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Potato supply chain contributes over 100 billion dollar to U.S. economy

March 09, 2023

The total economic contribution of the U.S. potato sector in 2021 is estimated to be 100.9 billion dollar, of which farm production alone accounts for 10.8 billion dollar. This is one of the main conclusions from an analysis carried out by economists and researchers at Michigan State University, marking the first time any organization has measured and reported on the national economic impact of ‘America’s favorite vegetable’, underlines incoming president of the National Potato Council (NPC) RJ Andrus.

In their report ‘Spud Nation: Measuring the Economic Significance of the U.S. Potato Industry’ the economists and researchers assess the national economic contribution of the sector and analyze the supply chain for potatoes and the level of exports and imports of potatoes and potato products. During a virtual media roundtable NPC CEO Kam Quarles explains that with this report the NPC aims to showcase the importance of the potato industry, by creating understanding of its role in the nation’s economy.

Essential for national prosperity

‘This report highlights impact on society in every part of the country’, Quarles states, adding that the report brings in real clear focus that potatoes are an essential component of the country’s prosperity as a nation, benefitting the economy in an essential way. ‘We are thrilled to be such an important piece of the United States. We are very proud that America is a spud nation, and that America’s favorite vegetable is clearly contributing to this country’, the CEO concludes. Estimates suggest that 37.2 billion dollar of the 100.9 billion dollar contribution is direct economic activity resulting from growing, processing, wholesaling, and retailing potatoes and potato products. The remaining 63.7 billion dollar is made up of indirect activity from affected industries and expenditures from household consumption that can be traced back to activity generated by the potato sector.

Employment generated

Total employment generated by the potato sector is estimated to be in excess of 714,000 domestic jobs, of which approximately 405,000 are directly employed along the potato supply chain and more than 309,000 are employed in related industries or other businesses. These jobs command about 34.1 billion dollar in wages and salaries per year and contribute 53.5 billion dollar to the annual gross domestic product (GDP) of the United States. To place these findings into context, the report mentions that about 0.4 percent of the U.S. domestic workforce is supported by the domestic potato industry supply chain.

World’s fifth largest producer

The potato industry entails a wide spectrum of activity, from agricultural production, through wholesaling and processing and distribution ending with consumer purchases of final products through retail channels or through food service providers. Farms and businesses producing, processing, and distributing potato and potato products can be found in all parts of the U.S. and accordingly, the potato industry is present throughout the nation. The U.S. is the world’s fifth largest producer, and potatoes are the number one consumed vegetable by U.S. consumers. The largest producing state of potatoes in the U.S. is Idaho, followed by Washington. Other major producing states include Wisconsin, Oregon, North Dakota, Colorado, Minnesota, Maine, Michigan, Nebraska and California. States tend to specialize in the variety categories grown, though all varieties are viable in every state. Many, if not most, of the potatoes grown in the U.S. are produced under contract, the report states. Contracts are most pervasive for processing potatoes, especially for potatoes grown for fries and chips.

Foreign trade important outlet

More than two thirds of the potatoes sold in the U.S. were used for processing in 2018. One quarter of those were used for sales to households; the rest were allocated to other uses. Food service is an especially important outlet for potatoes primarily in the form of fries. While most potatoes grown in the U.S. are consumed domestically, foreign trade is an important outlet for potatoes. Approximately 20 percent of the potatoes grown or processed in the U.S. are exported either as fresh or processed potatoes, though the U.S. both imports and exports fresh, processed and products derived from potatoes. Canada and Mexico are major markets for U.S. fresh and dehydrated potatoes and Japan and South Korea are major markets for U.S. frozen potatoes. Canada is a leading source of imports for potatoes used in processing. These Canadian imported potatoes may be subsequently exported as processed potatoes or in potatoderived products.


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