincial Governments providing matching contributions of2 

and l percent, respectively.68 Farmers deposit after-tax dollars into these accounts, but they 

receive an interest bonus equal to a tax break on the deposit amount. Withdrawals are allowed 

when net farm income falls below the average for the last 5 years or below a minimum 

household income of Can$10,000. The Government contribution is taxable when withdrawn, 

but the farmer's own contribution is not taxed. 

Eligible sales under NISA are limited to Can$250,000, thus capping annual contributions per 

farmer at Can$7,500. AAFC officials have indicated that potato growers in P.E.I. have 

complained that, since potatoes are high-value crops, the NISA provides orily limited benefits 

because the contribution cap is too low.69 As noted in the section on P.E.I. programs, P.E.I. 

growers are currently allowed to make higher NISA deposits, based on a 6 percent Federal 

contribution. According to AAFC, NISA is not commodity specific, thus it is not possible to 

measure the assistance orily to potatoes. Sales by participants in NISA represented 81 percent 

of Canadian farm cash receipts of eligible commodities in 1995. 70 

60 In its administrative reviews of the countervailing duty order on live swine from Canada, the 

Department of Commerce found the NISA program to be noncountervailable. See 61 F .R. 52410, 

Oct. 7, 1996. 67 USDA, FAS, Review of Canadian Support Programs for the Potato Sector. 68 These contribution rates were effective as of the 1995 stabilization year. 69 Interview with AAFC official by USITC staff, May 5, 1997. NISA does allow for up to 10 

individuals in a partnership to have separate NISA accounts. 7

° Canadian Embassy, posthearing brief, June 19, 1997. 

4-39 
Crop Insurance 

All Provinces in which potatoes are grown operate crop insurance programs on a cost-share 

basis with the Federal Government. Program details vary by Province, but levels of coverage 

are generally up to 80 percent of the grower's own average farm yield, with the Federal and 

Provincial Governments providing at least 50 percent of the premium and the administrative 

costs.71 Three Provinces-Manitoba, Alberta, and Saskatchewan-provide enhanced crop 

insurance as discussed in the Provincial Programs sections. 

In crop year 1996/97 1,288 potato growers in Canada were enrolled in Crop Insurance, down 

from 1,463 in crop year 1995/96, as shown in the following tabulation of data by Province 

provided by AAFC: 

New Brunswick 555 

P.E.I. 273 

M.anitoba 198 

Quebec 144 

Ontario 40 

Alberta 30 

Other 48 

Total 1,288 

Credit Assistance 

Advance Payment for Crops Act (.4PCA) 

APCA is available to producers of all storable fruit, vegetable, and :field crops, except wheat and 

barley grown in the designated area of the Canadian Wheat Board. The plan advances up to 

Can$250,000 per farm at preferred rates negotiated by producer organizations and AAFC. The 

Federal Government guarantees 98 percent of the principal and interest. APCA provides an 

incentive for producers to store their crops and to market the product later in the year when 

prices may be improved. In 1996, APCA loan guarantees of Can$366 million, or 9.3 percent 

of such guarantees, were extended to potato growers. 72 

The Cash Flow Enhancement Program (CFEP) under APCA provides nontaxable interest 

rebates on advances of less than Can$50,000 to APCA participants.73 Expenditures under the 

11 AAFC, CROP INSURANCE-AAF, found at http://www.agr.ca/progser/aafc.html, updated Oct. 

3, 1996. 

72 Canadian Embassy, posthearing brief 73 AAFC, ADVANCE PAYMENTS FOR CROPS ACT-APCA, foimd at 

http://aceis.agr.ca/progser/apca.html, updated Aug. 6, 1996. 

4-40 
CFEP were Can$5.71millioninFY1995/96, of which potato growers received Can$909,100.74 

Expenditures for potatoes by Province are shown in the tabulation below (Can$): 

Total 909 100 1

New Brunswick, P.E.I., and Nova Scotia. 

Farm Credit Corporation (FCC) 

The FCC, a Crown Corporation reporting to the AAFC, is Canada's largest agricultural longterm lender. The FCC provides financial assistance to Canadian farmers and agribusiness; it 

is also the Federal delivery partner for a number of Federal Government agricultural programs. 

According to AAFC officials, the FCC, under its legislative mandate, cannot subsidize or lose 

money on its loans.75 

The FCC provides fixed-rate loans for up to 20 years, as well as long-term loans with 

amortization periods between 3 and 29 years, to qualified farmers and farming operations. 76 

FCC loans finance acquisition of farmland and equipment, or they may be used to erect or 

modernize faim buildings, refinance debt, or build farm manufacturing or processing facilities.77 

Such loans are provided at competitive interest rates. 

Loans extended by the FCC to potato producers increased during 1992-96 as shown in the 

following tabulation of AAFC data: 

Year Number of loans Amount (Can$'000) 

1992 85 10,165.8 

1993 75 10,492.4 

1994 109 14,961.3 

1995 188 22,573.1 

1996 212 27,954.8 

74 Canadian Embassy, prehearing brief, p. 4. 75 Interview withAAFC officials by USITC staff, May 5, 1997. 76 AAFC, FARM CREDIT CORPORATION, found at http://www.agr.ca/progser/aaffcca.html, 

updated Nov. 26, 1996. 77 USDA, FAS, Review of Canadian Support Programs, pp. 6-7. 

4-41 
The increased use of FCC loans by potato growers is likely due to the fact that FCC loans 

generally have much higher lending limits than the loans provided by the Provincial lending 

institutions. 

FCC specialized loans 78•include Family Farm Loans which make it easier to transfer fann real 

estate from one generation to the next. Under this program, the seller receives a percentage of 

the appraised value of the property at the time of sale and is paid in full after 4 years, while the 

buyer benefits by having loan payments go toward building equity rather than paying interest 

costs. Under FCC' s Farm Builder Construction Loan, a builder has up to 1 year to complete 

a construction project before making a payment or renewing the loan through another FCC 

lending instnnnent. The FCC's Agri-Land Investment Lease provides farmers with long-term 

leasing options of FCC land holdings.79 The FCC' s Shared-Risk Mortgage provides borrowers 

with financing over a 6-year term with a ceiling of 2.5 percent on rate increases. Rate 

adjustments are shared equally by the borrower and the FCC. 

AAFC's Commodity-Based Loan Program allows producers to convert regular FCC loans into 

loans that will allow them to make payments according to their ability to pay under conditions 

of variable commodity prices. AA.PC transferred Can$9.6 million to the FCC in FY 1995/96 

in support of this program. It is not known whether any of this transfer was applied to potato 

producers. 80 

The FCC is also the delivery agent for AAFC's Business Planning for Agri-Ventures Program 

(BPA V), which pays up to 50 percent of the cost of development of a business plan. Program 

eligibility requires that the business be a farm or agribusiness that is diversifying, or is a new 

agribusiness with employment creation potential. 81 Funding for this program, which ends in 

March 1999, is provided by AAFC through the Canadian Adaptation and Rural Development 

Fund. 

Farm Improvement and Marketing Cooperatives Loans Act (FIMCLA) 

FIMCLA helps producers and producer-owned cooperatives gain access to intermediate term 

credit on reasonable tenns to improve farm assets, strengthen production, and improve financial 

stability. Under FIMCLA, the AAFC provides a loan guarantee to designated lending 

institutions. The loans are based on up to 80 percent of the current appraised value or the 

purchase price. Loans are obtained through direct lending institutions. FIMCLA loans are 

available to all agricultural producers, including potato growers. 82 Any defaults on loans are 

picked up by the lending institution (5 percent of the remaining balance) and by AAFC. 

78 See FCC, Annual Report 1995-96 (Guelph, Ont: FCC, 1996) for a description of programs and 

services. 79 This program was put into place in Apr. 1994 to help farmers regain ownership of FCC-owned 

land. As of Mar. 31, 1994, 90 percent ofthis land was in Saskatchewan. 80 Receiver-General for Canada. Public Accounts of Canada 1996 (Ottawa: Public Works and 

Government Services Canada, 1996). 81 AAFC, BUSINESS PLANNING FOR AGRI-VENTURES, found at http://www. 

ca/progser/agrivene.htrnl, Mar. 20, 1997. 82 Official from the Royal Bank of Canada, telephone interview by USITC staff, May 23, 1997. 

4-42 
Economic Development Assistance 

Atlantic Canada Opportunities Agency (ACOA) 

ACOA is a Federal agency whose goal is to improve the economies of the Atlantic 

Provinces-New Brunswick, Nova Scotia, P .E.I, and Newfoundland-by providing assistance 

to small-and medium•size businesses. 83 ACOA largely has a manufacturing focus; however, 

its project portfolio has included agribusiness-related projects, such as potato processing, 

storage, and packing. ACOA administers its Direct Programs, and it is the Federal partner in 

a number of Regional Economic Development Agreements (REDAs) with the Provinces, which 

support economic development in the Atlantic region. 

Under its Direct Programs, ACOA provides interest-free, repayable contributions for qualifying 

projects through the Business Development Program. ACOA provides assistance for capital 

projects, as well as for training and improved business management, including marketing studies 

and trade shows. Assistance is limited to 50 percent for capital projects and to 75 percent for 

operating costs, including training, marketing, and quality assurance. Through the REDAs, 

ACOA has provided assistance for private business development and infrastructure, highway 

construction, industrial parks, education, and training. As of August 1996 ACOA no longer 

provides direct assistance to the private sector through RED As; instead such assistance is now 

directed to community infrastructure, training, provision of technology and information, and 

similar type projects. 

A complete list of ACOA projects benefiting the potato sector was requested but not provided 

to USITC staff. An incomplete listing of ACOA projects compiled by USITC staff is provided 

in table 4-16. 

Western Economic Diversification Canada 

Western Economic Diversification Canada (WO) promotes economic development and 

diversification in the four Western Canadian Provinces. The program provides contributions 

to programs or projects, but not to individual companies, that will (1) result in the expansion 

of enterprises or new businesses, (2) promote research and development, and (3) contribute to 

business infrastructure. In FY 1995/96, WD provided a contribution of Can$23 l,910 to the 

Manitoba Horticultural Productivity Enhancement Centre, a nonprofit corporation consisting 

of Keystone Vegetable Producers, Carnation Foods, and McCain Foods.84 WD, along with 

other donors, also provided development funds for the Manitoba Crop Development Centre (see 

the Provicial Programs section). An additional WD program affecting agriculture involves the 

Agricultural Value-Added Loan fund which is designed to benefit small and medium-sized 

agricultural processors. The Fund provides loans with favorable repayment terms at interest 

83 Interview with ACOA official by USITC staff, May 5, 1997. 84 Public Accounts of Canada 1996. 

4-43 
Table4-16 

C on trb 1 u ti ons b >Y th e Atl an ti c C d ana a 0 1000 rtu nities A .aencv to ootato "d m ustries i n PEI •• an dN f1W B runsw i c k, 1994-96 

Beneficiary/Province Project Contribution Date 

King's County Development Build a potato storage facility for lease to Cavendish Can$4.3 million' May 1994 

Corp./P.E.I. Farms and to benefit up 2,600 acres of potatoes 

P.C.L. & Eastern Packaging Assist packaging operation that supplies packages Can$514,058 FY1994/95 

Ltd./New Brunswick for potatoes 

Toner Farms Ltd./New Brunswick Assist potato packing operation Can$100,035 FY1994/95 

Lewis Potato Packers Ltd. and Assist potato packing operation Can$116,500 FY1995/96 

Lewis Bros lnc./P.E.1. 

M&W Potato Co. Ltd./P.E.I. Not available Can$225,495 FY1995/96 

O'Leary Potato Packers Ltd/P.E.I. Assist potato packing operation Can$309,821 FY1995/96 

AKL Agricultural Development Build a potato storage, packing, and shipping facility Can$192,2802 March 1996 

Inc/New Brunswick to expand seed potato production by 360 acres and 

improve marketing 

' Contribution made through ACOA and related regional development initiatives on a grant basis. 2 Contribution made under the Canada-New Brunswick Cooperation Agreement on Economic Diversification which is jointly funded 

by the Federal Government through ACOA and the Government of New Brunswick. 

Sources: USDA, FAS, Review of Canadian Support Programs for the Potato Sector; "How ACOA Spends Its Cash in NB," Telegraph 

Journal, Nov. 23, 1995; and Receiver-General of Canada, Public Accounts of Canada 1996. 

rates that range from 3 to 6 percent above the lender's prime rate through the FCC and a number 

of commercial banks. 85 

Canadian Adaptation and Rural Development Fund (CARDF) 

The CARDF is a Can$60 million-per-year-program announced in the 1995/1996 Federal 

Budget. CARDF programs are designed to support growth and job creation in the agricultural 

sector and in rural communities. CARD funds enhance existing departmental initiatives, 

undertake national programs with industry boards, and support Provincial initiatives by 

industry-led adaptation councils.86 CARD programs at the Federal level include financial 

assistance to the Canadian Fann Business Management Program, Business Planning for AgriVentures, the Agri-Food Trade Service, which supplies market information and intelligence for 

Canadian food exporters, and the Matching fuvestment fuitiative, among others. 

fuitiatives through adaptation collllcils are being formulated at the Provincial level. CARD 

:funding of Can$ l .5 million, which includes assistance for marketing, and for promotion of rural 

agricultural development, human resources, environmental sustainability, public/private 

85 WD, LOANS FOR VALUE-ADDED AGRICUL TUR.AL PROCESSORS, found at 

http://www.wd.gc.ca/eng/content/funds/xavaf.html. 86 AAFC, A Guide to the Canadian Adaptation and Rural Development Fund, found at 

http://www.agr.ca/policy/adapt/cardwhat/html, May 23, 1997. 

4-44 
partnerships, technology implementation, value-added activity, agricultural communications, 

and agribusiness management, was announced for New Brunswick in April 1997.87 Similarly, 

Can$40 million in CARD funding over 4 years will be provided to the Conseil pour le 

developpement de l'agriculture du Quebec and the Fonds quebecois d'adaptation des entreprises 

agroalimentaires in Quebec. CARD funding of Can$28 million was announced in March 1996 

for Ontario's Agricultural Adaption Council to be used to make Ontario's agricultural sector 

more competitive and self-reliant. CARD funding of Can$2.2 million was additionally 

announced for Manitoba in January 1997.88 

Irrigation, Infrastructure, and Crop Development Assistance--Prairie Farm 

Rehabilitation Administration (PFRA) 

PFRA, a branch of AAFC, delivers a range of programs in Manitoba, Saskatchewan, Alberta, 

and the Peace River region of British Columbia in cooperation with the Provinces, communities, 

and agricultural producers. PFRA programs promote sustainable development of land and 

water resources and diversification into activities that contribute to economic security. In regard 

to potatoes, PFRA is currently assisting producers by.identifying and mapping suitable lands 

and available water supplies, locating potato storage sheds, and analyzing how water is 

currently delivered to the land. 89 

PFRA's Rural Water Development Program (RWDP) provides technical and financial 

assistance covering up to one-third of the cost offarm water development projects, or up to onehalf the cost of water development schemes for small communities or rural groups. 90 In an 

interview with USITC staff, a PFRA official indicated that such projects provide water supplies 

to farms and rural households, and are generally not commodity-driven.91 In FY 1995/96 

· PFRA's expenditures for the development of dependable water supplies amounted to Can$5.2 

million and included Can$724,276 for the Coteau Hills Rural Water Pipeline in Saskatchewan, 

as well as other projects.92 

PFRA is also the Federal implementing agency for a number of Federal/Provincial programs 

that have provided assistance for potato production and processing in Canada as shown in table 

4-17. These programs are further discussed in the Provincial programs sections. 

87 Government of New Brunswick News Release,"New Brunswick Agricultural Council Receives 

CARD Funding," Apr. 17, 1997. 88 AAFC News Releases, "Federal Funding Delivered for Agricultural Adaptation in Ontario," 

Mar. 25, 1996, and "FederalFundingDeliveredforRuralAdaptation," Jan. 14, 1997. 89 AAFC, "All About Canada's Vegetable fudustry," found at 

http://aceis.agr.ca/cb/fact&'faol4e.html. 90 AAFC, 1996-97 Estimates, pp. 56-57. 91 PFRA official, interi'iew by USITC staff, May 5, 1997. 92 Public Accounts of Canada 1996. 

4-45 
Table 4-17 

Federal-Provincial cost-shared programs affecting potato industries administered by the Prairie Farm 

Rehabilitation Administration 

Cost-shared program Purpose Provlnclal partner 

Canada-Saskatchewan Provides assistance to rural entrepreneurs in business Saskatchewan Economic and 

Partnership Agreement on Rural planning, market and human resource development Co-operative Development 

Development (PARO) 

Canada-Saskatchewan Provides assistance for water-based infrastructure Saskatchewan Water 

Partnership Agreement on development, increasing on-farm irrigation efficiencies, and Corporation and other 

Water-Based Economic expansion of commercial crop storage and value-added crop Provincial agencies. 

Development (PAWBED) processing facilities 

Canada-Saskatchewan Agri- Supports research and development of emerging agricultural Saskatchewan Agriculture 

Food Innovation Agreement commodities and sustainable agriculture. A Can$91 million and Food 

program terminating March 31, 2000 

Canada/Saskatchewan Assistance for irrigation-based economic development in Saskatchewan Water 

Economic and Regional Saskatchewan. A Can$100 million program signed in Corporation 

Development Subsidiary October 1986 and terminated in FY 1995/96 

Agreement on Irrigation-Based 

Economic Development (SIBED) 

Saskatchewan Irrigation Conducts, funds, and facilitates irrigation research and Saskatchewan Water 

Development Centre (SIOC) demonstration activities to encourage diversification to higher Corporation 

valued crops 

Canada/Manitoba Assistance for municipal water infrastructure to Manitoba Rural 

Partnership Agreement on eliminate constraints to economic development Development 

Municipal Water 

Infrastructure (PAMWI) 

Manitoba Crop Identifies, evaluates, and facilitates use of new crops, Manitoba Horticulture 

Diversification Centre technologies, and value-adding opportunities for Productivity Enhancement 

(MCDC) agriculture Centre, Inc. and the 

Government of Manitoba 

Canada Agri-lnfrastructure In Manitoba, funds will be used to assist infrastructure Government of Manitoba, 

Program development for agro-processing industries, including various agencies 

(CAIP)1 development of water supplies and related 

infrastructure, and irrigation 

1 The CAIP will provide Can$140 million in Federal funding for agricultural-related infrastructure projects in 

Manitoba, Alberta, Saskatchewan, and British Columbia as follows: Manitoba (Can$B4.6 million), Alberta (Can$29.0 

million), Saskatchewan (Can$25.9 million), and British Columbia (Can$0.5 million). CAIP is one of several initiatives 

included under the Federal Government's 3-year Can$300 million WGTAF. Funds allocated to this program will be 

primarily used for road improvements. In Manitoba, however, the funds will be used to support irrigation and 

infrastructure development for agricultural industries. See AAFC News Release, "Federal Funding Announced for 

Manitoba Agricultural Infrastructure Improvements," Feb. 2B, 1997. 

Source: PFRA, "Prairie Farm Rehabilitation Administration (PFRA) Programs," found at http://www.agr.ca/pfra/ 

pfproge.htm, updated Feb. 1997. 

4-46 
Export Promotion, Marketing, Training, and Representation 

Canadian Farm Business Management Program (CFBMP) 

The CFBMP assists farmers to upgrade their business management skills thereby leading to 

improved competitiveness in domestic and global markets, and to improved financial viability. 93 

The CFBMP, a partnership program between AAFC, the Provinces and producers, was initiated 

in 1992. The original 3-year program ended in March 1995; it was renewed in the 1995/96 

Federal budget and continues until March 31, 1999. Federal CFBMP contributions in FY 

1995/96 amounted to Can$8.4 million, which were distributed to Provincial agricultural 

institutions and to the Canadian Farm Business Management Council in Ottawa.94 · 

Export promotion and marketing 

AA.PC and Canada's Department of Foreign Affairs and International Trade (DF AIT) operate 

export market development programs to promote Canadian food and agricultural exports.95 

AA.PC administers the Agri-Food Trade 2000 (AFT 2000) program which includes a branded 

program similar to the Market Access Program in the United States. DF AIT administers the 

Program for Export Market Development (PEMD), an all-industry export assistance fund. The 

PEMD includes access to international market information and provides services to facilitate 

export links. If export sales result from a PEMD plan or mission, companies must reimburse 

a portion of the PEMD contribution. To be eligible for AFT 2000 and PEMD funds, companies 

must participate through nonprofit agricultural or agribusiness associations which develop longterm export market strategies that are reviewed by the funding agencies. 

USDA, FAS has estimated that the value of Canadian Government export market expenditures 

for both PEMD and AFT-2000 in FY 1995/96 totaled Can$36.4 million, over half of which 

was spent on general market intelligence and market servicing. 96 AAFC reports expenditures 

of Can$109,252 and Can$77,600 during FYs 1995/96 and 1996/97, respectively, for 

promotional activities relating to processed potato products in markets outside the United States 

under AFT-2000.97 

Marketing and trade data 

Marketing and trade data dissemination to Canadian horticultural producers is provided through 

"InfoHort" an electronic bulletin board maintained by Statistics Canada. Potato producers who 

93 AAFC, Canadian Fann Business Management Program (CFBMP) found at 

http://www.agr.ca/policy I adapt/cardwhat./html, May 23, 1997. 94 Public Accounts of Canada 1996. 95 USDA, FAS, Review of Canadian Support Programs for the Potato Sector, p. 11. 96 Ibid. 97 Canadian Embassy, posth.earing brief. 

4-47 
subscribe to InfoHort receive information covering Canadian production, Provincial storage 

levels, weekly price data, and export movements. The cost is Can$250 per year. AAFC also 

operates the Agri-Food Trade Service, which is an electronic system for trade and marketing 

information and advice. The program is similar to the Trade Leads Program and other market 

information programs offered by USDA, FAS. 98 

Representation-Canadian Horticultural Council 

The Canadian Horticultural Council represents the Canadian fruit, vegetable, floriculture and 

nursery production sectors, including potatoes. The Council represents the majority of the 

horticultural producing sectors across Canada with the purpose of developing industry 

consensus on issues.99 The Council receives a grant from AAFC through the annual budget, 

which amounted to Can$280,000 in FY 1995/96. 

Transportation Assistance-Atlantic Region Freight Assistance Act 

(ARFAA)/Maritime Freight Rates Act (MFRA) 

Prior to FY 1995/96, shippers of agricultural and manufactured products, including potatoes 

and frozen french fries, in Newfoundland, P.E.I., New Brunswick, Nova Scotia, and part of 

Quebec were eligible for Federal transportation assistance under ARFAA, which applied 

primarily to truck movements, and MFRA, which applied primarily to rail.100 Two types of 

assistance were available: the Selective Westbound Assistance Program, which provided a 50-

percent subsidy to commercial carriers for the transportation of goods harvested, grown, or 

manufactured that were moved to points westward in Canada outside the select territory, and 

the Intra-Regional Assistance Program, which provided a 10-percent transportation subsidy on 

the shipment of eligible goods moved within the territory where the distance was at least 5 

miles.101 The assistance did not apply to import or export traffic, including shipments to or from 

the United States. 

Because the assistance was paid to the carrier, it is not possible to determine its value to the 

potato industry. Annual outlays under both programs were approximately Can$99 million.102 

The Federal Government's FY 1995/96 budgetterminated ARF AA and MFRA. To ease the 

loss of the program, the Federal Government introduced a Can$326 million adjustment 

program, to be paid over 5 years, through Federal/Provincial agreements to meet local shipper's 

98 USDA, FAS. Review of Canadian Support Programs for the Potato Sector. p. 11-12. 99 Canadian Horticultural Council, prehearing brief, Apr. 21, 1997, p. l. 10° Canadian Embassy, prehearing brief, p. 9. 101 USDA, FAS, "Frozen French Fry Annual," Oct. 24, 1994. 102 USDA, FAS, "Frozen French Fry Annual," U.S. Embassy, Ottawa, No. CA5071, Oct. 25, 

1995. 

4-48 
adjustment needs and to provide for improved infrastructure, such as roads. Payments by 

Province are shown in the tabulation below (Can$ million): 103 

New Bnlnswick 121 

Nova Scotia 85 

Quebec 78 

P.E.I. 21 

Newfoundland 21 

Total 326 

It was noted at the US ITC hearing by a representative of the National Potato Council and by 

AAFC in a 1995/96 report that the move to market freight rates in Eastern Canada could likely 

make the markets in the Eastern United States more attractive to Canadian producers. 104 

Information submitted to the USITC by the National Potato Council for the Frozen Processed 

Potatoes Industry Segment indicated that freight rates from Eastern Canada to markets in 

Central and Western Canada were expected to rise by 20-30 percent following the elimination 

of these programs.105 Officials from the N.B. Potato Agency and P.E.I. Potato Board, however, 

indicated to US ITC staff that truck rates for potatoes have not changed significantly in recent 

years and that supply and demand are more important factors in determining trade flows. 106 

Agricultural Research 

AAFC administers 18 research centers, each with a mandate based both on national research 

issues and on issues affecting the crops grown in the area where the center is located. 107 Three 

of these research centers, the Charlottetown Rese{lfch Centre, the Fredericton Research Centre, 

and the Lethbridge Research Centre have research mandates directed at potatoes as well as other 

crops and livestock.108 

AAFC introduced the Matching Investment Initiative (Mil), a 5-year project, in FY 1995/96 to 

promote collaborative research with private industry, universities, and the Provinces. The Mil 

103 Canadian Embassy , prehearing brief. The Canadian Embassy estimates that three-quarters of 

the assistance provided under this program was to shippers of manufactured goods. 104 Transcript of the hearing, p. 111. Also, Vandenberg, "1995/96 Canadian Potato Crop." 105 Collier, Shannon, Rill & Scott, prehearing brief, Apr. 21, 1997, exhibit 2, Atlantic Provinces 

Transportation Commission Media Release, "Freight Subsidy Loss Will Be Damaging," Feb. 28, 

1995. 106 Interviews conducted by USITC staff, May 6-7, 1997. One source indicated that transportation 

rates from New Brunswick to Toronto are around US$2.00 per cwt and US$2.50 per cwt from New 

Brunswick to New York, and that these rates have not changed appreciably in recent years. 107 Research officer from the Charlottetown Research Centre, P .E.I., interview by USITC staff, 

May7, 1997. 108 Ibid. The officer noted that the Research Centre at Kentville, Nova Scotia has a mandate for 

research in food processing and occasionally has potato research projects. 

4-49 
provides progressively larger funding in each year (up to Can$35.8 million in the fifth year).109 

1v1Il fimds can be accessed by all research centers, but only if there is a partner that is supporting 

50 percent of the research cost. According to an AAFC official, Mil funds cannot be used for 

new product development or to offset specific grower or company costs.110 

Charlottetown Research Centre 

The Charlottetown Research Centre has a mandate for potato management and feed crops that 

serve P .E.I. and the Atlantic Provinces, and a research mandate for clover breeding in Eastern 

Canada. The Centre's budget in FY 1997-98 will be about Can$5.6 million, of which onequarter is devoted toward potatoes. m Recent projects relating to potatoes include-112 

• A survey on problems of the Maritime potato industry, with the P.E.I. Potato 

Board, the N.B. Potato Board, and the Fredericton Research Centre; 

• Evaluation of growth characteristics and production of new seedlings and 

cultivars to support registration of superior cultivars and sales promotion in 

North America and overseas; 

• Research on improved management practices for potato rotations, including use 

of fall cover crops; 

• Identification of crop sequences to improve ability to suppress diseases of 

potatoes; 

• Research on the dynamics of the Colorado potato beetle and other insect pests. 

Fredericton Research Centre 

The Fredericton Research Centre develops new cultivars and technologies for the production, 

handling, and management of potatoes, as well as develops technologies for sustainable food 

production from dairy and beef cattle. It has a total budget of about Can$7 .8 million.113 The 

centre operates a National Breeding Program for potatoes. It's mandate also includes research 

on pest management for potatoes. Recent projects for potatoes include-114 

• Research on resistance to common scab and late blight; 

• Research on potato viruses; 

• Research on varietal selection to reduce mechanical injury of potatoes during 

harvest. 

109 AAFC, 1996-97 Estimates. 110 Research officer from the Charlottetown Research Centre, P .E.I., interview by USITC staff, 

May7, 1997. 111 Ibid. The Centre's potato research is '9-ed into its research program on soil management due to 

the need for rotation crops in potato production. 112 Charlottetown Research Centre, "Potato Research Program," found at http://www. res.agr. 

· ca/charlotte/crcpot.h1m, updated Jan. 1997. 113 AAFC, "Fredericton," found at http ://www.agr.ca/research/director/doc _ 1 Oe.h1ml#mandate, 

Mar. 10, 1997. 114 Ibid. 

4-50 
Lethbridge Research Centre 

The Lethbridge Research Centre produces new technology and information to help develop more 

sustainable production systems for rain-fed and irrigated cultivated land and rangeland in the 

Prairie Provinces and part of British Columbia. Its crop research focuses on cultivar 

development, pest and disease management, and agronomy of cereals, forages, potatoes, and 

special crops. Recent activities related to potatoes include development of a DNA method to 

identify potato cultivars; research on resistance to thiabendazole, a chemical licensed in Canada 

for use in storage; disease ratings and registration for a new cultivar AC Ptarmigan; and 

research on molecular genetics for Arnisk, a table potato suitable for french fries. 115 

Matching Investment Initiative (Mil) 

The following projects affecting potatoes were implemented under the MIT during FY 1995-

96-116 . 

• Scientists at the Charlottetown Research Centre worked with Canada's potato 

industry to combat late blight, a serious fungal disease of potatoes. The focus is 

on the dynamics oftbe disease-how it spreads and how it evolves. 

• The Fredericton Research Centre created a test for detecting the PVY n virus in 

dormant potato tubers. Previously the export-limiting virus could only be 

detected by growing the potatoes in Florida test plots in January, holding up 

shipments that were ready by November. Now, the potatoes can be tested any 

time after harvest. 

• The Kentville Research Centre in Nova Scotia is working with the manufacturer 

of a product that maintains the processing quality of stored potatoes. The study 

will characterize the effect of the product to determine how best to control 

sprouting and disease. 

Additionally, an o:flicjal from the Charlottetown Research Centre has indicated that up to March 

31, 1997, the Centrehad30 MII projects ranging from Can$5,000 to Can$100,000, with about 

50 percent of these projects related to potatoes and/or soil management.117 

Disease Control -PVYn Compensation 

The PVYn Compensation Program reimbursed potato producers in P .E.T. , New Brunswick, and 

Ontario for losses incurred as a result of the potato virus Y necrotic (PVYn) eradication 

program. The PVYn virus was first found in P.E.I. in late 1991 and early 1992. AAFC test 

results first indicated the virus was widespread, but subsequent retesting indicated that the 

us AAFC, Leth.bridge Research Centre, found at 

http://www.agr.ca/research/directory/doc_27e.html, May 21, 1997. 

u6 AAFC, 1996-97 Estimates. 

u7 Research officer from the Charlottetown Research Centre, P .E.I., interview by USITC staff, 

May7, 1997. 

4-51 
incidence was much less.118 This program compensated fanners who experienced financial 

losses due to the PVYn virus and the inaccurate test. Direct payments to producers in P.E.I., 

New Brunswick, and Ontario under this program amounted to Can$2.4 million in 1993, of 

which Can$988,000 and Can$ l.4 million went to potato producers in P.E.I. and New 

Brunswick, respectively. An additional payment of Can$ l 5 .3 million was made to producers 

in New Brunswick in 1995.119 

General Programs-WageAssistance 

Human Resources Development Canada (HRDC) programs available to food processors and 

other employers in Canada include the Targeted Wage Subsidy Program, which provides to 

employers a contribution of up to 60 percent of the wage of workers for up to 30 weeks, as well 

as training costs, for employment of currently unemployed workers. 120 The Job Opportunities 

for Youth-Wage Subsidy Program provides wage assistance of up to 60 percent for up to 26 

weeks, as well as training costs, to hire young people.121 The Transitional Jobs Fund provides 

wage assistance for employers who are expanding an existing business, manufacturing a new 

product, and/or providing a new service to a community.122 It is not known whether these 

programs have specifically benefited the potato inndustry. 123 

Provincial Programs-Prince Edward Island 

Safety-net Programs 

Enhanced NISA 

Under an agreement between P.E.I. and the Federal Government, agricultural producers of 

NISA-eligible commodities in P.E.I. are eligible for a NISA "top off' for 3 years. Currently, 

producers can contribute 6 percent of their eligible net sales to a NISA account, with their 

118 According to officials from the P .E.I. Department of Agriculture and Forestry, the retests 

showed that, in P .E.I, the virus was confined to 6 farms. 119 Statistics Canada, Agriculture Economic Statistics, Nov. 1996. 12° Canada Business Service Centre (CBSC), Targeted Wage Subsidy Program, folllld at 

http://cbsc.org/english/ fedbis/bis/2028.html, updated Jan. 2, 1997. 121 CBSC, Job Opportunities for Youth-Wage Subsidy Program, found at http://cbsc.org/english/ 

fedbis/bis/214 2.html, updated Apr. 18, 1997. · 122 HRDC, Transitional Jobs Fund, folllld at http://www.hrdcdrhc. gc. ca/hrdc/guide/Isect7 _ e.html, May 29, 1997. 123 A Maine potato processor indicated to USITC staff that if he had located his plant in New 

Brunswick, half ofhis labor costs would have been paid by the Government in his first year of 

operation. Interview by USITC staff, May 9, 1997. 

4-52 
contributions being matched by the Federal Government at 4 percent and by the Provincial 

Government at 2 percent.124 

Bacterial Ring Rot Insurance 

Bacterial Ring Rot Insurance is fmanced through a cost-sharing arrangement between potato 

producers and the Provincial Government. This program provides insurance to compensate 

producers in cases of potato crops positively infected with bacterial ring rot. The program was 

first made available in 1995 to eliminate ad hoc payments in cases of positive identification. 

In 1995, about one-sixth of P.E.I. 's seed potato farms were participating.125 

Agricultural Disaster Insurance Program (ADIP) 

The ADIP, along with the Agriculture Research Investment Fund (discussed under research 

programs below) are P.E.I. 's two Safety Net Companion Programs introduced in 1995. ADIP 

allows producers to purchase protection against a disastrous drop in income due to commodity 

price increases, input cost decreases, or productivity decreases for a fee of Can$50.126 Pa:Yments 

are made if the difference between a farm's eligible agricultural income and expenses suffers 

more than a 30 percent drop in one year, compared to the previous 3-year average. To access 

ADIP funds, a farmer must be enrolled in NISA and withdraw his NISA funds first. 

Credit Assistance Programs 

Enterprise P.E.L lending for potato farms 

Enterprise P .E.I., a Provincial corporation, administers agricultural operating and term (capital) 

loans at rates that are competitive with those of commercial lenders. 127 Loans are currently 

provided at the Provincial lending rate plus 1.75 percent.128 

Lease/purchase program 

The P.E.I. Land Development Corporation purchased agricultural land at fair market prices over 

the last 20-25 years and leased the land to farmers. The term of each lease was 5 years, and 

lease payments were calculated based on equal annual payments calculated at Enterprise P .E.I. 's 

124 P.E.I., "Agricultural Insurance Corporation, Agricultural Safety Net Programs," Corner Post, 

Feb. 1997, found at http://www.gov.pe.ca/ati'comerpost/html. 125 P.E.I. Agriculture, Fisheries and Forestry, Annual Report 1995 (Charlottetown: P.E.I. 

Department of Agriculture, Fisheries, and Forestry, 1995). 126 Ibid. 127 Canadian Embassy , prehearing brief, p. 4. 128 Official froxn the P.E.I. Department of Agriculture and Forestry, interview by USITC staff, May 

7, 1997. According to the Canadian Embassy, prehearing brief, Enterprise P .E. I. lending rates are 

more than 0.5 percent higher than the rates available from commercial lenders. 

4-53 
Table4-18 

current cost of fimds plus 1. 75 percent.129 AU legal and other costs were charged to the account 

of the lessee. According to P .E.I. agriculture officials, the lease program was terminated in 

1995 and the P.E.I. Land Development Corporation no longer exists.130 Existing lease 

agreements continue to be honored with the last lease expiring in 2001. 

Provincial lending for potato processing 

A number of loans provided through the Ministiy of Economic Development and Tourism 

(MEDT) to assist the expansion or development of potato processing and storage operations 

in P.E.I. were cited in the prehearing and posthearing briefs submitted to the USITC and are 

shown in table 4-18. 

Potato processing and storage loans and grants, P.E.I., 1994-96 

Company Loan amount (Can$) Loan terms Purpose 

King's County Can$4.3 million' Grant Build a potato storage facility for lease to 

Development Cavendish Farms and to benefit up to 2,600 

Corp. acres of potatoes 

Cavendish Farms Can$25 million 9 years, 8.02 percent fixed 1996 Can$75 million trench fry plant 

interest rate2 expansion 

Small Fry Snack Can$5 million• unknown 1996 opening of potato chip plant 

Foods 

Master Packaging, Can$6.5 million, 5 years, interest set at the 1996 opening of plant to produce card-board 

ltd. Provincial cost of borrowing boxes utilized by Cavendish Farms 

(about 3 and a quarter 

percent) ~--~ 

' Contribution made through ACOA and related regional development initiatives. 2 Cavendish Farms reports that the company did not receive any financial benefit from the loan received for its 1996 plant expansion 

because interest rates have since declined below the fixed rate currently being paid to the Province. 3 Contribution made through Canada/P.E.I. Cooperation Agreement on Industrial Development. 

Sources: Cavendish Farms, posthearing brief, May 27, 1997; Collier, Shannon, Rill & Scott, prehearing brief, exhibit 2; Government of 

P.E.I., Legislative Assembly, Hansard, Mar. 29, 1996, found at http://www.gov.pe./leg/hansard/996/spring/29mar/han4.html. 

Production/Extension Programs 

Potato Seed Incentive Program 

This program provided assistance up to Can$30 per acre to potato seed growers who were 

forced to sell infected seed in the lower-priced market for table stock. According to USDA, 

FAS, the annual average cost of the program was approximately Can$28,000. It was terminated 

in 1995 due to budget cuts and the low incidence of bacterial ring rot.131 

119 Ibid. 

130 Official from the P .E.I. Department of Agriculture and Forestry, interview by USITC staff, May 

7, 1997. 

131 USDA, FAS, Review of Canadian Support Programs for the Potato Sector. 

4-54 
Limestone Rebate Program 

This program, which provided rebates on purchases of limestone to improve soil ph, benefited 

potato, cereal, and forage production in P.E.I. The program was tenninated in 1992. The 

annual cost of the program in that year was Can$477,000.132 

Extension/Agricultural Resources Assistance 

The Agricultural Resource Team (ART) of P.E.I.'s Department of Agriculture and Forestry 

provides advice, assistance, and information in the areas of horticultural and potato crop 

production, livestock production, land and soil resource management, mechanization, and farm 

engineering services. In FY 1996/97 the ART provided grants to agricultural producers, 

forecast at Can$1.0 million.133 A P.E.I. agriculture official has indicated that these funds were 

not allocated to potato growers. 134 

Tax Assistance 

Farmers' purchases of certain goods, including marked gasoline for use in vehicles used only 

on the farm, are exempt from the Provincial sales tax otherwise applicable to those goods. 

Assistance for processors 

A number of programs operated by the MEDI have benefited food processors, particularly in 

reducing environmental and energy costs. The MEDI has operated an Electrical Rate Relief 

Program which provides certain manufacturing and processing industries, including potato 

processors, a rebate of 5 to 8 percent on their electricity costs. The budget for this program is 

forecast at Can$659. 7 thousand in FY 1996/97 .

135 The MEDI has funded energy audits in the 

past. If companies, including potato packers and processors, complied with the changes 

suggested in these audits, they were reimbursed for 25 percent of the associated costs.136 The 

amount budgeted for these audits in FY 1997 /98 is Can$3,200, down from Can$70,000 in FY 

1996/97. 

The Province has also funded the cost of infrastructure, such as wastewater treatment 

improvements, required of food processors and other manufacturers.137 According to Cavendish 

Farms, such assistance helps to defray the capital cost of P.E.I.'s higher environmental 

132 Ibid., p. 9. 133 P.E.I., Estimates 1997-98. 134 P.E.I. agriculture official, telephone interview by USITC staff, May 28, 1997. 135 P.E.I., Estimates 1997-98 (P.E.I.: Department of the Provincial Treasury, 1997). 136 Legislative Assembly of P.E.I., Hansard, Mar. 29, 1996. 137 Ibid. 

4-55 
standards. 138 Companies are expected to maintain any wastewater treatment facilities located 

on their plants and/or pay fees for the use of any municipal wastewater treatment facilities. 

Disease Control under the Plant Health Act 

The P.E.I. Department of Agriculture and Forestry funds the Potato Quality Program, which 

provides for education, enforcement, and monitoring in regard to the Province's Plant Health 

Act. FY 1996-97 expenditmes under this program are forecast at Can$687.6 thousand and FY 

1997 /98 expenditures are estimated at Can$728.4 thousand.139 

Disinfection Program 

P .E.I. 's Plant Health Act requires that warehouses, storage, trucks and trailers, equipment, and 

ocean vessels that handle P.E.I. potatoes be disinfected. 140 Starting in FY 1997/98, a fee of 

Can$ l 0 per vehicle will be charged to cover the cost of the disinfection service for these 

trucks.141 The Province disinfects approximately 20,000 transport vehicles each year. The fee 

is expected to add much less than 1 percent to the cost of shipping potatoes out of the 

Province.142 A mobile disinfection pr~gram will continue to be offered free of charge. 

Potato Cull Burial 

This program has two parts, Cull Burial and Cull Composting. Under the Cull Burial plan, 

which is designed to eliminate a source of contamination by bacterial ring rot, producers may 

apply for financial assistance equal to one-half the cost of burying cull potatoes, up to a 

maximum of Can$300 per farm per year. Under the Cull Composting plan, producers may 

apply for financial assistance equal to one-half the cost of composting cull potatoes, up to a 

maximum of Can$600 per farm per year. Payments to potato producers under this program 

were Can$13,000 in 1994, Can$7,000 in 1995, and Can$3,000 in 1996.143 

Research 

Laboratory Services and Plant Health Research 

The Soil and Feed Testing Laboratory, which is operated by the Department of Agriculture and 

Forestry, provides chemical analysis on soil, feed, plant tissue and greenhouse media. It also 

138 Cavendish Fanns, posthearing brief 

139 Ibid. 

140 Telephone interview with P.E.I. Department of Agriculture official by USITC staff, May 14, 

1997. 141 Embassy of Canada, prehearing brief, p. 8. 142 P.E.I., "Budget Emphasizes New Priorities," Corner Post, Apr. 1997. 143 Statistics Canada, Agriculture Economic Statistics, pp. 24-25. 

4-56 
provides specialized tests, such as seed gennination, manure, and compost analysis. A range 

of fees are charged for these tests. 144 The Department's Plant Health and Research Laboratory 

provides professional, technical, and other support services in the areas of plant health research 

and diagnostics. The Laboratory also maintains a Potato Pest Information Hotline. 

Agricultural Research Investment Fund (ARIF) 

The ARIF was established in 1995 by the Department of Agriculture and Forestry to assist 

agricultural organizations, agribusinesses, and individuals to finance applied and developmental 

research projects. The ARIF will match up to 3 dollars to every 1 dollar contributed by 

commodity boards or producer/industry associations. For individual producers and private 

businesses, the ARIF will match I dollar to every 3 dollars contributed by the applicant. The 

maximum contribution from the ARIF is Can$60,000.145 

P.E.1 Food Technology Centre (FTC) 

The FTC, which reports to the MEDT, was established in 1987 to provide scientific and 

technical expertise to agriculture and fisheries industries of P.E.I. 146 The FTC is involved in 

product development, sensory analysis, nutrition labeling, food safety, analytical services, and 

research and development.147 Through its Technology Partnering Program, the FTC is active 

in helping to establish new food companies in P .E.I. by providing its technology knowledge and 

expertise in exchange for equity in a new food business. The FTC also provides some services 

on a fee-for-service basis. 

Trade/Enterprise/Market Development Assistance 

Enterprise P.E.1 

Enterprise P .E.I., a Provincial agency that reports to the MEDT, operates a number of programs 

to assist the development of private enterprises on P.E.l.148 One such program is the P.E.1 

Trade Development Centre, which promotes international trade and development through 

collection and distribution of infonnation on export markets; applied research on the marketing 

of internationally competitive products and services; export awareness education and training, 

market entry and development initiatives, and the provision of export marketing advice.149 

144 P.E.I., Soil and Feed Testing Laboratory, found at 

http://www.gov.pe.ca/af/soilfeed/index.html, May 25, 1997. 145 P.E.I., "ARIF-Securing a Strong Agricultural Future," Comer Post, Feb. 1997. 146 P .E.I, .Food Technology Centre, found at http://www.gov.pe.ca/:ftc/index.html, May 25, 1997. 147 One such research project is assisting the potato processing industry by examining 

improvements in the utilization of potato waste. 148 Many of these Enterprise P.E.I. programs have been supported through the Canada/P.E.I. 

Cooperation Agreement on Industrial Development and other Cooperation agreements. 149 P.E.I., Estimates 1997-98. 

4-57 
Enterprise P.E.I. also operates a Small Business Support Program which provides services 

on a cost-shared basis to reduce financial risk in new product and market development, new 

business start ups and business expansions. Expenditures on this program are forecast at 

Can$695 thousand in FY 1996/97 and at Can$2.2 million in FY 1997/98, including Can$1.0 

million in Small Business Support. The Development Assistance Program provides 

infrastructure assistance,150 venture capital programs, tax incentives, and other types of 

assistance to attract investment in P .E.I. Forecast expenditures under this program in FY 1996-

97 amounted to Can$13.8 million, of which Can$9.9 million involved infrastructure 

assistance.151 Expenditures under this program were budgeted to decline to Can$8 .5 million in 

FY 1996/97. 

Canada/P.E.L Agreement on Regional Economic Development (REDA) 

This REDA is a 5-year (April 1, 1996-March 31, 2001) plan providing support in seven 

strategic areas: strategic infrastructure, tourism, educational support, community economic 

development, export trade development prospecting, planning, and primary resource 

development.152 This REDA consolidates and replaces two former Cooperation Agreements.153 

It will provide Can$20 million in additional funds, which will be cost-shared between the 

Federal and Provincial Governments on a 70:30 basis. ACOA is the Federal delivery partner. 

As noted earlier, ACOA is no longer lending to private businesses under regional agreements 

formed after August 1996. Thus, assistance will be provided only for noncommercial activities. 

Provincial Programs-Manitoba 

Safety-net Programs-Enhanced Crop Insurance 

Manitoba's Enhanced Crop Insurance was implemented in the 1996 crop year. Under this 

program, the Federal and Provincial Governments pay the entire premium cost of insuring crops 

for up to 50 percent of long-term average yield, while producers pay a Can$.20/per acre 

administration fee. 154 Producers are able to buy higher protection (70 to 80 percent) by paying 

150 Assistance for environmental infrastructure is supported through the P .E.I. Cooperation 

Agreement on Industrial Development. 

151 Ibid. 152 P.E.I., News Release, "New Canada/P.E.I. Agreement of Regional Economic Development 

Announced," Feb. l 7,J997. 153 One of the agreements replaced was the Canada/P .E.I. Cooperation Agreement on Primary 

Resource Development (PRDA) which ran from Apr. 1, 1994, to Mar. 31, 1996, and helped primary 

resource groups, organizations, and individuals to position themselves to take advantage of export 

development, import substitution, and niche and diversification market opportunities. According to 

MEDI officials, however, this agreement provided virtually no assistance to the potato sector in P.E.I. 

MEDI official, telephone interview by USITC staff, May 27, 1997. 154 Manitoba Government News Release, "New Crop Insurance Enhancements Announced," Dec. 

15, 1995. 

4-58 
a portion of the additional premium cost, with the remaining portion paid by Government. The 

enhancements are in effect for a 3-year trial period, and apply to all crops eligible for insurance, 

including potatoes. 

Credit Assistanc~Manitoba Agricultural Credit Corporation (MACC) 

Direct loans and loan guarantees 

MACC provides farmers with intermediate and long-term direct loans of up to Can$250,000 

for the purchase of, or improvements to, land, and for construction of farm buildings at an 

interest rate equal to MACC's cost of borrowing from the Province, plus 1 percent.155 MACC 

also provides direct loans for debt consolidation at an interest rate of 9 percent for the first 5 

years, after which the rate is set at the prevailing MACC rate. MACC's Young Farmer Rebate 

Program provides to eligible young farmers (39 years of age and under) a 2 percent rebate on 

the first Can$100,000 ofMACC loan principal, for each ofthe·first 5 years of the loan, up to 

a lifetime maximum of Can$10,000.156 MACC also provides loan guarantees for operating 

credit made to producers through lending institutions at an interest rate not exceeding prime plus 

1 percent. The loan guarantee cannot exceed Can$250,000 and the loan is repayable annually 

at the end of the production cycle. 

According to Manitoba officials, very few potato producers have been involved in these MACC 

lending programs because potato start up costs are relatively high·and most potato farmers 

would go over the lending limits.157 Additionally, MACC rates are relatively high. 158 According 

to these officials, MACC programs are primarily utilized by smaller, lower cost operations.159 

Loan limits for MACC loans and loan guarantees were raised from Can$200,000 to 

Can$250,000 in late 1995.160 

Diversification loan guarantees 

The Diversification Loan Guarantee Program, a Can$ l 0 million program designed to help 

farmers adjust to the loss of Federal grain transportation subsidies, was implemented in 

December 1995. The program assists producers to move into profitable crops and value-added 

155 Manitoba Agricultw"e, "Programs and Services," found at http://www.gov.mb.ca/agriculture/ 

programs/aaa20s0 I .html and Embassy of Canada, prehearing brief, Apr. 28, 1997. 156 Manitoba Agricultw"e,Annual Report 1995-96, p. 13. 157 Interview with officials from the Government of Manitoba byUSITC staff, Apr. 11, 1997. 158 MACC programs primarily serve higher-risk farmers who would have difficulty obtaining funds 

from other sources. 159 Ibid. 160 Manitoba Government News Release, "Loan Guarantee Program to Help Farmers Meet PostCrow Challenge: Enns," Dec. 21, 1995. 

4-59 
projects by guaranteeing a portion of start-up funds borrowed from private lenders. 161 The 

program guarantees 25 percent of loans ranging up to Can$3 million and is available for a 

variety of enterprises, although the announced target areas include hog operations, beef cattle 

feedlots, and potato production and storage.162 According to Provincial officials, Can$3.8 

million in loans had been approved for hog and potato producers by August 1996.163 

Irrigation/\V astewater Treatment Assistance/Infrastructure 

Canada/Manitoba Partnership Agreement on Municipal Water Infrastructure 

(PAMWI) 

PAMWI is an 8-year agreement ending March 31, 1999, with equal contributions from the 

Federal, Provincial, and Municipal Governments for water and wastewater system upgrades in 

selected rural communities where industrial and residential development has been limited by the 

size and condition of existing systems.164 The Provincial and Federal Governments have each 

committed up to $30 million for this initiative, with the remaining $30 million provided by the 

communities participating in the program. 

During FY 1995/96, expenditures under PAMWI totaled Can$20.2 million with a Federal share 

of Can$8.4 million. 165 During FY 1995/96 PAMWI initiated a Can$15 million project to 

upgrade a wastewater treatment plant at Portage la Prairie which would allow for the continued 

operation of a potato processing facility owned by McCain Foods Ltd. 166 McCain Foods 

subsequently announced that it would implement a Can$68.8 million expansion in its facility 

following the completion of this wastewater project.167 This expansion is projected to require 

an additional 6,880 hectares of irrigated potatoes, almost double its previous requirements.168 

Rural Economic Development Initiative (REDI) 

REDI, which is administered by Manitoba Rural Development, provides assistance for 

commercially feasible development initiatives, particularly in the areas of business development 

and manufacturing. REDI initiatives include the Infrastructure Support Program, which 

161 Manitoba Government News Release, "Diversification Loan Guarantee Program Well 

Received," Aug. 21, 1996. 

162 Ibid. 

163 Ibid. 

164 "Canada/Manitoba Partnership Agreement on Municipal Water Infrastructure," found af 

http://www.agr.ca/ pfra/pamgene.htm, updated Aug. 16, 1996 .. 165 AMC, 1996 Performance Report, p. 34. 166 USDA, FAS, "Frozen French Fry Annual," Oct. 18, 1996 and AMC, 1996-97 Estimates, p. 

56. 167 "Portage Expansion Begins," Collier, Shannon, Rill & Scott, prehearing brief, exhibit 2, Apr. 

21, 1997. 

168 . "A Potato Coup for Portage," Winnipeg Free Press, Sept. 20, 1995. 

4-60 
provided Can$1.0 million in FY 1996/97 for the Portage la Prairie wastewater infrastructure 

program.169 

Canada Agri-lnfrastructure Program (CAIP) 

CAIP initiatives totaling Can$30.6 million in Federal funding were announced for Manitoba in 

February 1997. These initiatives include Can$1.9 million for agricultural and agribusiness 

research (through the Manitoba Rural Adaptation Council), and Can$17.55 million for 

development of water supply/waste treatment and other infrastructure to assist the establishment 

of value-added industries, including an additional Can$4. 0 million for wastewater treatment 

improvements at Portage la Prairie.170 An additional Can$7 .1 million will assist projects that 

provide water for domestic use and for development of value-added agricultural industries, 

including Can$3.0 million for the Surplus Water hrigation Initiative (see below).171 The 

Government of Manitoba, municipalities, and other interested participants will be invited to 

contribute an additional Can$42.3 million for these projects under a cost-sharing arrangement. 

Crop Expansion-Surplus Water Irrigation Initiative 

Manitoba's Surplus Water hrigation Initiative is directed at the development of community 

irrigation infrastructure to enable a further expansion in the 68,000 acres of potatoes that were 

produced in 1996.172 The Government of Manitoba gave its tentative approval for this irrigation 

project in mid-1996, the cost of which is projected at between Can$16-20 million.173 The 

project will develop retention ponds to hold water diverted from heavy spring runoffs. The 

ponds would hold 3 00-400 acre/feet of water designed to irrigate about 700 acres of potatoes 

through a pipeline system. It is estimated that up to 30,000 acres of potatoes (new and 

existing) could benefit by the end of the century. About 60 percent of Manitoba potatoes are 

under irrigation currently. The new plan would raise the level to about 75 percent. 

According to USDA, FAS, the program is expected to offer interest reliefloans for irrigation 

development through the MACC for up to 5.5 years and to proyide average annual loan 

assistance of about Can$ l 60 per acre. 174 Provincial officials estimate that most commercial 

potato farmers grow about 500 acres of potatoes. District groups will be formed to allocate and 

charge farmer members for the water. 

169 Legislative Assembly of Manitoba, Hansard, May 30, 1996, found at http://www.gov.mb.ca/ 

leg-asmb/hansard/2nd-36th/vol42b/h042b _ lhtml. 

170 Ibid. 

171 Ibid. 

172 AAFC, 1996 Performance Report, p. 32. 173 USDA, FAS, "Frozen French Fry Arm.ual," Oct. 18, 1996. 174 Ibid. This is based on interest relief of 8 percent on Can$2,000, the maximum eligible amount 

per acre. 

4-61 
A commitment of Can$500,000 was included in Manitoba Agriculture's FY 1996-97 budget 

to support this initiative.175 Additionally, AAFC announced in February 1997 that Can$3.0 

million in Federal funding would be allocated for this project through the CAIP program.176 

CAIP funds will finance research and development, surplus water retention and distribution, 

water quality, environmental sustainability, soil conservation, and land use initiatives under this 

program. 

Canada-Manitoba Agreement on Agricultural Sustainability (ClliAS) 

CMAAS is a Can$20.8 million cost-shared program between the Canadian Government and the 

Government of Manitoba to respond to sustainable agriculture issues and to expand efforts to 

improve resource management. The program nms to December 31, 1997 .

177 Benefits for potato 

producers under this program have included an integrated pest management project involving 

selected vegetable, potato, and pulse crops. 178 During 1994-96 CMASS financed the 3-year 

Assiniboine Delta Aquifer (ADA) Monitoring Project at the Manitoba Crop Diversification 

Center (MCDC) in order to assess the impact of irrigation on the movement of agricultural 

chemicals into the aquifer. More than 15,000 acres are irrigated from the ADA annually, most 

of which are used for potato production. The increase in acreage under irrigation has raised 

concerns about its effect on water quality. 179 

CMAAS also contributed Can$210,000 during FY 1995/96 for the Agazziz irrigation 

association for irrigation development that could provide up to 1,600 of additional irrigated 

acres, including potatoes.180 Other contributions to this project included Can$200,000 from 

the MCDC, Can$300,000 from Manitoba Rural Development, and Can$100,000 from 

Manitoba Natural Resources. 

Rural development grants for irrigation 

The Manitoba Rural Development, through the Manitoba Water Services Board, provides a 

small grant of Can$3,000 to farmers who wish to develop irrigation fanning. The Soil and 

Water Management Section of Manitoba Agriculture provides an assessment of soils and water 

175 Legislative Assembly of Manitoba, Hansard, May 23, 1996, found at http://www.gov.mb.ca/ 

leg-asmb/hansard/2nd-36th/vol38b/h038b_2html. 176 AAFC Release, "Federal Funding Announced for Manitoba Agricultural Infrastructure 

Improvements," Feb. 28, 1997. 177 PFRA, "Canada-Manitoba Agreement on Agricultural Sustainability (CMAAS)," found at 

http://www.agr.ca/pfra/cmaase.htm, updated Feb. 18, 1997. 178 Manitoba Agriculture, Annual Report 1995-96 (Winnipeg: Manitoba Agriculture, 1996), 

p. 23. 

179 MCDC, 1996 Annual Report (Carberry, Manitoba: MCDC, 1996). 180 Legislative Assembly ofManitoba,Hansard, June 6, 1995, found athttp://www.gov.mb.ca/ 

leg-asmb/hansard/lst-36th/voll l/h011_ 4html 

4-62 
for irrigation suitability along with this grant program. Potential irrigators must apply for a 

license through the Water Services Board.181 

Manitoba Crop Diversification Centre 

The MCDC, located in Carbeny, Manitoba, is a co-operative facility based on a 10-year 

agreement signed in 1993 between three partners: the Government of Canada, the Province of 

Manitoba, and producers and processors through the Manitoba Horticultural Productivity 

Enhancement Centre.182 The MCDC has participated in the development of the potato industry 

in Manitoba through applied research and demonstration activities at six locations in Manitoba. 

Its activities include identification, evaluation, and demonstration of new crops, technologies 

and value added opportunities for sustainable agriculture, including development of irrigated 

agriculture. Client services include technical assistance and educational activities that facilitate 

the appropriate development in irrigation and crop diversification. 

Souris Valley Irrigation Centre 

The Souris Valley Irrigation Centre was formed in 1994 by a group of farmers to promote new 

farming practices and crops in southwestern Manitoba with the assistance of a grant from the 

Sustainable Development Innovations Fund. In 1996, the center grew various crops, both 

irrigated and dryland, including potatoes, which are the cornerstone for the rotation at the center. 

The center currently receives support from local businesses, agricultural corporations and 

government, through Manitoba Agriculture and the West Souris River Conservation District.183 

In 1996 the center produced white potatoes for french fry processing, which were delivered to 

Midwest Foods of Carberry. 

Tax Assistance 

Agricultural producers in Manitoba benefit from an exemption from the Provincial sales tax on 

gasoline and diesel fuel used for agricultural production. Additionally, manufacturers in 

Manitoba are exempt from the Provincial sales tax (7 percent) on electricity used in 

manufacturing. Manufacturers also benefit from a 10-percent manufacturing investment tax 

credit.184 

181 Legislative Assembly of Manitoba, Hansard, June 5, 1995, found at http://www.gov.mb.ca/ 

leg-asmb/hansard/l st:36th/vol l Ob/hO 1 Ob_ lhtml. 182 AAFC, 1996-97 Estimates,p. 120. 183 MCDC, 1996 Annual Report. 184 "Manitoba Basic Business Taxes and Tax Incentives," found at http://www.areadevelopment.com/FT_MAN.htm, June 11, 1997. 

4-63 
Research Programs 

Sustainable Development Innovations Fund 

Manitoba's Sustainable Development Innovations Fund provides :funding for the development, 

implementation, and promotion of environmental innovation projects which support sustainable 

development. During FY 1995/96, the Fund provided Can$340.2 thousand for agricultural 

projects. Included in this :funding was Can$95,000 for Manitoba's Seed Potato Growers 

Association and Can$17.8 thousand for the Manitoba Potato Industry.185 

ManitobaAgri-Ventures Initiative (.MAJII) 

The MA VI provides matching funding for feasibility studies and business plans related to 

agricultural diversification initiatives and value-added projects. The program provides matching 

grants of up to Can$5,000 for business development projects and matching grants of up to 

Can$10,000 for collaborative projects in technology transfer and market development. As of 

April 1996, the MA VI had provided Can$50,379 in assistance, with Can$5,000 made available 

for a project to study the feasibility of creating a healthy potato chip product and the potential 

for all-season fresh strawberry and jam production.186 

Food Technology Centre (FTC) 

The FTC, which is located in Portage la Prairie, provides a range of services to local, national 

and international food, feed, and beverage industries. Services include product development and 

testing, nutritional analysis, and labeling, sensory evaluation and shelf-life studies, process 

development, and engineering studies. The FTC is funded through Manitoba Rural 

Development. Services are provided on a fee-for-service basis. 

Provincial Programs-New Brunswick 

Credit Assistance 

New Brunswick Debt Refinancing Program 

The N.B. Debt Refinancing Program is an agreement with the Province of New Brunswick and 

the FCC announced in May 1995 to provide interest relief to New Brunswick potato and other 

185 Manitoba Agriculture, 1995-96 AnnualReport, pp. 75-76. 186 Government of Manitoba News Release, "Manitoba Agriculture Helps Manitobans Explore 

Agri-business Opportunities," Apr. 18, 1996. 

4-64 
horticultural producers affected by blight and drought in 1994. Under the program, eligible 

producers were able to obtain an interest-free, debt refinancing loan from the FCC for 80 

percent of their wipaid debt relating to the 1994 crop, repayable over a maximum 5-year 

period.187 The interest-free loans were restricted to a maximum loan of Can$500 per acre, or 

Can$ l 00,000 per farm. The remaining 20 percent of the wipaid debt could be refinanced at the 

commercial rate from the FCC or other financial institutions. 

According to officials from the N.B. Department of Agriculture and Rural Development 

(NBDARD), 49 potato farmers in New Brunswick participated in this program.188 Total interest 

paid by the Province ammmted to Can$65,720 in FY 1995/96;189 Federal payments amowited 

to Can$114,000 in FY 1995/96.190 The interest relief is cost-shared 60 percent Federal-40 

percent Provincial on the first Can$5 million, and 80 percent Federal-20 percent Provincial on 

any excess over Can$5 million. 

Agricultural Development Bank (ADB)-Lending Programs 

The ADB provides loans and loan guarantees to both viable agricultural operations as well as 

higher risk operations. The ADB administered the Fann Machinery Loans Act, which was 

tenninated April l, 1996;191 it also administers ad hoc Loan Guarantee programs that assist 

certain commodities from time to time.192 Loans to assist with the purchase of machinery under 

the Fann Machinery Loans Act had a favorable interest rate of prime plus 1 percent. 

Outstanding loans under this program amowited to Can$?39 ,234 as of March 31, 1996.193 

Under .a program canceled in 1992, the ADB provided borrowers with partial interest rebates 

on loans with interest rates greater than 7 percent, or on FCC loans with interest rates greater 

than 9 percent. Maximum rebates could not exceed Can$ l 0,000 per year for loans advanced 

by the FCC and Can$15,000 on loans advanced by the ADB. 194 No new loans were approved 

under this program after April 1, 1992. A 5-year phaseout ending March 31, 1997, was 

established for existing loans. 195 

The New Entrant Financing Program provides loans of up to Can$450,000 for 5 years to new 

farmers. During FY 1995/96 New Entrant Loans for all farming activities amounted to Can$1.8 

187 Government of New Bnmswick News Release, "Agricultural Loans for Potato and 

Horticultural Producers," NB 48, May 5, 1995. 188 NBDARD officials, interview by USITC staff, May 6, 1997. 189 NBDARD, 1995196 Annual Report (Fredericton: Department of Agriculture and Rural 

Development, 1996), p. 49. 190 AAFC, 1996 Performance Report, p. 61. 191 Canadian Embassy, prehearing brief, p. 7. 192 NBDARD,1995!96Annua/Report. 193 Ibid. The Annual Report also reports 20 loans amounting to Can$ l 98,000 extended in FY 

1995/96. 194 USDA, FAS, Review of Canadian Support Programs for the Potato Sector. 195 Canadian Embassy, prehearing brief, p. 6. 
million. 196 NBDARD officials report that this program has been primarily used by dairy 

fanners. 197 

ADB-Land Lease Purchase Program 

The ADB has offered a Land Lease/Purchase Program to enable existing farmers to acquire 

additional land necessaiy to make a more viable farm unit.198 Under this program, farmers could 

lease-to-purchase land held by the ADB. The tenn of ~e lease was 5 years, with the leasing fee 

equal to one Canadian dollar in the first 2 years. For years 3 to 5, the annual fee was 5 percent 

of the AD B's original capital investment. After the 5-year period, the farmer could purchase the 

property at the ADB's original investment or lease it for one additional 5-year term with a lease 

payment based on the new appraised value. All new leases after December 1993 were restricted 

to one 5-year term with the understanding that the property would be purchased within the 5-

year term for the amount of the AD B's investment.199 

As of March 31, 1996, 35 leases involving 6,580 acres, or 75 percent of acres under this 

program, had been extended to potato-growing operations. 200 According to NBD ARD officials, 

this program was primarily used for transferring farms from father to son. 201 The Land Lease 

Purchase Program ended March 31, 1996;202 however, the program has been placed under the 

Potato Expansion and Crop Expansion and Land Stewardship Programs (discussed below) to 

assist in bringing new land into production. The terms for leasing remain the same as under the 

previous program. 203 

Potato Expansion and Land Stewardship Program 

In June 1995 a 5-year, Can$2.5 million Potato Expansion and Land Stewardship Program was 

implemented to improve land-use management and increase potato production in New 

Brunswick. The purpose of the program is to improve plant stands; lead to better irrigation, 

land clearing, drainage and erosion control on existing farms and under-utilized agricultural 

land; and to provide better marketing schemes for small potatoes.204 

196 Ibid. 197 Interview by USITC staff, May 6, 1997. 198 NBDARD, 1995196 Annual Report. 199 USDA, FAS, Review of Canadian Support Programs for the Potato Sector, and Canadian 

Embassy, prehearing brief. 200 NBDARD, 1995196 Annual Report., p. 52. 201 Interview by USITC staff, May 6, 1997. 202 Canadian Embassy , prehearing brief 203 NBD ARD officials, interview by USITC staff, May 6, 1997. 204 New Brunswick Department of Finance, The New Brunswick Economy 1996 (Fredericton: 

New Brunswick Department ofFinance, 1996). 

4-66 
Irrigation development/land clearing/stewardship 

lbis program has several parts. The development of irrigation for potatoes is one component. 

Potato growers can apply for an interest buy-down to a maximum of 10 percent on the cost of 

developing water sources for irrigation. 205 The improvement of crop rotation and expansion of 

available land for potatoes and other crops is supported through a land-clearing component. 

Assistance in the form of an interest buy-down is provided for costs associated with land 

clearing, leveling, and liming. 206 A land-stewardship component is also included to provide an 

interest buy-down on the costs of eligible land drainage and soil conservation activities. 

During FY 1995/96, 1,257 acres benefited from farmland development and conservation 

projects under the Potato and Agricultural Crop Expansion207 and Land Stewardship 

Programs.208 Interest buy-down amowited to Can$30,000 under the Potato Expansion Program 

and to Can$195,576 for various crops under the Land Stewardship Program in FY 1995/96.209 

Soil and mapping survey 

The NBDARD completed a Can$104,000 mapping and soil survey in April 1997 to identify 

lands suitable for production in the Province's potato belt.210 lbis project was jointly funded 

with McCain Foods Ltd. The purpose of this project was to identify areas in the Province's 

potato belt that could be suitable for expansion of potato, grain, and forage production. 211 

Tax assistance 

Farm Land Identification Program (FLIP) 

The FLIP currently provides a deferral of the Provincial tax on land and buildings used in 

agricultural production for registered land owners for up to 10 years. After 10 years, it is 

possible to receive a tax exemption for land and buildings that are still in agricultural use.212 

205 Canadian Embassy, prehearing brief, p. 7. 206 The interest buy down is based on a simple interest rate set at prime plus 1 percent, or an 

interest rate of 10 percent, whichever is less. The interest buy-down is applied to 100 percent of the 

approved cost in year 1 and the applicable amount for the interest buy down is reduced by 20 percent 

of the original amount in each subsequent year. 207 The Agricultural Crop Expansion program is for crops other than potatoes. 208 NBDARD,1995!96Annua!Report,p. 27. 209 Ibid., p. 41. 210 Government of New Brunswick News Release, "Mapping and Soil Survey Completed," 

NB397, Apr. 4, 1997. 211 Ibid. 212 NBD ARD officials and New Brunswick fann representatives, interview by USITC staff, May 

6, 1997. 

4-67 
A proposal to extend the tax deferred status of agricultural land and buildings for up to 15 

years, starting January 1, 1998, is underreview.213 The FLIP provided a benefit of Can$8 per 

acre in deferred taxes to registered land owners in tax year 1996.214 Deferred taxes must be 

repaid with interest when the land use changes. NBDARD officials noted that fanners must still 

pay municipal taxes on agricultural land and buildings.215 

Tax rebates and exemptions 

Agricultural producers may receive a rebate on taxes paid on gasoline used in tractors and 

combines for agricultural production. Diesel fuel is delivered as nontaxable to fanners, so no 

rebate is required. This rebate program is available for all natural resource-based business 

activities. Fanners also receive input tax credits on purchases of inputs used in agricultural 

operations. 

Research/Extension, and Production 

Farm Infrastructure and Technology Program 

In May 1994, the Goverrunent ofNew Brunswick implemented a Can$2.9 million program to 

improve fann infrastructures and marketing potential and to increase the availability of 

technology. 216 According to infonnation supplied by McCain Foods, the Government of New 

Brunswick provides grant assistance of 25 percent for the purchase of irrigation equipment to 

expand use of this technology. This grant is available to potato as well as other growers. This 

grant is matched by McCain Foods in Florenceville, New Brunswick for potato growers under 

contract with McCain in the amount of Can$20,000 with an additional Can$5,000 if the 

equipment is purchased through a certain New Brunswick dealer.217 McCain Foods has 

indicated that since the program began in 1994 it has provided only four matching grants. 218 

NBARD Programs 

NBD ARD finances the activities of a number of research, extension and crop development 

programs benefiting potatoes as shown in table 4-19. 

213 Government of New Brunswick News Release, "Fann Land Identification 

Program/Amendments," NB 157, Feb. 7, 1997. 214 Based on a savings of Can$3 .5 million in deferred real property tax and 188,630 hectares 

registered in the program. NBDARD, 1995196 Annual Report, p. 25. 215 Interview by USITC staff, May 6, 1997. 216 N.B. Department of Finance, The New Brunswick Economy 1995 (Fredericton: N.B. 

Department ofFinance, 1995). 217 Officials from McCain Foods, interview in Easton, Maine by USITC staff, May 8, 1997 and 

0 'Melveny & Myers, LLP, Counsel to McCain Foods, posthearing brief, May 27, 1997. 218 McCain officials, telephone interview by USITC staff, June 23, 1997. 

4-68 
Table4-19 

N B . ew runsw1c kD epar tm en t of A • I .aricu ture and R ura IDe veo~men I researc h d an extension ac ti v lti es 

Program Recent activities 

Plant Propagation Centre Produces nuclear potato material for delivery to the Bon Accord Seed Potato Farm and the 

N.B. potato industry. Location of the Canadian Potato Variety Repository. 

The Bon Accord Seed Farm Provides high quality nuclear and Elite I seed potatoes to private producers for further 

propagation.' 

N.B. Horticulture Centre Provides field and greenhouse facilities in support of technical and demonstration projects 

involving vegetables, small fruit, potatoes, and ornamentals. 

Potato Centre Provides technical information and guidance to potato growers in the areas of seed, table and 

processing production, and pest, storage, and physiological management. FY 1995/96 

highlights include 

• establishment of a Late Blight Alert Network in partnership with McCain Foods 

and the N.B. Potato Agency; 

• obtaining registration of a new product to control the Colorado potato beetle; 

• evaluating the benefits of supplementary irrigation; 

. assistance to the industry in the Federal Government's revision of the Seed 

Regulations and inspection fees; and 

I evaluation of new potato storage construction technologies. 

Soil and Climate section, Provides analytical laboratory services for soil, feed, and tissue. Fees are charged for 

N.B. Department of laboratory services. Other recent activities include adaptive research trials on irrigation for 

Agriculture and Rural potatoes, advice and recommendations on crop suitability for various soil and climatic 

. Development locations, and other advisory services. 

' According to USDA, FAS, Bon Accord's seed 1s purchased at approximately 20 percent below its production cost. New Brunswick 

potato officials have indicated that this is because Bon Accord is a high-cost, inefficient seed producer. 

Source: NBDARD, 1995196 Annual Report, pp. 31-35, and USDA, FAS, Review of Canadian Support Programs for the Potato Sector. 

Agribusiness/Rural Development/Market Development 

Strategic Partnership Development Fund 

This Fund provides partnership assistance to help industry applicants access funds for 

agricultural production, food processing, rural-based small businesses, and marketing. During 

FY 1996-97, Can$300,000 was available under this program, which was used to support farm 

safety projects, adaptive research, and industry efforts to sell New Brunswick's agricultural 

products internationally. Approximately Can$2.0 million will be available in FY 1997-98.219 

The following research, marketing, and industry development projects for the potato industry 

were announced in May 1997 (Can$):220 

219 Government of New Brunswick News Release, "Applications/Strategic Partnership 

Development Fund," NB1881, Dec. 20, 1996. 220 Government of New Brunswick News Release, "Strategic Partnership Development Fwid," 

NB 620, May 6, 1997. 

4-69 
Organization Project Amount 

C&MFarms Site-specific potato management 24,850 

Tobique Farms Ltd .. Mexico seed potato mark.et expansion 17,950 

N.B. Seed Potato Growcrn Study on prespouting and spacing 11,600 

Michaud Equipment Ud. Potato planter evaluation 6,800 

Cavendish Fanns Study on Centre Pivot Irrigation 6,000 

Killoween Farms Study on forage seed/potato system 5,250 

Kevin Floyd Ltd. Potato quality control laboratory 5,000 

N.B. Seed Potato Gowers Development project 4,550 

N.B. Potato Agency Potato chip development 4,255 

Ferme Michaud Ltd Tuber and drip irrigation 1,350 

Max van Cingel/Killoween Farms Study of crops for potato belt 1,350 

McCain Foods Ud Study on drip tape methods 1,045 

Canada/New Brunswick Regional Economic Development Agreement 

(REDA)/Department of Agriculture and Rural Development 

The Marketing and Business Development Branch of the NBD ARD participates in industry and 

market development initiatives with primary producers and food-processing companies. Trade 

expansion initiatives have been funded through the New Brunswick REDA.221 For example, 

two trade missions were conducted in March 1997 to the Leeward Islands and to Mexico to 

promote seed potato exports.222 Additionally, in 1996. the N.B. Agriexport Inc. was formed 

under NBDARD. N.B. Agriexport is an umbrella company that plans and carries out feasibility 

studies and technology transfer projects~ sources supplies and inputs; and provides training and 

business financing for the purpose of facilitating export projects. 223 Primary areas of expertise 

of this company include fresh and processed potatoes, livestock, and other horticultural 

products. 

221 The REDA, a 5-year agreement between the Government of Canada and the Province of New 

Brunswick, was signed in August 1996 to provide funding for economic development projects in 

New Brunswick. The agreement consolidated five previous Cooperation agreements between the 

Federal government and New Brunswick, and it provided for additional funding of Can$53. 7 million, 

of which 70 percent will be provided by the Federal government. The REDA is administered by 

ACOA and by New Brunswick's Regional Development Corporation (RDC). 222 Government of New Brunswick, "Trade Missions to Leeward Islands and Mexico," NB 308, 

Mar. 17, 1997. 223 NBARD, Agriexport, Inc., found at http://www.gov.nb.ca./agricult/export.htm., June 25, 1997. 

4-70 
Food Processing Incentives 

A number of incentives are available to food processors and other value-added industries to 

locate in New Brunswick. For instance, a blueberry processing plant undertaking a Can$3.5 

million expansion in 1996 received a repayable, interest-free contribution under ACOA's 

Business Development Program, a non-repayable contribution through the Federal 

Government's Transitional Job Creation fund, and a 3-year interest-free loan and matching 

contribution from New Brunswick's Ministry of Economic Development and Tourism 

(NBMEDT). 224 Also in 1996, the NBMEDT and ACOA announced their support for a new 

potato processing plant that will produce and market value-added potato products from fresh 

market grade out potatoes, although the details of any assistance were not made known. 225 The 

new potato processing plant, which includes a V. S. investor, will target the Northeastern United 

States as its initial market. 226 

An additional program under the NBMEDT available to help rural businesses is the Small 

Entrepreneur Capital Assistance Program. This program provides nonrepayable assistance 

for eligible capital costs and salaries to help small businesses (less than 25 employees) develop 

or expand. 227 

Provincial Programs-Quebec 

Safety-net Programs-Quebec Farm Income Stabilization Insurance 

Program (FISI) 

The FISF program, which is administered strictly at the Provincial level, guarantees net aruiual 

returns to participating producers for a wide range of field crops and livestock, including 

potatoes. The program calculates commodity support levels according to a cost of production 

model. The formula includes fixed and variable costs, depreciation, and an adjustment for 

difference between the average wage of farm workers and the average wage of other workers 

in the Province. 

224 Government of New Brunswick News Release, "N.B. Blueberry Plant Expands and Creates 

Jobs," NB 933, June 24, 1996. 225 Government of New Brunswick News Release, "Twenty-five New Jobs for Centreville," 

NB418, Apr. 12, 1996. 226 Ibid. 227 Government of New Brunswick, Small Entrepreneur Capital Assistance Program (SECAP), 

found at http://www.gov.nb.ca/edt/biz_eng/smbusl.html, June 4, 1997. 228 In a posthearing submission for the Gouvemement du Quebec dated May 15, 1997, Pepper, 

Hamilton and Scheetz ILP indicated that the FIS! is not a countervailable subsidy as determined by 

three separate panels under the Canada-United States Free Trade Agreement. However, in its 

administrative reviews of the countervailing duty order on live swine from Canada, the Department of 

Commerce found the FIS! program to be countervailable. See 61 F.R. 52420, Oct. 7, 1996. 

4-71 
For potato producers, an insured yield is determined based on historical average yields for the 

Province. The gross payout per hectare equals the insured yield multiplied by the 'compensation 

finale' (the predetermined support price per kg) and FISI cash advances. The Province pays 

two-thirds of the cost, with producers paying the remainder. According to Statistics Canada, 

payouts of Can$20. 7 million and Can$2. 7 million were made to potato growers in 1993 and 

1994, respectively, under the FISl.229 Statistics Canada reported no net payouts under this 

program for potatoes in 1995 and a payout of Can$7.3 million in 1996.230 The posthearing 

brief filed for the Gouvemement du Quebec indicated that insurance payments equal to Can$8.2 

million were made for the period August 15, 1995-July 31, 1996.231 

Agricultural Credit 

The Office du Credit du Agricole du Quebec provides interest rate assistance to finance 

agricultural operations through a number of programs. On long-term loans, Quebec provides 

assistance equal to one-half of the interest rate where it exceeds 4 percent An additional 

'subsidy' in the first 4 years of the loan is available, depending on the educational level of the 

farmer. For example, farmers with degrees or college courses in agriculture are entitled to an 

additional interest rate subsidy of 4 percent in the first year, declining to 1 percent in the fourth 

year. Other farmers may receive an additional interest rate subsidy half that available to the 

more schooled applicants.232 According to Statistics Canada, interest rebates to all farmers in 

Quebec amounted to Can$34 million in 1996.233 

Tax Assistance 

Farmers in Quebec receive a tax rebate on Provincial taxes due on agricultural property used 

in agricultural production. The amount of this rebate to all farmers in Quebec in 1996 

amounted to Can$50 million in 1996.234 Quebec agricultural producers are also exempt from 

retail sales taxes on fuel used for agricultural purposes. 

229 Statistics Canada official, telephone interview by USITC staff, May 14, 1997. 230 Ibid. and facsimile data from Statistics Canada received May 30, 1997. 231 Pepper, Hamilton, & Scheetz, posthearing submission, May 27, 1997. The Statistics Canada 

data are on a calendar year basis. The payout of Can$8.2 million includes part of the 1994 payment 

reported by Statistics Canada. 232 Ibid., p. 8. 233 Statistics Canada, facsimile data received by USITC staff, May 30, 1997. 234 Ibid. 

4-72 
Agribusiness Development/Research-Canada-Quebec Subsidiary 

Agreement on Agri-Food Development 

This agreement is a Can$40 million multiyear cost-shared agreement contributing to 

agribusiness development in the Province.235 The agreement funds research projects which take 

both a global and specific approach, as well as projects that bring university, government, and 

private-sector partners together. The agreement also funds projects which are aimed at 

developing new innovative technologies.236 

Provincial Programs-Alberta 

Safety-net Programs 

Bilateral agreements 

The Alberta Government signed a series of bilateral agreements with the Federal Government 

in July 1996 to implement a number of income safety net programs following Alberta's 

withdrawal from the GRIP. 237 These agreements are effective for 3 years ending March 31, 

1999. The bilateral agreements includeThe Agricultural Safety Net. Management Agreement, which allows the establishment of 

industry development initiatives, includes initiatives for beef, hogs, sheep and wool, and 

agribusiness development. 

The NISA Companion Agreement, which allows Alberta to withdraw from the NISA program 

after 1996. The Government of Canada plans to offer the NISA to Alberta fanners as a 

"Federal-only" program with the Federal government matching NISA contributions by Alberta 

fanners up to the maximum of 3 percent of eligible sales. 

The Canada-Alberta Agreement on the Farm Income Disaster Program (FIDP), which 

provides for the Federal Government's contribution to this Alberta program. Under the FIDP, 

235 AAFC, "Research gets boost in Quebec," found at http://www.agr.ca/cb/agvision/ 

nl961 le.html, Jan. 9, 1997. 236 In its administrative reviews of the countervailing duty order on live swine :from Canada, the 

Department of Commerce found the Technology Innovation Program under the Canada/Quebec 

Subsidiary Agreement on Agri-Food Development to be countervailable, but not the research 

program. See 62 F .R. 18089, Apr. 14, 1997. 237 AAFC News Release, "Alberta Signs Significant Agricultural Income Safety Net Agreements 

with Government of Canada," July 4, 1996. 

4-73 
which was formerly knomi as the Alberta Farm Income Stability Program, Alberta farmers may 

receive a payment form the Agriculture Financial Services Corp. (AFSC) if the difference 

between their eligible agricultural income and expenses suffers more than a 30 percent drop in 

one year compared to their previous 3-year average. 

TheArableAcres Supplementary Payment Companion Agreement, which provides Can$50 

million in Federal funding to cover payments to landowners who own eligible cultivated acres 

that did not receive a payment under the Western Grain Transition Payments Program 

(WGTPP). Landowners targeted for this program include those who did not return their 

WGTPP application forms, and those who had tame hay, forage, pasture, horticultural crops 

(including potatoes), or other arable acres that were ineligible for payment under WGTPP 

rules.23s 

Crop Insurance 

The Alberta Government announced changes in the cost-sharing formula for 1997 which will 

result in lower premimns for farmers at every coverage level. 239 For coverage up to 50 percent, 

the farmer pays 20 percent of the premium, with the Government paying the remaining 80 

percent. For coverage between 50 and 80 percent, the farmer pays 50 percent and the 

Government 50 percent, the same as in previous years. 

Credit Assistance240 

Agricultural Financial Services Corp. 

The AFSC was formed during FY 1994/95 as a result of a merger between the former 

Agricultural Development Corp. (ADC) and the Alberta Hail and Crop Insurance Corp. 241 The 

ADC had previously operated a program to assist potato producers in improving or constructing 

storage facilities. This program was ended in March 1994.242 

238 Alberta Agriculture, Food and Rural Development (AAFRD), Agrinews for the Week of 

January 13, 1997, found at http://www.gov.ab.ca/ministry/comdv/agrn9702.html#arable.html: 239 Government of Alberta, Introduction of "New Look" Crop Insurance," found at 

http://www.gov.ab.ca-pab/4526.html, Mar. 20, 1997. 240 Statistics Canada reports that Alberta fanners received Can$7 .2 million in interest rebates in 

1995 and Can$8.1 million in I 996. It is not known under which credit assistance these rebates were 

provided or whether the rebates benefited potato growers in Alberta. Statistics Canada, Agriculture 

Economic Statistics,:Nov. 1996, and facsimile data received May 30, 1997. 241 Government of Alberta News Release, "1994-95 Sees Many Accomplishments and Cost 

Savings," Sept. 27, 1995. 242 USDA, FAS, Review of Canadian Support Programs, p. 6. 

4-74 
The AFSC provides loans to beginning fanners and to high-risk fanners wishing to refmance, 

as well as disaster insurance. 243 The AFSC provides direct loans to established farmers who 

cannot obtain alternative financing at its cost of borrowing rounded up to the nearest one-half 

percent. AFSC's Beginning Fanner Program provides direct loans of up to Can$200,000 to 

beginning farmers at rates fixed at 9 percent for the life of the loan and for up to 20 years. The 

AFSC also provides guarantees for loans made through commercial lenders. Under this 

program, the maximum interest rate for loans of 10 years or less is prime plus one percent; for 

loans over 10 years, the maximum rate is prime plus one and one-half percent. 

AFSC's Fann Disaster Assistance program provides direct and guaranteed loans to producers 

who have suffered an agricultural disaster and who do not have adequate insurance coverage or 

other compensation in place, or are unable to obtain financing on reasonable terms and 

conditions. Interest rates under this program are defined individually, and may be reduced for 

up to a 5-year period at the AFSC's discretion. 

AFSC additionally provides direct loans or guarantees to businesses that process or sell 

agricultural products, or service and supply the agricultural industry. Commercial interest rates 

apply to such lending. In FY 1995/96 20 Alberta agribusinesses received Can$5.3 million in 

fundingthroughAFSC, and throughjoint efforts with the FCC, Can$8.6 million of financing 

was arranged for seven other agribusinesses.244 It is not known whether any of this funding 

applied to potato processing activities. 

Alberta Farm Credit Stability Program 

The Alberta Farm Credit Stability Program provided fixed-rate loans at 9 percent interest for 

terms of up to 20 years. The lending phase of the program ended in July 1990, but loans may 

be transferred from one borrower to another provided the new borrower meets the program's 

eligibility criteria. The loans were provided to assist fanners in restructuring outstanding debt, 

or for improving the efficiency and productivity of fann operations through approved 

projects.245 The purpose of the program was to reduce and stabilize the cost of borrowed capital 

for eligible farmers, with the loans being administered by chartered banks, credit unions, and 

Treasury Branches. The Alberta Agriculture, Food and Rural Development (AAFRD) has 

estimated that over 30,000 loans totaling Can$1 billion were outstanding as of March 31, 

1996.246 

243 AAFRD, Agricultural Financial Sen;ices, found at http://www.agric.gov.ab.ca/sperg/ 

financia.html. 244 AAFRD, Annual Report 1995196, found at http://www.agric.gov.ab.ca/ministry/ 

annul96i.html. 245 AAFRD, Farm Credit Stability Program, found at http://www.agric.gov.ab.calsperg/ 

financia.html. 

2

40 AAFRD,Annua/Report 1995196. 

4-75 
Irrigation Assistance 

The Irrigation Branch of AAFRD assists irrigators through consultations, research, planning, 

demonstrations, and education on matters relating to agricultural irrigation. The Government 

of Alberta provides financial assistance for irrigation development, maintenance, and 

rehabilitation to 13 organiz.ed Irrigation Districts as well as to private irrigators.247 Aside from 

domestic or certain agricultural users, water users in Alberta must have a license, which 

provides the licensee a right to an allocation of water for certain purposes. 

The 13 Irrigation Districts manage and administer water delivery infrastructure for 

municipalities, industries, rural residences, livestock facilities, as well as farms. In 1996, the 

Districts supplied water to 1.27 million assessed irrigated acres. In 1996, potatoes accounted 

for 21,441 acres, or less than 2 percent, of the assessed acres in the 13 Irrigation Districts.248 

The Irrigation Rehabilitation Program (IRP) and the hrigation Rehabilitation Endowment Fund 

(IREF) have provided financing for rehabilitation of Alberta's irrigation infrastructure and for 

improving operational efficiency and effectiveness of irrigation systems in the 13 Irrigation 

Districts. This assistance has been provided through a cost-share formula under which, 

currently, the Province pays 75 percent and the water users pay 25 percent.249 In 1995/96, 

Can$17 .2 million was expended under the IRP and Can$7 .2 million was expended under the 

IREF by the Irrigation Council, an agency of AAFRD.25° From 1969 to FY 1995/96, grants 

amounting to Can$43 7. 7 million were expended under these and other irrigation rehabilitation 

and expansion programs.251 Currently, funds under the !REF have been fully spent and the 

program is scheduled to expire as part of a reduction in spending by the Provincial 

Government.252 

Approximately Can$558 million was expended by Alberta Environmental Protection under its 

Water Management Systems Improvement Program (WMSIP) to upgrade headworks systems 

and a number of main canal systems in the Irrigation Districts. 253 The WMS IP funding ended 

in March 1995. 

247 Grant assistance is provided for private irrigation development on a 50-50 cost-share basis. 

However, according to the Government of Alberta, there are few, if any, private irrigators producing 

potatoes. Telephone interview with Government of Alberta official by USITC staff, Apr. 28, 1997. 248 Facsimile data received by USITC staff from Cameron & Hombostel LLP, Apr. 22, 1997. 249 Irrigation districts increased their share of the cost to rehabilitate irrigation infrastructure to 25 

percent from 14 percent during FY 1995/96. 250 AAFRD, J995/96AnnualReport. 251 AAFRD, The Land Base, found at http://www.agric.gov.ab.ca 

. /agdex/000/0002500b.html#Irrigation. 

• 252 Interview with Government of Alberta officials by USITC staff, Apr. 9, 1997. 253 AAFRD, The Land Base. 

4-76 
Farmers in the Irrigation Districts pay an annual per acre water fee. In 1996, these rates ranged 

:from Can$6.50 per acre to Can$16.15 per acre, depending upon the Irrigation District.254 Most 

irrigated potato production is located in the higher rate Districts. 

Tax Assistance-Alberta Farm Fuel Benefit Program (AFFB) 

The AFFB offers motor fuel to Alberta farmers at a rate competitive with the rates offered to 

farmers in other parts of North America. The AFFB consists of a fuel tax exemption and the 

Alberta Fann Fuel Distribution Allowance, which further reduces the cost of diesel fuel. Since 

September 1996, the tax exemption portion has allowed farmers to purchase marked gasoline 

and diesel without paying the 9 cents per liter provincial fuel tax. The Alberta Farm Fuel 

Distribution Allowance reduces the cost of marked diesel fuel further by 6 cents per liter. 

Farmers are additionally exempt from the tax on propane of 6.5 cents per liter provided the 

propane is used for eligible farming purposes.255 AAFRD estimates that approximately 50,000 

farmers have received Can$32 million in benefits :from the 6 cent per liter reduction on diesel 

fuel, in addition to the provincial tax exemption.256 

Research, Industry Assistance, and Market Development 

Crop Diversification Centre 

The Crop Diversification Centre is a Provincial research institution funded by the AAFRD. The 

Centre maintains an ongoing research project to assist variety development of new potato 

cultivars by providing information on processing and quality attributes for raw potato varieties. 

Industry assistance 

The Processing Industry Division of AAFRD works with Alberta agribusinesses to encourage 

expansion and new investment Assistance is provided in the form of information and access 

to technical and other services. The Industry Development Branch of this Division provides 

cost-shared financial assistance for feasibility projects, provided the projects are conducted by 

a third-party consultant. 257 The Food Processing Development Centre, also part the Processing 

Industry Division, is a fully-equipped development laboratory facility. Services are provided 

to industries accordilig to a fee schedule. 

254 Facsimile data received from Cameron & Hombostel LLP, Apr. 22, 1997. There is an 

additional pressure charge for acres serviced by a gravity pressure pipeline. 255 AAFRD,AlbertaFarm Fuel Benefit (AFFB}, found at 

http://www.agric.gov.ab.ca/sperg/.financia.html. 256 AAFRD,AnnualReport 1995196. 257 AAFRD, Industry Development Branch-Financial Incentive Program, found at 

http://www.agric.gov.ab.ca/ministzy/org.idbf.html. 

4-77 
Market development 

AAFRD assists Alberta agricultural industries to take advantage of overseas marketing 

opportunities in a mnnber of ways. 258 The AAFRD established an electronic networking system 

(Agriculture Food Alliance) to facilitate information sharing and cooperation on marketing 

opportunities. AAFRD also holds trade shows and participates in overseas trade missions to 

promote Alberta's exports and investment opportunities. AAFRD additionally opened a trade 

office in Portland, Oregon in July 1996 to ensure access to the Pacific Northwest and to develop 

market information about industry opportunities in the Western United States.259 

Provincial Programs-Ontario 

Credit Assistance 

Ontario provides loan guarantees to famiers under two programs. One program provides 

operating credit at competitive rates for 12 months. The second, a Young Farmer Credit 

Program, guarantees loans through chartered banks and designated credit agencies at 1 percent 

above the prime rate. The guarantee under the latter program is for 10 years.260 The Food 

Industry Financial Assistance Program has provided funding, primarily loans, to food 

processing companies for new technology and infrastructure improvements. 

Agricultural Research 

The Ontario Ministry of Agriculture, Food, and Rural Affairs (OMAFRA) funds a network of 

researchers and laboratories at Guelph, the Horticultural Research Institute of Ontario, and 

three regional agricultural colleges. Research undertaken at these facilities is developed into onf arm applications at over 10 different experiment stations, each focused on adapting research 

results to Ontario's diverse agricultural regions. 

258 Ibid. 

259 Government of Alberta News Release, "Alberta Agriculture Open for Business in Vancouver, 

Washington," July 31, 1996. 2

6() USDA, FAS, Review of Canadian Support Programs, p. 8. 
Tax and Input Assistance 

Tax assistance 

The Fann Tax Rebate Program.261 provides farmers with a rebate on the Provincial property tax 

levied on fannland and outbuildings. The rebate was increased to 75 percent in FY 1994-95 .262 

In January 1997, the Government of Ontario announced a new farm tax initiative to replace this 

program effective January, 1, 1998. The new program will maintain a separate property class 

for farm lands, which will continue to be assessed on their farm use. Such eligible lands will 

be taxed at 25 percent of the municipal residential tax rate. This measure is estimated to 

provide a Can$17 l million tax cut for Ontario farmers. 263 

The Retail Sales Tax Rebate Program provides farmers with rebates on the Provincial sales tax 

of 8 percent on any building materials purchased to either help build or modernize a building 

or structure used exclusively for farm purposes. 264 This program was originally announced in 

Ontario's 1996 budget, and current plans are to extend this program until March 31, 1998. 

Statistics Canada reports that agricultural producers received a rebate of Can$6.9 million on the 

Provincial sales ta.x on purchases of fuel used for agricultural purposes in 1996. 265 

Wage assistance 

Statistics Canada reports that agricultural producers in Ontario received wage assistance 

amounting to Can$893,000 for agricultural labor in 1996.266 Agricultural producers in Ontario 

will be eligible to receive wage assistance amounting to Can$2.00 per hour for youth employed 

from April 15, 1997, up to September, 30, 1997.261 This Provincial program is expected to help 

an additional 1,500 employees obtain jobs working in Ontario fields during the summer of 

1997.268 

261 In its administrative reviews of the countervailing duty order on live swine from Canada, the 

Department of Commerce found the Ontario Fann Tax Rebate Program to be noncountervailable. 

See 61 F.R. 52410. Oct. 7, 1996. 

262 Ontario Ministry of Agriculture, Food and Rural Affairs, Annual Report 199419 5 (Ontario: 

Queen's Printer, 1995), p. 12. 263 Government of Ontario News Release, "New Initiative Brings Fairness to Fann Property 

Owners," Jan. 16, 1997, found at http ://www.gov.on.ca/OMAFRA/english/about/new/pressJhtml. 264 Government of Ontario News Release, "Tax Rebate Spurs Fann Construction and Jobs, 

Villeneuve Tells Ontario Farmers," Mar. 27, 1997, found at 

http://www.gov.on.ca/OMAFRA/english/about/new/press/html 

265 Statistics Canada, facsimile data received by USITC staff, May 30, 1997. 266 Ibid. 

267 Government of Ontario, 1997 Summer Jobs Service, found at 

http://www.gov.on.ca/OMAFRA/ english/infores/jobs.html, June 1, 1997. 268 "Summer Job Program Should Help Farmers," Ontario Tater Times, Apr. 1997. 

4-79 
Agribusiness and Rural Development-Grow Ontario Investment Program 

The Grow Ontario Investment Program is a Can$15 million provincial initiative announced in 

Ontario's 1996 budget to develop new value-added products and services.269 The program 

provides research :fundS for projects such as developing value-added products and services and 

applying new technologies; it provides marketing funds for such projects as quality 

enhancement, branding "Ontario" agricultural products, import replacement, or export 

promotion and marketing. Competitiveness :funds are provided for strategic investments to help 

the rural sector andforpromotionofinnovation. No direct support to individuals or businesses 

is provided under this program. 

Provincial Programs-Saskatchewan 

Safety-net Programs 

Enhanced NISA 

An Enhanced NISA Program allowed Saskatchewan producers to make additional contributions 

to their NISA acc0W1ts during the 1995 and 1996 calendar years. Eligible producets were 

allowed to contribute an additional 2 percent of eligible net sales which was matched by 

Government 270 Participants were also eligible for a Federal "top-up" contribution of 1.45 

percent of eligible net sales. Potato producers were not eligible for Enhanced NISA in 1995, 

but were eligible in 1996. The Enhanced NISA ended in 1997 with only the base NISA 

program in effect in that year.271 

Enhanced Crop Insurance 

The Federal and Provincial Governments have agreed to pay 80 percent of the premium for 50 

percent coverage with the producer paying 20 percent in 1997. Coverage as high as 80 percent 

can also be purchased with the producer paying 60 percent of the.incremental premium cost and 

the Government contributing 40 percent of the cost. The Provincial and Federal Governments 

have also reduced the debt accumulated by the Saskatchewan Crop Insurance Program through 

contributions of Can$128 million and Can$162 million, respectively. These contributions, 

269 OMAFRA, The Grow Ontario Program, found at 

http://www.gov.on.ca/OMAFRA/english/about/grow/index.html, June 2, 1997. 270 Saskatchewan Agriculture and Food (SAF), NET INCOME STABILIZATION ACCOUNT 

(NISA)- 199 5 Stabilization (Tax) Year, found at http ://www.gov.sk.ca/agfood/programs/nisa/htm. 271 SAF official, telephone interview by USITC staff, Mar. 7, 1996. 

4-80 
along with debt pay-domi through nonnal operations, will reduce crop insurance premiums for 

Saskatchewan producers by about 10 percent on average. 272 

Credit/Financial Assistance 

Agricultural Credit Corporation of Saskatchewan (ACS) 

The ACS provides long-term loans and loan guarantees to Saskatchewan fanners to help 

establish, develop, and diversify farm operations for which financing is not readily available and 

covers all guarantees in case of default 273 The ACS Capital Loan Program provides direct loans 

to individuals, partnerships, companies, or cooperatives for development or expansion of 

livestock or other diversified agricultural enterprises at interest rates equal to the ACS cost of 

borrowing plus 1-2 percent. Interest rates are fixed for the entire term of the loan. 274 

Crown Land Leasing and Sales 

Saskatchewan Agriculture and Food (SAF) operates Crown Land Lease and Crown Land 

Tender Sales Programs. The fonner provides leases for Crown land designated for agricultural 

use for up to 33 years with the opportunity to renew or transfer the lease to a family member. 

According to SAF, over 6.8 million acres of Crown land are under lease to 13,500 farmers for 

the pmpose of grain fanning, grazing, and hay production. 275 Land not under lease and eligible 

for sale is tendered for sale to eligible buyers under the latter program. 

Irrigation/Water Supply Assistance 

Irrigation development/services-Saskatchewan Water Corporation (Sask Water) 

Sask Water is a Provincial Crown Corporation which owns, manages, controls, develops and 

administers the use of all water resources in Saskatchewan. Sask Water receives revenue from 

Saskatchewan's General Revenue Fund, as well as from other agencies, to fund its acquisition 

of capital assets and operations. Sask Water has developed more than Can$250 million worth 

272 Saskatchewan Crop Insurance Corporation, "Canada-Saskatchewan Crop Insurance," found at 

http://www.gov.sk.ca/ agf ood/scic97bigh.htm. 273 SAF, "Mandate," found at http://www.gov.sk.ca/govt/agfood/mandate.htm, June 6, 1997. The 

Government of Saskatchewan reports that it provided Can$500,000 in interest 'subsidies' and 

Can$8. l million for loan losses to the ACS in FY 1995/96. See Government of Saskatchewan, 

Public Accounts l 995196 (Regina: Ministry of Finance, 1996), p. 40. 274 SAF, "Capital Loan Program," found at http://www.gov.sk.ca/agfood/programs.htm, June 6, 

1997. 275 SAF, "Crown.Land Lease Program," found at ibid., June 9, 1997. 

4-81 
of irrigation projects over the past 25 years. 276 As of end 1995, 322,000 acres of land in 

Saskatchewan were under irrigation.277 Saskatchewan's 5,600 acres of potatoes, which are 

produced under irrigated conditions, represent less than 1 percent of these acres. However, 

increased production of high value crops, including chy beans and potatoes for seed and table 

stock markets, in the Lake Diefenbaker Development Area of Saskatchewan is a priority for 

Sask Water. 278 

Sask Water provides technical and agronomic assistance to Sask Water users. This assistance 

includes feasibility analysis, engineering and technical assistance for irrigation water supply 

development, including up to I 00 percent of actual costs of reservoirs, head work, and supply 

systems owned and operated by user groups and individuals, and up to 50 percent of costs for 

the purpose of conveying water from the source to the irrigated parcel for individual projects. 

Additionally, Sask Water provides erosion control and farm dugout pumping assistance.279 

Grants to persons, commwrities, and organizations in 1995 included Can$3.3 million for 

Irrigation Development and Can$212 thousand for individual irrigation-Agricultural 

Development. 280 Sask Water users pay irrigation fees through their local irrigation districts. 

Fees are structured to recover all operational costs. In addition, local districts pay annual fees 

which are directed into replacement funds.281 

Sask Water potato expansion 

In 1995, Sask Water established an Irrigation and Agricultural Services Division to promote 

economic development and diversification through water-based projects. 282 In December 1996, 

SPUDCO, a division of Sask Water, was created to expand production of potatoes in the Lake 

Diefenbaker area. According to news reports, SPUDCO is planning to cost-share production 

by providing financing for as much as 75 percent of new potato production and to take a 49 

percent equity position in storage facilities, if necessary.283 It is reported that Sask Water, 

through SPUDCO, has budgeted up to Can$12 million over 3 years to finance this initiative. 284 

276 USDA, FAS. "Frozen French Fry Annual," Oct. 18, 1996. 277 Sask Water, Annual Report (Moose Jaw, Saskatchewan: Sask Water, 1996). 278 Ibid., p. 17. 279 SAF, "Programs," found at http://www.gov.sk.ca/agfood/programs.htm, Apr. 20, 1997. 280 Sask Water, Annual Report, p. 30. A program providing financial assistance for development 

of on-fann irrigation had been discontinued by FY 1995/96. See Government of Saskatchewan. 

Public Accounts 1995196, p. 197. 281 USDA, FAS, "Frozen French Fry Annual," Oct. 18, 1996. 282 Sask Water, Annual Report. 283 "Potato Producers Split over Gov't Subsidies," The Star Phoenix, Saskatoon, Saskatchewan. 

Feb. 17, 1997. 284 Canadian Taxpayers Federation Saskatchewan. "Let's Talk Taxes," A Weekly Commentary, 

Jan. 31, 1997. 

4-82 
Canada/Saskatchewan Economic and Regional Development Subsidiary Agreement on 

Irrigation-Based Economic Development (SJBED) 

SIBED, which was administered by PFRA and Sask Water, was a Can$100 million program 

completed in FY 1995/96.285 The program provided assistance for development of new costeffective irrigation supply systems and irrigation-related research; value-added processing; 

improvement of existing irrigation systems; and construction of new works in Southwestern 

Saskatchewan. 

Canada/Saskatchewan Partnership Agreement on Water-Based Economic Development 

(PAWBED) 

PA WBED was cr~ted in 1991; the current partnership agreement ends on December 31, 2000. 

Three programs have been approved under PA WBED-286 

• Program 1 ~evelopment of water-related infrastructure to improve the viability 

of communities or to increase their capacity to support agriculture and 

agribusiness-related development; 

• Program 2-improvements to existing irrigation infrastructure, promotion of 

irrigated crop production, and removal of water related constraints to 

diversification possibilities; and 

• Program 3-support for secondary economic activities such as produce 

cleaning, grading, processing and storage. 

PA WBED has provided assistance for diversification and intensification of irrigated production, 

particularly for potatoes and mint, as well as for a wide variety of agricultural processing 

industries, including potato, flax straw, alfalfa, beef, aquaculture and vegetables. 287 PA WBED 

has been active in funding potato storage facilities as well as a business plan for the Coteau 

Hills Potato Corporation, which has been expanding seed potato production in the Province in 

the area of Lucky Lake.288 According to a newspaper announcement, the largest.potato 

packaging plant in Western Canada, a Can$7-million project of the Coteau Hills Potato 

Corporation, will be up and running in the town of Lucky Lake in the fall of 1997. 289 

A list of approved PA WBED water-development projects in potato-growing areas, and other 

projects assisting the potato sector in Saskatchewan is provided in table 4-20. 

285 AAFC, 1996-97 Estimates, p. 110. 286 Ibid. 287 AAFC, 1995-96 Performance Report, p. 34. 288 PA WBED Feature Article, "Seed Potato Acres on the Rise," found at 

http://www.agr.ca/pfra/pawbar6.htm, updated Dec. 3, 1996. 289 "Potato Packaging Plant Set," Regina Leader-Post, Feb. 4, 1997. Also, SAF, "SK Potatoes," 

AGBITS, Vol. 5, Issue 11, May 26, 1997 

4-83 
Table4-20 

Approved projects for general water supply Infrastructure, Irrigation effectiveness, and commercial development affecting 

the potato sector under the Canada/Saskatchewan Partnership Agreement on Water Based Economic Development, as of 

February 1997 

Program Beneficiary Type of project 

Assistance for water - Coteau Hills Pipeline Assistance for pumpstation works to provide raw water to 

supply infrastructure: Pumpstation-Sask Water proposed rural pipeline project 

- Coteau Hills Rural Rural water pipeline to supply year-round water to 90 farms 

Development Corporation and 3 villages; also potato storage facility and 4 large hog 

operations; 

- Saskatchewan Centre for Soil Maps showing the suitability of areas in Saskatchewan for 

Research growing potatoes and dry beans 

Assistance for enhanced - Craven Riverside Gardens Irrigation improvement to allow a more precise application for 

irrigation effectiveness the production of vegetables and potatoes 

-Saskatchewan Irrigation Research and demonstration 

Development Centre 

Assistance for - Birch Holdings Potato storage facility 

processing and -Norman & Marilyn cay Potato storage and processing facility 

commercial development -Robert & Tracey Cay Nuclear seed potato lab and greenhouse 

to support the - Coteau Hills Potato Complete a feasibility/business plan; provide for an 

establishment or expansion of an existing potato storage facility; purchase of a 

expansion of water- scale 

dependent industries' - Craven Riverside Gardens Equipment requirements to expand markets for gourmet 

potatoes 

- Dave Dolman Construct an addition to existing potato storage and washing 

building 

- Dutch Potato Farm Additional potato storage and work area for distribution of 

seed potatoes 

- Ed & Jane Fielder Seed potato storage facility 

- Gursky Potato Potato storage facility 

- Hyland Seed Potato Construct a new potato processing and storage facility 

- Hyland Seed Farm Help purchase a scale 

- Ingram Seeds Expansion of seed potato storage facility 

- Lakeview Growers Construction of potato storage 

-Jim Massey Renovations to potato storage 

- Mor-Kare Farms Construction of seed potato storage and purchase of related 

equipment 

- Prairie Dome Potatoes Seed potato storage facility 

- Albert J. Robertson Potato storage and production of seed potatoes 

-Riverhurst Agricultural Products Increase storage and production capacity for seed potatoes 

-Sask Ida Farms Purchase and renovate for potato storage 

-Saskatchewan Seed Potato Funding for industry-wide marketing initiative 

Growers Association 

-Ray Skalicky & Son Potato storage facility 

-J. Torrie Renovation for potato storage facility 

.. ' For storage facilities, PAWBED generally provides 25 percent of eligible capital costs. The contributions are repayable, with the first 

Can$20,000 exempt from repayment unless the total Government contribution exceeds Can$100,000, in which case the entire 

contribution is repayable. Recipients are required to make payments in five equal installments. Interest is charged only if the payment 

is delayed. 

Source: Compiled from "Partnership Agreement on Water 6ased Economic Development Summary of Approved Projects," found at 

http://www.agr.ca/pfra/pawbappe.htm, updated Aug. 16, 1996, and Feb. 20, 1997, and Canadian Embassy, posthearing brief. 

4-84 
Saskatchewan Irrigation Development Centre 

The SIDC serves as a focal point for inigation research and demonstration activities in 

Saskatchewan. Efforts by the SIDC have led to producer diversification into seed potato 

production in irrigated areas in the Province. According to a recent SIDC perfonnance report, 

SIDC played a pivotal role in the identification of the Northern Vigor concept290 and the average 

20 percent yield increase using Saskatchewan-grown seed potatoes.291 Seed potato production 

acres doubled in Saskatchewan between 1993 and 1994 and doubled again between 1994 and 

1995 to reach 2,512 acres in the latter year. 292 

Tax Rebates 

The Saskatchewan Farm Fuel Program reduces farm input costs through a refund of the 

Provincial tax on gasoline and a tax exemption on the purchase of colored diesel fuel purchased 

for farming operations. The maximum yearly refund on all gasoline and propane purchased is 

Can$900 per farm family. The total estimated benefits of the tax exemption on diesel and 

refund on gasoline was estimated at Can$ l 17 million in 1993. 293 

In March 1997 the Government of Saskatchewan announced a tax rebate on the Provincial sales 

tax payable on building materials used in livestock operations and horticultural facilities, 

including greenhouses and vegetable and raw fruit storage facilities. 294 The purpose of the tax 

program is to assist the diversification of the rural economy by providing a favorable climate 

for investment in the construction oflivestock and horticultural facilities. 

Research and Agribusiness Development 

Under Saskatchewan's long-tenn economic development strategy, the Partnership for Growth, 

three programs, the Agri-Food Innovation Fund, the Agriculture Development Fund, and the 

Agri-Food Equity Fund, are to be targeted to make investments that promote diversification of 

Saskatchewan's agricultural sector, especially into "pork, potatoes and food processing."295 

Additional industry assistance programs are administered by SAF and Saskatchewan Economic 

and Co-operative Development (SECD).296 

290 This concept refers to the phenomenon that northern grown seed potatoes have higher yield 

potential than southern-grown seed. 291 "SIDC Current Focus and Achievements," found at http://www.agr.ca/p:fra/sidcproe.htm#ment, ~~ . 

Dec. 1, 1996. 292 Economics and Agronomics of New Crops-Seed Potatoes. 293 SAF, "Farm Fuel Program," found at http://www.gov.sk.ca/agfood/ programs.htin. 294 Government of Saskatchewan News Release, "Budget Provides Tax Rebate for Agriculture," 

Agriculture and Food 97-113, Mar. 24, 1997. 295 Saskatchewan Department ofEconomic Development, Partnership for Growth, Feb. 1996, 

found at http://www.gov.sk.ca/govt/econdev/page7b.htm, . 296 The Department of Economic Development was renamed the Department of Economic and 

Co-operative Development in Mar. 1997. 

4-85 
Canada/Saskatchewan Partnership Agreement on Rural Development (PARD) 

PARD is a Federal-Provincial cost-shared program in Saskatchewan that provides assistance 

for project planning, marketing and hwnan resource development to increase entrepreneurial 

skills. Funding for 147 PARD projects totaled more than $1.5 million in FY 1995/96.297 A 

potato project funded in that year involved development of a feasibility study and business plan 

for storing, processing and marketing potatoes, carrots, berries, and fiddle heads for B&B Agri. 

Ltd. 298 All projects under P ARD must be completed by March 1998. 

Agri-Food Innovation Fund 

The Agri-Food Innovation Fund is a $91 million Federal-Provincial program terminating March 

31, 2000, which supports research and development of emerging agricultural commodities and 

sustainable agriculture. The strategic areas targeted for funding under this initiative include 

horticulture (Can$3.0 million), food processing (Can$13.0 million), sustainable agriculture 

(Can$8.0 million), biotechnology (Can$19.0 million), as well as other general and commodityspecific areas (Can$48 million). 299 

Agriculture Development Fund (ADF) 

The ADF provides financial assistance for research projects undertaken by producers, 

researchers, companies, cooperatives, associations, and food processors that develop, diversify, 

and advance Saskatchewan agribusiness industries. As of August 1995, an ADF project 

financed storage studies for the development of a sous vide potato product by a local potato 

packaging plant, while others were involved in financing the development of economic 

diversification strategies for the agricultural sector.300 Twenty-two additional agriculture 

research and development projects approved to receive a total of Can$ l .25 million from ADF 

were announced in August 1996.101 

297 A.AFC News Release, "Agreements Promote Economic Development in Rural Saskatchewan," 

Mar. 15, 1996. 298 "P ARD Summary of Approved Projects," found at http://www.agr.ca/pfra/pardappe.htm, 

updated Dec.3, 1996. 299 "Agri-Food Innovation Fund. "Initial Strategic Area Allocations," found at 

http://www.gov.sk.ca/agfood/afif/allocate.htm. 300 ADF, "Current Project Listing (August 1995)," foundathttp://www.eru.usask.ca/research_ 

and _:funding/ad.ti' Adf.htm. 301 Government of Saskatchewan News Release, "Agriculture Development Fund Project 

Approvals Announced," No. 400, Aug. 16, 1996, found at 

http://www.ca/saskgov/newsrel/1996Aug/400.96081601.html. 

4-86 
Agri-Food Equity Fund 

The Agri-Food Equity Fund is a 5-year, Can$20 million program established by ACS in early 

1995 to provide equity capital for new or expanding value-added agriculture and food 

businesses. The fund purchases equity in and provides management assistance to new or 

expanding businesses, with the maximum equity investment not exceeding Can$500,000 or 49 

percent of the total equity of the business.302 As of January 30, 1997, the Agri-Food Equity 

Fund had made six investments, with Can$ l 7 million remaining to be expended. 303 None of the 

six approved projects involved the potato industry. 

Market development/industry assistance 

SAF administers the Agriculture Industry Assistance program which provides financial 

assistance to various agricultural organizations which, in turn, provide services, administrative, 

assistance, and :financial assistance to support agribusiness industries. SAF provided Can$1.9 

million in such assistance in FY 1995/96; it is unknown whether any of this assistance benefited 

the potato industry.304 

SECD administer' s a number of programs to assist industry development, including value-added 

pr6cessing, in Saskatchewan. The Diversification Program assists with domestic procurement 

and international trade opportunities; identifies potential investment sources; and encourages 

out-of-Province business firms to locate their business operations in Saskatchewan. 305 The 

Business Investment Program supports technology and market development, and value-added 

business projects. Jn FY 1995/96, Can$15 .2 million was transferred to various businesses and 

organizations for product and market development under this program, of which Can$60,000 

and Can$11,500 was provided to the Vegetable Producers of Saskatchewan and the 

Saskatchewan Food Processors Assoc., respectively.306 It is unknown whether these specific 

amounts benefited the potato industry. 

The SECD also provides an operating grant to the Saskatchewan Opportunities Corporation, 

which delivers a range of financial services including direct loans, loan guarantees, and equity 

to small- and medium-sized Saskatchewan businesses. The Corporation targets value-added, 

export-oriented and import-replacement industries with priority given to agriculture and food 

processing, among other industries. 307 

302 "The Agri-Food Equity Fuml," found at http://www.funding/ag_equity/Ag_food.htm#overview. 303 SAF, "Equity Fund," AGBITS, Vol. 5, Issue 4, Feb. 17, 1997. 304 Government of Saskatchewan, Public Accounts 1995196, p. 39. 305 Ibid, p. 44. 306 Government of Saskatchewan, Public Accounts 1995196,p. 50. 307 Ibid., p. 45. 

4-87 

CHAPTERS 

Analysis of Competitive Factors 

Introduction 

This chapter provides an analysis of the competitive conditions that affect the U.S. and 

Canadian fresh and processed potato industries, concentrating on the U.S. market. Separate 

analyses are provided for supply factors, demand factors, exchange rates, terms of sale, and 

government involvement. These factors are summarized in table 5-1. Finally, this chapter 

provides an econometric analysis of the U.S. potato market. 

Table 5-1 

Potatoes: Listing of competitive factors affecting the U.S. and Canadian fresh and processed potato 

industries 

Competitive factor1 

Supply factors: 

Industry structure: 

Number of producers 

Capacity 

Concentration 

Production 

Location 

Availability of inputs 

Ownership 

Integration 

International trade 

Stocks 

Technology 

Costs: 

Production costs 

Transportation costs 

1 May vary according to region or individual firm. 

Demand factors: 

Market structure: 

Market size and distribution 

Demand attributes and shifts 

Consumer income 

Seasonality 

Market share 

Stocks 

Prices 

Exchange rates 

Terms of sale 

Government assistance, trade, and regulatory 

programs: 

Government assistance programs 

Seed certification 

Trade policy: 

Tariffs 

Nontariff barriers 

Market access in Mexico 

Source: Compiled by the staff of the U.S. International Trade Commission. 

5-1 
The competitive environment in the U.S. potato market has changed significantly in recent 

years. A variety of factors have contributed to an increasingly competitive situation faced by 

U.S. fresh and processed potato producers with respect to Canadian producers. There has been 

a shift in market demand away from fresh potatoes toward further processed products; the 

expansion of Canadian fresh potato production and processing capacity; changes in government 

programs to confonn to the WTO Agreement on Agriculture; growth in exports; increasing 

foreign investment in the processed potato sector; and, a shift to North-South regional trading 

patterns between the United States and Canada. 

Supply Factors 

The primary competitive factors affecting the supply of fresh and processed potatoes in the 

United States and Canada include industry structure, stocks, technology, and production and 

transportation costs. This section compares these factors in the United States and Canada. 

Industry Structure 

Industry structure affects competitiveness in terms of the ability to supply markets in absolute 

terms as well as in. terms of production efficiencies. Major structural factors in the fresh and 

processed potato industries include the number of producers, capacity, concentration, 

production, location, the availability of inputs, the nature and source of ownership, the level of 

integration, and international trading activity. 

Number of Producers 

In 1992, the year of the latest US. Census of Agriculture, there were about three times as many 

potato farms in the United States (14,500) as in Canada (4,700 in 1991) (table 2-5, table 4-2). 

There has been a long-tenn trend toward fewer farms in both countries. In 1996, the U.S. frozen 

potato products industry comprised 11 firms and 29 plants. The Canadian industry consisted 

of four major firms with six plants and about a half dozen smaller-volume regional firms in 

1996.1 

Capacity 

The area planted in potatoes in the United States far exceeds that of Canada. In 1996, U.S. 

acreage was about four times as great as that in Canada for potatoes other than seed (table 2-3, 

table 4-2). However, U.S. acreage for seed potatoes was only about two and one-halftimes 

1 US ITC staff interviews with officials of the U.S. and Canadian frozen potato products industries, 

Apr. 7-17, 1997; U.S. Department of Agriculture (USDA), Foreign Agricultural Service (FAS), 

"Frozen French Fry Annual," U.S. Embassy, Ottawa, No. CA6064, Oct. 18, 1996, p. 3. 

5-2 
greater than Canadian acreage (table 2-1, table 4-4). The average U.S. potato farm was 45 

percent larger than the average Canadian potato farm in 1991/92 (table 2-5, table 4-2). Potato 

farms in some of the major potato-producing U.S. States are larger than those in the major 

potato-producing Canadian Provinces, averaging 230 acres in Idaho and 300 acres in 

Washington (compared to 127 acres in Prince Edward Island (P.E.I.) and 218 acres in Manitoba 

in 1991/92 (table 2-5, table 4-2)). Larger farm size generally allows for increased production 

efficiencies, which may contribute to a competitive advantage, albeit in conjunction with other 

factors, such as climate. 

U.S. frozen potato products capacity was about four and one-half times greater than similar 

Canadian capacity in 1996. 2 However, in 1997, U.S. processors announced capacity cutbacks 

of about 4 percent. In 1996, expansions in potato processing capacity occurred in P .E.I. and 

Manitoba. Additionally, as noted in Chapter 4, Manitoba has implemented a Surplus Water 

Irrigation Initiative to meet the expected increase in demand for irrigated processing potatoes 

from this expansion in capacity. New Brunswick and Saskatchewan are also seeking to expand 

production of fresh potatoes through programs and incentives. 

Concentration 

Both the U.S. and Canadian fresh potato industries exhibit very low levels of concentration. 

The largest U.S. fresh potato producer, RD. Offutt Company, accounts for less than 4 percent 

of total acreage planted and production of potatoes; the next largest producer is reportedly onethird this size. 3 Comparable information is not available for Canadian producers. 

Both the U.S. and Canadian frozen processed potato industries are relatively concentrated 

compared with their fresh potato counterparts. The following tabulation shows the 

concentration ratios for the U.S. and Canadian frozen processed potato industries at the end of 

1996 (estimated by USITC staffbased on information provided by the National Potato Council 

(NPC), in share of production capacity): 

Share (percentage) held by: 

Country: Top 1 firm Top 4firms Top8firms 

United States 36 85 . 1100 

Canada............ 46 

1 A small share may be accounted for by additional firms. 

2 Presentation by the National Potato Council (NPC), Ore-Ida Foods, Inc., and Lamb-Weston, Inc., 

Sept. 1996. 3 Michelle Conlin, "The Sultan of Spuds," Forbes, May 19, 1997, found at 

http://207 .87 .27 .10/forbes/97 /0519/5910060a.h1m. 

5-3 
Production 

In 1996, U.S. production of fresh potatoes was nearly six times the level of Canadian production 

(table 2-15, table 4-1 ). In regard to production of frozen french fries, Canadian production has 

been increasing relative to production in the United States as sho'Ml in the following tabulation 

(compiled from data in table 2-16, table 4-6, in terms of quantity): 

1992 1993 1994 1995 1996 

U.S./Canadian production . . . . . . . . . . . . . . . . 6.99 6.82 5.13 5.03 4.69 

The ratio of production in the United States compared with that in Canada fell by one third 

during 1992-96, reflecting the greater increase in Canadian expansion of capacity and 

production. 

Location 

Fresh potatoes 

Location plays a key role in the competitiveness of the fresh potato industries of the United 

States and Canada. Location determines production conditions, mainly climate, soil type, and 

availability of inputs, as well as marketing conditions, such as distance to markets. In general, 

the U.S. fresh potato industry is more geographically dispersed than the Canadian industry, 

providing for a longer nation-wide growing and harvest season, and the possibility of greater 

absolute acreage. Tiris minimizes the risk of adverse weather conditions and disease that might 

negatively influence any one area at any given time. However, the optimal production areas in 

the United States are relatively concentrated, since the desired russet potatoes for processing are 

grown primarily in a few regions. 

Relevant climatic elements include the length of the growing season, mean daily temperatures 

and temperature variations, and moisture. Certain soil types are naturally more conducive to 

potato production. In the United States, the growing season among major potato-producing 

areas is longest in Washington at 175 days, compared with about 140 days in North Dakota, 

120 days in Idaho, and 110 days in Maine. Canadian growing areas generally experience a 

somewhat shorter growing season, ranging from 163 days in P .E.I. to 110 days in Manitoba. 4 

Long, warm days and cool nights are optimal for potato production; these conditions are more 

prevalent in the United States. 5 Relatively low levels of precipitation and humidity enable the 

control of moisture levels (in conjunction with irrigation) which reduces plant stress, lowers the 

4 USITC staff interviews with Canadian potato industry officials. 5 However, the higher latitude of Canadian production areas provide more light during the summer, 

somewhat mitigating this U.S. advantage. USITC staff interview with Idaho potato farmers, Rexburg, 

ID, Apr. 13, 1997. 

5-4 
incidence of disease, and contributes to quality. Loose, nutrient-rich soils (such as volcanic ash 

and sand) are optimal for potato production. Such soils are in greater supply in U.S. producing 

areas, primarily in Washington and Idaho. These climatic factors affect yields (mainly in terms 

of size) and quality (mainly in terms of solids content).6 

Desirable climatic conditions for seed potatoes are different than those for fresh table stock and 

processing potatoes. Seed potatoes generally are produced at higher altitudes and colder 

temperatures, as compared with table stock and processing potatoes, because of the increased 

incidence of serious disease damage in drier, more moderate areas. Canadian producers contend 

that these conditions, particularly in Alberta and Saskatchewan, contribute to a trait in seed 

potatoes referred to as "northern vigor," which they claim provides a heartier seed that produces 

higher yields. 7 Also, the colder winters in Canada are alleged to naturally limit disease and 

insectdamage.8 However, some U.S. producers contend that studies are inconclusive regarding 

the superiority of Canadian seed in terms of yield. 9 

Potato processing 

Competitive advantages conferred by location vary between the United States and Canada in 

potato processing. As discussed later in the section in this Chapter on transportion costs, potato 

processors in P.E.I., New Bnmswick, and Maine hold an advantage in marketing to the 

relatively populous Northeastern U.S. market; processors in Manitoba and the Midwestern 

United States hold an advantage over Western U.S. processors both in Northeastern and 

Midwestern U.S. markets; and Western U.S. and Canadian processors hold an advantage over 

other U.S. and Canadian processors in the Western U.S. and Canadian markets as well as in 

exporting to the Pacific Rim. 

Availability of Inputs 

Fresh potatoes 

The major inputs for fresh potato production include seed, fertilizer, chemicals, water, power, 

labor, fuel, land, storage, and capital. The relative competitive position of the U.S. and 

Canadian industries varies significantly by location within each country with respect to these 

inputs. For example, there is a substantial amount of dryland farming of potatoes in each 

country, yet there is extensive irrigation in parts of both countries. The availability oflabor may 

vary within a particular State or Province, depending on the season or production location, and 

appears to have no limiting effect on producers in either country. 

6 Washington State Potato Commission, "Growing World-Class Potatoes", informational brochure, 

WSPC-47-93. 

7 See, for example, Gabor I. Botar and N. Richard Knowles, "A Synopsis of 'Northern Vigor' in 

Canadian Seed Potatoes," Department of Agricultural, Food and Nutritional Science, University of 

Alberta, Mar. 18, 1997. 8 Transcript of the hearing, testimony ofLarry Buba, pp. 228-229. 9 USITC staff interviews with members of the Idaho seed potato industry, Apr. 14, 1997. 

5-5 
Expansion of potato production in both the United States and Canada is limited by the need to 

grow potatoes in rotation with other crops to control the spread of disease. For instance in 

Atlantic Canada, in general, potatoes are rotated every 2 to 3 years with grain or other crops. 

P.E.I. officials have also indicated the availability ofland is a constraining factor on any future 

expansion of potato acreage in the Province.10 New Brunswick's Potato Expansion Program 

includes a land-clearing component to bring suitable new land into production. In Manitoba, 

the availability and cost of water for irrigation, as well as environmental concerns about the use 

of additional water for irrigation purposes, are factors potentially limiting future supplies of 

potatoes from that Province. 

Potato processing 

Potato processors in Idaho, Washington, and Oregon hold a competitive advantage in terms of 

availability of most production inputs. Processors in these areas are located along the Snake and 

Columbia Rivers, which provide ample power and water and are the site of the most extensive 

and efficient raw potato production areas in North America. These areas also produce a large 

amount of other fresh potatoes that can be purchased on the open market for processing.11 

Processors in other U.S. and Canadian locations do not have the same access to inputs. 

Some Canadian processors must import raw potatoes from the United States or other Provinces. 

Cavendish imported about 70 million pounds ofraw potatoes from Maine during 1993-96, with 

50 million pounds imported in 1996.12 Manitoba plants also have imported raw potatoes, with 

more than 15 million pounds being sourced from Washington annually in some recent years. 13 

Ownership 

The ownership structure is similar in both the U.S. and Canadian fresh potato industries. Most 

farms are privately owned and additional land is rented. According to the 1992 Census of 

Agriculture, 77 percent of U.S. farms reporting potato production were individually owned. In 

Canada, 53 percent of such farms were individually owned in 1991 and 27 percent of fanns 

were held in partnerships.14 Canadian potato farms showed a greater share of corporate 

O'Mlership, likely the result of tax policy. 15 Available data indicate that corporate ownershlp is 

greater for irrigated and larger fanns in the United States. Such farms likely are associated with 

10 P .E.I. agriculture officials, interview by USITC staff, May 7, 1997. 11 NPC, posthearing brief, May 27, 1997, pp. 17-18. 12 0 'Melveny & Meyers, LLP, Cowisel to the Food Institute of Canada, posthearing brief, May 27, 

1997, appendix A. p. 2. 13 Ibid. 

14 Glenn Zepp, Charles Plwnmer and Barbara McLaughlin, "Potatoes: A Comparison of CanadaU. S. Structure," Canadian Journal of Agricultural Economics, 1995 Special Issue, p. 170. 15 Ibid., p. 168. 

5-6 
potato processors and shippers since processors often require their raw potato suppliers to use 

irrigation, and dehydrators and fresh potato shippers often have their own potato acreage. 16 

The ownership structure in the U.S. and Canadian processed potato industries is mixed, as 

shown in the following tabulation (based on information obtained from USITC staff fieldwork 

and annual company reports): 

Country and firm Owner 

United States: 

Lamb Weston ConAgra, Inc. 

Simplot . . . . . . . . . J.R. Simplot Co. 

Ore-Ida . . . . . . . . . H.J. Heinz/McCain Foods' 

Nestle . . . . . . . . . • Nestle SA 

McCain . . . . . . . . . McCainFoods 

Aviko . . . . . . . . . . Cebeco-Handelsraad 

Canada: 

McCain . . . . . . . . . McCain Foods 

Cavendish . . . . . . . Irving Oil 

Midwest Foods . . . Nestle-Simplot 

YorkFanns...... MapleLeafFoods 

Status 

Public (U.S.) 

Private (U.S.) 

Public (U.S.)/Private (Canada) 

Public (Switzerland) 

Private (Canada) 

Private (Netherlands) 

Private (Canada) 

Private (Canada) 

Public (Switzerland)/Private (U.S.) 

Public (Canada) 1

Heinz owns the retail portion and McCain is in the process of purchasing the foodservice portion of Ore-Ida. 

A greater share of U.S. production is accounted for by publicly held firms while the bulk of 

Canadian production is by privately-held finns. Foreign direct investment is present in both the 

U.S. and Canadian processed potato industries. Although specific data are not available, it 

appears that the level of such investment is greater in the United States than in Canada, with 

three major U.S. firms showing foreign investment compared to 1 firm in Canada. This 

structure may affect competitiveness in terms of company strategy, management goals, timehorizons, and capital availability. 

Integration 

Integration is more prevalent in the U.S. fresh potato industry than in the Canadian industry. 

Some U.S. large-scale fresh potato packers/shippers and dehydrators mainly in the Western U.S. 

16 USITC staff interviews with potato industry officials in Idaho and Washington, Apr. 14-17, 1997. 

5~7 
region have their own potato acreage.17 The U.S. potato industry also generally is not forward 

integrated into distribution., as most fresh potatoes and potato products are sold through brokers 

and distributors.18 The greater degree of backward integration in the U.S. fresh potato industry 

offers greater control with respect to logistics, costs, and quality, but also involves a greater 

degree of risk with respect to factors affecting their raw potato production. 

U.S. frozen potato processors generally contract for the majority of their raw materials.19 

However, some finns may own potato storage facilities and raw potato delivery trucks. 20 The 

industry generally is not forward integrated into distribution, although some firms own forward 

distribution centers (notably Lamb Weston21 ) and use refrigerated rail cars (notably Lamb 

Weston22 and Simplot23). Canadian frozen potato processors are not generally backward or 

forward integrated. 24 

International Trade 

Fresh potatoes 

Canada trades a greater share of its production of fresh potatoes internationally than does the 

United States. Most of Canada's trade consists of exports to the United States. lri 1996, 

Canadian seed potato exports were more than eight times the quantity of such U.S. exports 

(table 3-6, supplemental table 3-23). Exports of table stock potatoes from Canada were 1.4 

times greater than those from the United States in 1996 (table 3-6, supplemental table 3-23). 

Canada exported about 34 percent of its table stock and seed potato production in 1996, up 

from 20 percent and 24 percent, respectively, in 1992. 25 In contrast, the United States exported 

about 1 percent of its table stock potatoes26 and 2 percent of its seed potatoes in 1996, about 

the same as in 1992 (table 2-14, table 2-15). 

In absolute terms, Canada imported a greater quantity of table stock and processing potatoes 

(combined) in 1996 than did the United States (table 3-25, supplemental table 3-20).27 In 1996, 

17 Ibid; transcript of the hearing, testimony of Gary Ball, p. 87. 18 USITC staff interviews with potato industry officials in Idaho and Washington, Apr. 14-17, 1997. 19 Collier, Shannon, Rill & Scott._PLLC, prehearingbrief, Apr. 25, 1997, p. 3. 20 US ITC staff visits to potato production facilities, Idaho and Washington, Apr. 14-17, 1997. 21 Lamb Weston, Product and Profitability Guide (Tri-Cities, WA: Lamb Weston, Inc, 1994), pp. 

1-5. The fum owns forward distribution centers in Rochelle, IL; Vineland, NJ; and Atlanta, GA. 22 USITC staff interview with officials of Lamb Weston, Inc., Richland, WA, Apr. 16, 1997. 23 USITC staff interview with officials of J.R. Simplot Co., Boise, ID, Apr. 15, 1997. 24 USITC staff visits to potato production facilities, Alberta and Manitoba, Apr. 8-9, 1997. 25 Estimated from data in supplemental table 3-23 and table 4-7. Canadian seed potato production 

is estimated at 13 percent of total fresh potato production, fresh table stock potatoes at 27 percent, and 

fresh processing potatoes at 60 percent. 26 A significant share was for processing. 27 According to Canadian industry officials, a significant portion, at least 50 million pounds, more 

than 10 percent of the total, was imported in 1996 by frozen potato processors. Food Institute of 

(continued ... ) 

5-8 
Canada imported about 9 percent of its consumption of table stock potatoes, 28 compared With 

about 2 percent for the United States, and about 4 percent of its consumption of seed potatoes, 29 

compared with 10 percent for the United States (tables 2-14 and 2-15). Canada imported about 

6 percent of its consumption ofraw potatoes in 1996,30 compared with a smaller share by the 

United States. 31 

Processed potato products 

The United States is more active than Canada in international trade of processed potato products 

on an absolute basis, but is less active in relative terms. As is the case for fresh potatoes, the 

Canadian frozen potato products industry is larger relative to its domestic market than is the 

U.S. industry and market. The U.S. frozen processed potato products industry has been more 

export oriented than the Canadian industry, as shown by the following tabulation (derived from 

data of the U.S. Department of Commerce, and Statistics Canada, in terms of quantity): 

1992 1993 1994 1995 1996 

Ratio ofU.S./Canadian exports .......... . 1.73 1.41 . 1.51 1.57 1.39 

U.S. exports of frozen processed potato products in 1996 were 3 9 percent greater in quantity 

compared with such Canadian products (table 3-6, supplemental table 3-23). This ratio 

generally declined during 1992-96. In relative terms, the Canadian industry is substantially 

more oriented to exports compared with the U.S. industry, as shown in the following tabulation 

demonstrating the share of frozen french fry production that is exported (derived from data of 

the U.S. Department of Commerce and Statistics Canada, in percent of quantity): 

Canada ............................. . 

United States ........................ . 

2

7( ... continued) 

Ratio of exports to production: 

1992 1996 

39 

7 

38 

11 

Canada, posthearing brief, appendix A. p. 2. Also, Canadian potato chip manufacturers imported 

about 86 million pounds of raw potatoes for processing in 1996 (table 4-9). 28 Estimated from data in supplemental table 3-20 and table 4-7. Canadian seed potato production 

is estimated at 13 percent of total fresh potato production, fresh table stock at 27 percent, and raw 

potatoes at 60 percent. 29 lbid. 

30 Ibid. 

31 Virtually no processing potatoes are imported by U.S. frozen processed potato producers, while 

less than 5 percent of total raw potato inputs are imported by U.S. potato chip manufacturers. USITC 

staff interviews with officials of the U.S. frozen processed potato industry, Apr. 14-17, 1997; 

transcript of the hearing, p. 156. 

5-9 
The Canadian share of frozen french fry production that was exported remained relatively flat 

during 1992-96, while the U.S. share increased. 

In tenns of imports of frozen processed potatoes,. the United States is substantially more active 

than Canada on an absolute basis, as shown in the following tabulation (derived from data of 

the U.S. Department of Commerce, Statistics Canada, in percent, quantity basis): 

1992 1993 1994 1995 1996 

Ratio ofU.S/ Canadian imports. . . . . . . . . . . . . 16.5 19.5 18.8 21.0 15.6 

The United States imported from 16 to 21 times the quantity of frozen processed potato 

products than did Canada during 1992-96. The decline in the ratio in 1996 largely reflects a 

gain in Canadian market access by U.S. exporters owing to the elimination of Canadian 

packaging restrictions.32 In relative terms, the U.S. frozen processed potato products market 

is more active with respect to imports. The ratio of imports to consumption in the U.S. frozen 

french fry market increased from 3 percent in 1992 to 6 percent in 1996 (table 2-16). The ratio 

in Canada also rose during the period, from 2 percent to 4 percent (table 4-6). Although the 

frozen french fry market share held by imports doubled for both countries during 1992-96, the 

share of the U.S. market held by imports was 50 percent greater than the share in the Canadian 

market both in 1992 and 1996. 

Stocks 

The great bulk of fresh potato production in both the United States and Canada, whether for 

seed, table stock, or processing, is harvested within a relatively short period, mainly during the 

fall, is held in storage, and is drawn down throughout the year. Stocks generally are lowest in 

the late spring,33 after the.previous fall's stored production has been drawn down and the current 

spring crop is being harvested. The ratio of stocks to the previous fall's harvest is an indicator 

of the success of the industry to supply the market throughout the marketing year. 34 The ratio 

of monthly stocks to U.S. fall production during crop years 1991-96 declined regularly from 67 

percent in December to 20 percent in May. 35 In 1997, however, the ratios in March-May were 

larger than those in any previous year in the period. 

It is believed that Canadian stocks are depleted more quickly than U.S. stocks.36 As a result, 

Canada typically is at a relative disadvantage in terms of ability to supply the U.S. market 

toward the end of the marketing year, particularly during July-September. 

32 Food Institute of Canada, posthearing brief, appendix B., p. 14. 33 May is the last month for which data on stocks are available. 34 This ratio is also an indicator of market conditions, as discussed in the following section on 

market factors. 35 Based on data from the USDA. National Agricultural Statistics Service (NASS), Potato Stoch, 

May 14, 1997. 36 USITC staff telephone interviews with Canadian industry officials, March-May 1997. 

5-10 
Inventories are an important competitive factor in tenn.s of the ability of f1Ill1S to supply frozen 

processed potatoes to the market. Producers, both in the United States and Canada, compete 

on service commitments, generally striving to respond to customer requirements within a 

prescribed time period and order share. 37 There is an inventory cycle based on a production 

cycle, which, in tum, is based on the fresh potato harvest cycle. The frozen processed potato 

production cycle generally begins in the late summer, as early varieties such as Shepody are 

harvested. fuventories are built beginning at this time and are dra\W down by the following 

summer, when plants are usually shut down for maintenance. Inventory levels differ by firm and 

generally range from a 2-week supply to 2-month supply. 38 There has also been an effort by the 

United States and Canadian frozen potato products industries to lower inventories as a costsaving measure.39 Monthly U.S. inventories of frozen french fries as a share of annual 

production generally declined during 1992-96 (table 5-2 ). U.S. producers maintained monthly 

inventories of frozen french fries at about 10-15 percent of annual production during 1992-96. 

Comparable data are not available for Canada. 

Technology 

The primary technologies employed in the production of fresh potatoes are seed technology, 

planting and harvesting equipment, irrigation methods and equipment, and storage methods and 

facilities. These technologies are approximately similar in the United States and Canada with 

the exception of irrigation The use of irrigation currently is much greater in the United States, 

particularly in W asbington and Idaho. This practice, generally demanded by potato processors, 

improves yields and quality. As a result of the use of irrigation, as well as the aforementioned 

factors related to scale, climate, and soil, average yields for U.S. potato production in the main 

production areas of Washington and Idaho exceed those for Canadian production. The average 

U.S. yield for potato production was a third higher than that in Canada in 1996 (323 cwt per 

acre in the United States compared with 243 cwt per acre in Canada) (table 2-3, table 4-3, table 

4-7). However, the use of irrigation in Canada is rising, as irrigation infrastructure projects 

proceed in Manitoba and Saskatchewan, and as potato processors increasingly demand in their 

contracts that irrigation be used to insure that quality potatoes are grown. 

37 USITC staff interviews with U.S. and Canadian frozen processed potato products officials, 

Alberta, Manitoba, Idaho, and Washington, Apr. 8-17, 1997. 38 Ibid. 39 Ibid. 

5-11 
Table5-2 

Frozen trench fries: Monthly changes In stocks, January 1992-Aprll 1997, and share of monthly stocks to annual production, January 

1992-December 1996 

Year January February March April May June July August September October November December 

Change from previous month (percent) 

1992 .... 9.5 1.9 2.6 10.2 -4.3 4.5 1.8 -16.3 -3.3 1.4 15.1 -0.1 

1993 .... 9.6 -1.1 6.0 -5.8 -5.3 5.6 -0.1 -5.3 -3.2 16.7 16.0 -1.5 

1994 .... 12.9 0.8 1.9 1.9 -3.9 4.1 -0.9 -9.9 6.3 7.5 9.1 -1.4 

1995 .... 6.7 6.0 5.0 -5.3 1.0 -1.0 -0.9 -12.0 -0.4 19.6 8.5 -5.4 

v. 

1996 .... 3.6 3.1 2.3 -1.2 -4.6 -3.6 -3.1 -15.8 7.6 21.0 11.9 -6.7 

I 

........ 

N 1997 .... 4.3 -0.1 5.3 -1.2 

Share of annual production (percent) 

1992 .... 12.8 13.1 13.4 14.8 14.1 14.8 15.0 12.6 12.2 12.3 14.2 14.2 

1993 .... 11.9 11.8 12.5 11.8 11.1 11.8 11.7 11.1 10.8 12.6 14.6 14.3 

1994 .... 11.5 11.6 11.8 12.0 11.5 12.0 11.9 10.7 11.4 12.3 13.4 13.2 

1995 .... 11.6 12.3 12.9 12.2 12.3 12.2 12.1 10.6 10.6 12.7 13.8 13.0 

1996 .... 12.5 12.9 13.2 13.0 12.4 12.0 11.6 9.8 10.5 12.7 14.2 13.3 

Source: Stocks from USDA, NASS, Cold Storage, various issues; production from American Frozen Food Institute, Frozen Pack Statistics, various issues. 
The technologies employed by frozen potato product processors are generally similar in the 

United States and Canada, as much of the machinery is from similar U.S. or European sources 

and the overall production process is similar in each country. 40 Also, there is a significant 

amount of production in each country accounted for by finns based in the other (such as 

McCain, Nestle, and Simplot). Differences in technology do exist among individual firms 

within each country, however. Thus, there is no clear competitive advantage in terms of 

technology held by either the U.S. industry or the Canadian industry. Industry sources have 

reported that some of the recent closing of U.S. facilities have been plants described as having 

older technology or equipment. 

Costs 

Production Costs 

Comparable data on production costs for fresh potatoes in the United States and Canada were 

not available to USITC staff. U.S. and Canadian fresh potato fanners generally use similar 

production methods and machinery and face similar cost items. As mentioned earlier, costs 

appear to be higher for seed potatoes compared with table stock and processing potatoes. In 

addition, the startup costs for potato production are relatively high, owing mainly to dedicated 

machinery and the increasing use of irrigation equipment. 

Cost of production data are not available for U.S. or Canadian frozen potato products. 41 A 

Canadian study showing a comparison of business costs in Canada and the United States, while 

not specifically studying costs of producing processed potato products, indicated that all 

Canadian locations studied enjoyed a cost advantage relative to all U.S. locations studied in the 

production of frozen foods. 42 The study indicated that for the frozen foods industry, costs of 

doing business in Canada were 5.9 percent lower than the costs in the United States. The 

principal reasons for the lower costs in Canada were lower construction, labor, and energy costs, 

and smaller employer-sponsored benefits. 

The cost structure for frozen potato products appears to be similar for producers both in Canada 

and in the United States.43 However, one recent development in the cost structure for U.S. 

processors involves the contracting of raw potatoes for processing. The lack of a contract 

between processing potato growers and frozen potato processors in Idaho in 1996 coupled with 

a large crop that contributed to relatively low prices on the open market appears to have 

provided Idaho processors with a recent substantial cost savings on raw potatoes, which 

40 USITC staff visits to U.S. and Canadian frozen processed potato products production facilities, 

Alberta, Manitoba, Idaho, and Washington, Apr. 7-17, 1997; P .E.I., New Brunswick, and Maine, 

May6-9, 1997. 41 Collier, Shannon, Rill & Scott, PLLC, posthearing brief, May 27, 1997, p. 17; the Food Institute 

of Canada, posthearing brief, appendix B, p. 6. 42 KPMG, The Competitive Alternative: A Comparison of Business Costs in Canada and the 

United States (Ottawa: Prospectus, Inc., 1996). 43 USITC staff interviews with Canadian and U.S. frozen potato products producers, Apr. 8-18, 

1997. 

5-13 
nonnally account for approximately 50 percent of production costs. 44 This advantage may only 

be temporary, as raw potato supply conditions are likely to change in the future. 

Transportation Costs 

Fresh potatoes 

The costs of transporting fresh potatoes from production areas to markets vary substantially 

among and between different production regions in the United States and Canada. These costs 

principally are detennined by the distance from major markets and the type of transportation 

mode available and have had a major role in trade patterns that have developed between the two 

countries. 

Table 5-3 presents data on the distance between major U.S. and Canadian fresh potato 

production areas and markets.45 Jn general, shippers in Maine, New Brunswick, and P .E.I. have 

a transportation advantage over Idaho and Washington shippers in delivering fresh potatoes to 

major U.S. markets in the Northeastern United States. Likewise, shippers in Idaho and 

Washington hold an advantage in shipping to markets in the Western United States and Western 

Canada. 

Table 5-4 provides data on transportation rates from major fresh potato supply areas and 

destinations in the U.S. and Canadian markets. These rates generally reflect the distance 

between the production areas and markets. Fresh potatoes are a relatively heavy, low-value 

commodity for which transportation costs represent a large· share of the total value. The 

following tabulation shows wholesale prices, transportation costs, and the share of estimated 

wholesale market prices accounted for by transportation costs for fresh table stock potatoes 

shipped from Idaho and P.E.I. into the Boston market in April 1997: 

Source and type 

Idaho-russets ........ . 

P.E.I.-russets ........ . 

P.E.I.-round whites ... . 

Wholesale price1 

(dollars per cwt) 

9.25 

6.00 

4.00 

Transportation 

oost1 (dollars per 

cwt) 

S.20 

2.20 

2.20 

Transportation 

cost/ 

wholesale price 

(percent) 

56 

37 

51 

1 Price data from the U.S. Department of Agriculture; transportation data from industry submissions. 

44 Fraser's Potato Newsletter, Jun. 12, 1997, p. 3. 45 The data represent point-to-point mileage. Actual road mileage may be significantly higher. 

5-14 
Table5-3 

F h res po t t a oes: o· 1s t ance b e t weenma1or US .• an dC ana d" 1an pro d uct1on areas an d k mares t 

Production area 

United States Canada 

St. John, Charlottetown, Winnipeg, 

Market Easton, ME Monte Vista, CO Burley, ID Othello, WA N.8. P.E.I. MAN 

(Miles) 

United States: 

Boston ......... 334 1,878 2,161 2,356 327 476 1,347 

New York ....... 510 1,730 2,045 2,267 517 666 1,285 

Atlanta ......... 1,241 1,249 1,702 2,025 1,263 1,412 1,290 

Miami .......... 1,590 1,724 2,223 2,576 1,564 1,696 1,894 

Chicago ........ 1,031 1,026 1,337 1,588 1, 111 1,253 719 

Houston ........ 1,877 821 1,350 1,736 1,922 2,072 1,392 

Los Angeles ..... 2,744 721 633 883 2,840 2,973 1,532 

Seattle o 0 I 0 0 0 t Io 2,513 1,073 545 158 2,635 2,734 1,157 

Canada: 

Montreal ........ 284 1,761 1,993 2,159 371 506 1,134 

Toronto ......... 596 1,462 1,730 1,933 672 814 943 

Vancouver ...... 2,510 1,168 644 247 2,634 2,727 1, 161 

Source: Derived from distance calculator found at httpJ/www.indo.com/distance. 

5-15 
Table 5-4 

Fresh otatoes: Frei areas and markets 

Market 

United States: 

Boston .................. . 

Hartford ................. . 

New York ............... . 

Washington, D.C .......... . 

Miami .................. . 

Chicago ................. . 

Houston ................ . 

Los Angeles 

Canada: 

Montreal 

Toronto ................. . 

Vancouver .............. . 

Idaho' 

$0.052 

.049 

.051 

.030 

.032 

.020 

.050 

.053 

1 Rail shipments based on 125,000 pound loads. 

Production area 

Prince Edward Island 

(Per pound) 

$0.022 

.024 

.029 

.031 

.016 

.019 

Note.-Canadian data converted to U.S. dollars using an exchange rate of US$1=Can$1.37. 

Manitoba 

Source: National Potato Council, posthearing brief, May 27, 1997, p.10; Canadian Horticultural Council, 

posthearing brief, May 27, 1997, app. B, pp. 4-5. 

5-16 

$0.034 

.018 

.034 

.038 

.038 

.038 

.038 
Transportation costs appear to have been a major factor affecting the development of a northsouth trading pattern in fresh potatoes between the United States and Canada since 1992, as is 

demonstrated by the relative market share held by various fresh potato origins in major selected 

U.S. markets (table 5-5). In general, fresh potatoes are shipped principally to major markets 

that are relatively nearby. In 1996, 61 percent of table stock arrivals from Canada were in the 

Boston market, followed by 17 percent in New York and 11 percent in Philadelphia. A similar 

pattern holds for arrivals from Maine. 

In the West, 35 percent of table stock arrivals from Oregon, 56 percent of those from California, 

and23 percent of those from Washington were in Los Angeles. In the Midwest, 68 percent of 

arrivals from North Dakota and 21 percent of arrivals from Wisconsin were delivered into 

Chicago, while 50 percent of arrivals from Colorado were in Dallas. The major exception is for 

Idaho, the major source of table stock potatoes in most U.S. markets. Idaho potatoes generally 

are believed to hold a price premium in most major markets, which mitigates the transportation 

factor. 

Another factor in transportation costs is the mode of transportation. Rail shipments tend to cost 

less for higher volume, longer distance shipments. Rail is also used in relatively isolated areas. 

North Dakota, California, and Idaho utilize rail for a relatively large share of their shipments 

of table stock potatoes (table 2-28). Jn contrast, Maine and Canada ship virtually all of their 

table stock potatoes shorter distances by truck, which is a more flexible and faster mode of 

transportation (table 2-28). 

The mode of transportation also varies by market. In major Eastern U.S. markets, arrivals of 

table stock potatoes in New York occur mainly by rail, 57 percent in 1996, reflecting the 

dominance of distant Idaho and California in that market.46 Jn Boston, 74 percent of arrivals 

were by truck that year, reflecting the dominant share of shipments from Canada and Maine. 47 

Processed potatoes 

Transportation costs also have contributed to the current patterns in trade in frozen potato 

products between the United States and Canada. fu general, frozen potato product processors 

in the Eastern United States and Canada hold an advantage in the Northeastern U.S. market with 

respect to transportation costs. Producers in the Eastern and Midwestern United States and 

Canada hold a roughly equal advantage in Southeastern U.S. markets, while Western U.S. 

producers hold the advantage in Western U.S. and Canadian markets. 

46 Derived from data provided by USDA, Agricultural Marketing Service (AMS), Market News 

Branch, June 1997. 47 Ibid. 

5-17 
Table5-5 

Fresh table stock potatoes: Arrivals in selected U.S. cities, by major shipping origins, 1992-96 

Shipping origin 

Year and city Idaho California Washington bregon Colorado Wisconsin N. Dakota Maine Canada All others Total 

1992: 

Boston . . . . . . . . . . . . . . . • 5 10 

New York . . . . . . . . . . . . . . 24 12 

Philadelphia . . . . . . . . . . . . 7 3 

Atlanta . . . . . . . . . . . • . . . . 6 1 

Chicago . . . . . . . . . . • . . . . 6 3 

Detroit................. 7 4 

St Louis................ 7 O 

Dallas . . . . . . . . . . . . . . . . . 2 2 

Los Angeles . . . . . . . . . . . . 9 45 

Others2 • • • • • • • • • • • . • • • • 26 21 

Total . . . . . . . . . . . . . . . . . 100 100 

1993: 

Boston . . . . . . . . . . . . . . . . 4 8 

New York . . . . . . . . • . . . . . 22 13 

Philadelphia . . . . . . . . . . • . 6 3 

Atlanta . . . . . . . . .. . . . . . . 7 

Chicago . . . . . . . . . . . . . . . 6 4 

Detroit................. 9 5 

St Louis................ 8 O 

Dallas . . . . . . . . . . . . . . . . . 3 

Los Angeles . . . . • . . . . • . . 8 45 

Others• . . . . . . . . . . . . . . . . 28 21 

Total . . . . . . . . . . . . . . . • . 100 100 

1994: 

Boston . • • . . . . . • . . . . . . . 4 9 

New York . . . . . . . . • . . . . . 26 10 

Philadelphia . . . . . . . . . . . . 6 3 

Atlanta . . . . . . . . . . . . . . . 6 1 

Chicago . . . . . . . • . . . . . . . 11 6 

Detroit................. 9 3 

St Louis................ 8 1 

Dallas . . . . . . . . . . • . . . . . . 2 2 

Los Angeles . . . . • . . . . . . . 3 40 

Others2 • • • • • • • • • • • .. • • • 26 25 

Total . . . . . . . . . . . . . . . . . 100 100 

1995 

Boston . . . . . . . . . . . . . . . . 5 8 

New York . . • .. . . . . . . . . . 21 10 

Philadelphia . . . . . . . . . . . . 6 3 

Atlanta . . . . . . . . . . . . . . . . 5 o 

Chicago • . . . . . . • . . . . . . . 17 7 

Detroit................. 8 4 

St Louis................ 8 o 

Dallas . . . . . . . . . . . . . . . . . 3 1 

Los Angeles . . . . . . . . . . . . 3 43 

Others2 • • • • • • • • • • • • • • • • 24 23 

Total . . . . . . . . . . . . • . . . . 100 100 

1996: 

Boston ·....•........... 4 

New York . . . . . . . . . . . . • . 19 

Phllade_,hia . . . . . . . • . • • • 6 

Atlanta . . . . . . . . . . . . .. . . 5 

Chicago . . . . . . • . . . . • . . . 20 

Detroit . . . . . . . . . . . . . . . . . 10 

St Louis................ 10 

Dallas . . . . . . . . . . . • .. . . . 3 

Los Angeles . . . . . . . . . . . . 2 

Others2 • • • • • • • . • • • • • • • • 22 

Total .........•....•.. 100 

6 

7 

2 

1 

7 

2 

56 

17 

100 

4 

6 

1 

2 

7 

0 

0 

2 

33 

45 

100 

4 

9 

2 

3 

9 

2 

1 

2 

. 24 

45 

100 

5 

9 

3 

2 

12 

2 

2 

2 

22 

41 

100 

5 

5 

2 

12 

2 

2 

30 

41 

100 

4 

5 

3 

1 

12 

1 

2 

2 

23 

49 

100 

2 

0 

2 

0 

0 

0 

56 

37 

100 

4 

0 

2 

5 

2 

0 

1 

41 

42 

100 

2 

9 

0 

24 

0 

0 

36 

27 

100 

42 

0 

0 

0 

34 

19 

100 

1 

2 

1 

1 

32 

0 

0 

35 

27 

100 

1 

3 

1 

6 

1 

0 

7 

46 

20 

16 

100 

1 

2 

1 

9 

0 

14 

35 

19 

18 

100 

2 

15 

0 

0 

15 

25 

16 

25 

100 

0 

11 

0 

0 

14 

49 

13 

10 

100 

1 

0 

0 

15 

0 

0 

21 

50 

6 

5 

100 

(Percent) 

3 

7 

3 

19 

36 

2 

3 

0 

0 

26 

100 

3 

4 

4 

18 

34 

4 

2 

0 

0 

31 

100 

5 

4 

4 

11 

35 

5 

4 

0 

0 

32 

100 

6 

1 

6 

15 

25 

4 

6 

0 

0 

37 

100 

7 

2 

8 

19 

21 

4 

4 

1 

0 

34 

100 

1 Includes both rail and truck arrivals. Unloads at Canadian cities are excluded from origin totals. 

7 

10 

9 

2 

53 

2 

4 

2 

6 

6 

100 

4 

12 

10 

3 

46 

1 

7 

0 

16 

100 

5 

6 

7 

2 

57 

1 

4 

0 

0 

16 

100 

4 

2 

5 

2 

66 

2 

4 

2 

0 

12 

100 

4 

3 

4 

2 

68 

2 

5 

0 

0 

12 

100 

2 Includes Baltimore, Buffalo, Cincinnati, Columbia, Denver, Miami, New Orleans, Pittsburg, San Francisco, and Seattle. 

Source: USDA, AMS. 

5-18 

58 63 

18 23 

a 7 

1 0 

0 0 

0 0 

0 0 

0 

0 0 

15 6 

100 100 

51 57 

20 24 

7 9 

1 0 

0 0 

0 0 

0 0 

0 

0 0 

20 9 

100 100 

51 50 

25 31 

5 7 

1 0 

0 0 

0 

0 0 

0 1 

0 0 

19 9 

100 100 

51 

12 

6 

0 

0 

0 

0 

0 

30 

100 

63 

15 

10 

0 

0 

0 

0 

0 

11 

100 

43 61 

12 17 

7 11 

1 0 

0 0 

0 0 

0 0 

0 0 

0 0 

37 11 

100 100 

6 

9 

10 

6 

10 

7 

6 

4 

5 

38 

100 

5 

13 

10 

4 

11 

a 

6 

3 

9 

31 

100 

4 

10 

11 

5 

10 

7 

5 

3 

6 

39 

100 

6 

9 

14 

6 

9 

7 

7 

4 

7 

31 

100 

9 

12 

16 

5 

5 

7 

8 

4 

5 

30 

100 

8 

13 

6 

5 

9 

4 

4 

6 

16 

28 

100 

9 

14 

5 

5 

9 

5 

5 

5 

15 

28 

100 

8 

16 

5 

5 

13 

5 

5 

3 

12 

28 

100 

8 

11 

5 

4 

17 

5 

6 

6 

14 

25 

100 

9 

11 

6 

4 

15 

5 

6 

5 

16 

24 

100 
----------------------- --- -

Source 

United States: 

Table 5-6 shows general transportation rates for major frozen potato products origins and 

destinations in the United States and Canada. These rates generally reflect the distance 

relationships between production facilities and markets. Although transportation costs do not 

represent as great a share of the total cost of frozen potato products compared with table stock 

potatoes, this share is still substantial, as shown in the following tabulation (estimated based 

on industry submissions, assuming a wholesale price of 3 0 cents per pound for frozen french 

fries and truck rates in table 5-6, in percent): 

Destination: 

New Los 

Boston York Atlanta Chicago Angeles Seattle 

Columbia Basin 25 24. 21 16 10 5 

Idaho ................ 23 18 14 8 8 

North Dakota ......... 18 14 7 18 14 

Canada: 

Manitoba ............. 18 15 8 18 13 

P.E.I. ................ 7 12 17 18 32 29 

Transportation costs have been a major factor in the expansion of Canadian frozen potato 

product capacity in Manitoba, P.E.I., and New Brunswick~ the expansion of U.S. capacity in the 

Western region to export to the Pacific Rim~48 and a shift in overall U.S. capacity to the 

Midwest. The following tabulation shows the share of total U.S. production of frozen potato 

products accounted for by various regions (data from the American Frozen Foods Institute 

(AFFI), Frozen Food Pack Statistics, various annual issues, in percent, quantity basis): 

Share of total production: 

Region: 1992 1993 1994 1995 1996 

West .................... 81.6 81.9 82.9 80.9 79.4 

East, Midwest, and South• ... 18.2 17.9 16.9 19.0 20.5 

California ................ .2 .2 .2 .1 .1 

Total 100.0 100.0 100.0 100.0 100.0 

1

Mainly Midwest. 

48 The proximity of Western U.S. processing plants to the major port of Seattle provides this 

advantage. 

5-19 
Table 5-6 

Frozen potato products: Freight rates, by mode of transportation, between major U.S. and Canadian producing areas and markets 

Production area and mode of transportation 

United States Canada 

North Dakota/ 

Columbia Basin Idaho Minnesota Manitoba Prince Edward Island 

Market: Truck j Rail Truck I Rail Truck I Rail Truck j Rail Truck I Rail 

(Per pound) 

United States: 

Boston .......................... $0.075 $0.055 $0.070 $0.050 $0.055 $0.053 $0.021 

New York o o' IO o o O o o < O o o o 0 o I I 0 I I I .072 .066 .037 

Baltimore ........................ .068 .048 .063 .043 .045 

Atlanta .......................... .063 .043 .055 .038 .043 .046 .051 

Vt 

I 

N Miami O O o o o o IO o o O O o o o o o o 0 0 I 0 0 0 I I 0 .085 .065 .078 .058 .063 .066 .073 

0 

Chicago ........................ .048 .033 .043 .028 .020 .025 .054 $.044 

Dallas .......................... .053 .040 .045 .033 .050 .037 .075 

Seattle .......................... .015 .023 .043 .039 .088 

Los Angeles o Io o O o O O O o o 0 • 0 I 0 0 0 0 I I .030 .023 .055 .053 .097 

Canada: 

Montreal '. ' ..................... .078 .068 .075 .063 .063 .040 .018 

Toronto ......................... .068 .060 .063 .055 .053 .036 .020 

Vancouver ............... ' ...... .013 .028 .050 .039 .098 .070 

Source: Collier, Shannor, Rill, & Scott, posthearing brief, May 27, 1997, exhibit 14. 
In absolute teilllS production in the :Midwest rose 28.6 percent during 1992-96, while that in the 

West only rose 1.5 percent.49 

The transportation cost disadvantage in the eastern U.S. market borne by producers in Idaho, 

Washington, and Oregon has been mitigated somewhat by the use of company-owned rail cars 

and company-owned forward distribution centers located near major market areas. As shown 

in table 5-6, rail rates are substantially lower than truck rates, generally by 25-30 percent. Data 

are not available on the share of frozen potato product shipments by mode of transportation. 

Demand Factors 

This section analyzes in detail the relative competitive position of the U.S. and Canadian potato 

industries with respect to factors that affect demand, as summarized in table 5-1. The primary 

factors that affect market demand for fresh and processed potatoes include market structure, 

stocks, and prices. These factors are discussed in detail below for the United States and Canada. 

Market Structure 

Market structure is detemrined by the size and distribution of the market, demand attributes and 

shifts, consumer income, seasonality, and the share of the market held by domestic and foreign 

producers. These factors define the specific competitive environment faced by these producers. 

Market Size and Distribution 

TheUS. market size, as measured by population, was 265.3 million people as of July 1996.50 

This was nearly nine times the Canadian population of 30. 0 million that year.51 

Fresh potatoes 

The following tabulation shows seed, table stock, and processing potato consumption in the 

United States and Canada in 1996 (derived from USDA and Statistics Canada data, in million 

pounds): 

United States 

Canada 

'Estimated by USITC staff. 

Seed 

2,847 

1

775 

Table stock 

13,011 

1

1686 

Processing 

25,555 

l 5 513 

Total 

41,413 

7 974 

49 Based on data from the AF'FI, Frozen Food Pack Statistics, various issues. Midwest region 

includes a relatively minor amount of production from the East and South. 50 U.S. Bureau of Census, found at http://www. census. gov/population/estimates/nation/intfile2-l. txt. 

si Statistics Canada, found at http://www.statcan.ca/english/Pgdb/People/Population/demo02a.htm. 

5-21 
The predominant position ofraw potatoes used for processing in the U.S. market reflects the 

long-term growth in conswnption of processed potato products compared with table stock 

potatoes. The geographic distribution of the U.S. fresh potato market can be approximated by 

arrivals in major U.S. cities. The primary U.S. market for table stock potatoes is Los Angeles, 

which accounted for 16 percent of total arrivals in 1996 (table 5-5). Following Los Angeles that 

year were Chicago (15 percent), New York (11 percent), and Boston (9 percent). Data are not 

available for Canadian markets. However, it is believed that the distribution of table stock 

potatoes in Canada is influenced by population in major cities as in the U.S. market. 

Processed potato products 

The United States is a much larger market for processed potato products compared with 

Canada. The U.S. market for frozen french fries, at 6.9 billion pounds, was about seven times 

larger than the Canadian market in 1996 (table 2-16, table 4-6). Conswnption increased by 24 

percent in the U.S. market during 1992-96. Consumption increased by 9 percent in Canada and 

7 percent in the United States during 1994-96.52 The rate of growth in the market for frozen 

french fries is slowing both in the United States and Canada, however, as shown in the following 

tabulation (derived from USDA and AFFI data, in terms of quantity, in percent): 

Market 

United States 

Canada ..................... . 1

Not meaningful. 

Increase in consumption over previous year: 

1993 

8.1 

(1) 

1994 

7.1 

(1) 

1995 

4.2 

7.1 

1996 

2.4 

1.9 

This decline in growth in the frozen french fry markets has occurred in conjunction with slower 

growth in quick service restaurant sales, which account for the greatest share of frozen french 

fry consumption. Projected sales in such restaurants in the United States totaled $103.5 billion 

in 1997, up 5.2 percent in nominal terms and 2.5 percent in real terms compared with 1996. 53 

This growth rate was below the 5. 8 percent (nominal) annual average during 1994-97. Recent 

developments in the QSR industry suggest that the U.S. market for frozen processed potatoes 

may be approaching saturation.54 In addition, the growth in total U.S. consumer average annual 

expenditures for food away from home declined from 2.0 percent between 1993-94 to 0.2 

percent during 1994-95, the latest year for which data are available; expenditures averaged 

$1,702 in 1995.55 

52 Data estimation for Canadian production changed in 1994; prior years are believed to be 

understated. 

53 National Restaurant Association, 1997 Restaurant Industry Forecast, found at 

http://www.restaurant.org/research/forecast/index.htm. 

54 Collier, Shannon, Rill & Scott, PU...C, posthearing brief, May 27, 1997, pp. 20-21; "Fallen 

Arches," Time, June 9, 1997, found athttp://www~pathfinder.com/@@NZPTQwUAKM7EUf3j/ 

time/magazine/1997 /dom/970609/business.falen _arches _.html. 55 U.S. Department of Labor, Bureau of Labor Statistics Press Release, "Con.sumer Expenditures in 

1995," Jan. 22, 1997, found at http://stats.bls.gov/news.release/cesan.toc.htm. 

5-22 
Demand Attributes and Shifts 

The U.S. and Canadian markets for fresh potatoes generally are similar in terms of consumer 

demand attributes. Two-way trade exists for seed and table stock potatoes, generally for similar 

varieties and uses. 55 Demand shifts, such as an increase in demand for certain varieties, 

generally have been parallel in each colllltry. For example, the demand for processing varieties, 

such as Russet, Shepody, and Norkotah, has increased in both countries. Per capita utilization 

of table stock potatoes in the U.S. market has been relatively flat and totaled 49 .2 pounds in 

1996, whereas per capita consumption of table stock potatoes in Canada totaled 56.3 pounds 

in 1996, down from 64.8 pounds in 199257 and indicating a shift in demand in both markets 

from table stock potatoes to processed potato products. 

Per capita use of processed potato products in the United States increased by 10 percent during 

1992-96, of which most of the growth was accollllted for by frozen potato products (table 2-13). 

Comparable data are not available for Canada; however, the trend toward processed potatoes 

has been reported to be similar to that in the U.S. market. 58 Thus, demand attributes and shifts 

appear to affect the competitiveness of the U.S. and Canadian fresh potato industries in a similar 

manner. 

Per capita consumption is compared for frozen french fries in the U.S. and Canadian markets 

in the following tabulation (derived from data of the U.S. Bureau of Census, AFFI, USDA, and 

Statistics Canada, in pounds per person): 

Per capita consumption: 

Country 1992 1993 1994 1995 1996 

United States ................. 21.7 23.3 24.7 25.4 25.8 

Canada ...................... (') (') 30.8 32.6 32.8 

1 Not meaningful. 

Canadian per capita consumption of french fries was about one-third higher than that in the 

United States in 1996. U.S. per capita consumption grew by 4.5 percent during 1994-96 while 

Canadian per capita consumption grew by 6.5 percent. 

56 Trade in fresh potatoes for processing largely flows from the United States to Canada, owing 

mainly to advantages held by U.S. processors, mainly freezers, in available supplies located near 

primary U.S. production areas. Some fresh potatoes for processing are imported from Canada by 

U.S. chippers owing to seasonal availability and quality concerns. 57 Estimated by USITC staff. 58 John Vandenberg and Gilbert Parent, "1996/97 Canadian Potato Crop Situation and Trends," 

Agriculture and Agri-F ood Canada, Mar. 4, 1997, p. 1. 

5-23 
Consumer Income 

Consumer income levels in the United States and Canada, as measured by per capita gross 

domestic product (GDP), are shown in the following tabulation (derived from data from the 

International Monetary Fund, Bureau of the Census, and Statistics Canada, in U.S. dollars per 

capita, except where noted): 

Per capita GDP: 

Market 1992 1993 1994 1995 1996 

United States .............. 24,487 25,419 26,638 27,593 28,558 

Canada: 

Can$ ................. 24,179 24,627 25,542 26,213 26,625 

US$ .................. 19,999 19,090 18,699 19,106 19,520 

In nominal tenns, U.S. per capita income grew 16.6 percent during 1992-96 compared with 10.1 

percent in Canada. Canadian income declined on a U.S. dollar basis during 1992-94 and rose 

during 1994-96, but to a level below that in 1992. In terms of U.S. dollars, U.S. per capita 

income exceeded that in Canada by 46 percent in 1996. Thus, the U.S. market is wealthier than 

the Canadian market, both in terms of absolute level and growth. The large and growing U.S. 

market is attractive to Canadian exports. 

Seasonality 

Seasonality affects competitiveness mainly in the U.S. table stock market. Such potatoes are 

harvested and marketed from many sources to numerous markets at varying levels throughout 

the year. Table stock potatoes from Canada (primarily New Brunswick and P.E.I.) and Maine 

generally are harvested in the fall and marketed mainly through the fall and winter. Potatoes 

from Idaho generally are harvested in the fall and are marketed relatively evenly throughout the 

year. Potatoes from other sources, such as California, may be harvested in different seasons and 

marketed within a relatively short window of time. These seasonal harvesting and marketing 

patterns affect competitiveness in terms of available supplies and price effects in discrete 

markets. 

Competition from Canadian table stock potatoes is greatest in the U.S. markets of Boston, New 

York, and Philadelphia. The imports compete most directly in terms of monthly arrivals with 

Maine potatoes. Table stock potatoes from Canada and Maine generally are harvested and 

marketed during similar periods. Arrivals of table stock potatoes from Canada and Maine in 

the Boston market generally peaked during October-April each year during 1992-96 (table 5-7). 

Arrivals from these two sources during September-May generally accounted for the largest share 

of total arrivals in Boston annually during 1992-96 (table 5-8). Arrivals from Idaho in the 

Boston market were relatively constant on a monthly basis during 1992-96, while those from 

5-24 
Table5-7 

Fresh table stock tatoes: Share, b source, of monthl arrivals in Boston, b al sources, 1992-96 

Month 

Source and year January February March April May June July August September October November December Total 

Share by source (Percent) 

Canada: 

1992 ......... 9.7 6.1 7.1 12.1 3.7 2.0 0.0 4.3 15.9 19.4 22.9 17.3 9.8 

1993 ......... 16.4 19.3 18.3 25.4 19.3 9.3 0.7 2.7 31.7 36.5 25.2 25.6 19.8 

1994 " " .. " . 21.0 21.5 27.4 18.4 15.9 3.9 0.5 5.0 19.1 27.5 22.9 14.9 17.0 

1995 ......... 10.7 9 10.1 11.1 4.2 1.7 2.2 4.4 32.1 41.0 46.3 50.0 18.0 

1996 """." 43.8 45.6 35.5 42.4 22.0 16.7 0.4 4.0 22.0 31.5 39.2 42.5 30.5 

Maine: 

1992 "" ..... 51.1 56.8 57.8 49.2 18.6 3.4 0.4 1.6 21.6 37.4 29.0 55.2 33.1 

1993 ......... 55.6 65.9 60.6 54.5 37.8 17.0 0.0 0.9 17.2 18.5 54.3 50.2 40.1 

1994 "" ..... 51.5 63.7 47.4 49.2 31.1 6.7 3.3 2.5 11.5 22.3 37.6 41.6 33.0 

1995 ......... 54.0 48.2 55.1 40.1 30.9 4.3 0.9 0.0 3.2 19.5 25.4 28.0 27.6 

1996 ......... 34.8 31.9 35.2 26.1 5.5 4.1 3.8 4.4 10.1 13.1 24.8 29.8 20.3 

Idaho: 

1992 " ....... 27.6 26.2 19.5 16.4 19.9 22.2 16.7 4.9 20.2 24.3 24.3 15.4 19.9 

1993 ......... 19.3 8.0 13.3 12.3 17.9 14.1 9.5 6.8 9.1 15.8 5.0 10.3 12.1 

v. 1994 ......... 15.1 8.2 13.1 16.8 18.9 21.8 14.1 10.7 23.0 22.8 14.3 25.7 16.8 • N 1995 ......... 20.8 23.7 20.9 29.4 33.0 22.9 24.0 9.9 10.4 14.3 13.0 8.0 19.9 Vt 

1996 ......... 10.4 11.7 13.8 18.2 22.7 12.6 12.8 12.1 26.8 22.7 20.4 15.1 16.2 

California: 

1992 ......... 0.4 0.0 0.3 0.4 39.9 55.3 39.8 6.0 0.0 0.0 0.5 0.3 12.9 

1993 ......... 0.6 0.8 0.3 0.3 17.6 48.9 53.4 18.7 1.1 1.4 0.0 0.0 10.0 

1994 . " " .... 0.7 0.0 0.0 1.2 17.0 57.4 61.0 20.2 2.6 0.5 0.0 0.0 12.2 

1995 ......... 1.4 2.9 0.9 2.2 11.8 53.9 38.2 12.6 4.5 2.4 2.0 1.9 11.7 

1996 ......... 1.9 1.3 1.2 4.2 33.3 45.9 36.3 19.4 1.8 1.9 0.8 1.2 11.6 

All other: 

1992 " ... " " 11.2 10.9 15.3 21.9 17.9 17.1 43.1 83.2 42.3 18.9 23.3 11.7 24.2 

1993 ......... 8.0 6.0 7.5 7.5 7.5 10.7 36.5 70.8 40.9 27.9 15.5 13.9 18.0 

1994 ......... 11.7 6.6 12.1 14.5 17.0 10.2 21.1 61.6 43.8 26.9 25.2 17.8 20.9 

1995 ......... 13.1 16.3 13.0 17.2 20.0 17.1 34.7 73.1 49.8 22.9 13.4 12.1 22.8 

1996 ......... 9.0 9.4 14.4 9.2 16.5 20.7 46.6 60.1 39.3 30.8 14.8 11.5 21.4 

Total: 

1992 ......... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

1993 . " ...... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

1994 ......... 100.0 100.0 100.0 100.0 100.0 .100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

1995 ..... " .. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

1996 ......... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

Source: U.S. Department of Agriculture, Agricultural Marketing Service, Fruit and Vegetable Division, Market News Branch, Fresh Fruit and Vegetable Arrivals in 

Eastern Cities, various issues. 
Table5-8 

Fresh table stock tatoes: Share, b month, of monthl arrivals in Boston, b 

Month 

Source and ear Janua June Jul October November December Total 

Share by month (Percent) 

Canada: 

1992 .............. 8.7 4.7 7.4 10.4 3.7 2.0 0.0 2.7 11.1 14.4 16.1 18.8 100.0 

1993 .............. 7.9 7.5 9.8 13.2 10.4 3.9 0.2 0.9 9.2 12.6 13.4 11.2 100.0 

1994 .............. 11.0 12.2 20.0 8.5 7.7 2.0 0.2 2.2 8.1 9.5 10.6 8.1 100.0 

1995 .............. 5.3 3.8 6.0 5.3 2.4 1.0 0.9 1.4 12.2 14.8 24.4 22.6 100.0 

1996 .............. 15.7 13.4 11.9 15.8 6.3 4.0 0.1 1.0 3.6 8.1 9.6 10.5 100.0 

Maine: 

1992 .............. 13.6 12.9 17.7 12.5 5.5 1.0 0.1 0.3 4.5 8.2 6.1 17.8 100.0 

1993 .............. 13.2 12.6 16.0 13.9 10.0 3.5 0.0 0.2 2.5 3.1 14.2 10.8 100.0 

1994 o o o o 0 o o I 0 0 I Io o 13.9 18.7 17.8 11.7 7.8 1.8 0.6 0.6 2.5 4.0 9.0 11.7 100.0 

1995 .............. 17.4 13.2 21.2 12.5 11.4 1.7 0.2 0.0 0.8 4.6 8.7 8.3 100.0 

1996 .............. 18.8 14.1 17.8 14.7 2.4 1.5 1.3 1.6 2.5 5.0 9.2 11.1 100.0 

Idaho: 

1992 I 0 o 0 o o 0 o o 0 I 0 o o 12.2 9.9 9.9 6.9 9.7 10.7 6.8 1.5 6.9 8.9 8.4 8.2 100.0 

1993 o o o o o 0 0 o o 0 0 I 0 I 15.2 5.1 11.7 10.4 15.7 9.6 3.6 3.8 4.3 8.9 4.3 7.4 100.0 

Vo 1994 .............. 8.0 4.7 9.7 7.8 9.3 11.3 5.5 4.7 9.9 8.0 6.8 14.2 100.0 I 1995 .............. 9.3 9.0 11.1 12.7 16.9 12.2 8.4 2.8 3.6 4.6 6.2 3.3 100.0 N 

°' 1996 .............. 7.1 6.5 8.7 12.8 12.2 5.8 5.6 5.6 8.3 10.9 9.5 7.1 100.0 

California: 

1992 .............. 0.3 0.0 0.3 0.3 29.9 41.1 24.9 2.8 0.0 0.0 0.3 0.3 100.0 

1993 .............. 0.6 0.6 0.3 0.3 18.8 40.7 24.4 12.7 0.6 0.9 0.0 0.0 100.0 

1994 I 0 I 0 o I 0 o 0 0 o 0 0 I 0.5 0.0 0.0 0.8 11.5 40.8 32.5 12.3 1.5 0.3 0.0 0.0 100.0 

1995 .............. 1.1 1.8 0.8 1.6 10.3 48.9 22.6 6.1 2.6 1.3 1.6 1.3 100.0 

1996 .............. 1.8 1.0 1.0 4.1 25.1 29.2 22.0 12.4 0.8 1.3 0.5 0.8 100.0 

All other 

1992 I 0 I 0 0 o 0 0 o O O 0 o O 4.1 3.4 6.4 7.6 7.2 6.8 14.4 20.8 11.9 5.7 6.6 5.2 100.0 

1993 0 0 I 0 0 o 0 0 0 0 Io I 0 4.3 2.6 4.4 4.3 4.4 5.0 9.2 26.5 13.0 10.6 9.1 6.7 100.0 

1994 .............. 5.0 3.1 7.2 5.4 6.7 4.2 6.6 21.8 15.1 7.6 9.5 7.9 100.0 

1995 >I 0' 0 I 0 o 0 0 0 0 I 0 5.1 5.4 6.1 6.5 8.9 8.0 10.6 18.0 14,9 6.5 5.6 4.3 100.0 

1996 .............. 4.6 3.9 6.9 4.9 6.7 7.1 15.3 20.9 9.2 11.2 5.2 4.1 100.0 

Total: 

1992 I I I I Io I 0 'o 0 t I I 8.8 7.5 10.1 8.4 9.7 9.6 8.1 6.0 6.8 7.3 6.9 10.6 100.0 

1993 o 'o I I' Io'' I< I< 9.6 7.7 10.6 10.3 10.7 8.3 4.5 6.7 5.7 6.8 10.5 8.6 100.0 

1994 .............. 8.9 9.7 12.4 7.8 8.3 8.7 6.5 7.4 7.2 5.9 7.9 9.3 100.0 

1995 ............... 8.9 7.6 10.6 8.6 10.2 10.6 6.9 5.6 6.8 6.5 9.5 8.1 100.0 

l li!li!fi I I I I I I I I I 'I 'I I I I l l.!2 B.Q 102 11.4 B.7 7.4 7.0 Z.!1 50 78 z.~ Z.fi 100.0 

Source: U.S. Department of Agriculture, Agricultural Marketing Service, Fruit and Vegetable Division, Market News Branch, Fresh Fruit and Vegetable Arrivals in 

Eastern Cities, various issues. 
California and other sources were concentrated during May-August, when arrivals from Canada 

and Maine are relatively low. 

The effect of seasonality on competitiveness is less clear in the New York and Philadelphia 

markets, where arrivals from Idaho dominate (table 5-9, table 5-10). Arrivals in New York from 

Canada and Maine tended to be lowest during August-October each year during 1992-96 (table 

5-11). Arrivals in Philadelphia from Canada tended to be lowest during June-August and those 

from Maine during July-September each year during 1992-96 (table 5-12). 

Market Share 

Fresh potatoes 

The U.S. fresh potato industry holds a large advantage over the Canadian industry in terms of 

U.S. market share. The share of the U.S. fresh potato market held by domestic producers is 

greatest for potatoes other than those used for seed, at about 98 percent (table 2-15). Separate 

data are not available for table stock and processing potatoes. However, the market share held 

by domestic producers is greatest for processing potatoes, as most U.S. processors source their 

raw material near production facilities for cost and quality considerations and do not import raw 

potatoes forprocessing. 59 The share of the domestic market held by U.S. seed potato producers 

declined from 95 percent in 1992 to 92 percent in 1996 (table 2-14). 

The share of the market for table stock potatoes in major U.S. cities is shown in table 5-13. 

U.S. producers hold a predominant share of all major domestic markets. In terms of individual 

sources, table stock potatoes from Idaho hold the largest share of most major U.S. markets, with 

some regional exceptions such as California (in Los Angeles) and Colorado (in Dallas). Imports 

of table stock potatoes from Canada hold the leading share in Boston, the only U.S. market in 

which they lead. Canadian fresh potato producers also hold a large share of their domestic 

market. Canadian producers hold 91 percent of the domestic seed potato market and 94 percent 

of the combined table stock and processing potato market.60 

59 USITC staff interviews with officials of the U.S. potato industry, Apr. 14-17, 1997; transcript of 

the hearing, testimony of the Snack Food Association, p. 157. A relatively small share of processing 

potatoes are imported by U.S. potato chip producers. 60 Estimated by the USITC staff. 

5-27 
Table 5-9 

Fresh table stock otatoes: Share, b source, of monthl arrivals in New York, b 

Month 

Source and ear June Jul Au ustSe tember OctoberNovemberDecemberTotal 

Canada: Share by source (Percent) 

1992 0. • o 0. 0 o 0 o o I 0 0 0 0 0 0 0 0 0 o 0 o o 0.0 0.0 0.8 3.4 6.8 4.6 0.0 0.0 1.4 0.8 2.7 2.1 2.1 

1993 '.' ............. ' ........ 5.7 8.2 6.0 6.2 4.4 5.5 0.4 0.0 1.0 4.3 7.0 13.9 5.3 

1994 ......................... 11.0 7.2 3.3 4.5 11.7 4.5 3.7 0.8 0.5 1.9 6.6 9.5 5.5 

1995 ............. ' ........... 3.5 2.5 2.9 2.4 2.8 1.7 0.8 0.0 0.0 4.3 8.0 9.8 3.1 

1996 'o o 0 o o 0 o o 0 I 0 0 o o o o Io o 0 Io a 0 6.0 8.5 8.0 8.0 9.4 6.3 7.4 5.8 0.0 5.2 8.5 6.4 6.8 

Maine: 

1992 a 0 0 Io Io 0 o o o o o o 0 0 0 0 I I I 0 o 0 o 7.4 6.3 9.1 11.6 9.9 9.7 3.0 0.0 0.8 0.8 6.5 5.7 6.2 

1993 0 I 0 I I I Io o o o 0 o 0 o I 0 0 0 0 0 Io 0 o 14.5' 11.8 19.5 13.4 10.4 14.1 8.1 0.2 0.8 7.2 9.1 11.8 10.1 

1994 . . . . . . . . . . . . . . . . . ~ . . . . ~ . . 12.6 13.1 11.4 15.3 13.0 10.4 5.8 0.4 1.0 6.6 6.1 6.5 8.5 

1995 o O o o a & a Io o o o o 0 to O o o o & 0 I I 0 12.3 6.5 7.1 8.7 5.9 5.7 2.3 0.0 0.0 0.0 0.3 2.3 4.7 

1996 0 O O o o O O O I Io o o 0 O o O Io o o I I 0 I 3.0 5.2 5.7 9.1 8.5 5.1 6.6 1.2 0.0 0.0 3.1 5.0 4.7 

Idaho: 

1992 0 o o 0 0 o o 0 o o o 0 0 0 I IO o o o 0 o o 0 0 65.6 65.1 67.0 71.9 57.0 54.0 62.0 36.1 43.6 52.4 61.4 67.0 59.2 

1993 ................... ' ..... 61.0 65.1 59.4 67.7 58.2 43.9 53.5 28.6 18.2 35.5 43.1 41.7 46.9 

1994 o o o o o o o o o •I> 0 Io O O IO I• 0 0 0 0 49.7 65.4 692 60.8 48.9 54.5 57.3 26.7 48.6 62.3 71.9 69.2 56.0 

1995 I I I I I I Io< o o 0 0 I Io 0 0 I I I Io 0 I 65.2 75.5 73.2 72.6 66.6 61.7 70.1 40.5 24.7 58.7 70.8 63.3 63.6 u. 

I 1996 .................... ' .... 66.7 60.1 65.8 63.0 54.6 57.3 54.7 52.5 39.1 61.4 52.7 65.8 58.0 

N 

00 California: 

1992 o 0 o o o o 0 0 o' o 0 I 0 0 I I Io 0 o o ._ 0 0 6.2 8.6 5.5 4.1 19.4 22.8 13.3 9.1 6.8 0.4 0.0 0.2 8.9 

1993 ......................... 0.8 0.7 1.5 0.0 14.0 25.8 25.2 17.8 8.6 4.9 4.4 4.2 9.8 

1994 o o o o O o o o O O o o 0 I IO O O Io o 0 o 0 0 3.9 2.0 0.2 0.7 11.5 18.8 19.0 16.2 3.4 1.7 0.5 1.1 7.4 

1995 ......................... 2.9 8.5 10.5 3.7 13.8 24.9 19.2 16.7 10.6 5.2 2.9 8.3 11.0 

1996 ......................... 5.4 6.4 3.7 9.1 17.9 23.1 21.3 14.0 9.2 6.2 6.5 5.3 11.2 

All other: 

1992 0 I 0 I 0 0 0 0 0 0 o 0 o o 0 0 0 o 0 0 0 0 0 0 0 20.8 20.0 17.6 9.1 7.0 8.9 21.7 54.8 47.4 45.5 29.3 25.0 23.7 

1993 ..... ' ................... 17.9 14.1 13.5 12.7 12.9 10.7 12.8 53.3 71.4 48.0 36.4 28.5 27.9 

1994 I 0 0 I I 0 o o o o 0 o o o o o o o o 0 I 0 o o 0 22.8 12.2 15.9 18.8 14.9 11.8 14.1 55.9 46.5 27.5 14.8 13.7 22.6 

1995 0 I 0 I 0 0 0 0 0 o 0 0 o•o o 0 0 o 0 0 0 0 '' 0 0 16.0 7.0 6.3 12.6 10.9 5.9 7.6 42.8 64.7 31.8 18.0 16.3 17.6 

1996 .......... '' ............. 18.9 19.8 16.7 10.8 9.6 8.3 10.0 26.5 51.6 27.2 29.3 17.4 19.3 

Total: 

1992 I I I I IO o 0 0 0 0 o 0 0 Io I I Io 0 o o I 0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

1993 .......................... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

1994 ..................... ' ... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

1995 0 0 Io 0 0 o 0 I 0 0 o 0 0 0 0 o o 0 0 0 0 I I 0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

1996 0 O o o 0 O o Io 0 0 Io 0 IO O O I 0 0 0 I I 0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

Source: U.S. Department of Agriculture, Agricultural Marketing Service, Fruit and Vegetable Division, Market News Branch, Fresh Fruit and Vegetable Arrivals in 

Eastern Cities, various issues. 
Table 5-10 

Fresh table stock otatoes: Share, b month, of monthl arrivals in New York, b 

Month 

Source and ear Janua March June Jul Au ust Se tember October November December Total 

Canada: Share by month (Percent) 

1992 ............ 0.0 0.0 2.8 14.0 29.9 27.1 0.0 0.0 4.7 3.7 9.3 8.4 100.0 

1993 ............ 8.1 9.2 10.3 6.6 5.9 10.3 0.7 0.0 1.5 5.5 12.8 29.3 100.0 

1994 ............ 19.2 9.4 5.0 5.6 20.6 8.8 6.2 1.2 0.9 2.1 7.7 13.3 100.0 

1995 ............ 9.6 7.4 9.6 6.6 10.3 5.1 2.2 0.0 0.0 10.3 19.9 19.1 100.0 

1996 ............ 7.1 9.9 11.3 10.3 14.5 7.8 12.4 5.3 0.0 6.0 8.9 6.4 100.0 

Maine: 

1992 ............ 8.0 7.1 10.6 16.3 15.1 19.6 5.4 0.0 1.0 1.3 7.7 8.0 100.0 

1993 ............ 10.9 7.0 17.7 7.6 7.4 14.0 7.8 0.2 0.6 4.9 8.9 13.2 100.0 

1994 ............ 14.3 11.0 11.2 12.4 14.9 13.3 6.3 0.4 1.1 4.6 4.6 5.9 100.0 

1995 ......•..... 22.3 12.6 15.5 16.0 14.6 11.2 4.4 0.0 0.0 0.0 0.5 2.9 100.0 

1996 ............ 5.1 8.7 11.8 16.9 19.0 9.2 15.9 1.5 0.0 0.0 4.6 7.2 100.0 

Idaho: 

1992 ............ 7.4 7.6 8.2 10.6 9.0 11.3 11.7 2.8 5.3 8.6 7.6 9.8 100.0 

1993 ............ 9.8 8.3 11.6 8.2 8.8 9.4 11.0 5.9 2.9 5.1 9.0 10.0 100.0 

1994 ............ 8.6 8.4 10.4 7.5 8.5 10.6 9.4 4.1 8,4 6.6 8.2 9.5 100.0 

1995 ............ 8.7 10.8 11.7 9.8 12.0 8.9 9.9 4.9 2.1 6.8 8.5 5.9 100.0 Vl 

I 1996 ............ 9.3 8.2 11.0 9.5 9.9 8.4 10.7 5.6 5.0 8.3 6.5 7.7 100.0 

N 

\0 California: 

1992 ............ 4.7 6.7 4.5 4.0 20.5 31.9 16.7 4.7 5.6 0.4 0.0 0.2 100.0 

1993 ............ 0.6 0.4 1.4 0.0 10.1 26.2 24.7 17.5 6.6 3.4 4.4 4.8 100.0 

1994 ............ 5.0 2.0 0.2 0.7 15.1 27.6 23.6 18.6 4.4 1.3 0.4 1.1 100.0 

1995 ............ 2.3 7.0 9.7 2.9 14.5 20.9 15.7 11.8 5.2 3.5 2.1 4.5 100.0 

1996 ............ 3.9 4.5 3.2 7.1 16.8 17.5 21.6 7.8 6.0 4.3 4.1 3.2 100.0 

All other: 

1992 ............ 5.9 5.9 5.4 3.3 2.8 4.7 10.3 10.5 14.5 18.7 9.0 9.1 100.0 

1993 ............ 4.8 3.0 4.4 2.6 3.3 3.9 4.4 18.4 19.3 11.6 12.8 11.5 100.0 

1994 ............ 9.7 3.9 5.9 5.8 6.4 5.7 5.8 21.1 19.8 7.2 4.2 4.7 100.0 

1995 ............ 7.7 3.6 3.6 6.2 7.1 3.1 3.9 18.7 19.5 13.4 7.8 5.5 100.0 

1996 ............ 7.9 8.1 8.4 4.9 5.3 3.6 5.9 8.5 19.6 11.0 10.8 6.1 100.0 

Total: 

1992 ............ 6.7 6.9 7.2 8.7 9.4 12.4 11.2 4.6 7.2 9.7 7.3 8.6 100.0 

1993 ............ 7.5 5.9 9.1 5.7 7.1 10.0 9.6 9.6 7.5 6.8 9.8 11.3 100.0 

1994 ............ 9.6 7.2 8.4 6.9 9.7 10.9 9.2 8.5 9.6 5.9 6.4 7.7 100.0 

1995 ............ 8.5 9.1 10.1 8.6 11.5 9.2 8.9 7.7 5.3 7.4 7.7 6.0 100.0 

1996 ............ 8.0 7.9 9.7 8.7 10.5 8.5 11.3 6.2 7.3 7.8 7.1 6.8 100.0 

Source: U.S. Department of Agriculture, Agricultural Marketing Service, Fruit and Vegetable Division, Market News Branch, Fresh Fruit and Vegetable Arrivals in 

Eastern Cities, various issues. 
Table5-11 

Fresh table stock otatoes: Share, b source, of monthl arrivals in Philadel 

Source and ear Janua March June Jul Au ust Se tember October November December Total 

Canada: Share by source (Percent) 

1992 .............. 2.8 0.7 1.6 4.8 1.2 0.0 0.0 0.7 0.5 1.8 2.3 3.2 1.5 

1993 .............. 5.0 6.9 7.1 9.0 8.6 2.6 0.0 0.7 2.9 5.7 7.5 9.7 5.3 

1994 .............. 9.2 4.5 5.2 10.5 4.6 2.9 0.5 0.4 0.5 4.3 4.7 5.2 4.0 

1995 .............. 6.8 3.7 3.1 1.3 0.0 0.0 0.0 0.4 2.4 9.3 13.8 19.2 4.3 

1996 .............. 13.2 19.4 14.4 11.0 9.5 5.1 1.6 0.0 3.2 8.1 13.6 13.3 8.6 

Maine: 

1992 .............. 13.2 14.8 15.5 13.8 5.8 0.4 0.0 0.0 0.0 1.2 11.6 10.6 6.8 

1993 .............. 13.3 17.8 15.3 23.4 12.3 4.8 0.0 0.0 4.7 10.0 13.7 8.3 9.9 

1994 .............. 15.8 13.6 9.7 11.4 4.6 1.0 0.0 0.0 0.0 0.6 6.7 5.8 5.0 

1995 .............. 7.3 8.8 13.6 16.5 8.3 0.5 0.0 0.8 2.4 1.2 4.6 3.2 5.3 

1996 .............. 13.2 13.3 12.5 12.6 6.5 2.0 0.4 0.5 0.0 1.0 1.6 4.0 5.0 

Idaho: 

1992 .............. 50.7 55.6 54.4 51.0 43.6 46.2 40.9 12.0 26.2 37.1 37.8 41.3 41.2 

1993 .............. 41.1 26.7 38.8 32.4 37.7 35.5 30.4 23.5 15.3 32.1 43.2 40.7 33.4 

1994 .............. 36.8 43.9 42.2 53.5 42.3 37.8 38.3 26.1 35.5 45.7 48.0 48.3 40.5 

1995 .............. 44.1 54.4 43.8 51.9 48.0 44.5 38.0 12.4 16.7 31.1 36.8 33.6 37.1 Vi 

I 1996 .............. 43.1 33.7 38.8 40.8 29.9 36.0 39.7 24.1 24.7 35.5 38.7 43.4 35.7 w 

0 California: 

1992 .............. 0.7 0.7 1.0 0.0 21.5 19.6 13.9 0.0 0.5 0.0 0.0 0.0 5.5 

1993 .............. 0.0 1.0 0.0 1.4 17.9 18.6 11.1 2.7 0.6 0.0 0.0 0.0 5.1 

1994 .............. 0.7 0.0 0.0 1.8 14.4 16.7 17.5 7.3 2.7 1.8 0.0 2.3 6.2 

1995 .............. 2.3 3.7 3.7 1.3 12.7 16.5 10.9 6.2 3.6 1.9 2.9 4.8 6.4 

1996 .............. 2.9 3.1 1.3 11.5 15.9 16.2 13.1 3.7 1.6 3.0 1.6 2.9 6.9 

All other: 

1992 .............. 32.6 28.1 27.5 30.3 27.9 33.8 45.2 87.3 72.8 59.9 48.3 45.0 45.0 

1993 .............. 40.6 47.5 38.8 33.8 23.5 38.5 58.5 73.2 76.5 52.1 35.6 41.4 46.3 

1994 .............. 37.5 37.9 42.9 22.8 34.0 41.6 43.7 66.2 61.3 47.6 40.7 38.4 44.3 

1995 . ' ......... , .. 39.5 29.4 35.8 29.1 31.0 38.5 51.0 80.2 75.0 56.5 42.0 39.2 47.0 

1996 .............. 27.6 30.6 33.1 24.1 38.3 40.6 45.2 71.7 70.5 52.3 44.5 36.4 43.7 

Total: 

1992 .............. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

1993 .............. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

1994 .............. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

1995 .............. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

1996 .............. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

Source: U.S. Department of Agriculture, Agricultural Marketing Service, Fruit and Vegetable Division, Market News Branch, Fresh Fruit and Vegetable Arrivals in 

Eastern Cities, various Issues. · 
TableS-12 

Fresh table stock otatoes: Share b 

Month 

Source and ear June Jul Au ustSe tember October November December Total 

Canada: Share by month (Percent) 

1992 ...................... 12.5 3.1 9.4 21.9 6.3 0.0 0.0 3.1 3.1 9.4 12.5 18.8 100.0 

1993 ...................... 8.8 6.9 13.7 12.7 13.7 5.9 0.0 1.0 4.9 7.8 10.8 13.7 100.0 

1994 0 o' o o 0 o 0 0 0 0 0 o 0 o o o o o 0 I 0 17.3 7.4 9.9 14.8 11.1 7.4 1.2 1.2 1.2 8.6 8.6 11.1 100.0 

1995 ...................... 13.0 5.4 5.4 2.2 0.0 0.0 0.0 1.1 4.3 16.3 26.1 26.1 100.0 

1996 ...................... 12.1 10.0 12.1 11.1 10.0 5.3 2.1 0.0 3.2 8.4 13.7 12.1 100.0 

Maine: 

1992 ...................... 13.4 14.1 21.1 14.1 7.0 0.7 0.0 0.0 0.0 1.4 14.1 14.1 100.0 

1993 ...................... 12.6 9.4 15.7 17.8 10.5 5.8 0.0 0.0 4.2 7.3 10.5 6.3 100.0 

1994 ...................... 23.5 17.6 14.7 12.7 8.8 2.0 0.0 0.0 0.0 1.0 9.8 9.8 100.0 

1995 ...................... 11.5 10.6 19.5 23.0 16.8 0.9 0.0 1.8 3.5 1.8 7.1 3.5 100.0 

1996 ...................... 20.7 11.7 18.0 21.6 11.7 3.6 0.9 0.9 0.0 1.8 2.7 6.3 100.0 

Idaho: 

1992 ...................... 8.4 8.7 12.1 8.5 8.7 12.0 9.8 2.1 6.1 7.2 7.5 9.0 100.0 

1993 ....................... 11.4 4.2 11.7 7.3 9.4 12.7 8.0 5.4 4.0 7.0 9.7 9.1 100.0 

V\ 1994 ...................... 6.8 7.0 7.9 7.4 9.9 9.5 8.5 7.4 8.0 9.1 8.7 10.0 100.0 I 

w 1995 ...................... 9.8 9.3 9.0 10.3 13.9 11.2 9.2 4.0 3.5 6.3 8.1 5.3 100.0 ....... 1996 ...................... 9.5 4.2 7.8 9.9 7.6 9.0 12.7 5.7 5.9 8.9 9.4 9.5 100.0 

California: 

1992 ...................... 0.9 0.9 1.7 0.0 32.2 38.3 25.2 0.0 0.9 0.0 0.0 0.0 100.0 

1993 ...................... 0.0 1.0 0.0 2.0 29.3 43.4 19.2 4.0 1.0 0.0 0.0 0.0 100.0 

1994 ...................... 0.8 0.0 0.0 1.6 22.0 27.6 25.2 13.4 3.9 2.4 0.0 3.1 100.0 

1995 ...................... 2.9 3.7 4.4 1.5 21.3 24.3 15.4 11.8 4.4 2.2 3.7 4.4 100.0 

1996 ...................... 3.3 2.0 1.3 14.4 20.9 20.9 21.6 4.6 2.0 3.9 2.0 3.3 100.0 

All other: 

1992 ...................... 5.0 4.0 5.6 4.7 5.1 8.0 9.9 13.8 15.5 10.6 8.8 9.0 100.0 

1993 0 0 o 0 0 0 0 o o 0 o o o 0 0 o 0 0 I 0 0 0 8.1 5.4 8.5 5.5 4.2 9.9 11.1 12.2 14.5 8.1 5.8 6.7 100.0 

1994 ...................... 6.3 5.5 7.3 2.9 7.3 9.6 8.8 17.1 12.6 8.6 6.7 7.3 100.0 

1995 ...................... 7.0 4.0 5.8 4.6 7.1 7.7 9.7 20.6 12.5 9.0 7.3 4.9 100.0 

1996 0 o o o 0 o o o o o 0 o I IO 0 o I 0 I I 0 5.0 3.1 5.5 4.8 8.0 8.3 11.8 13.9 13.9 10.7 8.8 6.5 100.0 

Total: 

1992 ...................... 6.9 6.4 9.2 6.9 8.2 10.7 9.9 7.1 9.6 7.9 8.2 9.0 100.0 

1993 0 0 0 0 0 0 0 0 0 0 o I I 0 0 o 0 I 0 0 0 o 9.3 5.2 10.1 7.5 8.4 11.9 8.8 7.7 8.8 7.2 7.5 7.5 100.0 

1994 ...................... 7.4 6.5 7.5 5.6 9.5 10.2 9.0 11.4 9.1 8.0 7.3 8.4 100.0 

1995 ...................... 8.3 6.4 7.6 7.4 10.7 9.3 9.0 12.1 7.9 7.5 8.1 5.8 100.0 

1996 ...................... 7.9 4.4 7.2 8.6 9.1 8.9 11.4 8.5 8.6 8.9 8.6 7.8 100.0 

Source: U.S. Department of Agriculture, Agricultural Marketing Service, Fruit and Vegetable Division, Market News Branch, Fresh Fruit and Vegetable Arrivals in 

Eastern Cities, various issues. 
Table 5-13 

Fresh table stock potatoes: Arrivals in selected U.S. cities, by major shipping origins, 1992-96 

Shipping origin 

Cit and ear Idaho Colorado Wisconsin North Dakota Maine Canada All others Total 

(Percent) 

1992: 

Boston ... 20 13 4 0 1 3 3 33 10 13 100 

NewYork. 59 9 4 1 2 4 3 6 2 10 100 

Philadelphia 41 5 3 0 2 5 6 7 2 30 100 

Atlanta ... 36 2 4 2 9 29 1 1 0 17 100 

Chicago .. 21 3 8 1 1 30 20 0 0 16 100 

Detroit ... 57 9 1 0 0 4 1 0 0 28 100 

St Louis .. 54 1 1 0 13 6 3 0 0 22 100 

Dallas ... 12 4 3 0 69 1 1 0 0 11 100 

Los Angeles 17 28 20 18 10 0 1 0 0 5 100 

Others' .. 31 8 17 7 5 8 1 3 0 22 100 

Total .. 33 10 10 5 8 8 4 5 1 16 100 

1993: 

Boston ... 12 9 4 1 3 2 40 20 9 100 

NewYork. 47 10 6 2 2 3 10 5 14 100 

Philadelphia 33 5 4 0 1 5 7 10 5 30 100 

Atlanta ... 37 1 5 2 14 25 2 1 0 12 100 

Chicago .. 19 5 9 3 1 27 18 0 0 19 100 

Detroit ... 54 10 3 3 0 6 1 0 0 24 100 

St Louis .. 49 1 2 0 22 3 5 0 0 18 100 

Dallas ... 17 3 4 1 63 0 1 0 1 12 100 

Los Angeles 16 33 15 15 10 0 0 0 0 10 100 

Total .. 33 10 10 5 8 8 4 5 1 16 100 

1994: 

Boston ... 17 12 6 2 1 4 2 33 17 6 100 

New York. 56 7 6 4 1 2 1 9 6 8 100 

Philadelphia 41 6 6 1 1 5 5 5 4 27 100 

Atlanta ... 38 3 5 1 22 14 1 1 0 14 100 

Chicago .. 29 5 10 12 0 17 16 0 0 11 100 

Detroit ... 61 8 4 1 0 6 1 0 0 19 100 

St Louis .. 51 1 3 0 22 5 3 0 0 13 100 

Dallas ... 18 5 7 0 56 0 1 0 1 12 100 

Los Angeles 9 36 19 19 10 0 0 0 0 7 100 

Others' .. 31 10 15 6 7 7 2 4 1 18 100 

Total .. 33 11 11 6 8 6 4 5 3 13 100 

1995: 

Boston ... 20 12 6 1 1 3 2 28 18 10 100 

NewYork. 64 11 4 1 0 0 1 5 3 10 100 

Philadelphia 37 6 3 1 0 5 5 5 4 33 100 

Atlanta ... 38 1 2 1 21 16 2 1 0 17 100 

Chicago .. 35 5 7 22 0 7 19 0 0 7 100 

Detroit ... 61 9 5 1 0 3 2 0 0 19 100 

St Louis .. 50 1 3 1 21 5 4 0 0 16 100 

Dallas ... 15 2 3 0 69 0 1 0 0 9 100 

Los Angeles 7 36 21 21 8 0 0 0 0 6 100 

Others' .. 33 11 16 7 3 7 2 5 1 16 100 

Total .. 33 12 10 9 8 4 5 4 2 13 100 

1996: 

Boston ... 16 12 5 1 1 3 1 20 31 11 100 

New York. 58 11 4 1 0 1 1 5 7 12 100 

Philadelphia 36 7 5 2 0 5 2 5 9 29 100 

Atlanta ... 39 3 2 1 22 17 1 1 0 14 100 

Chicago .. 44 8 8 16 0 5 14 0 0 4 100 

Detroit ... 68 8 3 1. 0 4 1 0 0 16 100 

St Louis .. 55 2 3 1 20 3 2 0 0 14 100 

Dallas ... 18 2 3 0 66 1 0 0 0 9 100 

Los Angeles 3 60 14 17 2 0 0 0 0 3 100 

Others' .. 29 12 20 8 1 5 2 6 2 14 100 

Total .. 33 17 10 8 6 4 3 4 4 11 100 1 Includes both rail and truck arrivals. Unloads at Canadian cities are excluded from origin totals. 2 Includes Baltimore, Buffalo, Cincinnati, Columbia, Denver, Miami, New Orleans, Pittsburg, San Francisco, and Seattle. 

Source: USDA, AMS. 

5-32 
Processed potatoes 

The share of the U.S. market for frozen processed potato products held by U.S. processors61 

declined by 3 percent during 1992-96 while the share held by Canadian processors62 nearly 

doubled (table 2-16). Canada held virtually the entire U.S. import market for frozen potato 

products during 1992-96. Most of this gain in Canadian share resulted from relatively large 

contracts won from major U.S: QSR.s, mainly in the Northeast and Midwest regions.63 

Stocks 

As noted earlier, fresh potatoes are stored and marketed throughout the year. U.S. stocks on 

May 1, 1997, were up 7 percent from the corresponding period in 1996 and up 59 percent from 

1992. 64 The high level of fresh potatoes in storage in May 1997 reflects increased production 

levels in 1996 and also indicates an excess of supply in relation to market demand. In response 

to the high storage levels, USDA recently announced a diversion program to reduce fresh potato 

stocks. 65 

Comparable monthly data are not available for Canada. Stocks generally are nil by June each 

year. 66 However, Canadian storage holdings of fresh potatoes as of November 1, the highest 

monthly level, rose during 1992-96 to a record level of 6.6 billion pounds in 1996 (table 4-5), 

reflecting high production levels that year. The Canadian stock situation was similar to that in 

the United States in 1996, and the above average stock levels in both countries have affected 

competitive conditions in the U.S. market for both U.S. and Canadian producers. 

Inventories of processed potatoes reflect market conditions as well as supply conditions. 

Generally declining U.S. monthly inventories of frozen french fries as a share of annual 

production during 1992-96 suggest positive market conditions during the period (table 5-2 ). 

However, at least one U.S. processor recently cited a buildup in inventories as a contributing 

factor in a cutback in production capacity.67 Slower growth in the U.S. market in 1996 may 

affect inventory levels in 1997. 

61 Includes production by facilities located in the United States regardless of ownership. 62 Includes production by facilities located in Canada regardless of ownership. 63 Collier, Shannon. Rill & Scott, PLLC, posthearing brief, p. 2; USITC staff interviews with 

officials of the U.S. and Canadian frozen processed potato industries, Apr. 8-17, 1997. 64 Based on data from the USDA, NASS, Potato Stocks, May 14, 1997. 65 USDA Press Release 138-97, May 29, 1997, found at http://www.usda.gov/ams/138.htm 66 See discussion in chapter 4 on fresh potato inventories. 67 Collier, Shannon. Rill & Scott, PLLC, posthearing brief, exhibit 8. 

5-33 
Prices 

Fresh Potatoes 

U.S. and Canadian prices of table stock potatoes are compared in two Northeastern U.S. 

markets, Boston and New York City. Canadian fresh table stock potatoes enter the United 

States and are sold primarily in Northeastern U.S. markets. 68 USDA data show that Canada was 

the source of the largest share of Boston's 1996 fresh potato arrivals, 31 percent, a share which 

exceeded even Maine's 20 percent and Idaho's 16 percent. 69 

To compare U.S. and Canadian prices, the USITC staff used a monthly price series for 

comparable classes and quality of a number of U.S. and Canadian potatoes sold in the Boston 

and New York City markets. Monthly prices were collected for comparable U.S. and Canadian 

russets and round white potatoes for each of the two cities, resulting in the development of eight 

price series. Prices for each product were not available for all months during the January 1994-

April 1997 period. Monthly comparisons are limited to those months for which both U.S. and 

Canadian prices were reported in a particular market. Generally, two comparisons are made for 

each potato type in each market: 

(1) A "yearly" average of the monthly U.S./Canadian price differences or 

margins, calculated for as many of each year's months as comparable U.S. and 

Canadian prices were reported. These yearly averages are averages of the 

monthly differences and are calculated for each year and potato type in each of 

the two urban markets. 

(2) A second set of "early year" comparisons were performed for a common 

season in order to uncover seasonal distortions ofU.S./Canadian price 

comparisons. U.S./Canadian price differences or margins were calculated for as 

many of each year's first four months as comparable U.S. and Canadian prices 

were both reported. Early year averages were calculated for each year and 

potato type in each of the two urban markets [data were not complete enough to 

effect other seasonal comparisons]. 

The average monthly differences between U.S. and Canadian prices during a year are focused 

on, rather than the difference in average U.S. and average Canadian prices each year. 

68 Producers testified as to significant regional concerns in the Northeastern United States where 

Canadian potato exports, especially from the Provinces of P.E.I. and New Brunswick, primarily enter 

the United States, and hence compete most directly with U.S. production in those markets. Transcript 

of the hearing, testimonies ofG. Smith, pp. 46-48, and NPC, pp. 145-147. 69 See table 5-13. 

5-34 
Price comparisons for russets and round white potatoes in Boston 

The following four monthly price series were obtained for the comparison period (January 1994-

April 1997) and are reported in table 5-14: Idaho russet price, P.E.L russet price, Maine round 

white price, and P.E.I. round white price.70 Since 1994, P.E.I. russet potato prices have been 

far more competitive than Idaho russet prices in the Boston market. Idaho russet prices 

exceeded P .E.I. russet prices in Boston by an average monthly margin of 51 to 67 percent 

annually during the January 1994-April 1997 period. 71 Early year averages to monthly Idaho 

russet price excesses over P .E.I. russet prices ranged from of 54 to 7 5 percent. 72 

Data sho""11 in table 5· 14 suggest that P.E.I. and Maine round white potatoes are closer in value 

to each other than are Idaho and P.E.I. russet potatoes. Further, it appears that Maine round 

white prices have shifted from one of competitive advantage to one of disadvantage relative to 

P.E.I. round white prices in the Boston market since 1994. The average monthly margin by 

which Maine round white potato prices fell below P.E.I. prices was 5.9 percent in 1994. This 

average monthly advantage in U.S. over Canadian price fell to 4. 7 percent during 1995, and to 

a far lower 0.7 percent in 1996. In January-April 1997, Maine round white potato prices 

actually exceeded P .E.I. prices by an average monthly margin of 2.9 percent in Boston. When 

comparing prices during the early months of 1994-96 in Boston, Maine prices of round white 

potatoes fell below P .E.I. prices by an average monthly margin of 11 percent in 1994, and this 

average monthly margin of Maine price advantage increased to more than 14 percent in 1995. 73 

In 1996, however, the early-year Maine price advantage fell markedly to 2.4 percent and then 

turned to disadvantage with Maine prices actually exceeding P.E.L price in early 1997 by an 

average monthly margin of 2. 9 percent in Boston. 

Based on such limited available data, Canadian russet potato prices have been more competitive 

than prices of Idaho russets since 1994, while the Maine price advantage over P .E.I. for round 

white potatoes declined during 1994-96 and turned to a disadvantage in early 1997. The more 

pronounced Canadian price advantages over U.S. potatoes in Boston is confirmed by 1996 

USDA data on Boston fresh potato arrivals which indicate that Canadian fresh potatoes 

70 The following prioes were obtained: (1) Canadian grade-one Russet Burbank potatoes of size 70 

fromP.E.L and sold in Boston on the last market day of each month in 50 lb. cartons, (2) U.S. gradeone Russet Burbank potatoes of size 70 from Idaho and sold in Boston on the last market day of each 

month in 50 lb. cartons, (3) U.S. grade-one Maine round white potatoes of size A sold in Boston on 

the last market day of each month in 50 lb. sacks, and (4) Canadian grade-one P.E.I. round white 

potatoes of size A sold in Boston on the last market day of each month in 50 lb. sacks. These prices 

were obtained from USDA, AMS, Market News Branch, Onions and Potatoes, found at 

http://mis.ifas.ufl.edu/cgi-bin/barc/barc?a=v&d. 

71 As previously stated, these are annual averages of the monthly Idaho/P.E.I. russet price 

differences calculated for each year during the months for which both Idaho and P .E.I. prices were 

reported as per table 5-15. 72 Early year average margins ofldaho price excess over P .E.I. price were calculated with differing 

numbers of monthly data depending on data availability as follows: with February-April data in 1994 

and 1996; and January through April in 1997. Early year P.E.l. data were not reported during the 

early year period for 1995. 73 Because of data unavailability, the early year average Maine/P.E.l. price differences for round 

white potatoes in Boston were calculated with data for Jan. through Mar. in 1994; Jan. and Feb. in 

1995; Jan. through Mar. in 1996; and Jan. and Mar. data in 1997. 

5-35 
Table 5-14 

Fresh table stock potatoes: Monthly prices in the Boston market for U.S. and Canadian Russet Burbank 

and round white potatoes, by year and by month, Jan.1994-Apr.1997 

Russet Burbank Round white 

Year and month P.E.I. I Idaho P.E.I. I Maine 

U.S. dollars per 50 lb. carton U.S. dollars per 50 lb. sack 

1994: 

Jan ............ nla $16.75 $6.00 $5.50 

Feb ............ $11.50 18.25 6.50 5.75 

Mar ............ 12.75 21.00 7.00 6.00 

Apr ............ 12.75 19.50 n/a 6.00 

May 0. 0 0 o o o o 0 Io n/a 19.75 n/a 6.00 

Jun ............ 11/a 21.00 n/a n/a 

Jul ............ n/a 21.50 n/a n/a 

Aug ........... n/a n/a 6.75 6.00 

Sept ........... n/a 9.50 5.25 5.50 

Oct ............ n/a 10.75 5.50 5.37 

Nov ........... n/a 10.00 5.50 5.50 

Dec ........... n/a 9.00 5.50 5.25 

1995: 

Jan ............ n/a 9.50 6.00 5.25 

Feb ............ a/a 11.00 6.25 5.25 

Mar ............ n/a 11.50 n/a 5.25 

Apr ............ n/a 10.75 n/a 5.37 

May o o o o o' o o 0 0 I n/a 19.00 n/a n/a 

Jun ............ n/a 19.50 n/a n/a 

Jul o o 0 Io 0 0 Io o o 0 n/a 20.00 n/a n/a 

Aug ............ n/a n/a n/a n/a 

Sept ........... n/a n/a 4.75 n/a 

Oct ............ 13.00 17.50 5.00 n/a 

Nov ........... 11.00 18.50 5.00 5.50 

Dec ........... n/a 18.00 4.92 4.87 

1996: 

Jan ............ 1025 . n/a 4.92 4.87 

Feb ............ 9.75 18.25 5.00 4.87 

Mar ............ 10.75 18.50 4.92 4.75 

Apr ............ 11.25 18.50 5.00 n/a 

May ........... 11.50 18.00 5.75 n/a 

Jun ............ n/a 18.00 n/a 9.75 

Jul 0 I 0 0 0 0 o o o' 0 0 n/a 14.50 n/a n/a 

Aug ........... nla 15.00 5.25 n/a 

Sept ........... nla 10.00 n/a nla 

Oct ............ n/a 8.75 4.00 4.25 

Nov ........... n/a 8.75 4.00 3.87 

Dec o o 0 0 I 0 0 Io 0 o 5.75 8.75 4.00 4.00 

1997: 

Jan ............ 6,00 9.25 3.75 3.97 

Feb ............ 6.00 8.75 4.00 n/a 

Mar ............ 6.00 9.75 4.00 4.00 

Apr ............ 6.00 9.25 n/a 4.00 

Note.-The "n/a" denotes data that are not available. Russet Burbank prices at Boston are for (1) Canadian gradeone russets of size 70 from P.E.1. in 50 lb. cartons, and (2) U.S. grade-one russets of size 70 from Idaho, in 50 lb. 

cartons. Prices of round white potatoes (AWPs) at Boston are (1) Canadian grade-one RWPs from P.E.1. of size A 

in 50 lb. sacks, and (2) U.S. grade-one RWPs from Maine of size A in 50 lb. sacks. Prices were those reported on 

the last market day of each month.When price ranges were reported, Commission staff recorded the mid-point 

price for evenly divisible ranges, and the mid-point price rounded-down to one full cent when ranges were not 

evenly divisible. 

Source: U.S. Department of Agriculture, Market News Branch, Onions and Potatoes, found at 

http://mis.ifas.ufl.edu/cgi-bin/barc/barc?a=v&d. 

5-36 
accounted for 31 percent of Boston's fresh arrivals.74 This market share of arrivals exceeds that 

of any other source country or State, including Maine, which supplied only 20 percent of 

Boston's fresh arrivals that year.75 

Price comparisons for russets and round white potatoes in New York City 

The following four prices were examined for the period January 1994 through April 1997 (table 

5-15): price of New Brunswick russets (hereafter New Brunswick russet price), Idaho russet 

price, price of P.E.I. round white potatoes, and price of Maine round white potatoes.76 New 

Brunswick russet prices were more competitive than Idaho prices in New York City throughout 

the January 1994-April 1997 period. The average monthly margin by which the Idaho russet 

price exceeded the New Brunswick russet price was 36 percent in 1994, 17 percent in 1995, and 

49 percent in 1996.77 

Early-year comparisons also suggest competitive price advantages of New Brunswick russets 

over Idaho russets in New York. Average early-year margins by which Idaho russet prices 

exceededNewBrunswickrussetprices were 38 percent in 1994, 21percentin1995, and about 

51 percent in 1996. 78 

Table 5-15 demonstrates that data needed for U.S.-Canadian comparisons of round white potato 

prices are scarce and such comparisons should be cautiously implemented. Generally, Maine 

round white potatoes were more competitively priced than P.E.I. round white potatoes in the 

New York market. The average monthly margin by which the price of Maine round white 

potatoes fell below the price of comparable P.E.I. product was 4.3 percent in 1994~ 8 percent 

in 1995; and 5.4 percent in 1996.79 USITC staff did not make the early-year price comparisons 

ofU.S.-Canadian round white potato prices in New York City because data were not available. 

74 See table 5-13. 75 Ibid. 76 USITC staff collected the following: (1) Canadian grade-one Russet Burbank potatoes of size 70 

from New Brunswick and sold in the New York City market on the last market day of each month in 

50 lb. cartons, (2) U.S. grade-one russets of size 70 from Idaho and sold on the New York City 

market on the last market day of each month in SO lb. cartons, (3) Canadian grade-one P.E.I. round 

white potatoes of size A sold on the New York City market during the last market day of each month 

in 50 lb. sacks, and ( 4) U.S. grade-one Maine round white potatoes of size A sold on the New York 

City market during the last market day of each month in 50 lb. sacks. Prices were obtained from 

USDA, AMS, Market News Branch, Onions and Potatoes. U.S. and Canadian monthly potato price 

comparisons are limited to 1994, 1995, and 1996, as New York City prices of the above cited 

Canadian potatoes were not reported. 77 These average monthly differences or margins were calculated over differing months each year 

depending on when data were reported. The margins averages were calculated with 5 months of data 

in 1994, 3 months of data in 1995, and 6 months of data in 1996. 78 Data unavailability necessitated that these average early-year margins were calculated for different 

numbers of months: with Jan.-Feb. and Apr. data in 1994 and 1996, and with only March data in 

1995. 

79 These average monthly margins of U.S. price advantage were calculated with 2 months of data in 

1994; 1 month of data in 1995; and 3 months of data in 1996. 

5-37 
TableS-15 

Fresh table stock potatoes: Monthly prices in the New York market for U.S. and Canadian Ru~et Burbank and 

round white potatoes, Jan. 1994-Apr.1997 

Russet Burbank Round white 

Year and month New Brunswick I Idaho New Brunswick I Maine 

U.S. dollars per 50 lb. carton U.S. ciollars psr 50 lb. sack 

1994: 

Jan ........... $11.50 $16.50 $6.50 $6.25 

Feb ........... 12.00 17.50 6.87 6.25 

Mar ........... nfa 17.50 6.87 6.87 

Apr ........... 13.50 17.00 nfa 6.75 

May .......... 14.00 18.50 n/a 8.00 

Jun ........... 14.00 18.50 n/a 8.00 

Jul ........... n/a nfa n/a n/a 

Aug .......... n/a nfa nfa n/a 

Sept .......... n/a 9.00 nfa n/a 

Oct ........... n/a 9.00 nfa 5.62 

Nov .......... n/a 10.00 nfa 5.62 

Dec .......... n/a 8.75 nfa 5.25 

1995: 

Jan ........... n/a nfa nfa 5.25 

Feb ........... n/a 10.50 nfa 5.25 

Mar ........... 9.50 11.50 nfa 5.75 

Apr ........... n/a n/a n/a 5.82 

May .......... 12.50 14.00 nfa 6.50 

Jun ........... 13.50 16.00 n/a 6.50 

Jul ........... n/a 17.00 n/a n/a 

Aug .......... n/a 19.00 nfa nfa 

Sept .......... n/a n/a n/a n/a 

Oct ........... n/a 16.00 6.25 n/a 

Nov .......... n/a 15.50 6.25 5.75 

Dec .......... nla 16.50 n/a 5.50 

1996: 

Jan ........... 11.00 16.50 nfa 5.37 

Feb ........... 11.00 17.00 nla 5.50 

Mar ........... 11.00 n/a nfa 5.50 

Apr ........... 11.50 17.00 5.75 6.00 

May .......... 9.00 17.50 8.50 6.75 

Jun ........... 13.50 17.50 n/a 7.25 

Jul ........... 12.50 15.00 nla 7.50 

Aug .......... nfa nfa n/a n/a 

Sept .......... n/a 12.00 n/a nfa 

Oct ........... n/a 8.25 n/a nfa 

Nov .......... n/a 8.75 4.25 4.25 

Dec .......... n/a 8.50 n/a 4.50 

1997: 

Jan ........... n/a 8.50 n/a 4.50 

Feb ........... nla 8.50 n/a 4.50 

Mar . . . . . . . . . . . n/a n/a n/a 4.50 

Apr . . . . . . . . . . . n/a 8.50 n/a n/a 

Note.-The "n/a" denotes data that are not available. The four New York City (NYC) prices are for: (1) Canadian grade-one Russet 

Burbank potatoes of size 70 from New Brunswick and sold on the NYC market on the last market day of each month in 50 lb. cartons, (2) 

U.S. grade-one russets of size 70 from Idaho and sold on 1he NYC market on the last market day of each mon1h in 50 lb. cartons, (3) 

Canadian graclEH>ne PEI round white potatoes of size A sold on the NYC market during the last market day of each month in 50 lb. sacks, 

and (4) U.S. grade-one Maine round white potatoes of size A sold on the NYC market during the last day of each month in 50 lb. sacks. 

When ranges were reported, Commission staff recorded the mid-point price for evenly divisible ranges, and the mid-point price roundeddown one full cent when ranges were not evenly divisible. 

Source: USDA, AMS, Market News Branch, Market Information System, Onions and Potatoes, at http://mis.ifas.ufl.edu/cgi- bin/barc/barc?a=v&d. 

5-38 
Summary of U.S./Canadian wholesale potato price comparisons 

A number of conclusions emerge from the analyses of the wholesale prices reported by the 

USDA. First, prices of Canadian russets have been lower than prices of Idaho russets in the 

Boston and New York City markets. Second, patterns ofU.S.-Canadian price differences are 

less clear in the two markets for comparable sales of round white potatoes. 

In the Boston and New York City markets, Canadian russets have been priced lower than Idaho 

russets since 1994. Some of the persistently higher Idaho russet prices over comparable 

Canadian prices in the Northeastern U.S. markets (tables 5-14 and 5-15 ) may be attributed to 

substantial rail and truck transportation costs noted in testimony by Idaho growers.80 Since 

1994, the once-standing price advantage of Maine round white potatoes over P.E.I.-grown 

product in the Boston market has not only diminished, but has turned into a price disadvantage. 

Since 1994, data in the New York City market, which are more limited than data in the Boston 

market, suggest that Maine-produced round white potatoes are lower priced than comparable 

product from P .E.l 

The conclusions that U.S. russets are more expensive than Canadian (P.E.I., New Brunswick) 

russets in these two markets, and that Canadian rolllld white potatoes have begun to sell at lower 

prices than Maine product in the Boston market, coincide with other evidence and with modeling 

results. Canadian data (chapter 4) suggest that 59 percent of Canada's 1996 potato acreage and 

production are concentrated in P.E.I., New Brunswick, Quebec, Newfoundland, and Nova 

Scotia.81 Maine industry sources have testified that fresh potato imports from Canada 

(particularly from P.E.I. and New Bnmswick) enter in significant volumes through Northeastern 

U.S. ports; that such imports compete with U.S. production more in Northeastern U.S. markets 

than in other regions such as Western U.S. markets where grower/processor production 

contracts are more common; and that such imports are displacing U.S. production and 

depressing U.S. potato prices.82 Such testimony is supported by USDA data on Northeast U.S. 

fresh potato arrivals that suggest (1) Canada captured the largest share of Boston's 1996 fresh 

arrivals, 31 percent, which exceeded Maine's 20-percent share and Idaho's 16-percent share, 

and (2) that most (78 percent) of the 1996 U.S. arrivals of fresh Canadian potatoes arrived in 

New York or Boston.83 Further, results from the Commission staff's modeling analyses 

presented and detailed in later sections suggest that (1) fresh table stock imports (virtually all 

of Canadian origin) primarily displace U.S. product in the Northeast; and (2) that variations in 

price and quantity of fresh potatoes from such events as increased imports of Canadian potatoes 

influence Northeastern potato markets more than other U.S. markets. Finally, analysis of 

movements in nominal and real exchange rate (in terms of Canadian dollars per U.S. dollar) 

suggest that the nominal U.S./Canadian price comparative patterns are rather close 

80 Transcript of the hearing, testimony of Gary Ball, a grower from Idaho, pp. 113-114. 81 See tables 4-2 and 4-7 in chapter 4. This proportion was calculated by USITC staff from official 

statistics of Statistics· Canada. 82 Transcript of the hearing, testimonies of G. Smith, pp. 46-48; the NPC pp. 145-147; Olympia 

Snowe, U.S. Senator from Maine, pp. 9-19; and Susan Collins, U.S. Senator from Maine, pp. 20-28. 83 See tables 5-5 and 5-13. 

5-39 
approximations of real patterns when the relative inflation patterns are accounted for in both 

countries.84 

Processed Potato Product Prices 

Prices generally have been less of a competitive factor for processed, particularly frozen, potato 

products compared 'With fresh potatoes. This is mainly because of price stability conferred by 

annual contracts between producers and QSRs; the relative importance of product 

specifications; product differentiation; and robust market expansion. However, recent market 

developments have accentuated the role of price in determining the competitiveness of U.S. and 

Canadian processed potato producers. These developments include a substantial expansion of 

capacity and production in the United States and Canada; increasing competition from Canada 

in the U.S. market; and a slowdown in the U.S. growth of the QSR industry. In addition, major 

processed potato items, particularly frozen french fries, have become more of a commodity-type 

product where price is a significant attribute, much like fresh table stock potatoes. As a result, 

both U.S. and Canadian producers increasingly are under competitive price pressure in the U.S. 

market. 

Exchange Rates 

Canadian processing interests85 and U.S. growers86 have stated that exchange rates influence 

U.S.-Canadian potato sales through price. U.S. growers stated that the weaker Canadian dollar 

renders. Canadian potatoes cheaper for U.S. purchasers in terms of U.S. dollars, and encourages 

Canadian potato exports to the U.S. market, which in turn displace U.S. production and depress 

U.S. prices. 87 Canadian processing interests88 stated that while nominal exchange rates may 

seem to influence Canadian potato sales through price, this advantage is offset by such rates 

making U.S.-produced farm inputs and processing equipment used in Canada more expensive 

for Canadian farmers to purchase. Further, they contend that Canada's rate of inflation has been 

84 The nominal Canadian dollar per U.S. dollar exchange rate (hereafter, nominal Can$/US$ rate) is 

the nominal "rf' exchange rate in nominal Canadian dollars per nominal U.S. dollar. The real 

Canadian/U.S. dollar exchange rate is calculated as follows: nominal Can$/US$ exchange rate 

multiplied by the ratio (PPIUS!PPICN), where the PPIUS and PPICN are the producer price index for 

the U.S. and Canada, respectively. The nominal Can$/US$ exchange rate is the rf exchange rate of 

Canadian dollars per U.S. dollar obtained from the Canada page; PPICN was obtained from the 

Canada page (line 63), and PPIUS was obtained from the United States page of the International 

Monetary Fund (IMF), International Financial Statistics, 1996 Yearbook and Apr. 1997 issues. The 

real exchange rate cakulation follows J. Longmire and A. Morey, "Strong Dollar Dampens Demand 

for U.S. Farm Exports," in Foreign Agricultural Economic Report No. 193, Dec. 1983. During 

1994-96, the IMF's nominal rf exchange rates were nearly constant within the 1.364-1.366 range, as 

were real rates within the 1.26-1.30 range. 85 Food Institute of Canada, prehearing brief, Apr. 21, 1997, pp. 16-19. 86 NPC, prehearing brief, Apr. 21, 1997. Transcript of the hearing, testimony of G. Smith, a grower 

from Maine and a member of the NPC, p. 108. 87 NPC, prehearing brief, p. 15. 88 Food Institute of Canada, prehearing brief, pp. 16-19. Also transcript of the hearing, statement of 

D. Westfall on behalf of the Food Institute of Canada, p. 203. 

5-40 
higher than that in the United States, such that the real Can$/US$ exchange rates, and hence real 

Canadian-US. purchasing power, have changed vezy little. 89 

USITC staff examined the nominal exchange rates, expressed in tenns of Canadian dollars 

(Can$) per U.S. dollar (US$), for 1987-96 (table 5-16 ). The real Can$/US$ exchange rate 

provides the actual purchasing power of the Canadian dollar relative to the U.S. dollar when the 

nominal exchange rate is adjusted for relative inflation patterns among the two cowitries. 90 The 

exchange rate between two freely convertible currencies, here Canadian and U.S. dollars, 

reflects the supply and demand conditions for those currencies in the two nations, particularly 

in their respective money markets. Changes in the nominal and real exchange rates may 

influence U.S.-Canadian potato trade through effects on US$-denominated prices of Canadian 

potato products in the U.S. market and Can$-denominated prices of U.S. potato products in the 

Canadian market. A rise in the nominal and real Can$/US$ exchange rates, as shown in table 

5-16, suggests that more Canadian dollars are required to equal a U.S. dollar, signaling a fall 

in the strength of the nominal and real Canadian dollar relative to the U.S. dollar. If the nominal 

rate's rise is offset by an increase in relative U.S.-Canadian inflation so as io negate any change 

in the real rate, the exchange rates should have neutral effects on Canadian-US. price 

competitiveness. 

As shown in table 5·16, nominal and real Canadian-US. exchange rates have mcreased since 

1988, by about 11 percent and 9.5 percent, respectively, thereby weakening the Canadian dollar 

relative to the U.S. dollar in both nominal and real tenns. Canadian inflation appears not to 

have adequately offset nominal Can$/US$ exchange rate increases or canceled out exchangerate-induced price advantages. Subsequently, since Canada's currency has weakened relative 

to U.S. currency by nearly 10 percent in real terms since 1988, it appears that exchange rates 

have resulted in a price advantage to Canadian potato growers and processors relative to U.S. 

growers and processors. The extent to which the relative weakening of the Canadian dollar to 

the U.S. dollar in real tenns has offset potato price advantages with increased Canadian 

production expenses through higher prices of U.S.-produced fann inputs is unclear. Yet 

exchange rates may accowit for some of the price advantages that Canadian potatoes have had 

over comparable U.S. products noted above in the Boston and New York City markets, and are 

supported by U.S. producer testimony.91 

89 Food Institute of Canada, prehearing brief, pp. 16-19. 90 The real Canadian!U.S. dollar exchange rate is calculated as follows: nominal C$/US$ exchange 

rate multiplied by the ratio (PPIUS/PPICN), where the PPIUS and PPICN are the producer price 

index for the U.S. and Canada, respectively. The nominal rf exchange rate of Canadian dollars· per 

U.S. dollars was obtained from the Canada page; PPICN was obtained from the Canada page (line 

63), and PPIUS was obtained from the United States page of IMF, International Financial Statistics, 

1996 Yearbook and Apr. 1997 issues. The real exchange rate calculation follows I. Longmire and A. 

Morey, "Strong Dollar Dampens Demand for U.S. Farm Exports." This form of the real exchange 

rate has been used before, as referenced in agricultural economics literature such as D. Bessler and R. 

Babula, "Forecasting \Vheat Exports: Do Exchange Rates Matter?," Journal of Business and 

Economic Statistics, Vol. 66 (1987), pp. 397-406. 91 Transcript of the hearing, testimony of Gary Smith, p. 108. 

5-41 
Table 5-16 

Nominal and real Canadian dollarJU.S. dollar exchange rates, 1988-96 

Year No'11inal eX_change rate Real exchange rate 

1988 . ' .. ' ... ' ...... ' .. ' ..... . 1.231 

1.184 

1.167 

1.146 

1.209 

1.290 

1.366 

1.372 

1.364 

1.16 

1.15 

1.17 

1.16 

1.22 

1.28 

1.30 

1.26 

1.27 

1989 ........ ' ............ ' .. . 

1990 ................ ' ....... . 

1991 ......... ' ...... ' .. ' .... . 

1992 .. ' ...... ' ... ' ..... ' .... . 

1993 .......... ' ...... ' ..... '. 

1994 ' .. ' .. ' ... ' ... ' ..... ' ... . 

1995 .... ' .. ' ... ' .. ' ......... . 

1996 .... ' ... ' ......... ' ..... . 

Note.-The real Canadian/U.S. dollar exchange rates were calculated by Commission staff as follows: nominal 

Can$/US$ exchange rate multiplied by the ratio (PPIUSIPPICN), where the PPIUS and PPICN are the producer price 

index for the U.S. and Canada, respectively. The nominal rt exchange rate of Canadian dollars per U.S. dollar was 

obtained from the Canada pages; PPICN was obtained from the Canada pages (line 63), and PPIUS was obtained 

from the United States pages of the International Monetary Fund (IMF) source below. The real exchange rate 

calculation follows J. Longmire and A. Morey, "Strong Dollar Dampens Demand for U.S. Farm Exports," in Foreign 

Agricultural Service Economic Report No. 193, Dec. 1983. 

Source: International Monetary Fund International Financial Statistics, 1996 Yearbook and Apr. 1 S97 issues. 

Terms of Sale 

The terms of sale m11y affect competitiveness by influencing buyers decisions to source fresh 

potatoes from suppliers that offer favorable logistical and financial terms. Fresh potato prices 

usually are quoted on a free-on-board (f.o.b.) origin or a delivered basis, and payment is usually 

specified within a certain period. For example, for fresh table stock potato sales from New 

Brunswick into the Northeastern U.S. market, prices generally are quoted on an fo.b. origin 

basis,92 in U.S. funds, with all duties and assessments included in the price.93 Payment generally 

is due in full within 21 days, although this period may be significantly longer in practice; no 

discounts are given for early payment. For sales from P.E.I., prices generally are quoted on a 

delivered basis,94 with the other terms being similar to those for sales from New Brunswick.95 

Sales from Maine into the Northeastern U.S. market mostly are sold through brokers or dealers, 

with growers quoting prices to them on an f.o.b. origin basis; the brokers or dealers arrange for 

transportation and quote prices to their buyers orr a delivered basis. Payment generally is due 

92 This is mainly owing to the proximity to the U.S. border, which allows for the use of U.S. trucks 

for most shipments. 93 USITC staff telephone conversation with a Canadian fresh table stock potato industry official, 

June 25, 1997. 94 This is mainly owing to the distance from the U.S. border, which causes shippers to use their own 

or other Canadian trucks for most shipments. 95 USITC staff telephone conversation with a Canadian fresh table stock potato industry official, 

June25, 1997. 

5-42 
in full within 30 days, but as with Canadian sales, this period may be significantly longer in 

practice. 96 Prices of fresh table stock potatoes shipped from Idaho generally are quoted on an 

f.o.b. origin basis, with payment due in full within 30 days and no discounts for early payment.97 

Although these terms may differ somewhat within the United States and between the United 

States and Canada, any such differences do not appear to lead to a significant competitive 

advantage for fresh potato shippers in either country. Rather, the final cost of the product to the 

final buyer is the most important consideration. 98 

The terms of sale for processed potato sales may affect competitiveness in a similar manner as 

compared with fresh potatoes. In general, the terms of sale for processed potatoes are similar 

for U.S. and Canadian suppliers; as such, the terms of sale do not appear to result in a 

competitive advantage for producers in either country.99 Prices generally are quoted on an f.o.b. 

origin basis, with full payment due within a specified time, typically 15-30 days. A discount 

is usually given for early payment, typically 1-2 percent for payment within 10-15 days. These 

terms generally are similar for QSR and retail sales. As is the case for table stock potatoes, the 

final delivered cost is more important to the processed potato buyer than the pricing basis (f.o.b. 

or delivered), as such buyers are sensitive to prices.100 

Government Assistance, Trade, and Regulatory Programs 

Government Assistance Programs 

As shown in chapters 2 and 4, the U.S. and Canadian Governments provide assistance programs 

at different levels that either directly or indirectly affect their fresh and processed potato 

industries. In the United States, Federal Government assistance to the potato industry includes 

export and market. development programs, market support and regulatory programs, crop 

insurance, disaster assistance, research and extension, irrigation assistance through the Bureau 

of Reclamation, and :financial assistance for rural businesses. Although programs vary by State, 

State assistance includes tax incentives, financial assistance, research, and market development 

and promotion. 

Canadian assistance programs affecting potato growing and processing industries include 

income safety net programs, crop insurance, regional and economic development programs, 

production :financing and credit programs, research, and export and marketing assistance .. Many 

Federal Canadian assistance programs are administered with the Provinces through cost-sharing 

arrangements between the Federal and Provincial Governments. 

96 USITC staff telephone conversation with a Maine fresh table stock potato industry official, June 

25, 1997. 97 USITC staff telephone conversation with an Idaho fresh table stock potato industry official, June 

25, 1997. 

98 Transcript of the hearing, p. 110. 99 US ITC staff interviews with officials of the United States and Canadian frozen processed potato 

industries, Apr. 8-17, 1997. 100 Collier, Shannon, Rill & Scott, prehearing brief, p. 26. 

5-43 
Owing to the general nature of many government assistance programs both in the United States 

and Canada, it was not possible for US ITC staff to detennine an aggregate munerical level of 

support for each country specific to the potato industry. In general, both countries provide a 

wide range of programs, many of which are similar in nature. However, one difference appears 

to be the intent of certain Canadian programs to facilitate the diversification out of relatively 

low-value crops, such as wheat, to higher value crops and agricultural products, such as 

potatoes. Similarly, as part of this diversification strategy, certain Canadian programs appear 

to be directed at the development of agricultural value-added activities, such as potato 

processing and packing. Crop expansion programs for potatoes were cited in chapter 4 for 

potato growers in Manitoba, New Brunswick, and Saskatchewan, all of which are benefiting 

from either Federal or Provincial assistance, or both. 

Seed Certification 

Government involvement with respect to seed certification differs in Canada and the United 

States. Canada has a single, national certification agency, administered by the Canadian Food 

Inspection Agency, with common terminology and criteria 101 The United States has 18 separate 

State seed potato certification agencies, many with different terminology and criteria. The single 

agency and standard may provide Canadian seed potato producers an advantage, particularly 

in export markets.102 Some U.S. and Canadian seed potato industry members believe that the 

single certification agency has given Canadian exporters an advantage in gaining markets, 

particularly in Mexico.103 The U.S. seed potato industry is attempting to establish a similar 

national certification agency in the United States in conjunction with the USDA. 104 

Trade Policy 

Fresh Potatoes 

Tariffs 

Tariffs on fresh potato trade between the United States and Canada have been negotiated under 

the Canada-United States Free Trade Agreement (CFTA) and the subsequent North American 

Free Trade Agreement (NAFTA), as shown in the following tabulation (data from the CanadaUnited States Free Trade Agreement, Final Text, December 9, 1987; the Harmonized Tariff 

Schedules of the United States Annotated, 1997; and the Canadian Harmonized Tariff 

Schedules, 1997, in percent ad valorem or national currency): 

101 Canadian Horticultural Council, prehearing brief, Apr. 21, 1997, p. 4, exhibit 6. 102 Transcript of the hearing, testimony of Larry Buba, Ivan Noonan, pp. 245-246. 103 USITC staff interviews with officials of the Canadian and U.S. seed potato industries, Apr. 7-17, 

1997. 

104 USITC staff interviews with officials of the U.S. seed potato industry, Apr. 14-17, 1997. 

5-44 
Country and item Base rate 

United States: 

Seed . . . . . . . . . . . . . . . . . . . . . . . 0.77¢/kg. 

Other .77¢/kg. 

Canada: 

Seed . . . . . . . . . . . . . . . . . . . . . . . $7. 72/mt. 

Other . . . . . . . . . . . . . . . . . . . . . . $7.72/mt. 

Rate as of Jan. 1, 1997: 

Free 

Free 

77.2¢/mt. 

77.2¢/mt. 

In addition, the Canadian Province of British Columbia has imposed antidumping duties on 

imports of fresh potatoes from Washington, Oregon, California, and Idaho since 1984. The 

antidumping duties vary based on the difference between a calculated "normal value" and the 

export price for various varieties, packs, and sources. For example, during Apr. 20-26, 1997, 

antidumping duties ranged from zero to Can$5.62 per hundredweight (app. F). Such imports 

enter free of duty during May I-July 31. The U.S. industry has expressed concern about several 

points regarding the imposition of the antidumping duties, including the use of "mostly prices," 

the calculation of "nonnal values," and the implications of the size of the U.S. industry 

regarding the threat of dumping. 105 

Nontariff barriers 

Sanitary and phytosanitary (SPS) restrictions and inspection requirements, which concern the 

control of disease and pests, are generally similar in the United States and Canada. U.S. seed 

potato exporters are particularly concerned with Canadian restrictions on imports of U.S. seed 

potatoes with respect to nematodes. 106 Canadian exporters of fresh table stock potatoes are 

particularly concerned with a "spot-check" program in Maine107 during 1995-96 and with 

"stratified compliance examinations. "108 

According to U.S. industry officials, differences in U.S. and Canadian grading regulations result 

in more restrictive Canadian import requirements with respect to fresh potato sizes. U.S. 

regulations allow for smaller potatoes from Canada to be imported, while Canadian regulations 

require larger size potatoes from the United States.109 The NPC and the Potato Committee of 

the Canadian Horticultural Council currently are working to harmonize grades.11° 

105 Transcript of the hearing, testimony of Joel Junker, pp. 67-74; NPC, 1997 National Trade 

Estimate Report, submitted to the Office of the U.S. Trade Representative, Nov. 27, 1996, p. 4. 106 USITC staff interviews with officials of the U.S. seed potato industry, Apr. 14-17, 1997; 

transcript of hearing, testimony of Henry Michael, p. 66. 107 Canadian Horticultural Council, prehearing brief, p. 16. 108 Canadian Horticultural Council, posthearing brief, p. 3. 109 USITC staff interviews with officials of the U.S. fresh potato industry, Apr. 14-17, 1997; 

transcript of hearing, testimony of Henry Michael, p. 66. 11° Canadian Horticultural Council, prehearing brief, p. 15; exhibit 20. 

5-45 
U.S. exports of fresh potatoes to Canada are limited by restrictions under of the Fresh Fruit and 

Vegetable Regulations of the Canada Agricultural Products Act (CAPA). These restrictions, 

which also apply to inter-Provincial shipments of fresh potatoes within Canada, generally 

prohibit bulk shipments of fresh potatoes for processing or repacking. Processors and repackers 

must request a ministerial exemption for such shipments. The following tabulation shows the 

amount ofU.S. exports of fresh potatoes granted such exemption during 1994-96 (in thousands 

ofpounds): 111 

Purpose 1994 

Processing' . . . . . . . . . . . . . . . . . . . 436,511 

Repacking . . . . . . . . . . . . . . . . . . . 40,785 

1995 

355,602 

50,375 

1996 

336,202 

138,420 

1 According to the Canadian Snack Food Association, 141.9 million pounds were imported in 1994 and 86 .4 

million pounds were imported in 1995 for .potato chip processing. The remainder is believed to be destined for frozen 

processed potato production. 

Canadian interests contend that ministerial exemptions are "virtually never rejected."112 

However, a letter from the responsible Canadian Government agency to the U.S. Embassy states 

that "nearly all requests are postponed until there is evidence of a shortage and are then 

granted."113 U.S. potato industry officials contend that "procedural delays often curtail 

marketing opportunities for U.S. shippers."114 The United States maintains no such restrictions 

on imports of fresh potatoes from Canada.115 

Another Canadian restriction that affects U.S. trade in fresh potatoes is the prohibition of 

consignment sales under the CAP A. U.S. interests contend that Canadian shippers are not 

constrained by this prohibition when shipping between Provinces116 or into the United States, 117 

which does not have a similar restriction. However, Canadian interests maintain that Canadian 

fresh potato shippers are prohibited from consignment sales regardless of the origin and 

destination.118 

111 Canadian Horticultural Council, prehearing brief, p. 20. 112 Canadian Horticultural Council, prehearing brief, p. 20. 113 Letter from R.A Carberry, Director, Dairy, Fruit and Vegetable Division, Food Production and 

Inspection Branch, AAFC, Dec. 6, 1995, presented in ibid., exhibit 25. 114 NPC, posthearing brief, p. 15. 115 Bulle shipments of fresh potatoes from Canada to U.S. States with marketing orders may require 

a certificate of privilege to certify the destination. Transcript of the hearing, testimony of Gary Ball, p. 

107. 

116 National Potato Council, 1997 "National Trade Estimate Report," submitted to the Office of the 

U.S. Trade Representative, Nov. 27, 1996, p. 3 ~ NPC, posthearing brief, exhibit 1, May 27, 1997. 117 NPC, posthearing brief, p. 16. 118 Canadian Horticultural Cowicil, posthearing brief, p. 3. 

5-46 
Market Access in Mexico 

A major concern of the U.S. fresh potato industry is the relative market access accorded the 

United States and Canada to Mexico under the NAFT A. 119 The access to the Mexican market 

differs substantially for seed and table stock potatoes. Although Mexican imports of seed 

potatoes are duty-free and market access was not negotiated specifically wtder NAFTA, Mexico 

historically has restricted imports owing to phytosanitary considerations. These considerations 

have been addressed since 1976, when the North American Plant Protection Organization 

(NAPPO) was established to develop regional phytosanitary standards which can be used by 

member countries as recommendations to be implemented by their internal regulatory and 

legislative processes.120 NAPPO established North American seed potato trade standards on 

October 18, 1995.121 An ad hoc potato working group, comprising federal plant protection 

officials of Canada, the United States, and Mexico drafted work plans to implement the 

standards. 

Mexico, in October 1996, expressed its desire to have separate, bilateral work plans with the 

United States and Canada and wanted reciprocity in tenns of market access. The U.S. 

contingent was unprepared for immediate reciprocity, as more time was needed to address the 

proximity of the U.S. market to Mexico and pest and disease concerns. U.S. and Mexican 

representatives currently are continuing discussions. 122 The Canadian contingent signed a 

bilateral work plan on October 24, 1996.123 Canadian concerns regarding reciprocity are 

mitigated largely by transportation factors. Despite the bilateral work plan between Canada and 

Mexico, U.S. exports of seed potatoes to Mexico exceed those from Canada, as shown in the 

following tabulation (data from the U.S. Department of Commerce and Statistics Canada, in 

thousands of U.S. dollars): 

Jan.- Jan.-

Mar. Mar. 

Source 1992 1993 1994 1995 1996 1996 1997 

United States .. 344 463 505 498 1,189 460 2,566 

Canada ....... 13 0 0 0 9 0 0 

For market access for fresh table stock potatoes under NAFTA, Mexico converted an import 

licensing system to a transitional, 10-year tariff-rate quota (TRQ). The initial within-quota 

119 Charlene Barshefsky, United States Trade Representative, letter to the Honorable Marcia Miller, 

Chairman, U.S. International Trade Commission, May 5, 1997, in appendix A. 120 NAPPO, information found athttp://www.nappo.org/menu_E.htm. 121 NAPPO, Requirements for the Importation of Potatoes Into, and Movement Within, the 

Regional Territories of the North American Plant Protection Organization, found at 

http://www.nappo.org/pot-std _ E.htm. 122 USITC staff telephone conversation with a NAPPO official, June 13, 1997. 123 Workplan Between Agriculture and Agri-Food Canada and the Department of Agriculture, 

Livestock and Rural Development of Mexico, Establishing the Phytosanitary Measures for Bilateral 

Trade in Seed Potatoes Between Canada and Mexico. 

5-47 
amount for U.S. exports of fresh table stock potatoes was 15,000 metric tons, while the amount 

for Canada was 4,000 metric tons. 124 The within-quota quantity increases by 3 percent 

annually. The over-quota quantity, both from the United. States and Canada, was dutiable at 

$354 per metric ton, but not less than 272 percent ad valorem. An aggregate 24 percent of the 

over-quota tariff is being eliminated during the first 6 years of the agreement, while the 

remainder will be phased out over the rest of the IO-year transition period. In 1996, the U.S. 

TRQ was 15,914 metric tons (35.084 million pounds), while that for Canada was 4,244 metric 

tons (9.356 million pounds). The over-quota tariff rate in 1996 was $311 per metric ton, but 

not less than 239.3 percent. Compared with 1996 production levels, the U.S. TRQ was 

approximately 0.07 percent of production while the Canadian TRQ was about 0.11 percent of 

production. In 1997, the U.S. TRQ is 16,391 metric tons (36.136 million pounds) and that for 

Canada is 4,371 metric tons (9.637 million pounds). The over-quota tariff rate in 1997 is $297 

per metric ton, but not less than 228.4 percent ad valorem. 

Processed Potatoes 

Tariffs 

Tariffs on processed potato product trade between the United States and Canada have been 

negotiated under the CFTA and NAFTA, as shown in the following tabulation (data from the 

CFTA, Final Text, December 9, 1987; the Harmonized Tariff Schedules of the United States 

Annotated, 1997; and the Canadian Harmonized Tariff Schedules, 1997; in percent ad valorem 

or national currency): 

Country 

and item 

United States: 

Frozen. not pp ............................. . 

Dried .................................... . 

Flour ..................................... . 

Flakes .......... , ......................... . 

Starch .................................... . 

Frozen, pp ...... , ......................... . 

Other, pp .......•.......................... 

Canada: 

Frozen, not pp ............................. . 

Dried ..................................... . 

Flour ..................................... . 

Flakes .................................... . 

Starch ........................ _ ............ . 

Frozen, pp .......................... · ... · · · 

Other, pp ................................. . 

Base rate 

17.5% 

2.9¢/kg. 

2.6¢/kg. 

2.9¢/kg. 

.88¢/kg. 

10% 

10% 

10% 

10% 

12.5% 

10% 

12.5%_ 

10% 

10% 

124 NAFTA. Ann.ex 302.2, Schedule ofMexico, chapter 7, p. 1, footnotes 2-4. 

5-48 

Rate as of Jan. 1, 

1997 

1.7% 

Free 

.2¢/kg. 

.2¢/kg. 

Free 

1% 

1% 

1% 

Free 

1.2% 

1% 

1.2% 

1% 

1% 
Nontariff barriers 

Nontari:ffbarriers faced by Canadian frozen processed potato exporters in the U.S. market are 

minimal. Similar product standards and inspection requirements exist between the two 

colllltries. Nontariffbarriers faced by U.S. exporters of frozen processed potatoes to Canada, 

however, have been more significant. 

The Processed Products Regulations of the CAP A required that immediate containers holding 

food products, such as frozen french fries, be packed and labeled in metric increments of 500 

grams or more. This requirement resulted in the industry standard 5-pound inner packages 

inside a master carton being labeled as 2 kilograms. This so-called "Larger-than-Largest" size 

regulation was modified in December 1995 to require that only the outside container be so 

labeled. 125 U.S. interests contend that this regulation suppressed U.S. exports to Canada and 

that such exports rebounded following its modification.126 Canadian interests state that 

Canadian producers were opposed to the regulation and also benefit from its modification. 127 

Another barrier faced by the U.S. industry is the requirement to include both French and English 

labels, although this requirement applies to Canadian producers as well.128 

Market access in Mexico 

As with fresh potatoes, an issue of concern to the U.S. frozen processed potato industry is the 

relative market access gained by the United States and Canada in Mexico under NAFTA.129 

Under NAFTA, Mexicari duties on various processed potatoes will be phased out over 10 years 

and will be covered by a special agricultural safeguard, which is a seasonal TRQ. Under the 

safeguard, the under-quota amount is based on the highest annual quantity of imports during 

1989-91 plus 5 percent and will expand at an annual compounded rate of 3 percent over the 10-

year transition period.130 The over-quota tariff rate is the lower of either the initial MFN rate 

or the rate in effect at the time of the safeguard action. The following tabulation shows the 

initial Mexican MFN tariff applicable to over-quota imports from the United States, the current 

Mexican NAFTA tariff applicable to under-quota imports from the United States, the initial 

safeguard base, and the safeguard base for 1996 and 1997 for U.S. exports of various processed 

potato products (data from the NAFTA, Annex 302.2, Schedule of Mexico): 

125 Memorandum from the Dairy, Fruit and Vegetable Division, AAFC, Dec. 8, 1995, provided in 

the Canadian Embassy's prehearing brief, "Government of Canada Response in the 332 Investigation 

on Potatoes and Processed Potato Products, Apr. 24, 1997, response 7. 126 Collier, Shannon, Rill & Scott, prehearing brief, p. 12; and ibid., posthearing brief, p. 22. 127 Food Institute of Canada, prehearing brief, p. 22. 128 USITC staff interviews with officials of the U.S. frozen processed potato industry, Apr. 14-17, 

1997. 

129 Charlene Barshefsky, United States Trade Representative, letter to the Honorable Marcia Miller, 

Chairman, U.S. International Trade Commission, May 5, 1997, in appendix. A. 130 NAFTA annex 302.2, Schedule of Mexico, chapter 7, p. 7 ., footnotes 22 and 23; chapter 7, p. 8, 

footnote 25; chapter 11, p. 2; and, chapter 20, p. 2, footnotes 5 and 6. 

5-49 
Safeguard base: 

InitialMFN 1997NAFrA 

Product tariff tariff Initial 1996 1997 

--(Percent ad valorem)-- ---- (Million pounds) ----

Frozen potatoes' .......... 15 9 3.97 4.21 4.34 

Dried potatoes . . . . . . . . . . . 20 12 .44 .47 .48 

Frozen french fries ........ 20 12 6.83 7.25 7.47 

Other prepared potatoes ... 20 12 11.9 12.8 13.01 

1

Not prepared or preserved. 

Product 

The 1996 safeguard base for frozen french fries represented 0.1 percent of U.S. production that 

year. 

The Mexican concessions for imports of processed potato products from Canada are similar to 

those for imports from the United States. However, the safeguard base for frozen and dried 

potatoes are aggregated (1,000 metric tons), as is the base for frozen french fries and other 

processed potatoes (1,000 metric tons); the initial MFN base tariffrate applicable to over-quota 

imports from Canada is 15 percent ad valorem for all these products; and the safeguard base 

increases by 5 percent per year, as shown in the following tabulation (compiled from the 

NAFTA, annex 302.2, Schedule of Mexico): 

Safeguard base: 

InitialMFN 1997NAFrA 

tariff tariff Initial 1996 1997 

- (Percent ad valorem) -- (Million pounds) 

Frozen potatoes', dried potatoes 

Frozen french fries, other prepared 

15 9 2.20 2.43 2.55 

potatoes ..................... . 15 9 2.20 2.43 2.55 

1

Not prepared or preserved. 

The concessions granted by Mexico to Canada for processed potato products generally are 

superior to those granted to the United States, as the initial tariff and the current under-quota 

tariff rates are 25 percent lower for most products (except frozen potatoes, not prepared or 

preserved), and the increase in the safeguard base is two-thirds higher. Assuming that the 

category for frozen french fries and other prepared potatoes is accounted for by frozen french 

fries, the safeguard base in 1996 represented about 0.17 percent of production, 55 percent 

higher than th~ share for U.S. production.131 

131 There were no exports of other prepared or preserved potatoes to Mexico from Canada during 

1992-96, according to data from Statistics Canada, StatsCan Online database. 

5-50 
Econometric Analysis of the U.S. Fresh Potato and Frozen 

French Fry Markets132'

133 

Review of Economic Literature on Potatoes 

Economic literature on the U.S. and Canadian potato industries falls into two general categories: 

descriptive analyses of market trends and modeling analyses which apply empirical techniques 

to data for insights on potato-related issues. Two descriptive analyses of U.S. and/or Canadian 

potato market trends since the early 1960s were located. Buckley and Mai134 examined a 

nwnber of U.S. potato market trends, including the increasing U.S. market shares captured by 

Western producers at the expense of Eastern U.S. producers, and increasing U.S. consumption 

shares attributed to processed potato products. Although imports of Canadian potatoes gained 

in U.S. market shares, particularly in the Eastern States, Eastern U.S. producers have also faced 

competition and market share erosion from Western U.S. producers.135 Apparently, per capita 

132 For Vice Chairman Bragg's views on econometric modeling, see U.S. International Trade 

Commission, The Economic Effects of Antidumping and Countervailing Duty Orders and 

Suspension Agreements, USITC publication 2900, 1995, p. xii, and The Impact of the North 

American Free Trade Agreement on the U.S. Economy and Industries: A Three Year Review, 

USITC publication 3045, 1997 (expected to be released to the public in July 1997). 133 Commissioner Newquist notes that although he does not necessarily disagree with many of the 

"findings" in this report, he is generally skeptical of conclusions drawn from economic models rather 

than empirical quantification. In his view, economic modeling is essentially an exercise in untested, 

unverifiable, and often unrealistic theory. At its base level, economic modeling is nothing more than 

the manipulation of"data" and often vague or unspecific "variables." Underlying the data collection 

and identification of variables is the individual modeler's prejudices and subjective assumptions. 

Thus, individuals measuring the impact of a particular event or occurrence, may employ 

completely different assumptions and focus on different variables-to say nothing of "ranges within 

the assumptions and variables. Likewise, the quality and representativeness of data collected must be 

assessed and acknowledged. 

Commissioner Newquist does not dispute that model results in this report may represent a 

particular manipulation of available data using certain assumptions. However, given the limitations of 

the modeling exercise, he questions the extent to which policy decisions should be based on these 

manipulations, particularly where, as here, some of the "measuring" is of events that did not occur. 

For further discussion of Commissioner Newquist' s view regarding economic modeling, 

particularly its limitations, see U.S. International Trade Commission, The Impact of the North 

American Free Trade Agreement on the U.S. Economy and Industries: A Three Year Review, 

USITC publication 3045, 1997, appendix F, and The Economic Effects of Antidumping and 

Countervailing Duty Orders and Suspension Agreements, USITC publication 2900, 1995, p. XI 

("Views of Commissioner Don Newquist"). See also, U.S. International Trade Commission, Potential 

Impact on the U.S. Economy and Industries of the GATT Uruguay Round Agreements, Volume I, 

USITC publication 2790, 1994, p. I-7, n. 17, and Potential Impact on the U.S. Economy and 

Selected Industries of the North American Free-Trade Agreement, USITC publication. 2597, 1993, 

p. 1-6, n.9. 134 K. Buckley and B. Mai, "Fresh Potato Market Shares in Eastern U.S. Cities, 1960-1984," in 

USDA, ERS, Vegetable Situation and Outlook Report, TVS-23, Sept. 1986. 135 Ibid. 

5-51 
consumption in the United States has increased because demand for processed potato products 

increased more than demand for fresh potatoes decreased.136 

Zepp, Plummer, and McLaughlin137 summarized the development of the United States and 

Canadian potato industries since the 1930s. Both nations' industries share a number of 

common trends: rising potato farm size; increasing yields and productivity; and rising 

production, despite large reductions in acreage. 138 There are a number of differing trends among 

the U.S. and Canadian industries. U.S. production has shifted from east to west, while regional 

Canadian production shares have been stable.139 In the Atlantic and Central regions of Canada, 

some potato acreage has shifted out of Quebec and Ontario, while acreage in P .EJ. has 

increased.140 Fresh potato consumption has a greater share of total consumption in Canada than 

in the United States. i

41 

There have been several articles summarizing modeling tool applications to issues relating to 

the U.S. and Canadian potato industries in the literature since the mid-1980s. Richards, Kagan, 

and Gao142 estimated own-price elasticities of -0.48 for Marshallian U.S. fresh potato demand, 

and of -0.22 for the Hicksian U.S. fresh potato demand. 143 They note that their fresh potato 

elasticities are somewhat higher than other literature estimates such as those of Guenthner, Levi, 

and Lin (discussed below) because some of these other studies reflect analysis periods which 

omit some of the recent proliferation of potato-competing substitutes (curly fries, premixed rice 

products, gourmet breads, etc.) which tend to render U.S. own-price elasticity of fresh potato 

demand more elastic.144 

Miranda and Glauber145 combined maximum likelihood estimation methods with stochastic 

dynamic programming, and developed a nonlinear rational expectations model of the U.S. fall 

potato market. In particular. they focused on quantifying the dynamic attributes of the 

intraseasonal demand for U.S. fall potatoes. They modeled U.S. table stock demand, processing 

demand, and ending stock demand, and considered total demand to be the summation of these 

demand components.146 They provided a number of U.S. potato market parameter estimates: 

income elasticities of 0.021 for fresh table demand (hereafter table demand) and 0.6 for 

processing demand, as well as O'Ml price elasticities of -0.4 for table demand, -0.17 for 

136 lbid. 

137 Zepp, Plummer, and McLaughlin, "Potatoes: A Comparison of Canada-U.S. Structure." 138 lbid. 

139 lbid. 

140 Ibid. 

141 lbid. 142 T. Richards, A. Kagan, and X. Gao, "Factors Influencing Changes in Potato and Potato Substitute 

Demand," Agricultural and Resource Economics Review, vol. 26, No. 1 (Apr. 1997), pp. 52-56. 

L

43 Ibid., p. 62. More specifically, the authors employed a linear approximation of an almost ideal 

demand system (LA/AIDS) model to investigate the effect of relative prices, expenditures, and 

various socioeconomic variables on U.S. potato-based demands. Their model was estimated with 

iterated seemingly unrelated regression. 144 Ibid., p. 62. Richards, Kagan, and Gao's estimated Marshallian and Hicksian own-price 

elasticities of frozen product demand were positive, and hence not used here because of the 

unexplained sign. 145 M. Miranda and J. Glauber, "Intraseasonal Demand for Fall Potatoes Under Rational 

Expectations," American Journal of Agricultural Economics, vol. 7 S, Feb. 1993, pp. 104-112. 146 Ibid., pp. 105-106. 

5-52 
processing demand, and-0.9 for ending stock demand.147 Expected price played an important 

positive role in ending stocks, with stocks moving in the same direction as expected price.148 

Processing demand, as expected, was far more income-elastic than table demand.149 Of the three 

modeled demands, stock demand was the most price-elastic, while table demand was more 

price-elastic than processing demand 150 Results concerning the dynamic nature of intraseasonal 

demand for U.S. fall potatoes suggest that total demand levels fall and become less price-elastic 

as the marketing year progresses; and potato prices generally rise throughout the market year.151 

Guenthner, Levi, and Lin152 estimated an annual econometric model of U.S. potato-related 

demands at the following levels: potato chips, dehydrated food service, dehydrated retail, fresh, 

frozen food service, and frozen retail. They reported the following estimated own-price 

elasticities of demand: -0.14 for fresh potato demand; -0.55 for frozen product demand at retail; 

-0. 77 for dehydrated product demand at retail; and -0.67 for potato chip demand.153 At the 

Commission hearing, Guenthner treated these elasticity estimates as if they are the approximate 

inverses of own price elasticities of demand:154 -7.0 for fresh potato demand; -1.8 for frozen 

product demand at retail~ -1.3 for dehydrated product demand at retail; and -1.5 for potato chip 

demand. 155 

A number of results of interest to this investigation emerged from the Guenthner, Levi, and Lin 

analysis: that the price elasticity of fresh potato demand is very inelastic, while the price 

flexibility of fresh potato demand is very high; that income effects (and income elasticities of 

demand) were positive on demands for frozen products and chips but negative on demands for 

fresh and dehydrated products; that societal preferences for enhanced convenience may be 

147 Ibid., p. 109. 148 Ibid., p. 109. 149 Ibid., p. 109. 

ISO Ibid., p. 109. 151 Ibid., p. 110. 152 J. Guenthner, A Levi, and B. Lin, "Factors that affect the Demand for Potato Products in the 

United States," American Potato Journal, vol. 68, No. 9, 1991, pp. 569-579. They estimated their 

model with ordinary and generalized least squares methods. 153 Ibid., p. 574. 154 This article served as part of the basis for the NPC's economic testimony at the hearing. After 

receiving the transcript of the hearing and the NPC 's prehearing submission, it appears that the NPC 

mislabeled these price flexibilities of demand as price flexibilities of supply. USITC staff uses the 

correct term, price flexibilities of demand, for what were submitted as price flexibilities of supply 

since this article by Guenthner, Levi, and Lin has a fresh potato own-price elasticity of demand of -

0.14 which inverts into the -7. 0 price flexibility reported as price flexibility of supply by the NPC. 

The NPC prehearing brief mentions this article as the basis for their price flexibility of supply. Thus 

it appears that the -7. 0 and other price flexibilities reported in the NPC' s prehearing brief are actually 

price flexibilities of demand but misreported as price flexibilities of supply. See transcript of the 

hearing, pp. 50-54, and the NPC's prehearing brief, p. 13. 155 For a particular demand, inverting own-price flexibilities into own-price elasticities should be 

done with caution. An own-price flexibility can be inverted into an approximate, lower-bound 

estimate of the absolute value of the own-price elasticity only under certain conditions. With zero 

cross-price effects, and essentially no substitutes, the inverse of the own-price flexibility 

approximates the lower bound of the own-price elasticity. If there are·signi:ficant cross price effects, 

then the price flexibility is less than the own-price elasticity (in absolute value). See W. Tomek and 

K. Robinson. Agricultural Product Prices (Ithaca, NY: Cornell University Press, 1985), pp. 66-68. 

For the seminal work, see J. Houck, "The Relationships of Direct Price Flexibilities to Direct Price 

Elasticities," Journal of Fann Economics, vol. 47 (1965), pp. 789-792. 

5-53 
resulting in a switch from :fresh to processed potatoes; and that movements of :fresh potato price 

had a positive effect on frozen demand, suggesting that fresh and frozen potatoes are 

substitutes.156 Further, the model estimated by Guenthner, Levi, and Lin was estimated with 

annual data from 1970 or 1975 through 1988.157 

Love and Willet158 estimated a 27-relation model of the U.S. potato industry. Included among 

their results are a-0.34 estimate of the price flexibility of U.S. fresh potato demand and a -0.22 

estimate of the price flexibility of U.S. frozen product demand. 159 

Goodwin, Fuller, Capps, and Asgill (hereafter, Goodwin et al.)160 estimated a four-equation 

potato price model, which included one equation for each of the Chicago, Dallas, Denver, and 

St. Louis markets. Estimated with monthly data and cross-section, time-series methods, the 

model included the following among its dependent variables: quantity traded; remaining fall 

stocks in storage; terminal market location; packaging type; and marketing season.161 Results 

suggest that state of origin, package type, and season marketing significantly influence price.162 

Evidence also suggests that price differences exist between potato types because of marketing 

season and levels of fall potato stocks. 163 Grower-controlled and shipper-controlled factors such 

as cultivar selection, cultural practices, and market selected can be used to increase price and 

expand markets.164 

Econometric Relationships among Prices, Stocks, Market-Clearing 

Quantities, and Trade: The U.S. Markets for Fresh Potatoes and 

Frozen French Fries 

For ease of presentation and expression, the tenn "U.S. fresh potatoes" refers to U.S.-produced 

fresh fall table stock potatoes~ "french fries or fries" refers to frozen french fries; "fresh potato 

imports" refer to U.S. imports of fresh non-seed potatoes; and "market-clearing quantities" 

refers to the reduced fonn or equilibrium concept of quantities demanded and supplied rather 

156 Guenthner, Levi, and Lin, "Demand for Potato Products," pp. 574-575. 

151 Ibid. 

158 J. Love and L. Willett, "Modeling the U.S. Potato Industry," Vegetables and Specialties 

Situation and Outlook Report, TVS-250, March 1990, pp. 16-24. The model has 27 relations 

(endogenous variables and a number of definitional identities) that subdivide the U.S. potato industry 

into five subsectors. All endogenou5 variables were econometrically estimated with annual 1961-

1988 data. There is a four-relation production sector; an eight-relation utilization subsector; a stock 

subsector that includes two stock equations (for fresh and frozen potatoes); a seven-equation trade 

sector, and a retail sector with price-dependent retail demand functions for fresh and for frozen 

potatoes. 159 Love and Willet, "Modeling the U.S. Potato Industry," p. 19. 160 H. Goodwin, F. Fuller, 0. Capps, and 0. Asgill, "Factors Affecting Fresh Potato Price in 

Selected Terminal Markets," Western Journal of Agricultural Economics, vol. 13, No. 2, Dec. 1988, 

pp. 233-243. 

161 Ibid. 

162 Ibid. 

163 Ibid. 

IQ.I Ibid. 

5-54 
than quantities specifically demanded or supplied. A monthly econometric model of the U.S. 

fresh potato and U.S. frozen potato markets, and its relevant simulations, are useful in 

illuminating the following competitive conditions: 

· (1) how increased U.S. fresh potato imports influence U.S. fresh and frozen product 

markets through impacts on relevant prices, stocks, and market-clearing quantities, 

(2) how changes in U.S. fresh potato supply (stocks or traded quantities) affects the 

domestic fresh market, particularly fresh price; price, stocks, and market-clearing 

quantities in the domestic frozen potato market; and U.S. trade in these in these 

products. 

(3) how changes in U.S. fresh potato price influence U.S. fresh potato stocks and 

market-clearing quantities; U.S. prices, stocks, and market-clearing quantities of 

frozen potato products; and U.S. trade volumes of such products, and 

( 4) how changes in market-clearing quantities of frozen potato products influence U.S. 

frozen potato prices and stocks; U.S. fresh potato prices, stocks, and marketclearing quantities; and ultimately U.S. trade in these products. 

With adequate data, such a monthly econometric model can address regional issues and 

considerations such as whether U.S. fresh potato imports more adversely impact Northeastern 

U.S. growers through displaced shipments and lower prices than in such other major U.S. 

growing areas as the West. 165 

Modeling Approach 

Theory is useful in addressing some of these issues, but often only to a limited nonempirical 

degree. For example, theory may suggest that increased U.S. fresh potato imports displace 

U.S.-produced quantities and reduce domestic prices; that increased U.S. prices may lead to 

lower volumes of market-clearing quantities and increased imports; and that fresh potatoes, as 

a major frozen product input, have price and quantity variations which influence the U.S. frozen 

potato markets. Yet such theory often provides only limited insights concerning the empirical 

degree to which such relationships and competitive conditions are manifest. Further, there are 

truly empirical issues, such as whether U.S. fresh potato imports adversely influence 

Northeastern U.S. maikets more severely than in the U.S. West, about which a pn'orl theory has 

little to say. An empirical econometric model of the U.S. fresh and frozen potato markets is 

needed to generate evidence about as many of the USTR's requested insights as possible. 

Commission staff reviewed the agricultural economic and modeling literature related to 

potatoes, and examined the available data bases for variables most relevant to this 

investigation's focus. For reasons summarized briefly here but detailed in the Technical 

Modeling Appendix, Commission staff chose a vector autoregression (VAR) model of the 

following nine monthly endogenous variables (hereafter denoted by the parenthetical, uppercased labels): 

165 A Northeastern potato grower from Maine testified that imports do compete more with the 

Northeastern fresh market than with the Western fresh market. Transcript of the hearing, pp. 145-

147. 

5-55 
1. U.S. imports of fresh, primarily Canadian, potatoes sold in the U.S., seed potatoes 

excluded (FRESHIMP) 

2. Stocks of fresh U.S.-produced fall table potatoes (FRESHSTK) 

3. Shipments of fresh fall table potatoes produced and sold (consumed) in the 

Northeast United Stat~s (NESHIP)166 

4. Shipments of fresh fall table potatoes produced and sold in the remainder or "nonNortheast" United States (RESTSHIP) 

5. Quantities ofU.S.-produced frozen french fries consumed (FRYQ) 

6. U.S. fresh potato price (PFRESH) 

7. U.S. french fty price (PFRIES) 

8. Stocks ofU.S.-produced french fries (FRYSTOCK) 

9. U.S. exports of frozen french fries (EXPFRY) 

Data definitions and sources are provided in the Technical Modeling Appendix. For reasons 

presented in the Technical Modeling Appendix, Commission staff chose to estimate (with 

ordinary least squares) the above nine potato-related variables as a monthly VAR model in 

levels converted to natural logarithms (hereafter, logged levels) over the period January, 1987 

through November, 1996 (i.e., 1987:1-1996:11).167 Following accepted procedures outlined in 

the Technical Modeling Appendix, the VAR model posits each of the nine endogenous current 

variables as a :function of four lags of itself and of four lags of each of the remaining eight 

endogenous variables.168 Each equation also includes a constant, a time trend, and 11 seasonal 

binary variables to account for time-ordered trends and seasonal factors not endogenous to the 

model. 

The Technical Modeling Appendix details a number. of staff's specification-related 

considerations that led to the choice of the above variables, and these considerations are only 

briefly mentioned here. First, the U.S. potato market was subdivided into fresh and frozen 

components to address USTR requests for information and analysis on the competitive 

conditions of both components. Second, the fresh fall table stock portion of the U.S.-grown 

fresh market was modeled, because in addition to data limitations, U.S. fall potato production 

accounts for the preponderance (about 90 percent in 1995) of U.S. fresh potato production (see 

chapter 2). Third, the french fry portion of the U.S. frozen potato market was modeled because 

166 As detailed in the Technical Modeling Appendix, the "Northeast U.S." fresh potato shipments 

include fresh table stock potatoes reported as shipped in Maine, New York (including Long Island), 

and New Jersey by rail, piggyback, and truck. There were no data on these volumes reported from 

other Northeastern States such as Vermont, New Hampshire, etc. 167 Hereafter, monthly dates are numerically denoted with a colon, with the year denoted to the 

colon's left and the month numerically denoted to the colon's right. Hence, 1995:1 and 1995:12 

denote Jan. and Dec. ofl 995. 168 R. Babula and D. Bessler, "The Com-Egg Price Transmission Mechanism," Southern Journal of 

Agricultural Economics, vol. 22, No. 2 (Dec. 1990), pp. 80-83. 

5-56 
this segment constitutes most of the frozen market: nearly 90 percent of 1995 U.S. frozen 

product production.169 

Fourth, because a reduced form model was used (for reasons stated in the Technical Modeling 

Appendix), the modeled nonstock quantities of fresh shipments (NESHIP, REST SHIP) and the 

volumes ofU.S.-produced frozen french fries consumed domestically (FRYQ) are not quantities 

specifically produced· (supplied) or specifically demanded, but rather the market-clearing 

quantities both produced and consumed.170 And likewise, the modeled prices, the U.S. fiy price 

or PFRIES and the U.S. price of fresh potatoes or PFRESH, are not specifically the supply 

prices at which products are offered or specifically the prices at which the products are 

demanded, but are rather those prices at which demand and supply volumes equate and clear the 

market 

Fifth, U.S. imports of fresh potatoes (FRESHIMP) were modeled as a source of North 

American-produced supply consumed in the U.S. market, and not as a trade flow within a U.S. 

import demand/foreign (primarily Canadian) supply framework. This is justified because of 

evidence suggesting that comparatively classed supplies of U.S. and imported (primarily 

Canadian) fresh potatoes are nearly perfect, if not perfect substitutes, such that increases in such 

imports are likely to have similar, if not identical, effects on U.S. markets as equal increases in 

U.S. production. 

Sixth, there is no one monthly "market clearing quantity" series for U.S.-produced fresh 

tablestock potatoes. Therefore, data on fresh U.S.-produced fresh tablestock fall potatoes 

(FRESHSTK), fresh U.S. imports of tablestock potatoes as a North American supply produced 

for and consumed in the U.S. market (FRESHIMP), and shipments of fresh U.S.-produced fall 

table stock potatoes (NESHIP plus RESTSHIP) were included to represent monthly supply as 

best as limited data resources would allow. 

And seventh, total U.S. fresh shipments of fall potatoes were subdivided into two variables: 

Northeast shipments (NESHIP) and shipments for the rest of the United States (RESTSHIP). 

This permits the addressing of certain "regional highlights" requested by USTR 

Model Simulations and Results 

VAR econometrics is well suited to address the above-cited issues and competitive conditions. 

The method provides a tool called an impulse response function which can be used to shock the 

system of nine endogenous potato-related variables by a shock in one of the variables, say U.S. 

fresh potato imports. It is of interest to see how, and to what degree, that such a shock in one 

of the variables such as imports influences the other modeled variables such as Northeast fresh 

shipments as opposed to other U.S. fresh shipment$, U.S. fresh and frozen french fiy prices, 

169 U.S. frenchfry production in 1995 accounted for 86 percent of the 1995 volwne of U.S. :frozen 

potato product production according to the AFFI, 1995 Frozen Food Pack Statistics (McLean, VA: 

AFFI, 1996), p. 30. 110 See R. Babula, "An Empirical Examination of U.S. Lamb-Related Import and Domestic Market 

Relationships Near the Fanngate," Journal of International Food and Agribusiness Marketing, vol. 

8, No. 2, 1996, p. 71. 

5-57 
stocks of french fries and fresh potatoes, etc. 111 Given the USTR's requests in this 

investigation, the four simulations described below were chosen. 

Before presenting the simulations and results, a number of points are required about the model 

and simulations. First, the model was estimated in logged levels such that shocks to and 

impulse responses in the logged variables are approximate proportional changes in the 

nonlogged variables and approximate percent changes when multiplied by 100 .

172 Second, the 

size and the direction (increase and decrease) of each shock are arbitrary because of the 

generality emerging from the model's linearity. 173 

Simulation 1: 10 percent shock (increase) in stocks of fresh U.S.-produced fall 

potatoes (FRESHSTK) to generate responses in the remaining eight endogenous 

variables.174 

Simulation 2: 10 percent increase in U.S. fresh potato price (PFRESH) to generate 

responses in the remaining eight endogenous variables. 

Simulation 3: 10 percent increase in quantities ofU.S.-produced french fries produced 

and consumed (FRYQ) to generate responses in the remaining eight endogenous 

variables. 

Simulation 4: 10 percent increase in U.S. fresh potato imports (FRESHIMP) to 

generate responses in the remaining eight endogenous variables. 

Impulse responses (or responses) of the VAR model estimated in logged levels generated by 

such simulated shocks represent history's average percentage responses over and above time 

trends and seasonal factors. Response multipliers can be calculated from each simulation's 

statistically non-zero responses.175 The multipliers, provided in table 5-17, indicate the model's 

percentage change in the response variable per percentage change in the shock variable. Sign 

is important: a positive multiplier suggests that each percentage change in the shock variable 

has generally coincided with the response variable changes, while negative multipliers suggest 

a variable's response in the opposite direction of the shock. For example, simulation l's 

multiplier of-0.77 for PFRESH su2gests that on average historically, each percentage increase 

171 R. Babula, P. Colling, and G. Gajewski, "Dynamic Impacts of Rising Lumber Prices on HousingRelated Prices," Agribusiness: An International Journal, vol. 10, No. 5 (Sept./Oct. 1994), pp. 377-

378. 

172 See USITC, Lamb Meat, chapter 5 and appendix L, and Babula, Colling, and Gajewski, 

"Dynamic Impacts of Lumber Prices," pp. 377-378. 173 That is, the simulated responses from a one percent shock in some variable may be converted to a 

10 percent shock by multiplying results by a scaler of 10.0, and a positive shock's simulated results 

may be converted to a negative shock's results through result multiplication by negative one. See 

Babula, Colling, and Gajewski, "Dynamic Impacts of Lumber Prices," pp. 377-378. 174 For ease of presentation, the simulations are defined in terms of positive shocks of 10 percent 

increases, although other sized shocks and other signed shocks are easily generalized from the linear 

model's results. 175 For detailed calculation methods and interpretations of such multipliers, see Babula, Colling, and 

Gajewski, "Dynamic Impacts of Lumber Prices," pp. 379-381. 

5-58 
(decrease) in FRESHSTK bas coincided with an oppositely-directed176 -0. 77- percent decrease 

(increase) in fresh potato price. Connnission staff emphasized multipliers which were 

statistically nonzero at approximately the 1-percent statistical significance level. Certain results 

which emerged at the lower 95- percent significance level (hereafter denoted a "marginal" 

significance level) were considered when of particular relevance to the investigation's issues. 

Simulation 1: Effects of a 10 Percent Rise in Stocks ofU.S.-Produced Fresh 

Potatoes 

A primacy reason for this simulation was to obtain a data-based and empirical price response 

to the quantity of fresh potatoes. A 10 percent FRESHSTK increase was chosen for this 

because most fresh fall U.S.-produced potatoes are stored immediately after harvest, and 

because of the finding of Goodwin et. al.177 that the primacy "price/ quantity" relationship is 

between stocks and price of fresh potatoes -- a finding supported empirically by Miranda and 

Glauber' s17& strong fresh potato price/stock relationships. 

Table 5-17 provides the multipliers which emerged from simulation l's results. On average 

historically, each percent change in FRESHSTK elicited a 0. 77 percent oppositely-directed 

response in PFRESH, such that a 7. 7 percent decline in price results from a I 0 percent stock 

increase. 

The -0.77 reduced form PFRESH multiplier from the shock in FRESHSTK falls generally 

within, but nearer the lower end of, a rather wide range of price flexibilities of U.S. fresh potato 

demand reported in or implied by the literature.179 These literature estimates range from the 

U.S. producers' estimate of -7.0,180 down to the USDA potato model's (POTSIM's) low-end 

estimate of -0.34 reported by Love and Willett. 181 USITC staff concludes with Richards, Kagan 

and Gao 182 that the price flexibility of demand likely falls below the -7. 0 estimate of the NPC. 

Richards, Kagan, and Gao1&

3 note that some of·the less recent literature, which includes the 

176 For ease of expression and presentation, "oppositely-directed" refers to responses that move in 

the opposite direction of the initiating shock: decreasing responses from positive shocks and 

increasing responses from negative shocks. 177 Goodwin and others, "Factors Affecting Potato Price," p. 238. 178 Miranda and GJauber, "Intraseasonal Demand," pp. 108-109. 179 The multiplier is not an estimated price flexibility of fresh potato demand, but rather a multiplier 

of market-pleating (i.e., reduced form) price response from changes in quantities demanded and 

supplied, that is a net price response from offsetting movements in quantities demanded and supplied. 

The estimated price flexibilities of demand in the literature are price effects of a change of quantities 

demanded, and not price effects net of demand changes offset by oppositely directed supply changes. 

Insofar as the multiplier for PFRESH is a price adjustment net of changes in quantities demanded and 

supplied, then the multiplier is useful as a lower limit (in absolute value) comparison for the 

literature's price flexibilities of demand. So while not exactly identical, the multiplier for PFRESH 

and the literature's estimated price flexibilities of fresh potato demand are similar enough for useful 

comparisons. See Babula, "Emprical Examination of Lamb-Related Relationships." 1

8() Transcript of the hearing, testimony of J. Guenthner on behalf of the NPC, p. 52. 181 J. Love andL. Willett, "Modeling the U.S. Potato Industry," p. 19. 181 Richards, Kagan, and Gao, "Factors in Potato Demand," p. 62. 183 lbid., p. 62. 

5-59 
Table 5-17 

M u It" IP r 1ers o f s· 1muae I t d R esponsesto Sel ecte dVARM o e d ISh ocks 

Simulation 1: Simulation 2: Simulation 3: Simulation 4: 

Response rise in rise in rise in rise in 

variable: FRESHSTK PF RESH FRYQ FRESHIMP 

Fresh imports 

(FRESH IMP) -0.86 2.4 SHOCKED 

Fresh fall stocks 

(FRESHSTK) SHOCKED -0.4 

Fresh shipments, 

Northeast U.S. -0.2· 

(NESHIP) 2.0 -1.a· -0.83 

Fresh shipments, 

rest of U.S. 

(RESTSHIP) -0.4 -0.18 

U.S. fresh price 

(PF RESH) -0.77 SHOCKED 

Frozen fry quantity 

(FRYQ) 0.27 -.16· SHOCKED 

U.S. fry price 

(PFRIES) 0.12· -0.24 

French fry stocks, 

(FRYSTOCK) ·.19" 1.5 

French fry exports -0.07" 

(EXP FRY) 

Note.-Results are interpreted as the percent change in the response variable per percentage change in the shock 

variables. "SHOCKED" denotes the variable shocked (increased) in the simulation. Generally, multipliers are 

statistically nonzero at about the 1 percent significance level, except for the asterisk-superscripted multipliers which 

are statistically nonzero at the 5 percent significance level and considered "marginally significant." Blank cells reflect 

an absence of a statistically significant response. 

Source: Calculated by Commission staff from results of simulations of the econometric model. 

Guenthner, Levi, and Lin184 article serving as a basis for the NPC's prehearing brief, uses 

econometric samples through 1988, and hence ignores, during the last 10 years or so, the 

proliferation of potato-competing products which would tend to elasticize own-price 

elasticities, and thus reduce price flexibilities, of potato-related demands. 

Simulation l's results suggest that the 10-percent FRESHS TK increase elicited a 2. 0 percent 

rise in Northeast shipments (NESHIP multiplier of 2.0), but did not result in a statistically 

significant (significant) response in other U.S. fresh shipments. That the 10 percent shock (rise) 

in fresh stocks influenced Northeast fresh shipments to a greater extent than in such other major 

U.S. markets as the West coincides with testimony that suggests that the fresh potato market 

fluctuations in traded volumes and prices influence the Northeast fresh markets more heavily 

than other major markets because of the Northeast's reliance on open, non-contracted free 

markets and less reliance on production contracts.185 

184 Guenthner, Levi, and Lin, "Demand for Potato Products." 185 Transcript of the hearing, testiinony of G. Smith, pp. 146-14 7. 

5-60 
Simulation l's changes in fresh potato stocks influence the frozen fry market through market 

clearing fry volumes. With a FRYQ multiplier of 0.27, the model's data-embedded evidence 

suggests that on average historically, a IO percent rise in fresh fall U.S. stocks (FRESHSTK) 

results in a 2. 7 percent rise in the quantity of frozen french fries produced and consumed. The 

less than proportional nature of the FR YQ response coincides with the fact that fresh potatoes 

are only one of an array of frozen fry production inputs. Further, record evidence suggests that 

the fresh retail market supplies unforseen surges in the fry market volume on a residual basis, 

which may explain the less than proportional FRYQ response. 186 The muted impacts of 

increased fresh potato stocks on the frozen fry market is supported by U.S. processor 

contentions that processors source only a minor part of raw potatoes from the open fresh potato 

markets.187 

A particularly interesting result is that increasing fresh stocks of U.S.-produced fresh fall 

potatoes appears to effectively deter fresh imports. With a response multiplier of -0.86 for U.S. 

fresh imports (FRESHIMP), data-embedded evidence suggests that on average historically, a 

10 percent rise in fresh stocks elicits a decline of about 9 percent in imports. 

Simulation 2: Effects of a 10 Percent Rise in U.S. Fresh Potato Price 

Table 5-17 provides multipliers of -0.4 for both fresh potato stocks (FRESHSTK) and fresh 

shipments in the non-Northeast U.S. (RESTSHIP), as well as a multiplier of -1.8 for fresh 

shipments in the Northeastern United States (NESHIP). These multipliers suggest that marketclearing shipments and stocks of fresh potatoes decline as fresh price increases. On average 

historically, a 10% rise in U.S. fresh potato price (PFRESH) results in a 4-percent decline in 

fresh potato stocks, perhaps as stock holders take advantage of higher prices, as well as declines 

in shipments (declines of 18 percent in the Northwestern United States and of 4 percent 

elsewhere), as higher prices appear to decrease fresh potato demand to a greater extent than the 

higher prices increase fresh potato production. That Northeast shipments respond to price 

increases proportionally more than U.S. shipments elsewhere coincides with U.S. producer 

testimony that Northeast markets are prone to more pronounced adjustments from fresh price 

variations, given that the Northeast markets are less insulated than such other major markets as 

the U.S. West from price and quantity variations.188 There seems to be a regional disparity here: 

that the volumes of fresh fall potatoes produced, shipped, and consumed are more severely 

influenced by price variation in the Northeastern U.S. than in other parts of the country. 

However, this disparity should be examined with caution in that the-1.8 multiplier for NESHIP 

emerged at a marginal level of significance. 

The -0.4 response multipliers for fresh stocks (FRESHSTK) and fresh non-Northeast U.S. 

shipments (RESTSHIP) represent the model's majority of U.S. fresh frozen potato volumes 

produced and consumed in the United States; are reduced form analogues for the literature's 

estimated own-price elasticities of fresh U.S. demand;189 and fall within, and near the 

186 NPC prehearing brief, pp. 8-9. 187 Collier, Shannon, Rill, and Scott, posthearing brief, pp. 11-14. 188 Transcript of the hearing, testimony of G. Smith, pp. 146-14 7. 189 These multipliers of -0.4 for RESTSHIP and FRESHSTK resemble the own-price elasticities of 

U.S. fresh potato quantity (stocks plus RESTSfilP). The response multipliers are not exactly such 

elasticities, but are rather the market-wide or reduced form changes in such quantities from a change 

(continued ... ) 

5-61 
moderately elastic subrange of;. the literature's range of such estimates. The -0.4 multipliers of 

fresh stock and non-Northeastern shipments, as a reduced form guide for the price elasticity of 

fresh potato demand, is nearly three times the NPC' s inelastic estimate of -0 .14; t

9

o about equals 

the -0 .36 estimate of Miranda and Glauber; 191 and falls slightly below the -0. 48 estimate of 

Richards, Kagan, and Gao.192 Given the data-embedded evidence that emerged from the 

Commission staff's empirical model, as well as literature estimates of the U.S. own-price 

elasticity of fresh potato demand, the own-price elasticity of U.S. fresh potato demand is 

probably more elastic than that suggested by the -0.14 value cited by the U.S. growers.193 

Richards, Kagan, and Gao194 provide a reason for the NPC's reported -0.14 estimate's 

inelasticity: the Guenthner, Levi, and Lin195 article, published in 1991, employs annual samples 

of 1970 or 1975 through 1988, time frames which ignore proliferation of potato-competing 

products (curly fries, premixed rice dishes, new pasta products, gourmet breads, etc.) during the 

last decade. Such an emerging array of potato-competing products tends to augment the priceelasticity of potato-related demands.196 

High U.S. prices were effective in attracting U.S. fresh potato imports, modeled as a reduced 

form North American supply consumed in the U.S. market. Simulation 2's IO-percent rise in ' 

fresh potato price (PFRESH) coincided, on average historically, with a 24-percent rise in fresh 

potato imports, virtually all Canadian. The rather elastic 2.4 multiplier probably arises from 

the very minor share of U.S. table stock consumption (3.4 percent in 1995) attributed to fresh 

imports .

197 

Simulation 2's shock in fresh price had muted effects on the U.S. frozen :french fry market: the 

10 percent rise in PFRESH elicited declines ofless than 2 percent in traded fry volumes (FRYQ) 

and fry inventories (FRYSTOCK), as well as a 1.2 rise in french fry price (PFRIES multiplier 

of 0.12), and all three effects emerged at a marginal level of statistical strength. In that 

PFRESH is an important input cost for french fry production, the declines in fry volumes 

189( .•• continued) 

in price. In terms of the simulation's upward shock in fresh price, the multipliers reflect the 

oppositely directed, own-price-induced movement in fresh quantity net of the offsetting but combined 

quantity effects: the drop in demand and the rise in supply of the increased fresh price. So the model 

suggests that-0.4 is a lower limit of the literature's estimates of the own-price fresh demand 

elasticities, which. unlike the reduced form multipliers of the model, are only demand-side 

adjustments and not net quantity adjustments of both sides of the market. See Babula, "Empirical 

Examination of Lamb-Related Relationships." 190 Guenthner, Levi, and Lin. "Demand for Potato Products," p. 57 4. 191 Miranda and Glauber, "Intraseasonal Demand," pp. 108-109. 192 Richards, Kagan, and Gao, "Factors in Potato Demand," p. 62. This -0.48 estimate is an estimate 

of the own-price elasticity of the U.S. Marshallian demand for fresh potato~ and the article also 

provides a -0.23 estimate of the U.S. Hicksian or income-compensated demand for fresh potatoes (on 

the same page). 193 NPC, prehearing brief, p. 13 and Guenthner, Levi, and Lin, "Demand for Potato Products," p. 

574. 

194 Richards, Kagan, and Gao, "Factors in Potato Demand," p. 62. 195 Guenthner, Levi, and Lin. "Demand for Potato Products," p. 574. 196 Richards, Kagan, and Gao, "Factors in Potato Demand," p. 62. 197 This 3. 4 percent figure was calculated by Commission staff from information from two sources. 

The 1995 U.S. fresh potato imports of 458.921 million pounds was an official statistic of the 

Department of Commerce. The 1995 U.S. fresh table stock consumption level of l 3 .465 billion 

pounds was published in NPC, 1996 Potato Statistical Yearbook (Englewood, CO: NPC, 1996), p. 

47. 

5-62 
produced and consumed, the depletion of fry stocks, and a positive effect on fry price were 

expected. Yet the fry-related multiplier's muted or inelastic magnitudes, and their marginal 

statistical strength, are supported by testimony and record evidence submitted by U.S. growers 

and frozen potato processors. 198 Such evidence and testimony suggest that the preponderance 

of fresh potatoes processed into frozen fries and other products are procured through year-long 

contractual agreements between growers and processors, and that these year-long contracts 

deflect all but minimal and muted impacts that monthly variations in fresh market price have 

on french :fry volumes stocks, and price. 199 Processors further state that insofar as some minor 

portions of fresh potatoes processed into frozen products are procured on the non-contracted 

and open fresh potato markets, then a fresh price shock should have some influence on the fry 

market.200 Such impacts, however, are expected to be minimal, as suggested by the fry-related 

response multipliers' inelastic values and marginal statistical significance. 

Simulation 3: Effects of a 10 Percent Rise in U.S. Frozen French Fry Volume 

Produced and Consumed 

Simulation 3's results suggest that increased frozen fry market activity influences the frozen 

market variables primarily, and has only limited influence on the fresh potato variables. With 

a response multiplier of -0.24 for fry price (PFRlES), the simulation's 10 percent rise in the 

volwnes of frozen fries produced and consumed in the United States, on average historically, 

results in a 2.4 percent decline in french fry price, and is the model's reduced form analog to the 

literature's estimated price flexibilities of U.S. frozen product demand. The Commission staff 

model's -0.24 reduced form multiplier for fry price (PFRlES) about equals the USDA POT SIM 

model's -0.22 price flexibility estimate for frozen product demand reported by Love and 

Willett,201 and falls below the NPC's estimate of -2.0 (in absolute value).202 

With a multiplier for volwnes stocks of frozen fries (FRYSTOCK) of 1.5, the 10 percent rise 

in volumes of frozen fries produced and consumed (FRYQ) elicits, on average historically, a 15 

percent rise in such stocks. This 15-percent fry stock response (increase) about equals the 10 

percent upward shock in fry volume (FRYQ) on a pound for pound basis, as over the last 2 

years, FRYQ has been about 50 percent greater than FRYSTOCK.203 Yet, additional dynamics 

suggest a one-month (although marginally significant) fry stock depletion, during which older 

fry stocks of frozen fries may have been sold off as a sort of "rotation" process to make way for 

the newer and increased frozen fry volumes on the market. After the one-month depletion, 

FRYSTOCK seems to be re-stocked with the newer volumes during the ensuing four months, 

when stocks seem to change by an amount about equal to the fry volume shock on a pound for 

198 Transcript of the hearing, p. 52; Collier, Shannon, Rill, and Scott, prehearing brief, pp. 8-10 and 

posthearing brief, pp. 11-15. 

199 Ibid. 20° Collier, Shannon, Rill, and Scott, posthearing brief, p. 12. 201 J. Love andL. Willett, "Modeling the U.S. Potato Industry," p. 19. 202 Transcript of the hearing, testimony of G. Guenthner, for the NPC, p. 52. This -2.0 estimate 

appears to USITC staff to be a "rounding off'' of the -1.8 estimate in Guenthner, Levi, and Lin, " 

Demand for Potato Products," p. 57 4. 203 This calculation is based on USITC staff calculations based on confidential monthly data on 

FRYQ and FRYSTOCK for 1986:1-1996:11 obtained from a series of unpublished and confidential 

annual reports compiled by, and provided to USITC staff by, the Frozen Potato Products Institute. 

See also the Technical Modeling Appendix for detailed data definitions and sources. 

5-63 
pound basis. Such results coincide with U.S. frozen potato processor contentions that the frozen 

processing industry generally maintains an average 2-months supply of product in inventories, 

which serve as a "buffer" between frozen market supplies and demands.204 

Another regional highlight emerges from simulation 3. On a proportional basis, Northeast 

shipments of fresh potatoes are more depleted by an unexpected rise in levels of the frozen fry 

quantities produced and consumed than from other parts of the U.S. With multipliers of -0.83 

for Northeast fresh shipments (NESHIP) and -0.18 for fresh U.S. shipments elsewhere 

(RESTSHIP). the 10 percent rise in FRYQ elicits, on average historically, decreases of 8.3 

percent in Northeastern fresh shipments and of only 1. 8 percent in fresh shipments in other U.S. 

areas. Apparently, unexpected increases in U.S. fry market volumes are residually supplied 

more from the Northeast fresh market, where supplies are available for purchase by U.S. 

processors (primarily located in the U.S. West), and are largely not contracted as in such other 

U.S. areas as the West. The lack of a fresh price response may arise from the residual nature 

of this fresh market supply: fresh market potatoes are only occasionally and residually diverted 

to frozen processing, and on average historically, by not enough to influence the price of fresh 

potatoes.205 These results also suggest that primarily western processor demands compete with 

Northeastern U.S. fresh potato demands to procure Northeastern fresh potatoes, and may 

indicate a degree of competition among U.S. regions for fresh potatoes. 

Simulation 4: Effects of a 10 Percent Rise in U.S. Fresh Potato Imports · 

The 10-percent increase in fresh potato imports have very little national effects aside from 

coinciding with a slight and marginally significant drop in exports of less than a percent 

(EXPFRY multiplier of-0.07). However, one notable regional highlight emerges, although at 

a marginal level of significance: the 10 percent rise in imports does little or nothing to displace 

U.S. shipments, displace quantities, or affect price except in the Northeast. With a multiplier 

of-0.2, the IO percent rise in imports seems to displace 2.0 percent of the U.S. fresh shipments 

in the Northeast market. 

So imports seem to have little market influence except in the Northeast This result coincides 

with analysis of Canadian data which suggests that more than half of Canadian potato acreage 

and production are concentrated in Eastern Canada (P.E.I., New Bnmswick, Quebec, 

Newfoundland, and Nova Scotia) and near Northeastern U.S. markets.206 Although U.S. 

producers have testified that U.S. fresh potato imports displace U.S.-produced product and 

depress U.S. prices,107 the model's data-based evidence suggests that fresh U.S. table stock 

potato imports, which constitute minor shares of U.S. tablestock consumption (3.4 percent in 

204 Collier, Shannon, Rill, and Scott,. posthearing brief, pp. 14-17. 205 That the Northeast market is less influenced by grower/processor production contracting was 

stated by G. Smith, a Maine grower, in transcripts of the hearing. pp. 145-147. That the fresh markets 

only residually supply unexpected rises in volumes traded in the processed frozen markets emerges 

from information from the NPC's prehearing brief, pp. 8-9. 206 USITC staff made such calculations based on official statistics of Statistics Canada. See chapter 

4, tables 4-2 and 4-7. 207 Transcript of the hearing, testimony of G. Ball, NPC, pp. 45-46. 

5-64 
1995208), have little impact on the U.S. fresh or frozen fry prices and quantities except in the 

Northeast. Further. the mild impacts such imports have historically had in terms of displaced 

Northeastern U.S. fresh shipments achieved only marginal levels of statistical significance. 

That imports displace production and sales ofU.S.-produced fresh potatoes disproportionately 

more in the Northeast than in other areas such as the West is a result supported by Northeast 

U.S. grower testimony. 209 Northeast growers testified that Northeastern U.S. production has 

been especially challenged competitively by fresh potato imports from New Brunswick and 

Prince Edward Island. 210 

The modeling results suggesting that Northeast U.S. markets are more challenged competitively 

by U.S. imports of fresh Canadian potatoes than other U.S. markets are supported by USDA 

data on fresh potato arrivals in Northeastern U.S. and other markets.211 These data suggest that 

78 percent of total 1996 U.S. arrivals of Canadian fresh potatoes were destined for Boston and 

NewYork.212 Further, Canada supplied the single largest 1996 share (31 percent) of Boston's 

fresh potato arrivals, a share exceeding even those of Maine (20 percent) and Idaho (16 

percent).213 

Simulation Results: Summary and Implications 

Simulation results and published research suggest that the U.S. price elasticity of fresh potato 

demand is moderately elastic, perhaps within the range of -0.3 to -0.5, and above the -0.14 

estimate reported by the NPC (in absolute value). This may explain the lack of strong iinportinduced national market effects outside of the Northeast markets. Further, imports appear to 

decline as market-clearing volumes of domestically produced fresh potatoes increase. 

While simulation results do suggest that U.S. fresh potato and frozen french fry markets 

interact and influence each other, the strength of inter-relations is muted. Increased fresh potato 

prices did elicit declines in fry volumes traded and stored, and a rise in fry price, although such 

fry-market effects were muted and emerged at a marginal degree of statistical strength. Fresh 

stock increases influence the frozen fry market through augmenting fry market volwnes; but to 

less than proportional degrees. Increased fresh potato imports had little or no effect on the 

modeled frozen :fiy relationships. The upward shock in traded volumes of french fries had little 

effect on the fresh market, aside from a decline in shipments, which was disproportionately large 

in the Northeast markets where U.S. growers point out that fresh potatoes are traded largely on 

the free and open market and not under contract.214 Further, such drops in fresh shipments, 

primarily from the Northeast, supports testimony and evidence from U.S. processors that fresh 

208 This 3.4 percent figure was calculated by USITC staff from information from two sources. The 

1995 U.S. fresh potato imports of 458.921 million pounds was an official statistic of the Department 

of Commerce. The 1995 U.S. fresh tablestock consumption level of 13.465 billion pounds was 

published in NPC's, 1996 Potato Statistical Yearbook, p. 47. 209 Transcript of the hearing, testimony ofG. Smith, pp. 45-48 and 145-146. 210 Ibid., p. 47. 211 See tables 5-4 and 5-14. 

212 Ibid. 

213 Ibid. 214 Transcript of the hearing, testimony of G. Smith, pp. 146-147. 

5-65 
markets supply minor amounts of fresh potatoes to processors, and only on a residual basis, 

when there are unexpected surges in the frozen processed markets.215 

Regional highlights do emerge from the simulation results. First, imports seem to be a 

Northeast issue more than a national one, insofar as increases in fresh imports elicited almost 

no changes aside from an oppositely directed, if marginally significant, displacement of 

Northeast shipments. Northeast markets seem more prone to bear the brunt of fresh market 

price and quantity movements than in such other areas as the U.S. West.216 Additionally, 

unexpected surges in frozen fry volumes appear to tap fresh supplies to a greater proportional 

degree in the Northeast than elsewhere. 

m NPC, prehearing brief, pp. 8-9; NPC, posthearing brief, p. 15. 216 This may constitute evidence of competition among U.S. regions for fresh potatoes. 

5-66 
APPENDIX A 

Letter of Request from USTR 

A-1 
OFFICE OF THE UNITED STATES 

TRADE REPRESENTATIVE 

EXECUTIVE OFFICE OF THE PRESIDENT 

WASHINGTON 

The Honorable Marcia Miller 

Chairman 

U.S. International Trade Commission 

500 E Street, S.W. 

Washington, D.C. 20436 

Dear Chairman Miller: 

20506 

IOCl£T 

fq"3~ ---------··-------·----·-----~ Off'ICI " tbl 

Sacntary 

Intl. Tr~Ce c~l:sio11 

---·--·------. 

\ 

J~uary 9, 1997 

V1 

_..,., 

_o 

Ul~ 

- .. . ·.-

It has recently come to my attention that the U.S. fresh and processed potato industries have 

concerns about increased U.S. imports of fresh potatoes (excluding sweet potatoes) and processed 

potato products from Canada. The domestic industry believes these imports may be benefiting from 

Canadian government policies and industry pricing practices. I am writing to request, under the 

authority delegated by the President and pursuant to Section 332(g) of the Trade Act of 1930, as 

amended (19 USC 1322(g)), that the Commission institute an investigation for the purpose of 

providing a report on factors affecting trade between the United States and Canada in (.1) fresh table 

stock potatoes, (2) seed potatoes, (3) raw potatoes for processing, and (4) frozen processed potatoes. 

Specifically, for each of these four product areas the following information should be provided, to 

the greatest e~ent po~sible: 

(I) Production and/or processing volumes and trends in Canada and in the United States 

over the past five years . 

. (2) U.S imports from Canada over the last five years, including market share of Canadian 

imports, with particular emphasis on any increases in U.S. imports from Canada. 

(3) Consumption trends for raw and finished processed potato products in Canada and the 

United States over the last five years. 

( 4) Federal, provincial, and municipal aid programs for potato growers and processors in 

Canada, including aid for the construction of storage, water treatment, and processing 

facilities~ a compilation of existing literature and industry views on the impact of such aid 

on the competitiveness of Canadian producers would also be appreciated. 

(5) For the last three years, prices of Canadian products in Canada and in U.S. markets, 

together with prices of U.S. products in U.S. markets. 

( 6 I The effect of exchange rates and terms of sale factors on Canadian prices. 

(7) The cost of production in Canada and in the United States, including raw material costs 

for processed products, over the last three years. 

A-2 

--- :::. 
Where data permit for the specific items listed above, it would be appreciated if the national 

data provided were supplemented with regional and/or seasonal highlights. In addition to 

these specific items, an analysis of any other factors that may be affecting the conditions of 

competition between the U.S. and Canadian fresh potato and processed potato industries 

would be appreciated. 

In light of the considerable importance of this investigation to the U.S. potato industry, we 

ask the Commission to report the results of the investigation on an expedited basis, but no 

later than six months from the receipt of this letter. 

In accordance with USTR policy, I direct you to mark as confidential such portions of the 

Commission's report and its working papers as my office will identify in a classification guide. 

Executive Order 12958 and its implementing regulations require that classification guides 

identify or categorize the elements of information which require protection. According, I 

request that you provide my office with a preliminary outline of this report as soon as 

possible. Based on this outline, and my office's knowledge of the information to be covered 

in the report, a USTR official with classification authority will provide detailed instructions. 

We appreciate the Commission's assistance. 

Sincerely, 

Charlene Barshefsky 

United States Trade Representative - Designate 

A-3 
EXECUTIVE OFFICE OF THE PRESIDENT 

OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE 

WASHINGTON, D.C. 20508 

The Honorable Marcia Miller 

Chairman 

U.S. International Trade Commission 

500 E Street, S.W. 

Washington, DC 20436 

Dear Chairman Miller: 

•. ., 

Pursuant to USTR' s request for the International Trade Commission to investigate the factors 

affecting trade between the United States and Canada in fresh table stock potatoes, seed potatoes, 

raw potatoes for processing and frozen processed potatoes, investigation No. 332-37.8, please 

also provide information, to the extent possible, on the comparative market access factors 

affecting U.S. and Canadian exports of these potato products to Mexico. 

If possible, we request that the Commission report the results of this additional information, 

concurrent with the full report, on an expedited basis, but not later than July 15, 1997. 

We appreciate the Commission's assistance. 

A-4 

__. .. r::-: ':~· 

-~ ~~-- ;'! .. ~ 

?:t:-: ·-: ~·-~~ ~-. 

'---.· .:::. ·····,r"'".: 

:""-· ..... 

-
APPENDIXB 

Commission's Notice of Institution of 

Investigation and Scheduling of Hearing 

B-1 
UNITED STATES INTERNATIONAL TRADE COMMISSION 

Washington, DC 

(lnvestigati.on 332-378) 

FRESH AND PROCESSED POTATOES: COMPETITNE CONDITIONS 

AFFECTING THE U.S. AND CANADIAN INDUSTRIES 

AGENCY: United States International Trade Commission 

ACTION: Institution of investigation and schohiling of hearing 

EFFECTIVE DATE: January 29, 1997 

SUMMARY: Following Rc:Cipt on January 15; 1997, of a request from the Office of the United States 

Trade Represcotativc (USTR), the O>mmission instituted investigation No. 332-378, Fresh and 

Processed Potatoes: Competitive Conditions Affecting the U.S. and Canadian Industries, under section 

332(g) of the Tariff Act of 1930 (19 U.S.C. 1332(g)), for the pmpose of providing a report on factors 

affecting trade between the United Swes and Canada in fresh tablestock potatoes, scc:d potatoes. raw 

potatoes for processing, and frozen processed potatoes. As requested bytbe USTR, the Commission's 

report on the investigation will focus on the period 1992-96, and to the extent possible, 1997, and will 

include the following information for each of the four product areas: 

(I) Production and/or processing volumes and trends in Canada and the United States ovei- the 

past s years. 

(2) U.S. imports from Canada over the last S years, including market share of Canadian 

exports, with particular rmphuis on any iocreascs in U.S. imports from C-anada 

(3) ·Consumption trends for raw and finishM processed potato products in Canada and the United 

States over the last S years. 

( 4) Federal, provincial, and muoicipal aid programs in Canada for Canadian growers aod 

processors, including aid for the coosttuction of storage, water treatment, and processing 

facilities; a compilation of existing litcnture aod indusb:y views on the impact of sucli aid on 

the competitivcoess of Canadian producers. 

(S) For the last 3 years, prices of Canadian products in Canada and in U.S.~ together with 

prices of U.S. products in U.S. marla:m. 

( 6) The effect of excbaoge rates and tmns of sale factors on Canadian prices. 

(7) The cost of production in C.nada and in the United States, including raw material costs for 

processed products, over the last 3 years. . 

As requested, the Commisi;ion will, to the cxtc:nt posslDle, supplcmcnf national data prescoted in 

the report with regional and/or seasonal highlights, and that the Cnmmission also include an analysis of 

any other factors affecting the conditions of competition between the U.S. and Canadian fresh potato and 

processed potato industries. 

As requested by the USTR., the Commission will submit the results of its investigation on an 

expedited basis, but not later than July 15, 1997. 

FOR FURTHER INFORMATION: Infonnation on industry aspects may be obtained from Tim McCarty, 

Office of Industries (202-205-3324) or Douglas Newman, Office of Industries (202-205-3328); and legal 

aspects, from William Gearhart, Office of the General Counsel (202-205-3091). The media should contact 

B-2 
2 

Margaret O'Laughlin, Office of External Relations (202-205-1819). Hearing impaired individuals are 

advised that information on this matter can be obtained by contacting the mo terminal on (202-205-

1810). 

PUBLIC HEARING: A public hearing in oonnection with the investigation will be held at the U.S. 

International Trade Commission Building, 500 E Street SW, Washington, OC, beginning at 9:30 a.m. on 

April 30, 1997. All persons will have the right to appear, by counsel or in person, to~ information 

and to be heard. Requests to appear at the public hearing should be filed with the Seaetary, United States 

International Trade Commission, SOO E Street SW, Washington, DC 20436, no later than 5:15 p.m. April 

14, 1997. Anyprchcaring briefs (oriJPnal and 14 copies) should be filed not latcctban 5:15 p.m., April 21, 

1997; the deadline for filing posthearing briefs or statements is 5:15 p.m., May 15, 1997. In the event that, 

as of the close of business on Apn,. 14, 1997, no witnesses are scbcduled to appear at the hearing, the 

hearing will be canceled. Any person interested in attending the bearing as an obscncz- or non-participant 

may call the Seaetaryto the Commission (202-205-1816) after April 14, 1997, to dctmnine wbetbc:rthe 

hearing will be held. 

WRITTEN SUBMISSIONS: In lieu of or in addition to participating in the public hearing, interested 

persons are invited to submit written. statements concerning the mattC'ls to be addressed in the report. 

Commercial or financial information that a party desires the Commission to treat as confidential must be 

submitted on separate sheets of paper, each clearly marked "Confidential Business Information" at the top. 

All submissions requesting confidential treatment must conform with the requirements of section 201.6 of 

the Commission's Rules of Practis;x QDd J>rocedure (19 CFR 201.6). All written submissions, except for 

confidential business information, will be made available for inspection by interested persons in the Office 

of the Secretaiy to the Commission. To be assured of c0nsideration by the Commission, written. 

statements relating to the Commission's report should be submitted at the earliest practical date and should 

be received no later than May 15, 1997. All submissions should be addressed to the Seaetary, United 

States International Trade Commission, 500 E Street SW, Washington, DC 20436. 

Persons with mobility impairments who will need special assistance in gaining acc:ess to the 

Commission should contact the Office of the Secretary at 202-205-2000. 

By order of the Commission. 

Issued: January 29, 1997 

B-3 
5484 Federal Register I Vol. 62, No. 24 i Wednesday, February 5, 1997 I Notices 

Date-signed: Juum:y 29, 1997. 

Bnice a.bbitt, 

Seaetutyof the lntmor. 

IFR Doc:. 97-2768 Filed 2-4-97: 8:·ts.eml 

llWMG COOE 4$1.,....... 

National Park Service 

Subsistence Resource Commission 

Meeting 

SUMMARY: The Superintendent of. Lake 

Clark National Park and the Chairperson 

of the Subsistence Resource 

Commission for Lake Clark National 

Park announce a forthcoming meeting of 

the Lake Clark National Park 

Subsistence Resource Commission. 

The following agenda items will be 

discussed: 

(1) Chairman's welcome. 

(2) Introduction of Commission 

members and guests. 

(3) Review agenda. 

(4) Approval of minutes of last 

meeting. 

(5) Old business: 

a. Review NPS SubSistence Issue 

Paper. 

(6) New business: 

a. Election of Chairperson. 

(7) Agency and public comments. 

(8) Determine time and date of next 

meeting. 

(9)Adjoum. 

DATE: The meeting will be held Monday. 

February 17. 1997. The meeting will 

begin at 10 a.m. and conclude aroWld 5 

p.m. 

LOCATION: The meeting will be held at 

the Lake Clark National Park Visitor 

Center, Port Alsworth. Alaska. 

FOR FURTHER INFORMATION CONTACT: Bill 

Pierce, Superintendent, Lake Clark 

National Park and Preserve, 4230 

University Drive, #311, Anchorage, 

Alaska 99508. Phone (907) 271-3751. 

SUPPLEMENJ'ARY INFORMATION:. The 

Subsistence Resource Commissions are 

authorized under Title VIIl. Section 808. 

of the Alaska National Interest Lands 

Conservation Act, Pub. L. 96--487. and 

operate in accordance with the 

provisions of the Federal Advisory 

Committees Act. 

Paul IL Andenon, 

Acting Field Director. 

[FR Doc. 97-2833 Filed 2-4-97: 8:45 aml 

BILLING COOE 431~1-

~RNA~ALTRADE . , .. ·'data preaentad in ·the report with -

..._ regional and/or l88SOD8l h,ighlights, and 

that the Commission also include an· 

analysis of any other factors affecting 

the conditions of oompetition between 

COMMISSIOM · _ _ ' . 

pnvutlgllllon 332~ 

· ,reSh and Processed Po18toes: 

Qornpedtlve Conditions Affecting the 

u.s. and Cenadlan Industries 

AGBICY: United States International 

trade Commissiao. 

ACTION: Institution of investigation and 

$Chedulh:\g of bearing. 

EFFECTIVE DATE: January 29, 1997. 

SUMMARY: Following receipt on January 

15, 1997, of a request from the Office of 

the United States Trade Representative 

(USTR), the Commission instituted 

investigation No. 332.:.378, Fresh and 

Processed Po~toes: Competitive 

Conditions Affecting the U.S. and 

Canadian Industries, under section 

332(g) of the 'tariff Act of 1930 (19 

U.S.C. 1332(g)), for the purpose of 

providing a report on factors affecting 

trade between the United States and 

Canada in fresh tablestock potatoes, 

seed potatoes. raw potatoes for 

processing. and frozen processed 

potatoes. As requested by the USTR, the 

Commission's report on the . investigation will focus on the period 

1992-96, and to the extent possible, 

1997, and will include the following 

information for each of the four product 

areas: (1) Production and/or processing 

volumes and trends in Canada and the 

United States over the past 5 years. 

(2) U.S. imports from Canada over the 

last 5 years. including market share of 

Canadian exports, with particular 

emphasis on any increases in U.S. 

imports from Canada. 

(3) Consumption trends for raw and 

finished processed potato products in 

Canada and the United States over the 

last 5 years. . (4) Federal, provincial, and municipal 

aid programs in Canada for Canadian 

growers and processors, including aid 

for the construction of storage, water 

treatment. and processing facilities: a 

compilation of existing literature and 

industry views on the impact of such 

aid on the competitiveness of Canadian 

producers. 

(5) For the last 3 years. prices c.f 

Canadian products in Canada and in 

U.S. markets. together with prices of 

U.S. products in U.S. markets. 

(6) The effect of exchange rates and 

terms of sale factors on Canadian prices. 

(7) The cost of production in Canada 

and in the United States, including raw 

material costs for processed products, 

over the last 3 years. 

As requested, the Commission will. to 

the extent possible, supplement national 

B-4 

the U.S. and Canadian fresh potato and 

processed ootato industries. 

A3 requ8sted by the USTR. the 

Commission will submit the results of 

its investigation on an mcpedited basis, · 

but not later than July 15, 1997. 

FOR FURTHER •F<>AMA110N: Information 

on industry aspects may be obtained 

from Tim McCarty. Office of Industries 

(202-205-3324) or Douglas Newman, 

Office of Industries (202-205-3328); 

and legal aspects, from William 

Gearhart, Office of the General Counsel 

(202-205-3091). The media should 

contact Margaret O'Laughlin, Office of 

External Relations (202-205-1819). 

Hearing impaired individuals are 

advised that information on this matter 

can be obtained by contacting the mo 

terminal on (202-205-1810). 

PUBLIC HEARING: A public bearing in 

connection with the investigation will 

be held at the U.S. International Trade 

Commission Building. 500 E Street SW., 

Washington. DC. beginning at 9:30 a.m. 

on April 30, 1997. All persons will have 

the right to appear. by counsel or in 

person. to present information and to be 

heard. Requests to appear at the public 

hearing should be filed with the 

Secretary. United States Intemational 

Trade Commission, 500 E Street SW .• 

Washington. DC 20436, no leter than 

5:15 p.m. April 14. 1997. Any 

prehearing briefs (original and 14 

copies) should be filed not later than 

5:15 p.m .. April 21. 1997; the deadline 

for filing posthearing briefs or 

statements is 5:15 p.m .. May 15. 1997. 

In the event that. as of the close of 

business on April 14. 1997. no 

witnesses are scheduled to appear at the 

hearing. the hearing will be canceled. 

Any person interested in attending the 

hearing as an observer or nonparticipant may call the Secretary to the 

Commission (202-205-1816) after April 

14. 1997. to determine whether the 

hearing will be held. 

WRITTEN SUBMISSIONS: In lieu of or in 

addition to participating in the public 

hearing, interested persons are invited 

to submit written statements concerning 

the matters to be addressed in the 

report. Commercial or financial 

information that a party desires the 

Commission to treat as confidential 

must be submitted on separate sheets of 

paper, each clearly marked 

"Confidential Business lnfonnation" at 

the top. All submissions requesting 

confidential treatment must conform 

with the requirements of section 201.6 

! : 
Federal Register I VoL. 62, No. 24 I Wednesd&y. February s. 1997 I Notices 5485 

of the Co~oo'.~ Buln of Practice ~-· .. -on the property· in conformance with. o~·: -· 74t3(b). for NACta.alleged violatiou. 

and Procedure (19 CFR 201.6). All " future use ohhe repository and · ' of proviaions ot the State 

written submissions, except for reflecting any institutional controls Implementation Plan for San 

confidential business information, will established through the remedial action. Benwd.ino, Califomia, as well as for. 

be made available for inspection by · The Consentbeci8e grants to the violations of the New Source 

interested persons in the Office of the SettlinR Defendants a covenant not to Performance Standards and Prevention 

Secretary to the Commission. To be sue and the oon~bution protection of Significant Deterioration ("PSD") 

assured of consideration by the afforded by Section 1133(f)(2) of provisions of the Clean Air Act. See 

Commission, written statements relating CERCLA, 42 U.S.C. 9613(1)(2). The Standards of Performance for 

t~ the Commiaion's report should be Consent~ also contains a _ftlO~r Nonmetallic Mineral Processing Plants, 

submitted at the earliest practical date ~t ~nmts ~e t?Dited Stat~, m certain 40 O'R part 60, subpart 000 and the. 

and should be received no later than s1tuauo175. to institu~e additio~l PSD provisions of the Act. 42 U.S.C. 

May 15, 1997. All submissions should procaedings to reqwre the Settling 7470-7501 The alleged violations 

be addressed to the Secretary, United Defendants perform further response • .. States lntematiooal Trade Commission, actions or reimburse the United States occurred at • facility owned and 

500 E Street SW •• Washington, OC for additional oosts of response. o~rat~ by NA.CC located near Trona. 

20436. The Department of Justi<» will re<»ive Califorma. 

Persons with mobility impairments comments relating to th~ proJ>Ollt!d Under this settlement between the 

who will need special assistance in Consent Decree for a penod ?f thirty United States and NA.CC, NACC will be 

gaining access to the Commission (30) days from the date of this required to reduce emissions of nitrogen 

should contact the Office of the publication. Comments should be oxides &om a gas tulbine at the facility. 

Secretary at 202-205-2000. addressed to the ~tant Attorney The iettlement provides for a civil 

General of the EnVU'On.ment and Natural penalty of $320,000. In addition, NAa: Issued: January 29.1997. Resources Division, Department of .

11 d 1 tal 

By order of the Commission. Justice, Washington, DC 20530, and WI con uct a aupp emen 

Donna It Koebnke, should refer to United States v. Connor environmental project to reduce 

particulate matter emissions at the Secretary. 

(FR Doc. 97-2829 Filed 2-4-97; 8:45 am) 

BILLING CODE Ta20-02..fl 

DEPARTMENT OF JUSTICE 

Notice. of Lodging of Con:>ent Decree 

Pursuant to the Comprehensive 

Environmental Response, 

Compensation, and Liability Act of 

1980 

Notice is hereby given that on January 

15, 1997, a proposed Consent Decree in 

United States v. Connor Investment Co .. Civil Action No. 97-5:106-CV-SW-3 

(W.D. Mo.) was lodged with the United 

States District Court for the Western 

District of Washington. This Consent 

Decree resolves the United States' 

claims in this action against Connor 

Investment Company ("Connor") and 

Lima Hill Mining Company ("Lima") 

(collectively "Settling Defendants") 

regarding their liability under Section 

107(a) ofCERCLA., 42 U.S.C. 9607(a), for 

response costs incurred or to be 

incurred by the United States in 

connection with the Oronogo/Duenweg 

Mining Belt Superfund Site in Jasper 

County. Missouri ("Site"). 

The Consent Decree requires, inter 

alia, that the Settling Defendants shall 

provide the United States 

Environmental Protection Agency 

("EPA") and the State of Missouri with 

broad access rights to their property at 

:he Site for the creation, operation, and 

maintenance of a hazardous waste 

repository. In addition, the Consent 

Decree requires that the Settling 

Defendants place restrictive covenants 

Investment Co., D.O.J. No. 90-11-3- facility. 

lOOtC. 

The proposed Consent Decree may be The Department ofJustice will receive 

examined at the Office of the United for a period of thirty (30) days from the 

States Attonuiy for the Western District date of this publication comments 

of Missouri, 1201 Walnut Street. Kansas relating to the proposed consent deaee. 

City, MO 64106; the Region VD Office Comments should be addressed to the 

of the U.S. Environmental Protection · Assistant Attorney General of the 

Agency, 726 Minnesota Ave., Kansas Environment and Natural Resources 

City, KS 66101: and at the Consent Division. Department of Justice, 

Decree Library, 1120 G Street. NW., 4th Washington. OC 20530, and should refer 

Floor. Washipgton. OC 20005 (Tel: (202) to United States of America v. North 

624--0892). A copy of the proposed American Chemical Company, DOJ Ref. 

Consent Decree may be obtained in #9(}-5-2_1_2001. 

person or by mail from the Consent 

Deaee Library, 1120 G Street, NW, 4th 

Floor, Washington, OC 20005. When 

requesting a copy, please enclose ~ 

check in the amount of $13.50 (25 cents 

per page reproduction cost) payable to 

the Consent Decree Library. 

Joel'Qnm. 

CJijef. Environmental Enforcement Section. 

Environment and Natural Resources Division. 

IFR Doc. 97-2769 Filed 2-4-97; 8:45 am) 

NoUce of Lodging of Consent Decree 

Pumaant to Clean Air Act • 

Notice is hereby given that on January 

24. 1997, a proposed Consent Decree in 

United States of America v. North 

American Chemical Company, Civil 

Action No. 97--0477-WJR (CWx). was 

lodged with the United States District 

Court for the Central District of 

California. This Consent Decree 

represents a settlement of claims against 

North American Chemical Company 

("NACC") pursuant to section 113(b) of 

the Clean Air Act (the "Act"), 42 U.S.C. 

B-5 

The proposed consent decree may be 

examined at the Office of the United 

States Attorney. Central District of · 

California, 7516 Federal Building, 300 

North Los Angeles Street, Los Angeles, 

California 90012 and at Region IX, 

Office of the Environmental Protection 

Agency. Air Division, 75 Hawthorne 

Street, San Francisco. California 94105, 

and at the Consent Decree Library, 1120 

G Street, NW .. 4th Floor, Washington, 

DC 20005 (202) 624-0892. A copy of the 

proposed consent deaee may be 

obtained in person or by mail from the 

Consent Decree Library. 1130 G Street, · 

NW., 4th Floor. Washington, OC 20005. 

In requesting a copy, please refer to the 

referenced case and enclose a check in 

the amount of S8.25 (25 cents per page 

reproduction cost),.payable to the 

Consent Decree Library. 

Joel M. Grass, 

Chief. Environmental Enforcement Section. 

Environment and Natural Resources Divisjon. 

(FR Doc. ~7-2771 Filed 2-l-91; 8:45 am) 

81LUNG COOE <MIO-I-
APPENDIXC 

List of Witnesses Appearing at the Hearing 

C-1 
CALENDAR OF PUBLIC'HEARINGS 

Those listed below appeared as witnesses at the United States International Trade 

Commission's hearing: 

Subject 

Inv. No. 

Date and Time 

FRESH AND PROCESSED POTATOES: 

COMPETITIVE CONDmONS AFFECTING 

TIIE U.S. AND CANADIAN INDUSTRIES 

332-378 

April 30, 1997 - 9:30 a.m. 

Sessions were held in connection with the investigation in the Main hearing room 101, 500 

E Street, S.W., Washington, D.C. 

Congressional Appearances: (In order of appearance) 

The Honorable Olympia J. Sn owe, United States Senator, State of Maine 

The Honorable Susan M. Collins, United States.Senator, State of Maine 

The Honorable Richard (Doc) Hastings, United States Congressman, 4th District, 

State of Washington 

The Honorable John E. Baldacci, United States Congressman, 2nd District, 

State of Maine 

The Honorable Michael D. Crapo, United States Congressman, 2nd District, 

State of Idaho 

The Honorable Larry E. Craig, United States Senator, State of Idaho 

C-2 
ORGANIZATION AND WITNESS 

Panel 1 

U.S. Growers 

National Potato Council (NPC) 

Englewood, Colorado 

Gary F. Ball, Grower. State ofldaho and Vice President for Trade. 

National Potato Council 

Dr. Joseph F. Guenthner, Economic Consultant, State of Idaho 

Greg Smith, Grower/Shipper, State of Maine 

Bruce P. Malasbevich, Economist, Economic Consulting Services, 

Incorporated 

David J. Levine, Counsel, McDermott, Will and Emery 

Jerry C. Bill, Counsel, McDermott, Will and Emery 

U.S. Processors 

Michael Coursey, Counsel, Collier, Shannon, Rill and Scott 

Lynn E. Duffy, Counsel, Collier, Shannon. Rill and Scott 

. Michael T. Kerwin, Economist, ~orgetown Economic Consulting 

Services 

Washington State Growers 

Henry Michael, President, Washington State Potato 

· Commission 

Joel R Junker, Junker and Thompson, Counsel to the Washington 

State Potato and Onion Association 

C-3 

TIME 

CONSTRAINTS 

40 minutes 

{15 mins.) 

(15 mins.) 

(10 mins.) 
ORGANIZATION AND WITNESS CONT'D: 

Panel 2 

Snack Food Industry 

Snack Food Association 

Alexandria, Virginia 

Mark Troyer, Vice Pr~ident, Troyer Potato Products, Incorporated, 

Waterford, Pennsylvania 

James A. McCarthy, Senior Vice President, Snack Food Industry 

Panel3 

Canadian Processors 

O'Melveny and Myers, L.L.P. 

Washington, D.C. 

on behalf of 

Food Institute of Canada ("the Institute") 

Chris Kyte, Executive Director 

Donald W. Westfall, Vice President 

Gary N. Borlick ) 

)-OF COUNSEL 

F. Amanda DeBusk ) 

C-4 

TIME 

CQNSTRAJNTS 

10 minutes 

15 minutes 
ORGANIZATION AND WJTNESS CONT'D: 

ranel 4 

Canadian Growers 

Cameron and Hombostel; L.L.P. 

Washington, D.C. 

QD behalf of 

Canadian Horticultural Council ("the Council") 

Potato Growers of Alberta 

Lan')' Buba, Crop Manager, Lewis Fanns, Spruce Grove, Alberta 

Alan Stuart, Manager, Potato Growers of Alberta 

Keystpne vegetable Producers Associatign 

GarTy Sloik, a grower from Portage La Prairie, Manitoba 

TIME 

CONSTRAINTS 

25 minutes 

Gary Hatfield, President, Gary Hatfield Limited, Hartland, New Brunswick 

Anne Fowlie, Assistant Executive Director, New Brunswick Potato Agency 

Ivan Noonan, Manager, Prince Edward Island Potato Board 

P. Earl Smith, General Manager, P.E.l Produce Co. Ltd., 

Summerside, P.E.l 

Morley Wood, Chairman, Prince Edward Island Potato Board 

William K. Ince ) 

)-OF COUNSEL 

Michele C. Sherman ) 

C-5 
APPENDIXD 

Supplemental Tables 

D-1 
Table3-7 

Frozen trench fries: 1 U.S. exports of domestic merchandise, by principal markets, 1992-96 

Market 199? 1993 1994 1995 1996 

Quantity ( 1, 000 pounds) 

Japan .... ; . . . . . . . . . . . . . . . 266,647 281,673 318,709 374,279 418,657 

South Korea............... 33,149 34,528 · 40,539 44,686 57,422 

Hong Kong................ 22,597 25,622 30,278 45,266 52,886 

Taiwan . . . . . . . . . . . . . . . . . . . 14,202 19,061. 23,156 30,281 38,563 

Canada . . . . . . . . . . . . . . . . . . ~3,033 15,260 16,233 16,625 28,820 

Philippines . . . . . . . . . . . . . . . . :10,379 13,831 22,152 28,032 31,637 

Malaysia.................. rn,715 12.,988 18,655 25,723 26,628 

Mexico . . . . . . . . . . . . . . . . . . . '14,633 18,827 29,137 17,403 26,018 

All other .................. __ 4_3,....~ .... o .... 7 __ .... 60...., . ..._7 .... 4 9.___ .... 97._., ..... 15 .... 9.___ .... 19...,6..,..2.... 6 .... 2.__ ___ 119,835 ......, ___ 

Total . . . . . . . . . . . . . . . . . . -4~2.,..9.,.,.1..-62..___4 .... 8...,2, .... 5..,.3..,8 _ _.5._.9 .... 6.... 0 .... 19...___ .... 77....,8....,.5... 5..,.8 __ .................. 800.466 ..._ 

Value ( 1 ,000 dollars) 

Japan . . . . . . . . . . . . . . . . . . . . 84,578 88,975 104,222 124,069 139,892 

South Korea............... 10,917 10,592 12,797 14,673 18,442 

Hong Kong................ 6,373 7,428 9,250 13,447 15,932 

Taiwan . . .. . . . . . . .. .. .. . . . 4,419 5,924 7,372 9,352 11,666 

Canada .. .. . .. . . . .. . .. . .. 5,181 6,135 6,696 6,815 11,466 

Philippines . . . . . . . . . . . . . . . . 3,289 4,634 7,275 9,681 10,683 

Malaysia . . . . . . . . . . . . . . . . . . 3,660 4,275 7, 166 11,228 8,743 

Mexico . . . . . . . . . . . . . . . . . . . 4,751 6,204 9,609 5,440 8,405 

All other . . . . . . . . . . . . . . . . . . _ ... J ... 4,_...Q,...68=----=2 40,082 .... Q,,lll"0""".8""'9 _ _..3_4,,_.4-"'8""'9 __ 6""'4,..3.... 9 .... 6'------'"'-..-=-

Total .................. _1.,.3...,7..,..?_,3 ..... 6__ 1..... 54 ... t... 2 .... s5....__1 .... 9.... 8,..,8 .... 76....__ .... 25...,9.,. ..... 1 o._1 ________ 265,310 __ 

Unit value (dollars per pound) 

Japan . . . . . . . . . . . . . . . . . . . . $0.32 $0.32 $0.33 $0.33 $0.33 

South Korea . . . . . . . . . . . . . . . .33 .31 .32 .33 .32 

Hong Kong................ .28 .29 .31 .30 .30 

Taiwan . . . . . . . . . . . . . . . . . . . .31 .31 .32 .31 .30 

Canada . . . . . . . . . . . . . . . . . . .40 .40 .41 .41 .40 

Philippines . . . . . . . . . . . . . . . . .32 .34 .33 .35 .34 

Malaysia . . . . . . . . . . . . . . . . . . .34 .33 .38 .44 .33 

Mexico . . . . . . . . . . . . . . . . . . . .32 .33 .33 .31 .32 

All other .................. ___ .34 ..""3""'2 ____ 3"'"3......_ __ _..3-..4...._ __ _......3.,.3..._ __ __. .......... 

Average ............... . .32 .32 .33 .33 .30 1 Schedule B number 2004.10.8020. 

Change 

1996 over 

1992 

Percent 

57 

73 

134 

172 

121 

205 

149 

78 

174 

87 

65 

69 

150 

164 

121 

225 

139 

77 

217 

93 

3 

(3) 

7 

(3) 

0 

6 

(3) 

0 

6 

(6) 

Note.-Because of rounding, figures may not add to the totals shown. Unit values and changes calculated using 

unrounded data. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

D-2 
Table3-8 

Potato chips: 1 U.S. exports of domestic merchandise, by principal markets, 1992-96 

Change 

1996 over 

Market 1992 1993 1994 1995 1996 1992 

Quantity ( 11000 e,ounds} Percent 

Belgium ................... 4 69 23,981 27,458 26,131 (2) 

Japan ..................... 1,221 3,786 31,672 46,730 32,292 2,545 

Canada o o o o 0 0 o 0 I 0 0 'o o o 0 o 0 0 22,946 21,038 21,944 20,130 21,732 (5) 

Philippines ................. 4,534 4,574 5,089 4,829 5,031 11 

South Korea ................ 2,233 3,927 2,158 2,996 5,013 125 

Taiwan .................... 8,827 11,809 11,987 8,203 5,224 (41) 

Mexico 0 0 0 0 0 0 I 0 0 I I 0°0 0 0 0 Io o • 6,799 7,979 23,683 268 10,400 53 

All other I 0 0 0 I 0 0 0 0 Io 0 I I 0 0 0 o o 371804 57,071 341592 25,144 221933 (39) 

Total ................... 841368 110,252 1551252 135?58 128?57 53 

Value (1 1000 dollars} 

Belgium o o o o o o o o 0 o 0 0 0 Io 0 0 o o 4 80 37,913 48,105 45,289 (2) 

Japan ..................... 2,010 6,795 52,442 49,437 36,502 1,716 

Canada o o o o 0 o o o 0 0 0 0 o I 0 I I I I 25,487 22,087 21,128 19,653 24,401 (4) 

Philippines ................. 5,529 6,793 6,998 5,234 6,743 22 

South Korea ................ 3,064 5,824 3,277 4,210 6,259 104 

Taiwan .................... 12,298 f9,355 17,743 10,336 5,980 (51) 

Mexico o 0 0 I 0 0 0 0 I 0 0 0 Io 0 0 o o o o 4,538 5,626 15,332 200 5,430 20 

All other I 0 O I IO O I Io O O o O O o I I 0 411689 63,949 451113 311190 281245 (32) 

Total ................... 941618 1~0,509 1991947 1681365 1581849 68 

Unit value (dollars e,er e,oung)_ 

Belgium I I 0 0 0 I 0 0 o I 0 0 o 0 o o o 0 I $1.10 $1.70 $1.58 $1.75 $1.73 57 

Japan ..................... 1.65 1.79 1.66 1.06 1.13 (32) 

Canada o o o 0 o o o 0 o 0 0 0 0 I 0 0 0 o o 1'11 1.05 .96 .98 1.12 1 

Philippines ................. 1.22 1.49 1.38 1.08 1.34 10 

South Korea ................ 1.37 1.48 1.52 1.41 1.25 (9) 

Taiwan .................... 1.39 1.64 1.48 1.26 1.14 (18) 

Mexico Io o o o 0 0 0 Io 0 I 0 0 I Io I 0 o .67 .71 .65 .75 .52 (22) 

All other ................... 1.10 1.12 1.30 1.24 1.23 12 

Average ................ 1.12 1.18 1.29 1.24 1.23 10 1 Schedule B number 2005.20.20 in 1992 through 1995; changed to 2005.20.0020 in 1996. 2 Change greater than 5,000 percent. 

Note.-Because of rounding, figures may not add to the totals shown. Unit values and changes calculated using 

unrounded data. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

D-3 
Table3-9 

Fresh table stock potatoes: 1 U.S. exports of domestic merchandise, by principal markets, 1992-96 

Change 

Market 1992 1993 1994 1995 1996 1996over1996 

Quantity ( 1,000 epundsl Percent 

Canada ........... ' ......... 459,774 458,884 559,655 473,850 482,874 5 

Mexico 0 0 o o o. 0 o 0 o o 0 I I 0 Io 0 I 0 0 o 32,362 38,380 35,394 34,329 56,297 74 

Singapore 0 o' o o o 0 0 0 0 I 0 0 o I 0 0 0 o 322 1,469 2,383 3,330 5,332 1,555 

Hong Kong ................... 1,799 3,374 4,135 3,784 4,297 139 

Russia 0 0 0 o o o o 0 0 0 I Io I 0 o 0 0 o o o o 412 0 13,390 1,800 3,880 841 

Barbados o o 0 0 o o 0 0 I 0 0 o Io o 0 o 0 o o 334 1,123 795 797 2,063 518 

Dominican Republic I 0 o Io o o o o o o 0 0 0 9 2,261 (2) 

Jamaica 0 0 I I 0 I Io o 0 o o o o o o o o o 0 0 266 321 250 700 1,589 497 

All other 0 O O O o O o o o o 0 0 0 I I 0 I Io o o 41620 31074 41365 171904 51411 20 

World ..................... 4991890 5061626 6201367 5361504 5641004 13 

Value (1 1000 dollars} 

Canada IO O O O o O o o 0 o I 0 0 Io 0 I I 0 o 59,522 68,395 75,662 67,823 64,811 9 

Mexico o o 0 0 0 I 0 0 It 0 o o o 0 o 0 0 o o o 0 4,270 5,531 6,486 6,215 9,524 123 

Singapore ................. '. 45 225 339 586 928 1,982 

Hong Kong ................... 291 641 614 615 617 112 

Russia ...................... 42 0 2,204 275 542 1,193 

Barbados o O O O IO o o I Io o Io o o 0 0 I 0 51 172 110 127 371 623 

D~minican Republic ........... 0 0 0 3 273 (2) 

Jamaica 0 O I IO o O o o 0 I I 0 I I 0 I 0 0 0 I 35 68 45 129 256 639 

All other ... ' ................. 960 586 973 2?03 11103 15 

World ..................... 251214 751617 861433 781474 781424 20 

Unite Value (dollars per pound) 

Canada o o o o o o o o I 0 0 o o 0 0 0 0 0 o 0 o $0.13 $ 0.15 $0.14 $0.14 $0.13 4 

Mexico 0 0 0 o 0 I 0 0 0 I I 0 o o 0 o' 0 o o o o .13 .14 .18 .18 .17 31 

Singapore O O Io O o o o o 0 Io o o 0 o 0 Io .14 .15 .14 .18 .17 26 

Hong Kong ................... .16 .19 .15 .16 .14 (11) 

Russia 0 0 IO O O o o o 0 I 0 0 I I Io 0 o o o o .10 .16 .15 .14 37 

Barbados .................... .15 .15 .14 .16 .18 17 

Dominican Republic 0 0 o 0 I 0 0 I 0 0 I .28 .12 (2) 

Jamaica 0 O O O o o o o o o 0 I 0 0 Io o' o 0 t .13 .21 .18 .18 .16 24 

All other I 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 .21 .19 .22 .19 .20 (2) 

Average world .............. .13 .15 .14 .15 .14 14 

' Schedule B number 0701.90. 

' Not meaningful. 

Note.-Because of rounding, figures may not add to the totals shown. Unit values and changes calculated using 

unrounded data. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

D-4 
Table 3-14 

Fresh table stock potatoes: 1 U.S. imports from Canada, by principal Customs districts, 1992-96 

Customs District 

Portland, Maine ......... . 

San Juan, Puerto Rico ... . 

Buffalo, New York ....... . 

Ogdensburg, New York ... . 

Pembina, North Dakota ... . 

Detroit, Michigan ........ . 

Great Falls, Montana ..... . 

All other ............... . 

_Total ............... . 

Portland, Maine ......... . 

San Juan, Puerto Rico ... . 

Buffalo, New York ....... . 

Ogdensburg, New York ... . 

Pembina, North Dakota ... . 

Detroit, Michigan ........ . 

Great Falls, Montana ..... . 

All other ............... . 

Total ............... . 

Portland, Maine ......... . 

San Juan, Puerto Rico ... . 

Buffalo, New York ....... . 

Ogdensburg, New York ... . 

Pembina, North Dakota ... . 

Detroit, Michigan ........ . 

Great Falls, Montana ..... . 

All other ............... . 

Average ............ . 1 HTS number 0701.90. 

1992 

192,043 

39,762 

14,896 

11,891 

6,755 

982 

185 

6,775 

213.~88 

12,901 

3,255 

1,246 

843 

483 

149 

17 

§14 

19.710 

$0.07 

.08 

.08 

.07 

.07 

.15 

.09 

.12 

.07 

2 Increase greater than 5,ooo percent. 

1~3 1994 1995 

Quantity (1.000 pounds) 

380,562 287.482 284,541 

50,592 43,975 37,881 

40,799 25,605 27,664 

37,551 15,967 20,969 

15,761 18,264 62,180 

5,665 3, 161 12,783 

433 4,634 7,097 

9.930 6.761 5.716 

541.293 405.849 458.832 

Value ( 1.000 dollars> 

30,019 28,633 23,505 

5,322 5,779 4,845 

4, 159 2,460 1,960 

3,262 1,816 2,361 

1,229 1,870 3,309 

574 587 1,301 

44 610 1,172 

864 865 658 

Ugit value (dollars per pound) 

$0.08 $0.10 $0.08 

.11 .13 .13 

.10 .10 .07 

.09 .11 .11 

.08 .10 .05 

.10 .19 .10 

.10 .13 .17 

.09 .13 .12 

.08 .11 .09 

1996 

394,633 

72,038 

67,784 

45,992 

55,361 

18,422 

28,287 

8.244 

690.761 

33,844 

9,451 

6,617 

4,725 

3,847 

2,054 

1,840 

662 

63.039 

$0.09 

.13 

.10 

.10 

.07 

.11 

.07 

.08 

.09 

Change 

1996 over 1992 

Percent 

105 

81 

355 

287 

720 

1,777 

(2) 

22 

153 

162 

190 

431 

460 

697 

1,276 

(2) 

(19) 

220 

28 

60 

17 

45 

(3) 

(27) 

(30) 

(33) 

27 

Note.-Because of rounding, figures may not add to the totals shown. Unit values and changes calculated using 

unrounded data. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

D-5 
Table 3-15 

Frozen trench fries: 1 U.S. imeorts from Canada, b~ erincieal Customs districts, 1992-96 

Change 

Customs District 1§92 1i93 1994 1995 1996 1996 over 1992 

,augnt!!x (1,000 e.ounds) Percent 

Portland, Maine .......... 153,907 165,952 171,700 174,698 255,282 66 

Pembina, North Dakota .... 20,194 90,400 90,250 113,900 118,710 488 

San Juan, Puerto Rico .... 10,643 15,316 18,446 34,600 36,009 238 

Detroit, Michigan ......... 291 2,032 5,619 4,097 5,766 1,884 

Buffalo, New York ........ 926 1,245 1,353 2,956 3,855 316 

Ogdensburg, New York .... 1,840 2,284 1,244 1,788 2,429 32 

All other ................ ~~o • ~§Z §16 213 899 181 

Total ............... 1~s.119 27?,78§ 689,227 332,252 422,950 125 

Vglue ( 1,000 dollars) 

Portland, Maine .......... 38,638 42,543 44,643 46,184 69,867 81 

Pembina, North Dakota .... 3,841 20,599 20,091 32,388 32,554 747 

San Juan, Puerto Rico .... 2,579 4,104 5,199 10,245 11, 154 332 

Detroit, Michigan ......... 55 475 1,429 1,018 1,324 2,307 

Buffalo, New York ........ 231 363 392 841 1,084 369 

Ogdensburg, New York .... 449 576 321 443 636 42 

All other ................ ~03 6i,~:i j77 67 270 162 

Total 0 I 0 0 0 0 0 0 o' o o o o o i5,:§15 72,252 91,187 116,890 155 

Portland, Maine .......... $0.25 

u~~ v11lue (dollars e.er e.ounr;f.J, 

0.26 $0.26 $0.26 $0.27 9 

Pembina, North Dakota .... .19 .23 .22 .28 .27 44 

San Juan, Puerto Rico .... .24 .27 .28 .30 .31 28 

Detroit, Michigan ......... .19 .23 .25 .25 .23 22 

Buffalo, New York ........ .25 .29 .29 .28 .28 13 

Ogdensburg, New York .... .24 .25 .26 .25 .26 7 

All other ................ .~2 .3~ .29 .32 .30 (7) 

Average ............. .24 .25 .25 .27 .28 13 

, HTS number 2004.10.8020. 

Note.-Because of rounding, figures may not add to the totals shown. Unit values and changes calculated using 

unrounded data. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

D-6 
Table 3-16 

Fresh seed eotatoes:1 U.S. imeorts from Canada, b~ erincieal Customs districts, 1992-96 

Change 

Customs District 1992 1993 1994 1995 1996 1996 over 1992 

Qya[!tirt ( 1,000 g,ounds} Percent 

Great Falls, Montana ...... 49,710 56,277 100,188 126,041 163,052 228 

Portland, Maine .......... 60,670 87,372 90,593 70,978 96,855 60 

Seattle, Washington ...... 14,304 17,210 19,211 20,962 22,269 56 

Detroit, Michigan ......... 1,012 5,555 19,611 2,060 9,794 868 

Pembina, North Dakota .... 1,988 3,365 6,619 3,485 2,790 40 

All other .. ' ............. g42 1,060 567 2,354 796 229 

Total ................ 167,926 170,840 236,789 225,881 295,556 131 

V!lue (1,000 dollars! 

Great Falls, Montana ...... 2,660 4,419 9,490 9,182 15,743 492 

Portland, Maine .......... 4,146 5,136 7,399 5,452 7,-021 69 

Seattle, Washington o o o I' o 1,163 1,742 2,139 2,216 2,569 121 

Detroit, Michigan ......... 104 366 2,299 207 1,195 1,049 

Pembina, North Dakota .... 140 225 608 244 295 110 

All other ................ JS 7§ 62 161 85 370 

Total ............... s.~~1 1 l ,96~ 21,997 17,462 26,907 227 

Ugit v1lue (dollars e.er e.ounfll 

Great Falls, Montana ...... $0.05 $0.08 $0.09 $0.07 $0.10 80 

Portland, Maine .......... .07 .06 .08 .08 .07 6 

Seattle, Washington ...... .08 .10 .11 .1 i .12 42 

Detroit, Michigan ......... .10 .07 .12 .10 .12 19 

Pembina, North Dakota .... .07 .07 .09 .07 .11 50 

All other ................ ,Q7 .07 .11 .07 .11 43 

Average ............. .06 .07 .09 .08 .09 41 1 HTS number 0701.0. 

Note.-Because of rounding, figures may not add to the totals shown. Unit values and changes calculated using 

unrounded data. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

D-7 
Table 3-17 

Fresh table stock potatoes:1 U.S. exports to Canada, by principal Customs districts, 1992-96 

Change 

1996 over 

Customs District 1992 1993 1994 1995 1996 1992 

Qugntitv ( 1,000 e.ounds) Percent 

Detroit, Michigan ......... 90,494 88,012 113,147 113,312 103,647 15 

Seattle, Washington 0 I' 0 o' 84,718 83,329 69,615 72,692 95,585 13 

Great Falls, Montana ...... 47,915 64,325 95,218 62,888 73,473 53 

Buffalo, New York ........ 75,891 63,096 76,478 65,662 53,223 (30) 

Ogdensburg, New York .... 52,128 53,492 61,347 55,197 45,463 (13) 

Portland, Maine .......... 27,996 29,623 51,993 30,745 25,684 (8) 

Pembina, North Dakota .... 17,092 26,934 21,870 14,980 17,848 4 

All other ................ 6~,§~9 501073 69,987 581373 67,950 7 

Total ................ 5~,774 ~581884 559,655 4731850 482,874 5 

~alue ( 1,000 dollars) 

Detroit, Michigan ......... 11,727 15,154 17,687 19,333 16,710 42 

Seattle, Washington ...... 10,264 11,821 9,436 10,135 12,297 20 

Great Falls, Montana ...... 7,169 10,118 11,367 9,078 9,400 31 

Buffalo, New York ........ 10,477 9,204 11,408 8,854 7,268 (31) 

Ogdensburg, New York .... 6,534 7,869 8,755 7,010 6,266 (4) 

Portland, Maine .......... 3,971 4,114 5,819 3,918 2,916 (27) 

Pembina, North Dakota .... 2,293 3,828 3,133 2,113 1,889 (18) 

All other ................ 7,Q§7 6~87 8,057 7,381 8,065 14 

Total ................ s~.§~~ 68,~95 75,662 671823 64,811 9 

Ynit value (dollars e.er e.ounr!J 

Detroit, Michigan ......... $0.13 $0.17 $0.16 $0.17 $0.16 24 

Seattle, Washington ...... .12 .14 .14 .14 .13 6 

Great Falls, Montana ...... .15 .16 .12 .14 .13 (14) 

Buffalo, New York ........ .14 .15 .15 .13 .14 (1) 

Ogdensburg, New York .... .13 .15 .14 .13 .14 10 

Portland, Maine .......... .14 .14 .11 .13 .11 (20) 

Pembina, North Dakota .... .13 .14 .14 .14 .11 (21) 

All other ................ .11 .13 .12 .13 .12 6 

Average .............. .13 .15 .14 .14 .13 4 1 Schedule B number 0701.90. 

Note.-Because of rounding, figures may not add to the totals shown. Unit values and changes calculated using 

unrounded data. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

D-8 
Table3-18 

Frozen trench fries:1 U.S. exports to Canada, ID' principal Customs districts, 1992-96 

Change 

1996over 

Customs District 1992 1993 1994 1995 1996 1992 

Ouent!tl £1,00012.ounds) Percent 

Seattle, Washington .......... 3,568 4,760 6,059 6,180 8,581 141 

Great Falls, Montana .......... 1,114 2,501 2,499 1,822 7,788 599 

Pembina, North Dakota ........ 2.201 2,186 2,074 2,670 7,900 259 

Detroit, Michigan ............. 3,813 3,717 2,665 2,186 1,435 (62) 

Buffalo, New York ............ 155 59 294 319 1,172 658 

All other .................... ~.1§3 2,037 2,642 3,449 1,944 (11) 

Total .................... l;j,033 15,260 16,233 16,625 28,820 121 

Value ( 1,000 do/fars) 

Seattle, Washington .......... 1,431 1,894 2,433 2,442 3,720 160 

Great Falls, Montana .......... 395 1,040 1,004 739 3,044 671 

Pembina, North Dakota ........ 732 746 810 994 2,529 245 

Detroit, Michigan ............. 1,635 1,487 1,030 930 742 (55) 

Buffalo, New York ............ 87 35 162 152 632 627 

All other .....•.............. 901 934 1 257 1 558 800 (11) 

Total .................... ~,181 §,135 6,696 6,815 11,466 121 

Un!S value ! dollars e,er eounfl). 

Seattle, Washington .......... $0.40 $0.40 $0.40 $0.40 $0.43 8 

Great Falls, Montana .......... .35 .42 .40 .41 .39 10 

Pembina, North Dakota .•...... .33 .34 .39 .37 .32 (4) 

Detroit, Michigan ............. .43 .40 .39 .43 .52 21 

Buffalo, New York ............ .56 .60 .55 .48 .54 (4) 

All other .....•.............. .~1 .46 .48 .45 .41 (2) 

Average ................. .40 .40 .41 .41 .40 (3) 1 Schedule B number 2004.10.8020. 2 Decrease of less than 0.5 percent. 3 Increase of less than 0.5 percent. 

Note.-Because of rounding, figures may not add to the totals shown. Unit values and changes calculated using 

unrounded data. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

D-9 
Table 3-19 

Fresh seed eotatoes: 1 U.S. exeorts to Canada, b}'.; erincieal Customs districts, 1992-96 

Change 

Customs District 1992 . 1993 1994 1995 1996 1996 over 1992 

Qu!ntttx ! 1, 000 e.ounds} Percent 

Pembina, North Dakota ..... 2,6$1 3,155 7,280 5,126 12,352 364 

Portland, Maine ........... 13,5~6 7,954 8,948 11,085 7,776 (43) 

Detroit, Michigan .......... 7,355 6,629 4,164 5,240 4,131 (44) 

Great Falls, Montana ....... 1,166 388 1,792 2,304 2,571 120 

Ogdensburg, New York ..... 538 811 525 1,858 434 (19) 

Buffalo, New York ......... 842 267 0 247 558 (34) 

All other ................. 5,743 3,091 1,272 3,691 1,188 (79) 

Total ................. 31,841 2~,295 ~3,982 29,550 29,010 (9) 

Vglue ( 1,000 dollars) 

Pembina, North Dakota ..... 239 287 800 486 1,432 500 

Portland, Maine ........... 1,350 721 913 1,044 706 (48) 

Detroit, Michigan ........... 743 612 412 481 420 (44) 

Great Falls, Montana ....... 130 46 177 237 403' 210 

Ogdensburg, New York ..... 74 84 57 223 58 (22) 

Buffalo, New York ......... 89 30 0 19 50 (44) 

All other ................. 332 202 131 252 124 (63) 

Total ................ g,957 1,980 2,490 2,742 3,192 8 

Unit value (dollars e.er e,oungj, 

Pembina, North Dakota ..... $0.09 $0.09 $0.11 $0.09 $0.12 29 

Portland, Maine ........... .10 .09 .10 .09 .09 (9) 

Detroit, Michigan .......... .10 .09 .10 .09 .10 1 

Great Falls, Montana ....... .11 .12 .10 .10 .16 41 

Ogdensburg, New York ..... .14 .10 .11 .12 .13 (3) 

Buffalo, New York ......... .11 .11 .08 .09 (15) 

All other ................. 06 .07 .10 .07 .10 80 

Average .............. .09 .09 .10 .09 .11 18 1 Schedule B number 0701.10. 

Note.-Because of rounding, figures may not add to the totals shown. Unit values and changes calculated using 

unrounded data. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

D-10 
Table3-20 

Potatoes: 1 Canadian imports for consumption1 by principal items, 1992-96 

Item 

Fresh table stock ........... . 

Other processed potatoes 3 ...• 

Fresh seed potatoes ........ . 

Frozen processed potatoes 4 •. 

Potato starches ............ . 

Dried potatoes 5

•

6 •.••••.••.•• 

Potato flour and meal 7 •..••• 

Other frozen potatoes ....... . 

Tota.I ..................... . 

Fresh table stock ........... . 

Other processed potatoes ... . 

Frozen processed potatoes .. . 

Potato starches ............ . 

Fresh seed potatoes ........ . 

Dried potatoes ............ . 

Potato flour and meal ....... . 

Other frozen potatoes ....... . 

Total ..................... . 

1992 

461 ,055 

31,784 

32,079 

11,853 

12,494 

3,200 

2,077 

3,517 

$58,057 

51,769 

30,915 

5,032 

3,264 

2,680 

1,89, 

835 

1,509 

. 97,896 

1993 1994 1995 

Quantity (1,000 pounds)2 

458,921 557,993 474,042 

31,392 36,739 37,766 

22,308 24,030 29,729 

14,843 16,443 16,858 

16,541 21 ,689 19,611 

3,837 3,890 2,726 

3,352 3,914 4,292 

2,635 421 1,441 

553,829 665, 119 586,466 

Value l 1.000 dof/ars)8 

59,909 68,499 61,734 

28,157 28,272 27,820 

5,935 6,490 6,495 

4,047 5,089 4,827 

1,739 2,380 2,588 

2,294 3,564 2,301 

1,436 2,086 2,173 

965 154 595 

104,482 116,535 108,535 

Unit value (dollars per pound) 

1996 

483,008 

40,381 

29,365 

28,970 

13,893 

4,649 

3,414 

1,915 

605,595 

58,975 

35,594 

10,401 

3,943 

3,003 

1,782 

1,911 

784 

116,392 

Fresh table stock............ $0.11 $0.13 $0.12 $0.13 $0.12 

Other processed potatoes . . . . .97 .90 .77 .74 .88 

Frozen processed potatoes . . . .42 .40 .39 .39 .36 

Potato starches . . . . . . . . . . . . . .26 .24 .23 .25 .28 

Fresh seed potatoes . . . . . . . . . .08 .08 .1 O .09 .1 O 

Dried potatoes . . . . . . . . . . . . . . .59 .60 .92 .84 .38 

Potato flour and meal . . . . . . . . .40 .43 .53 .51 .56 

Other frozen potatoes . . . . . . . . .43 .37 .37 .41 .41 

Average .. .. .. .. . .. . . .. .. .. .18 .19 .18 .19 .19 

Change 

1996 over 

1992 

Percent 

5 

27 

(8) 

144 

11 

45 

64 

(46) 

9 

14 

15 

107 

21 

12 

(6) 

129 

(48) 

19 

9 

(9) 

(15) 

9 

25 

(36) 

40 

(5) 

5 1 Canadian Import Classification numbers 0701.10, 0701.90, 0710.10, 0712.10, 1105.10, 1105.20, 1108.13, 

2004.10, 2005.20 2 Data converted from kilograms by multiplying by 2.2046 pounds per kilogram. 3 CIC number 2005.20; other potatoes, prepared or preserved, not frozen; includes potato chips. 4 CIC number 2004.1 O; other potatoes, prepared or preserved, frozen; includes frozen trench fries. 5 Data not available in 1996; Canadian code 0712.1 O was discontinued and collapsed into 0712.90 (dried 

vegetables). Data estimated by USITC staff using an average of the ratio of dried potatoes to dried vegetables in 

category 0712.90 between 1992 and 1995 and multiplying the 1996 data for 0712.90 by that ratio. 6 1996 total will not match 1996 total in table 3-21 because table 3-21 does not include dried potatoes in that year. 7 CIC number 1105; also includes flakes, granules and pellets. 8 Data converted from Canadian dollars to US dollars by dividing by average annual exchange rate, in Canadian 

dollars per US dollars. Average annual exchange rates from IMF International Financial Statistics, rf exchange rate, p. 

156, Feb. 1997. Average annual exchange rate not available for 1996. Estimated by USITC staff by averaging the 

quarterly rates for 1996. 

Note.-Because of rounding, figures may not add to the totals shown. Unit values and changes calculated using 

unrounded data. 

Source: Compiled from official statistics of Statistics Canada, StatsCan Online database. 

D-11 
Table 3-21 

Potatoes:1 Canadian imports for consumption, by principal sources, 1992-96 

Source 

United States ....... . 

The Netherlands .... . 

Germany .......... . 

Belgium ........... . 

United Kingdom ..... . 

Jamaica ........... . 

Japan ............. . 

All other ........... . 

Total ........... . 

United States ....... . 

The Netherlands .... . 

Germany .......... . 

Belgium ........... . 

United Kingdom ..... . 

Jamaica ........... . 

Japan ............. . 

All other ........... . 

Total ........... . 

1992 

544,063 

146 

1,223 

545 

364 

0 

55 

11 .662 

558,057 

94,251 

1,020 

1,858 

203 

195 

0 

28 

340 

97.896 

1993 1994 1995 

Qmmtity (1 ,ODO poundsf 

535,902 648,452 564,798 

125 189 53 

1,167 1,269 270 

617 655 563 

345 396 476 

0 0 296 

47 41 41 

15,624 20.927 19,956 

553,826 671.929 586,452 

Value ( 1,000 do/lars)3 

100,062 110,989 102,808 

1,274 1,063 1,285 

2,393 3,606 3,373 

233 168 253 

174 223 296 

0 0 145 

27 48 57 

318 354 317 

104.482 116,535 108,535 

1996 

583,337 

48 

570 

1,107 

523 

1,163 

452 

13.721 

600,919 

108,626 

1,618 

1,501 

1,160 

429 

412 

274 

592 

114,611 

Unit value (dollars per pound) 

United States . . . . . . . . $0.17 $0.19 $0.17 $0.18 $0.19 

The Netherlands . . . . . 6.99 10.23 5.29 24.30 33.97 

Germany . . . . . . . . . . . 1 .52 2.05 2.82 12.49 2.63 

Belgium . . . . . . . . . . . . .37 .38 .39 .45 1.05 

United Kingdom . . . . . . .53 .50 .56 .62 .82 

Jamaica . . . . . . . . . . . . .49 .35 

Change 

1996 over 1992 

Percent 

7 

(67) 

(53) 

103 

43 

725 

18 

8 

15 

59 

(19) 

471 

120 

880 

74 

17 

7 

386 

73 

181 

53 

Japan .. r •• r ••••••••• .51 .59 1.16 1.38 .61 19 

All other . . . . . . . . . . . . .03 .02 .02 .02 .04 48 

Average.......... .18 .19 .17 .19 .19 9 1 Canadian Import Classification numbers 0701.1 O, 0701.90, 0710.10, 0712.1O,1105.10, 1105.20, 1108.13, 

2004.10, and 2005.20. 2 Data converted from kilograms by multiplying by 2.2046 pounds per kilogram. 3 Data converted from Canadian dollars to US dollars by dividing by average annual exchange rate, in Canadian 

dollars per U.S. dollar. Average annual exchange rates from IMF International Financial Statistics (rf exchange rate), 

p. 156, Feb. 1997. Average annual exchange rate not available for 1996. Estimated by USITC staff by averaging the 

quarterly rates for 1996. 

Note.-Because of rounding, figures may not add to the totals shown. Unit values and changes calculated using 

unrounded data. 

Source: Compiled from official statistics of Statistics Canada, StatsCan Online database. 

D-12 
Table 3-22 

Potatoes: 1 Canadian exports of domestic merchandise, by principal markets, 1992-96 

Change 

Market 1992 1993 1994 1995 1996 1996 over 1992 

Qu~mt~ ( 1,000 e.ounds} 2 Percent 

United States ........ 593,246 991,576 940,366 1,028,738 1,436,852 142 

Japan .............. 37,870 38,747 39,665 35,176 37,414 (1) 

Venezuela .......... 120,483 168,009 101,045 81,794 47,808 (60) 

Cuba ............... 42,763 85,007 60,620 37,030 67,683 58 

Brazil .............. 1,151 1,927 17,731 20,719 11,552 904 

Trinidad '' o' Io o 0 0 o o 0 43,283 36,591 35,290 56,230 34,918 (19) 

Barbados ........... 15,476 19,208 14,277 18,155 17,543 13 

Norway ............. 110 0 5,659 30,560 17,657 (4) 

All other ............ 100,3~9 109,468 274,288 271,617 115,144 15 

Total ........... 954,750 1,450,534 1,488,942 1,580,018 1,786,571 87 

V1lue ( 1,000 dollars) 3 

United States ........ 81,274 135,013 148,226 161,506 230,922 184 

Japan .............. 12,984 12,973 12,768 11,881 12,486 (4) 

Venezuela .......... 14,108 16,949 13,645 10,707 6,030 (57) 

Cuba ............... 3,790 4,401 4,484 3,610 4,945 30 

Brazil o' 0 I 0 0 o 0 0 o o 0 0 I 468 605 4,019 6,067 3,875 727 

Trinidad ............ 6,368 4,448 4,796 5,985 3,788 (41) 

Barbados ........... 2,245 1,809 1,927 2,971 2,455 9 

Norway ............. 3 0 980 3,690 2,299 (4) 

All other ............ 19,919 18,712 41,194 64,688 36,445 83 

Total ........... 141,15~ 194,910 232,039 271,105 303,245 115 

Unit yalue (dollars per e.oundl 

United States . . . . . . . . $0.14 $0.14 $0.16 $0.16 $0.16 20 

Japan . . . . . . . . . . . . . . .34 .33 .32 .34 .33 (3) 

Venezuela . . . . . . . . . . .12 .10 .14 .13 .13 8 

Cuba............... .09 .05 .07 .10 .07 18 

Brazil . . . . . . . . . . . . . . .41 .31 .23 .29 .34 (18) 

Trinidad . . . . . . . . . . . . .15 .12 .14 .11 .11 (26) 

Barbados . . . . . . . . . . . .15 .09 .14 .16 .14 (4) 

Norway............. .03 .17 .12 .13 351 

All other .. . . .. . .. .. . 20 .17 .15 .24 .32 60 

Average . . . . . . . . . .15 .13 .16 .17 .17 13 1 Canadian Emport Classification numbers 0701.10, 0701.90, 0710.10, 0712.10, 1105.1 O, 1105.20, 1108.13, 

2004.10, and 2005.20 2 Data converted from kilograms by multiplying by 2.2046 pounds per kilogram. 3 Data converted from Canadian dollars to US dollars by dividing by average annual exchange rate, in Canadian 

dollars per US dollars. Average annual exchange rates from IMF International Financial Statistics, rf exchange rate, g. 

156, Feb. 1997. Average annual exchange rate not available for 1996. Estimated by US!TC staff by averaging the 

quarterly rates for 1996. 4 lncrease greater than 5,000 percent. 

Note.-Because of rounding, figures may not add to the totals shown. Unit values and changes calculated using 

unrounded data. 

Source: Compiled from official statistics of Statistics Canada, StatsCan Online database. 

D-13 
Table3-23 

Potatoes1

: Canadian exports of domestic merchandise, by principal items, 1992-1996 

Item 

Fresh table stock potatoes 

Frozen processed potatoes 3 . 

Fresh seed potatoes ....... . 

Potato flour and meal 4 •••••• 

Other processed potatoes 5 •.• 

Other frozen potatoes ...... . 

Potato starches ........... . 

Dried potatoes 6

•

7 •.••.••..•• 

Total ................. . 

Frozen processed potatoes .. 

Fresh table stock potatoes .. . 

Fresh seed potatoes ....... . 

Other processed potatoes .. . 

Potato flour and meal ...... . 

Other frozen potatoes ...... . 

Potato starches ........... . 

Dried potatoes ............ . 

Total ................. . 

1992 

436,916 

259,511 

248,044 

5,336 

1,431 

53,823 

3,326 

132 

270,474 

71,201 

41,033 

23,873 

1,842 

2,497 

22 

640 

52 

14i,159 

1993 1994 1995 

Quantity ( 1,000 pounds) 2 

816,904 545,548 720,719 

355,476 407,774 514,961 

263,939 322,771 356,775 

10,178 7,798 7,254 

852 1,424 4,610 

961, 166 1,423 429,507 

3,986 1,863 4,690 

87 7 27 

372,621 421, 157 533,048 

Value ( 1,000 dol/ars)8 

96,317 113,538 153,702 

70,304 81,390 69,590 

22,579 31,831 38,072 

639 1 ,393 5,424 

4, 140 3,279 3,238 

211 272 163 

688 321 896 

34 16 20 

194,910 232,039 271,105 

Unit value (per pound) 

1996 

790,182 

597,531 

376,405 

8,414 

5,967 

4,487 

3,532 

19,903 

621,297 

176,991 

76,578 

37,343 

6,729 

4,026 

989 

589 

1,776 

305,021 

Change 

1996 over 

1992 

Percent 

81 

130 

52 

58 

317 

8,236 

6 

51 

130 

149 

87 

56 

265 

93 

4,438 

(8) 

243 

88 

Other processed potatoes . . . $1.29 $0.80 $0.98 $1.18 $1.13 (12) 

Dried potatoes . . . . . . . . . . . . . .39 .41 .42 .75 .89 128 

Potato flour and meal . . . . . . . .45 .42 .40 .45 .46 2 

Frozen processed potatoes . . .27 .29 .28 .30 .30 8 

Other frozen potatoes . . . . . . . .41 .23 .19 .38 .22 (46) 

Potato starches . . . . . . . . . . . . .19 .18 .17 .19 .17 (13) 

Fresh seed potatoes . . . . . . . . .10 .09 .10 .11 .10 3 

Fresh table stock potatoes . . . .09 .09 .11 .1 O .1 O 3 

Average................ .40 .33 .56 .47 .42 5 1 Canadian Export Classification codes 0701.10, 0701.90, 0710.10, 0712.10, 1105.10, 1105.20, 1108.13, 2004.10, 

2005.20. 2 Data converted from kilograms by multiplying by 2.2046 pounds per kilogram. 3 CEC number 2005.20; other potatoes, prepared or preserved, not frozen; includes potato chips. 4 CEC number 2004.1 O; other potatoes, prepared or preserved, frozen; includes frozen french fries. 5 CEC number 1105; also includes flakes, granules and pellets. 6 Data not available in 1996; Canadian code 0712.1 O was discontinued and collapsed into 0712.90 {dried 

vegetables) in 1996. Data estimated by USITC staff using an average of the ratio of dried potatoes to dried vegetables 

in category 0712.90 between 1992 and 1995 and multiplying the 1996 data for 0712.90 by that ratio. 7

1996 total does not match 1996 total ln table 3-22 because 3-22 does not include dried potatoes in that year. 8 Data converted from Canadian dollars to US dollars by dividing by average annual exchange rate, in Canadian 

dollars per U.S. dollar. Average annual exchange rates from IMF International Financial Statistics (rf exchange rate), 

p. 156, Feb. 1997. Average annual exchange rate not available for 1996. Estimated by USITC staff by averaging the 

quarterly rates for 1996. 

Note.-Because of rounding, figures may not add to the totals shown. Unit values and changes calculated using 

unrounded data. 

Source: Compiled from official statistics of Statistics Canada, StatsCan Online database. 

D-14 
APPENDIXE 

Excerpts from Canada Customs Tariff 

Schedule Pertaining to Potatoes and Potato 

Products 

E-1 
SCHIDULEI 

.,. , 

Ullllt - ,..,, ........ - D• 1 ltpl•efQoode "' II.FA CLP. u.a. ....... u.a. ..... -. ,.. ,... 1llrtlr -- .... 

07A1 ,.. .................. muo.ao 00 ..... TNE .. x 77..t• 17b NIA 

"°""' ... Aonrl9 CIFl'A 

,... 

0701.IO.IO CJO -Olw lNE IU3 x 71.lt Tfb KIA 

"°""' llalN ..... onuo , .... ................. 0702.00.10 -For plHHMtg ~ZJlf/tlO x ~ 0.lfftvbt.11 NIA ....... notlilll 

l.n12.ft ... ,. .... IWl1.ft 

10 -°'*'>'·-··--·········-·--·--·-·---·---...... _ KOM 

20 

_,...,,. ........... -··-··-··-····-·····---·····-·-·-.. --···· KQM 

'° CJ!lw •• - •• --··-·····~-·-·-·····----········-- KGM . 

-Olhlt: 

0702.CI0.91 -lmportld ~"°'period. wNah ~-.... 1.1 ..... tut x ·~ NIA NIA 

lrllD "° If ...... ,.,.., ....... bf .... °'"' not ... ,_......°'.,. Oeput)'M~. noc---.aDtal 9""1S..ft. ... ..,, 

ot ...... "'#Ff 12,...,._perkldMdng11et , .. ~ 

..... 10 ~~----··---·--····-··-··-···· .. -··-·-··-···· KOM 

20 -RclfM ·---· .. ··-·-····· .. ----··············-·· .. -············ KOM 

80 OllNlf _, ___ ... _ ....... -·-·-··-·--·---·-.. - ........... KOM 

0702.00.99 --Other "- r:... r:... "'- NIA 

10 -C119n>'---························-----··-······--·-·--· KGM 

20 -Roma·········-··-········-········-·-·--·············· ....... __ , .. KGM 

80 ---cJftt« ................. -.... ··-·······-··· .... -......... - .................. KQM 

01.0I Onlofte. .......................... au• . ... ................... cnoa.10 -OMotw..t ........ 

070S.10.10 00 --OniDnMtl KOM 5.CNitlg x = 0 ...... N'A bulnoc-. ...... twl12.ft. ..... fws1A 

1.ft 

-ONona. ~-tar pra 'lg. . O'IOI. 10.21 00 -lniPO'f't9d a..tng 9&dl perk)d If alllred ~ ordlr of .. KGM f.'1'2Mg x ta~ o.-.eu .,,. ....,or tw Deputy~. mt *IO 12 •nat-- ..... In Sf'/ 12 ll'IONtl pertDd eftdng Stet Merd\ 

-- ..,, 12.ft .... ..,, tt.nu .. 1.1~ 

0'7DS.10.29 ,,. 00 .--Other KOM r... i:... Ftw F,.. NIA 

E-2 
SCHEDULE I 

M•tO 

T.nf Unit M.FJC. CIJll. u.a. ...... ...... .. DMlll'lpllen of ODCMl9 ef -- ,... ,_ T.tfl ....., u.a. -. T ... 

07.tO "Jeflllbl•(waalmder...ud"r•....mtetMllftl 

.... ...,,,,.. ... 

0710.10.00 00 -PutilkUI KOM I.ft ft. , .. , .. NIA 

-~ .................................. : 

0110.11.00 00 __,_ .,,., . ...,...., KOM 12.ft x , ... 1.194 NIA 

011U2.00 -•-,.,,.,..,._ ,,,,_. alw-.> 12.ft 794 t.&94 1.ft M'A 

10 ---BllllJ:t.-·-·-·-----------···· .. ··-.. ··-... ······-····· KGM 

20 -...L.Jrrta. _________ ........ _ ........ - ... ··--· .. -·-·-·· ICOM 

IO ~ .. -...... -----.... ····--···--·-------- KGM 

071G.21 -ot.r 

. 0710.29.10 00 -Chk:kpMI (gllblnzol), "'*11 MMe, ~ peu KGM ft9t Ftw FM F,.. NIA 

(Congo. dltll W IOOI'), __..D P9U. ...... PIM. ~•peuMCl_.,_8Ndl 

· 0710.29.IO 00 -otlwr KOM 12.K 794 1.K 1A NIA 

ID71UO.OO 00 -8plnmll, "-z..mnd tlptMah mcl ~ tplMOb KQM fiw Ftw fiw F,.. NIA .............. , . I 

; 0110.40,00 00 -8weetoom KQM t2.W x tA 1.1 .. NIA l . I 

I 0710.IO -Oa.rftl....._ 

I ono.eo.10 00 -AIP~ KOM 20.K x 2ft 1u .. NIA 

00 -8roccoD and ceutftowera KQM 11.41% x ft NIA NfA I 0710.IJ0.20 

I 

I 0710.80.SO 00 -8ru..le 1prout1 KQM 11.4 .. 1°'9 ft ft NIA 

-emnoa: 

0710.80.41 00 -a.by c.TOll (ot a ~not -.clng 11 om) KGM 1'.-494 x 1.794 10.1 .. WA 

: 0710.80.48 DO -oe.r KGM 123 x 1H 1.594 WA i 

i 0710.IO.IO 00 • tuahroorna KGM 11.-494 10.. ft. ft WA I . 

I . -Other: 

I 0110.eo.•1 . 00 -~ (;labe or CN....), Mnlbm lhocQ. CllCll'9 KQM fiw FNie Ftw r=... NfA IMMM (,,..._), CIMIDaM, dlluft (Cl\ineM OI 

i ....,, .,..'"¥ .... ...,, '*"' ..., dwvllil. 

~ Ollra. t.-Mrtlot (he toftleDNI), """'°'"· 

i tGIMUol, tlpeclot, truflee, wrdOllOU.,.,...., I 

' ' l 

~ 

i 0710.00.89 00 -Olll9f KOU 12.A x 1.l'rt u .. NIA 

E-3 
SCHEDULE I 

,.., Ulllt IU'JL &P. u.a. ...... ....... • a._..., ... 1..::.. ... ,.,. u.a. .... ..... ,... ,.... 

17to.tO.IO 00 ........,_.,,,......,,, KOU ,....,. '°" 1.A ... WA 

t1.11 . ,..,, ............. ......., ,._ ., .. (tN ........ .,, 

.......................................... ---::-.............. ). ................... ..... 1. I r#.1 _ • ., .... 

tnt.1UO 00 -OMoM KGM 1Da ft tft 1.ft WA 

mt.a.M 00 -OlvM KGM ,._ ,_ ,.. ,_ WA 

mt.JO.oo 00 -c.-a ICall ..... x '""' FNe NIA 

mtMM 00 -c ........................ KCIM 11.- x 1.a 1.-. WA 

071t.IO.OO 00 -oa.wg-....;.a.u-flf"t ..... KOU 10.- ft 1.a ., ... WA 

- 01.12 Dfl.aw1Uilllll1a. ....... ..a. .............. 1n 

,...... llutnot lurthlr p;apa8'. 

I 

01tUO.OO 00 -OnloM ICGM a.a ... ,.. "- WA 

aFT'A 

"-

07tl.JIO .................... truflm 

0712.30.10 00 -Murtiroanw KGM ..... x 1"' ,,. NIA 

8PT 

,... 

aFTA 

F... 

0712.30.20 00 -TMllM KCJM m. Ftw F.- F.- NA 

aFTA 

,... 

071t.IO -0 ... ,,......-.; ................... 

0712.I0.10 00 -Tlml;IH\ .... fmljllfwn and~ KQM "-

aFTA 

,,.. ,_ ,_ WA 

,... 

0712.90.20 00 -&WMt oom Med TNE 11.&7 ,_ SUt 11.it WA 

llllrllw .... 

·Ftw 

aFTA 

--

0712.IO.SO 00 -~ whothir ot not cut or alloMI bUt not Uttwr KGM a.a x ,_ '"' NIA ~· CIFTA 

,_ 

0712.SIOAO 00 --Galtlc KON a.a x 1 .. , .. NA 

aFTA 

,._ 

E-4 
,..,, Unit ..., .... G.P • u.a. .. .... ~ 

.... .. DelmtploftelGoodl ., ,.,. 1lldf 1lltfr 1Wtll u.a. ...... Tlrtll 

11.111 FloUr .................................... polllla11 

110l.to.OO 00 -Flour, llllllli _.,.....,. KGM 11.Mlt 

- 1A 'A WA 

110l.20.M 00 _......., ........ ,..... KGM IA '"' ,.,. . , .. NfA 

n.oe Float ............................... ........ ., ............ ,7.1 ............... .............. _ .... .,., .. ., ... ,. ........ Clmptarl. . 

1101.10 -0-llwdfted ........ _ ftlla.laa ......... 

No. 07.11 

1108.10.10 00 -GmrmNI KGM ... 1199 ,_ m. NfA 

CIFTA 

Flw . 1108.10.90 00 -Other Km.I an 5"' '"' , .. NfA 

CFTA 

Flw 

1108.IO -01-. oror...._ • ....,..,._.... No.17.14 

1t08.20.10 00 -Flou: or -vo Of' cu..,. KGM o.~ Frw a.1• "- NIA . CIFTA 

FtW 

1108.20.90 00 -Olher KOU F... "- , .. , .. NIA 

CIFTA 

FrM 

110..SO.OO 00 -Of 1hll pnMlucta of ChJll*r I KGJ.f mi. 

CIFTA Ft. , .. ,.. NIA 

ffM. 

11.m Melt. ......... ftOt ......... 

1101.10 -Not,_... 

-Whoi.: 

1107.10.11 00 -Within llCCl9eJ oommltrnent KQM o~ x Frw Free 

m. "'" . 

1107.10.12 00 -Owl 11C1DN1 CIOONhlitwnt lNE l116 . .C7' x NIA IOC NIA 

-.... narw. 

I -ODw: 

11107.10.81 00 --Within llCmll comm .. 1ient KOU o~ )' 0.1.wlrG 0.11it'kg NfA CIFTA 

I r 

J. .• Ftw 

I 

E-5 
U•I . 

..... ....... GI. u.a. ....... ,.. ....... o-.tplM•fO.. .. U.S. 

... •• ...... ,.,. ,..,.. ,.. ,..,, ,..,. . 

1;or.tOJt2 00 . a., - CICllNnllrW'lt TNE 1171.11 x NIA 11.00 NIA 

Jaww ,.,,,,. 

"" .. 

•R111t II 

-Wholt: .. 

' 1107.aD.11 CIO -WllM- ootnmltmtint KGM °RV x ,... .... NIA 

..... 1107.I0.11 00 °""' w OOft\nlltlMM TNE 11111.17 

... 

x NIA ... NIA 

09-= 

--

11 OT.20.11 CIO -Wlll*t ...._ cu111lltrrt9nt KOM °Jn/ x 0.1111cg cu.- NfA 

F.- . 

1101.ao.n 00. OWr w oommllmeftl TNE '11s.ti x NIA tum NIA ..... ltoM-. 

,,_. 8W"1tln;........_ 

------= , 

u ... u _.._..._.. 

UOl.11.10 -~ aooMt oonmiment 1.'761f11g o....,. 0.2fl1ro 0.2tlll; NIA 

10 Forttod .... --··-·-.. -·-·-.. ---.. ··---·-· ........ -. KOM 

IO 1-Awltd#ffM/.,.. (non a.oco .. __ , .. ,_ .. ___ ._ ........... ICBM 

noe.11Jm --0.. MOMS CIClfllfftllrMf ala.ID x &2.20 S2.20 NIA 

IDww IDww ID"'9 

10 -~ ""°" U.-·----c.~--·--· .. ········--· .. --........... TNE 

ao -ftol~ .... "'°" lootlJ-·-·-·· .. ··-....... -.. - TNE 

11M.12.00 _ ...... (...._> ..... ui-. ,... 0.2"8 0.2#111 WA 

10 _,... fllod.-__________ ·-··-·--·-··-... KCIM 

20 ,.,,,,,..,,. .. ,_, l:laiO ·-----·-·------ KOM 

110l.1LM ,, ........... t1.W ft 1.ft 1.ftt WA 

10 .__I/tel'""°" .. ------···-·-···············-·---··· ......... KQM - IO -For~ .... ,,.,., a.Gd] ...•••••••••..••• ___ .. ,,. ___ KOM . 11 ... , .... 00 ...... (IWl!ft)1"'91l KOU 1~ ,.,.. 0.1Mg ~ NA 

ttl&.11 --oe. ....... 

-~IWdl: 

1108.11.11 '"' CIO -WltHn eooeea OOfNllllnwnc KQM ,.....,. "- Utlkg ,... WA 

E-6 
SCHEDULE I 

~0-2 

..... u.a ....... CLP. u.a. ...... ....... - ~--elo.M9 ., u.a. ..... ....... ,.. .... ....., ,.... T ... 

-·. 

·-o .... CMMrWI tatln "" ... ,._ .......... ._. ... .................... ~ ........ ,..... ... , ................... 2004.'IO.IO 00 _,.. .... KGU ea x ,,. ,,. WA 

:004.IO -oew--••lu ... =ldlllW fll HD 9 'I I 

~004.I0.10 00 -MplAp ICGM ..... x a.a ti.ft NA 

;.oouo.20 00 -lroCCIOland ...... KOM ....... x lft 'lft NIA 

~·»C.IO.IO 00 -aru...-l!P""* KGM 1&.K x ft ... NtA 

--c.rroea: 

&.lCM.I0.41 00 -BabV(ot aillnglh not •••drig 11 mn) KCIM 18.ft x u ... 1.1'1. NIA 

::;;04.IO ... t .00 -ot.r KQM 12.ft x 1A 1..ft NA 

~ »UO.IO 00 -BpNdl KGM Frw Frw ... F,.. NIA 

---otw; 

•04.90.91 00 -Nlatloir.(globeoraw-)....._.-., .... KQM Ftw Ftw FMe Ftw NIA ..... (napeMI).---..,., f 

ollftn (CNMM or~......, -~· • ._. a.I), 

,....., ..., .,..,., ..,..,..... .... ,... (,.,.... ~. ~. plgloft) • ........,. C'Mtornll .. ). 

WTIOOI.._ tama9oe. __.. endliwd""" 

.)4.90.ISI --otw 12.a x 1.K 'C.ft NIA 

. 10 -~ fll'lllW a..v ... ·-··-·--·--·-······ .. ······ .. ·-··· KGM _,,... lllttl earn: 

21 • Pw .. ___ .... _ ........ ___ , .. _,,_, ..... _ .. , __ , .. __ ,_ .... l(QM. 

Z2 :Oiaitrl .. -··----·-········--·--····--····-·-·· ... KGM 

IO Olw---····------.. --·-···--··· .. -·-· .. ·-··· KGU 

~( .. GS °'* •• llllllll IW"lf Mw,._....-• ._.._._ " 

,.......,........, 

.................. ......... ~ .... -- 4 0,.10.00 00 - ...... lftind -.11Mh I KGM to.ft x 1.n. 1.n. NIA 

t ~5..20.10 _,. ....... a.ft x 1"" 1Y. NIA 

10 -~ti> .u.c( ttOt ii •ltlftroon.....,. ....... -... -........ KQM 

ao -Attt~ ........... ,. ____ ·---·-·--··-·-.. ICBM 

to ~------ .... ·--··············· KOM 

. J5.40.00 00 -"-(~ ... ....., KGM 10.fti x 1.ft 1.ft NIA 

{ ,. . 

" 

E-7 
APPENDIXF 

Revenue Canada Export Price and Margin 

of Dumping Report for Potatoes for 

April 20-26, 1997 

F-1 
REV CANADA AD&CV 

CUB 1518 .um 689; POTA'l'OBS 

MOS'l'LY OR. 

RANGE RBPOR 

!CAgF§@m 

PBR. 100# 

RUSSB'l' 

. 005.l.9 5/10# film bag• 4.00-4.50 

·00517 . 10/5# film })&g's 6.00-6.25 

. 00511 SOff carton 60• 

oo·s22 SO# careen 7011 

00516 so# carton 80s 8.00-9.00 

00516 sot carton 90s 7.00-8.00 

00518 sot ca.rt.cm 1008 6.00-7.00 

29402 SO#- carton 10 Oz. a.oo-9.oo 

00510 100i .•&ck 2.50-3.00 

414&6 lot paper/poly 

41467 151 paper~ol.y 41468 20# paper poly 

aomm mm 

29334 S/10# film J:)a9a 7.60-8.00 

29335 8.50-9.00 

29340 

101s1 t11m baw• so# carton, 1 oz min 

29342 100# sack s.oo-s.so 

29341. 50# eaRon size A . 29343 . 50# aack 8ize B 

29336 l.0# paper/poly 

29331 15# paper/poly 

29338 20# paper/poly 

LOllG 11R%f!'S 

29347. 50# carton l.7.00-20.00 

29346 100# sack size A 

29345 SO# sack 

00512 20# paper/po1y 

06337 15# paper/pcly 

00513 10# paper/poly 

33630 iOO# eack, OS #2 •• 00-6.00 

41444 l.00# sack size B 6.00-7.00 

. * * •• ALL VllIETIBS OF POTATOES ARE 

SUBJECT "l'O .ANTI-DtJMPING JJtJ'l'Y 

F-2 

PG2/2 

EXPORT NORMAL DtlMPING 

PRICE VALUE DOTY 

PER. 100# PER 100# ER i.oo 

$4.25 $9.37 $5.12 

$6.13 $10.32 $4.19 

$10.00 $9.39. $0.00 

$10.0D $9.39 $0.00 

$8.SD . $9 .39 $0.89 

$7.50 $9.39 $l..S9 

$6.50 $9.39 $2.U 

$8.50 $9.39 $0.89 

$2.'75 $8.28 $5.53 

$4.25 $8.518 $4..73 

l'-25 $8.71 $4..46 

4.25 $8.39 $4 .14 

$7.'75 $9.37 $1.62. 

$8.15 $10.32 $1.57 

$9.39. 

$5.25 $8.28 $3.03 

$12.00 $9.39 $0.00 

$14.00 $8."70 $0.00 

$7.75 $8.98 $1..23 

$7.75 $8.71 $0.96 

$7.75 $8.39 $0.64 

$18.50 $9.39 $0.00 

$14.00 $8.28 $0.00 

$10.00 $8.70 $0.00 

$8.39 

$8.71 

$8.98 

$5.00 $8.28 $3.28 

$6.SO $8.28 $1.78 
REV ·CANADA Al>&CV 

EXPORT PRICE AND MARGIN OF DUMPING REPORT (VALUES IN US$) 

CJJIS 1511 .&HD G89: PO'f'A~8 **** P.Ol./02 

NWW DATB: April 17, 1997 

REPORT PER.IOI>: April 20 - 26, l.997 

MOSTLY OJt ~T HORIGL DUMPING 

TRS RAHGB R.BPOR. Plll'.eE VALtJE Dtrn' 

NO. PRODUCT DBSCRIPTION PD 100# PEA 100# PER 100i ER. l.00 

•••••• ··-~············--········--········- ••••••• ---······ --····· . ( WXSR1WG!5! 

UL ftltD'na 

00487 5/10# ~ilm ba11 3.50-4.00 $3.75 $9.37 $5.,2 

00504 10/S# tilm bag 5.S0-15.00 $5.75 $10.32 $4..57 

42339 SO# carton 60a 9.00-10.00 $9.50 $9.39 $0.00 

42340 70s 9.00-10.00 $9.SO $9.39 $0.00 

•2341 808 '7.oo-a.oo $1.SO $9.39 $1.89 

42342 908 6.50•'7.00 $15.75 $9.39 $2.64 . 29328 100• $15.00 $9.39 $3.39 

31501 l.00# sack 2.50-3.00 $2.'75 $1.28 $5.53 

40049 1oot sack, OS Mo.2 2.S0-3.00 $2.'75 $8.28 $5.53 

00498 i.o#_paper/poly $3.75 $8.98 $S.23 

40285 15# paper/poly $3.75 $8. 7l. $4.96 

41469 20# paper/ioly $3.75 $1.39 $4.64 

,2271 SO# •&ck, 02: $4.SO $8.70 $4.20 

422'72 50# sack, 10oz $7.00 $8.70 $1..70 

4173S SO# carton,10 oz $1.00 $9.l9 $2.39 

(oRBGON 

ALL VU%STXU 

00488. 5/10# film bag 3.50-4.00 $3.7S $9.37 $5.62 

00505 10/5# £ilm bag 5.50-6.00 $5."75 $10.32 $4 .51 

42343 SO# can:on 60a 9.00-10.00 $9.50 $9.39 $0.00 

42344 70s 9.00-10.00 $9.SO $9.39 $0.00 

42345 80s 1.00-e.oo $7.SO $9.39 $1..89 

42346 90s 6.50-7.00 $6.75 $9.39 $2.64 

31841 10011 $6.00 $S.39 $3.39 

00476 100# aaek 2.50·3.00 $2. 75: $8.28 $5.Sl 

00502 10# paper/poly $3.75 $8.98 $5.23 

00485 15# paper~oly $3.75 $8.71 $4.96 

00482 20# paper poly $3.7S $8.39 $4.64 

31844 50# aack, 6oz $4.SO $8.70 $4.20 

31.846 SO# sack, lOOZ $7.00 $8.70 $1.70 42337 SO# carto.a.,10 oz $7.00 $9.39 $2.39 

1Ii5AHO 

ALL VAJtJ:S'l'IIS 

29320 5/10# rneah baga s.oo-s.so $5.25 $10.Sl $5.26 29323 10/51 meah bags 7.00-7.50 •$7. 25 $11.47 $4.22 29322 S/J.O# film baga 3.50-4.50 $4.00 $9.37 $5.3"7 29321 10/$# film bags S.00-6.00 $5.50 $10.32 $4..82 42347 SO# carton sos 9.00-11.00 $10.0D 19.39 $0.00 42348 708 9~00-11.00 $10.00 9.3t $0.00 42349 80s 8.S0-9.SO $9.00 $9.39 $0.39 423SO 90• 7.50-8.50 $8.00 r~.39 $l..39 00489 10011 6.00-8.00 $7.00 9.39 $2.39 42338 SO# cartozi 10/12 Dz 8.00-10.00 $9.75 :9.39 $0.00 00500 100# sack 2.S0-3.00 $2.75 8.28 $S.SJ 29324 20# paper/poly $4.00 $8.39 $4.39 

30497 15# paper/poly $4.00 $8. 71 $4.71 { 0503 l.O# paper/poly $4.00 $8.98 $4.98 31848 SO# sack, 6 oz min 3.00-3.SO $3.25 $8.70 $5.45• 31850 501 sack, 10 oz. m s.oo-s.so $5.25 $8.70 $3.45 

F-3 
Appendix G 

Technical Modeling Appendix 

G-1 
Technical Modeling Appendix 

As part of the investigation No. 332-3 78 task of examining the competitive conditions affecting 

trade in fresh and processed potato products between the United States and Canada, the US ITC 

is requested to provide information on U.S. production, consumption, prices, and trade, and if 

possible, with regional highlights. An econometric model, and its simulations, of U.S. fresh and 

processed potato markets, trade in such markets, and interactions among these markets aids the 

Commission and Commission staff to accomplish these tasks. 

Commission staff employed VAR econometrics to identify policy-relevant empirical regularities 

and market parameters among the following monthly variables of the potato market's fresh and 

frozen subsectors or markets (parenthetical labels hereafter denote these variables): 

1. U.S.-produced fresh fall table stock potatoes (FRESHSTK). 

2. Shipments ofU.S.-produced table stock potatoes from the Northeast United 

States as defined below (NESHIP). 

3. Shipments of fresh U.S.-produced table stock potatoes from the U.S. areas other 

than the Northeast United States (RESTSHIP). 

· 4. U.S. imports of fresh potatoes (FRESHIMP). 

5. U.S. fresh potato price (PFRESH). 

6. U.S. french fry production (FRYQ). 

7. U.S. french fry price (PFRIES). 

8. U.S. frozen french fry stocks (FRYSTOCK). 

9. U.S. exports of frozen french fries (EXPFRY). 

A number of considerations led to the Commission staffs modeling of these nine monthly 

variables. First, a mix of relevant fresh and frozen french fry (hereafter fry) variables is 

required to address US TR requests for competitive conditions about the fresh potato market, 

frozen potato products market, and the interactions between these two markets. Further, 

Guenthner, Levi, and Lin1 noted that such market subdivision into fresh and processed 

components is a common way to analyze U.S. potato-related markets. How price and quantity 

1 J. Guenthner, A Levi, and B. Lin, "Factors that Affect the Demand for Potato Products in the 

United States," American Potato Journal, vol. 68, No. 9, 1991, p. 570. 

G-2 
shocks in the fresh market affect the froz.en fry market and vice versa are important competitive 

conditions. 

Second, U.S. imports of fresh potatoes (FRESHIMP) were modeled as a source ofNorthAmerican-produced supply consumed in the U.S. market, and not as a trade flow within a U.S. 

import demand/foreign (primarily Canadian) supply framework. This seemed justified because 

of evidence suggesting that comparatively classed U.S. and Canadian fresh potatoes are nearly 

perfect, if not perfect, substitutes in the U.S. market,2 and that fresh U.S. imports account for 

a very minor share, about 3.4 percent in 1995, of U.S. fresh table stock consumption.3 

Consequently, imports of fresh, primarily Canadian, potatoes probably have identical effects 

on U.S. fresh and french fry markets as would identical changes in comparably classed US.-

produced quantities. These conditions are very similar to those which recently led Commission 

staff to similarly treat U.S. imports of primarily Canadian wheat. 4 Therefore, model simulations 

treat a change in imports as changes in North American (primarily Canadian) supply consumed 

in the U.S. market. Third, Commission staff modeled only the french fry portion of the U.S. 

potato product market because french fry production accounts for the preponderance of U.S. 

frozen product production (nearly 90 percent in 19955). · 

Fourth, a reduced form modeling methodology emerged as the most effective and 

straightforward way to model the USTR's requests. For example, the degree to which fresh 

potato imports ultimately influence US. market price and U.S.-produced quantities (i.e., reduced 

form or market-clearing price and quantities) seem the most relevant. A reduced form model 

provides overall market effects or movements in variables such as U.S. quantities and prices, 

and such overall market effects are the most germane to the USTR requests. Yet overall 

import-induced effects may not be obvious from a structural demand/supply framework which 

focuses individually on demand-side and supply-side effects, and which leaves readers, often 

non-economists, with the task of mentally aggregating them into total effects. Consequently, 

Commission staff chose a reduced form model as recently done with wheat and lamb. 6 

Fifth, fresh potato "supply" does not exist as one variable, and hence fresh potato stocks 

(FRESHSTK), fresh potato shipments in the U.S. (NESHIP plus RESTSHIP), and fresh imports 

(FRESHIJ\.1P) as a North American supply source for consumption in the U.S. market, were all 

included to capture most of the reduced form fresh potato quantities produced and consumed. 

2 Based on information obtained from Commission staff field work in Alberta, Manitoba, and 

Washington State on April 7-17, 1997 for Investigation 332-378. 3 This 3. 4 percent figure was calculated by Commission staff from information from two sources. 

The 1995 U.S. fresh potato imports of 45.892 million powids was an official statistic of the 

Department of Commerce. The 1995 U.S. fresh tablestock consumption level of 13 .465 billion 

. pounds was published 1n National Potato Council (NPC), National Potato Council's 1996 Potato 

Statistical Yearbook(l;:nglewood, CO: NPC, 1996), p. 47. 4 USITC, Wheat, Wheat Flour, and Semolina, Investigation No. 22-54, USITC publication no. 

2794, July, 1994, Chapter II and Appendix N. 5 This calculation was done by Commission staff using data published by the American Frozen Food 

Institute (AFFI), Frozen Food Pack Statistics, 1995 (McLean, VA: AFFI, 1996), p. 30. 6 See USITC, Wheat, Chapter II and Appendix N, and Lamb Meat, Chapter 5 and Appendix L. 

G-3 
Sixth, northeast shipments of fresh U.S.-produced fall potatoes were separated out from the 

U.S. total to provide separate NESHIP and RESTSHIP variables because of the request for 

regional highlights, and because investigation evidence suggests that imports and other market 

force variations such as price fluctuations may have more pronounced influences on the 

Northeast fresh potato markets than in other U.S. markets such as the West. 7 

Data Sources 

FRESHSTK are monthly stocks ofU.S.-produced fresh fall table stock potatoes (hereafter, U.S. 

fresh or fresh fall potatoes) in millions of pounds and are published by the U.S. Department of 

Agriculture's (USDA's) Economic Research Service.8 For reasons stated below, the VAR 

model that includes FRESHSTK is modeled in logged levels. FRESHSTK data are only 

reported for December through May of each September-August marketing year, with zero values 

reported for the other months. FRESHSTK levels diminish to zero or near-zero levels rapidly 

after May,9 and since the natural logarithm of a zero value is undefined, Commission staff used 

the "starter log" method of Mosteller and Tukey10 and added a minimal constant to all 

FRESHSTK values (an increment of 1,000 pounds) such that FRESHSTK values were all 

nonzero in order that the variable could be included in the VAR model in logged form. 

Fresh fall U.S.-produced potato shipments (hereafter, fresh potato shipments) are compiled by 

the USDA's Agricultural Marketing Service (AMS) and published and/or available from both 

USDA' s AMS and ERS in millions of pounds. The total fresh U.S. potato shipments were 

published by the USDA's AMS and ERS.11 The Northeast U.S. fresh shipments (NESHIP) 

were obtained from USDA, AMS12 and summed across rail, truck and piggyback shipments in 

Maine, New York (and Long Island), and New Jersey. The RESTSHIP variable representing 

U.S.-produced fall potato shipments for all of the United States except the Northeast was 

calculated as the difference in total shipments less NESHIP. 

7 Transcript of the Commission hearing for investigation No. 332-378: G. Smith., Grower/Shipper 

from Maine, pp. 145-147. 8 USDA, ERS, Potato Facts, Nov., 1996, p. 8. 9 This infonnation was provided to Commission staff in a telephone conversation with staff of the 

USDA's National Agricultural Statistics Service, who compile and provide the FRESHSTK levels to 

the USDA, ERS to publish. March 14, 1996. 1

° F. Mosteller and J. Tukey, Data Analyses and Regression: A Second Course in Statistics 

(Reading, MA: Addison-Wesley Publishing Co., 1977), pp. 89-91. 11 The 1996:1-1996:11 data were received in a facsimile transmission received byUSITC staff from 

USDA, AMS staff on March 14, 1997. The 1991: 1-1995: 12 data were obtained from the USDA, 

AMS, Fresh Fruit and Vegetable Shipments by Commodities, States, and Month, annual issues 

1991-1995. The 1986:1-1990:12 data are published in USDA, ERS, US. Potato Statistics, 1949-

1989, prepared and personally written by G. Lucier, A. Budge, C. Plummer, and C. Spurgeon, 

Statistical Bulletin N6. 829 (Washington DC, Aug. 1991), p. 100. 12 Data were obtained in two facsimile transmissions to Commission staff from USDA, AMS, the 

compiling agency for these shipment data, on March 14 and April 11, 1997. The Northeast shipment 

variable is the sum of shipments of U.S. fall fresh table stock potatoes, in millions of pounds, reported 

for Maine, New Jersey, New York (and Long Island) by truck, piggy back, and rail. Such shipments 

were not reported for other Northeast states such as New Hampshire, Vermont, etc. 

G-4 
Fresh U.S. potato imports and exports, in millions of pounds, are the official statistics of the 

Department of Conunerce. Commission staff was not able to locate a wholesale fresh potato 

price. The best available proxy for monthly U.S. fresh potato price, PFRESH in the model, is 

the consumer price index (CPI), of all urban consumers, for fresh potatoes available from the 

Department of Labor, Bureau of Labor Statistics (Labor, BLS).13 Labor, BLS14 also provided 

a U.S. average french fry price (in dollars per pound). 

U.S. :french :fiy production and stocks data, in millions of pounds, are the confidential monthly 

data provided to Commission staff by the Frozen Potato Products Institute (FPPI). 15 To the 

knowledge of Commission staff and the FPPI, there are no known, publicly available monthly 

data on U.S. levels of frozen french fry production and inventories (stocks). This report does · 

not provide any of these confidential data, although it uses aggregate coefficients and 

parameters derived from econometric estimations using such confidential data. That such data 

were provided only for the 1986: 1-1996: 11 period is the reason for limiting the data with which 

the model was specified to this period, and, for reasons stated below, the estimation period to 

1987:1-1996:11. 

Choice of the VAR Method, the Estimated VAR Model, and 

Adequacy of Specification 

A VAR Model in logged levels vs. A Vector Error-Correction Model of a 

Cointegrated System 

When a vector system of individually nonstationary variables move in tandem in a stationary 

manner, variables are said to be cointegrated, and rather than follow out-moded univariate 

methods and model the system in a mis-specified way as a VAR model in differenced levels, one 

would appropriately model the system as a maximum likelihood estimation of a vector error 

correction (VEC) model.16 However, should the vector elements each be stationary, then the 

13 The l 986: 1-1996:8 monthly data for the consumer price index (CPI), all urban consumers, U.S. 

city average for fresh potatoes were obtained from Labor, BLS' survey, Consumer Price Indexes for 

the Urban Population, on the LAB STAT Database. The 1996:9-1996: 11 values for this CPI were 

provided to Commission staff in a telephone communication with Labor, BLS staff on March 31, 

1997. 

14 The 1986: 1-1996 :8 monthly data for the average :french fiy price, U.S. City average in dollars per 

pound, were available from Labor/BLS' survey, Average Prices for Foods and Fuel for the U.S. and 

Selected Areas, on theLABSTAT data base. The 1996:9-1996:11 dataforthis averagefrenchfry 

price were provided to Commission staff in a telephone communication with Labor, BLS staff on 

January 17, 1997. 15 These confidential monthly data for 1986: 1-1996: 11 were obtained from a series of unpublished 

and confidential annual reports compiled by, and provided to Commission staff by, the FPPI. 16 S. Johansen and K Juselius, "Maximum Likelihood and Inferences on Cointegra.tion: With 

Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, vol. 52, 1990, 

(continued ... ) 

G-5 
VAR may be appropriately estimated as a VAR in levels. 17 Cointegration does not appear to 

be an issue here, and Commission staff deemed modeling the above 9 variables as a VAR model 

in logged levels as appropriate. This is because evidence from unit root tests conducted on the 

logged variables generally suggested that the nine time series were stationary in logged levels. 18 

The VAR was estimated in logged levels because shocks to and impulse responses in the logged 

variables are approximate proportional changes in the nonlogged values, and approximate 

percent changes when multiplied by 100.19 

The Estimated VAR Model 

AV AR model is a data-driven one. Using methods detailed below, Commission staff estimated 

amonthlyVARmodelof FRESHSTK, NESFDP, RESTSHIP, FRESIIlMP, PFRESH, FRYQ, 

PFRIES, FRYSTOCl<, and EXPFRY in logged levels. By a VAR model's definition, each of 

16( ••• continued) 

pp. 169-210. 

17 See D. Hendry, "Econometric Modelling with Cointegrated Variables: An Overview," Oxford 

Journal of Economics and Statistics, vol. 48, 1986, pp. 201-212, andR. Babula, F. Ruppel, andD. 

Bessler, "U.S. Com Exports: The Role of the Exchange Rate," Agricultural Economics, vol. 13, 

1995,pp. 75-88. 18 Dickey-Fuller (or DF) 't, tests for unit roots (i.e., nonstationarity) were conducted on the logged 

levels, and generated the parenthetical DF test statistics, as follows: FRESHSTK (-4.9), NESIIlP 

(-6.5), RESTSHIP (-10.4), EXPFRY (-3.4), FRESI-IlMP (-5.0), PFRESH (-3.6), FRYQ (-9.0); 

FRYSTOCK (-4.9); PFRIES (-2.8). If such test statistics are negative and have absolute values equal 

to or above 3.45, then evidence at the 95 significance level is sufficient to reject the null hypothesis of 

nonstationarity. Evidence was sufficient to reject the null hypothesis of nonstationarity for 

FRESHSTK, NESHIP, RESTSHlP, FRESHIMP, PFRESH, FRYQ, and FRYSTOCK. In staff's 

opinion, evidence was close enough to reject the null hypothesis of nonstationarity for EXPFR Y, 

especially when Sargan-Barghava' s Durbin-Watson-based value test for unit roots generated a test 

value of 0.32 which exceeded the 0.26 critical value needed to reject the null ofnonstationarity. 

PFRIES' DF test value of -2.8 suggests that the variable may be nonstationary, although the SarganBhargava value of 0.24 nearly equals the critical value needed to reject nonstationarity. Commission 

staff concluded that PFRIES was probably stationary, because its inclusion in logged levels did not 

inject nonstationarities into the PFRIES VAR equation or the other VAR equations: as seen later, all 

VAR equations, including the PFRIBS equation, generated residuals that were stationary. The 

Sargan-Bhargava test is detailed in J. Sargan and A. Bhargava, "Testing Residuals from Least 

Squares Regression for Being Generated by the Gaussian Random Walk," Econometrica, vol. 51 

(1983), pp. 153-174. In addition, this test evidence concerning PFRIES and EXPFRY suggested that 

both series may be stationary but close to having a unit root. In such cases, it is well known thii.t when 

dealing with finite samples, the DF tests for unit roots are often biased toward accepting the DF null 

hypothesis ofnonstationarity, as explained in R. Harris, Using Contegration Analysis in 

Econometric Modeling (New York: Prentice Hall, 1995), pp. 27-28. In light of such insights, 

treating EXPFR Y and PERIES as stationary seemed reasonable. 19 R. Babula, P. Colling, and G. Gajewski, "Dynamic Impacts of Rising Lumber Prices on HousingRelated Prices," Agribusiness: An International Journal, vol. 10, No. 5, Sept/Oct., 1994, pp. 373-

388. 

G-6 
the nine endogenous variables was posited a function of a specified number of lags (here, 4 )

20, 

of not only itself, but of the other eight endogenous variables as well. Fallowing Bessler' s

21 

reasoning, the VAR model is a monthly system of nine endogenous variables, where each such 

variable is permitted to influence all other endogenous variables through lags. 

Zepp, Plummer, and McLaughlin22, Goodwin et. al.,23 and Guenthner, Levi, and Lin24 note a 

number of trending forces in the U.S. potato industry, including, among others, increasing total 

(fresh plus frozen) potato consumption; increasing yields; and trends towards larger potato 

farms. Consequently, Commission staff included a time trend in each of the nine VAR 

equations. Following Miranda and Glauber25

, and Goodwin et. al.26, Commission staff 

recognized the importance and appropriateness of including 11 seasonal indicator variables to 

account for the high degrees of seasonal influences affecting the U.S. fresh potato and frozen 

fry markets. The above specified model was appropriately estimated with monthly 1987:1-

1996: 11 data because Commission staff set-aside the 12 monthly 1986 observations for the 

Tiao-Box lag search, and because data after November 1996 were not available when staff 

commenced the modeling analysis. Fallowing Commission staff procedure in recent 

investigations,27 the four-order lag VAR model of nine variables was appropriately estimated 

with ordinary least squares (OLS) using Doan's Regression Analysis of Time Series (RATS) 

software. 28 

Adequacy of Specification 

20 Following Babula, Ruppel, and Bessler, Conunission staff employed Tiao and Box's likelihood 

ratio method of lag selection, and these likelihood ratio tests suggested a four-lag structure. See the 

method detailed in.G. Tiao and G. Box, "Modeling Multiple Time Series: With Applications," 

Journal of the American Statistical Association, vol. 76, 1981, pp. 802-816. For the cited 

application, see R. Babula, F. Ruppel, and D. Bessler, "U.S. Com Exports: The Role of the Exchange 

Rate," Agricultural Economics, vol. 13, 1995, pp. 75-88. Further, this technique was successfully 

used by Conunission staff in specifying the VAR econometric models of two recent investigations: 

USITC, Lamb Meat: Competitive Conditions Affecting the U.S. and Foreign Lamb Industries, 

Investigation No. 332-357, U.S. publication 2915, August 1995, and Wheat, USITC publication 

2794, Chapter 5 and Appendix N. 21 D. Bessler, "Analysis of Dynamic Economic Relationships: An Application to the U.S. Hog 

·Market," Canadian Journal of Agricultural Economics, vol. 66, No. 25, 1984, pp. 109-124. 22 G. Zepp, C. Phuruner, and B. McLaughlin, "Potatoes: A Comparison ofCanada-U.S. Structure," 

Canadian Journal of Agricultural Economics, 1995 special Cun-numbered) issue, pp. 165-176. 23 Goodwin and others, "Factors Affecting Potato Price," p. 233-243. 24 Guenthner, Levi, and Lin, "Demand for Potato Products," p. 569. 25 M. Miranda and J. Glauber, "Intraseasonal Demand for Fall Potatoes Under Rational 

Expectations," American Journal of Agricultural Economics, vol. 75, Feb. 1993, pp. 104-112. 26 Goodwin and others, "Factors Affecting Potato Price," pp. 233-243. 27 See USITC, Lamb Meat, USITC publication 2915, and Wheat, USITC publication 2794. 28 T. Doan, Regression Analysis of Time Series (RATS), User's Manual, Version 3.11 (Evanston, 

IL: VAR Econometrics, 1990). See Bessler, "Dynamic Economic Effects," for appropriateness of 

estimating VAR models with OLS. 

G-7 
Following Babula, Colling, and Gajewski,29Commission staff ran three diagnostic tests on each 

of the VAR equations' estimated residuals in order to discern whether evidence suggested 

adequacy of specification: Dickey-Fuller (DF) 'tμ test, DF 't, test, and the Ljung-Box 

portmanteau test. Generally, stationarity of the VAR model's equations, reflected in stationary 

residual estimates (hereafter, residuals), is a reflection that the relations have been adequately 

specified by econometric standards established in the literature. 

Fuller3° and Dickey and Fuller31 developed the well-known tests for unit roots in time series 

processes: the DF 'tμ and 't, tests. The t-like values on the nondifferenced regressors were 

negative and had absolute values of at least 10. 0 for all equation residuals and both DF tests. 32 

Since these 18 DF test statistics were all negative and had absolute values which exceeded those 

of the critical values published in Hamilton33 (-3.51 for the 'tμ test and -4.04 for the 't, test), 

then evidence at the I-percent significance level is sufficient to reject the null hypothesis that 

the residuals were nonstationary for each of the 9 equations. The evidence generated by both 

DF tests on the residuals of each of the nine VAR equations suggests that the relations were 

adequately specified. 

Harvey34 and Granger and Newboid35 note that the Ljung-Box portmanteau value may be 

calculated from an econometrically estimated equation's residuals and used to test the null 

hypothesis that the equation was adequately specified. The Ljung-Box values ranged from 21. 7 

to 45.5 for eight of the VAR equations-all equations except the FRESHSTK equation. These 

eight Ljung-Box values all fell below the critical chi-square value of 50.9 (30 degrees of 

freedom) published in Kmenta,36 suggesting that evidence at the I-percent significance level is 

insufficient to reject the null hypothesis of model adequacy for these eight equations. 

The FRESHSTK equation's residuals generated a 78.3 Ljung-Box value, which taken of itself, 

would suggest that evidence is sufficient to reject the null hypothesis of model adequacy. Yet 

Granger and Newbold37 caution against the exclusive reliance on the Ljung-Box portmanteau 

as a test of model adequacy, and this accounts for the Commission staff's decision to conduct 

all three tests on each equation's residuals. Taken collectively, most (2) of the three tests for 

model adequacy conducted on the FRESHSTK residuals suggested evidence of such adequacy, 

which led to the staff conclusion that FRESHSTK was probably adequately specified. 

29 Babula, Colling, and Gajewski, "Dynamic hnpacts of Lumber Prices," pp. 373-388. 30 W. Fuller. Introduction to Statistical Time Series (New York, NY: John Wiley and Sons, 1976). 31 D. Dickey and W. Fuller, "Distribution of the Estimates for Autoregressive Time Series with a 

Unit Root," Journal of the AmericaJZ Statistical Association, vol. 7 4, 1979, pp. 427-431. 32 Full details on the tests' procedures are found in D. Dickey and W. Fuller, "Estimates with a Unit 

Root," pp. 427-431. 33 J. Hamilton. Time Series Analysis (Princeton, NJ: Princeton University Press, 1994). 34 A Harvey. The Econometric Analysis of Time Series, (Cambridge, MA: :MIT Press, 1990), pp. 

212-213. 

35 C. Granger and P. Newbold. Forecasting Economic Time Series, (New York: Academic Press, 

1986), pp. 99-101. 36 J. Kmenta. Elements of Econometrics (New York: Macmillan Publishing Company, 1971 ), p. 

622. 

37 Granger and Newbold, Forecasting, p. 100. 

G-8 
Most evidence generated from the two Dickey-Fuller tests and the Ljung-Box portmanteau test 

conducted on each of the 9 sets of VAR equation residuals suggests that the VAR equations 

have been adequately specified. Commission staff concludes that the VAR model is appropriate 

to simulate for evidence concerning the competitive conditions of the U.S. fresh and frozen fry 

markets. 

A number of studies (Richards, Kagan, and Gao,38 Zepp, Plummer, and McLaughlin,39 

Goodwin et al.,40 among others) point to various changes in the U.S. potato markets: changes 

in production sector organization, changing per capita consumption levels, and evolving changes 

in tastes and preferences, among other developments. These changes could conceivably have 

generated structural change over the 1987-1997 monthly sample, and could have consequently 

rendered the model with time-varying parameters or "structural change," among fundamental 

modeled relationships. 

For an econometric (linear regression) model of a market, "structural change" or "timevariance" of parameters occurs when events, such as those just cited, act to fundamentally 

change modeled market relationships over the sample period. Given structural change, the 

regression parameter estimates are not constant and hence do not validly characterize the 

modeled potato market relationships over the sample. 41 Existence of structural change usually 

requires division of the sample into subsamples at the junctures of the change' s occurrence, and 

the re-estimation of the model separately for the subperiods. 42 If such literature-noted trends 

and changes are not adequately strong to have induced structural change, then it is appropriate 

to estimate over the entire sample period and proceed as if parameter estimates are timeinvariant. 43 

Following procedures in recent research,44 the above 9-variable VAR is estimated over the 

1987:1-1996:11 sample period, and recursive residuals were generated for each equation and 

used to implement, for each of the 9 VAR equations, the data-analytic CUSUM and CUSUMsquared plot tests for structural change summarized in Harvey.45 Plots were not included here 

because of space constraints. At the points where the CUSUM and/or CUSUM-squared plots 

discerned a possibility of structural change, a Chow test for structural change was conducted 

38 Richards, Kagan, and Gao, "Factors in Potato Demand," pp. 52-66. 39 Zepp, Plummer, and McLaughlin, "Potatoes: Canada-U.S. Structure." 40 Goodwin and others, "Factors Affecting Potato Price," pp. 233-243. 41 R. Babula, "Economic Effects of a Countervailing Duty Order on the U.S. Lamb Meat Industry," 

Agricultural and Resource Economics Review, vol. 26, No. 1 (Apr. 1997), pp. 90-91. 42 See Harvey, Econometric Analysis, pp. 163-164, and B. Larue and R. Babula, "Evolving 

.Dynamic Relationships Between the Money Supply and Food-Based Prices in Canada and the United 

States," Canadian Journal of Agricultural Economics, vol. 42 (1994), pp. 163-164. 43 Larue and Babula, "Evolving Dynamic Relationships." 44 See R. Babula, F. Ruppel, and D. Bessler, "U.S. Com Exports: The Role of the Exchange Rate," 

Agricultural Economics, vol. 13 (1995), pp. 75-88, and B. Larue and R. Babula, "Evolving Dynamic 

Relationships." 

45 A. Harvey. The Econometric Analysis of Time Series (Cambridge, MA: The MIT Press, 1990). 

G-9 
at each point. And following recent research46 and recent Commission staff procedure, 47 

Commission staff concluded that evidence was insufficient to suggest structural change when 

the F-tests failed to reject the null hypothesis of no structural change at the points of possible 

change suggested by the CUSUM and CUSUM-squared tests. Evidence at the I-percent 

significance level generated by Chow F-tests for the following equations and at the following 

junctures suggested by the CUSUM and CUSUM-squared tests was insufficient in all cases to 

reject the null hypothesis of no structural change: FRESHIMP at October 1995; FRESHSTK 

at June, 1996; RESTSHIP at December 1991; NESHIP at March 1993 and August 1995; 

PFRESH at March 1993; FRYQ at July 1991 and November 1994; and EXPFRY at November 

1995. 

The nine VAR equations may have contemporaneously correlated innovations or residuals. 

Failure to correct for contemporaneously correlated current errors will produce impulse 

responses not representative of historical patterns. 48 A Choleski decomposition resolves the 

problem of contemporaneously correlated current innovations. 49 A Choleski decomposition 

was imposed on the VAR for each of the four simulations. 

Each of the four Choleski decomposition requires the imposition of an arbitrary Wold causal 

ordering among the current values of the dependent variables. 5

° Following established VAR 

modeling procedures, the shock variable was placed atop each ordering, with the remaining 

variables ordered in accordance with theory. 51 The following orderings were chosen: 

Simulation 1 (shock in FRESHSTK): FRESHSTK, RESTSHIP, NESHIP, 

FRESH!~, PFRESH, PFRIES, FRYQ, FRYSTOCK, EXPFRY. 

Simulation 2 (shock in PFRESH): PFRESH, FRESHIMP, FRESHSTK, 

RESTSIIlP, NESHIP, PFRIES, FRYSTOCK, FRYQ, EXPFRY. 

Simulation 3 (shock in FRYQJ: FRYQ, PFRIES, FRYSTOCK, EXPFRY, 

FRESHSTK, REST SHIP, NESHIP, PFRESH, FRESHIMP. 

Simulation 4 (shock in FRESH/MP): FRESHIMP, FRESHSTK, NESHIP~ 

RESTSHIP, PFRESH, PFRIES, FRYQ, FRYSTOCK, EXPFRY. 

46 Babula, "Economic Effects of a Countervailing Duty Order," pp. 82-93. See also See Babula, 

Ruppel and Bessler, "The Role of the Exchange Rate," pp. 75-88, and Larue and Babula, "Evolving 

Dynamic Relationships." 47 USITC, Economic Effects of Antidumping and Countervailing Duty Orders and Suspension 

Agreements, Investigation No. 332-344, Chapter 8, Lamb Meat, and Appendix D. 48 C. Sims, "Macroeconomics and Reality," Econometrica, vol. 48 (1980), pp. 1-48. 49 Ibid. 50 D. Bessler, "Dynamic Economic Relationships." 51 See Sims, "Macroeconomics," and Bessler, "Dynamic Economic Relationships." 

G-10