Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Here's why you can't find frozen fries, while U.S. farmers are sitting on tons of potatoes

Stock MarketsApr 24, 2020 11:10
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Frozen french fries are seen on sale at supermarket in Falls Church, Virginia

By Lisa Baertlein

(Reuters) - Shopper Lexie Mayewski is having a hard time finding frozen french fries in Washington, D.C.-area supermarkets in the wake of coronavirus-fueled stockpiling.

On the other side of the country, Washington state farmer Mike Pink is weighing whether to plow under 30 tons of potatoes worth millions of dollars that would have been turned into french fries for fast-food chains like McDonald's Corp (N:MCD), Wendy's Co (O:WEN) and Chick-fil-A.

Their incongruent experiences underscore how America's highly specialized and inflexible retail and foodservice supply chains are contributing to food shortages and waste in the wake of demand disruptions from the COVID-19 pandemic.

Frozen french fry sales at grocery stores spiked 78.6% for the four-week period ended April 4, according to Nielsen data, resulting in shortages at many U.S. supermarkets.

Mayewski, 25, a construction manager, has not seen frozen fries at the Giant Food (AS:AD) or Safeway (N:ABS) supermarkets near her Maryland home.

"There's not a single french fry to be found," said Mayewski, whose supply of frozen shoestring and waffle fries was running low.

Frozen fries are an ideal pandemic staple - offering comfort, convenience and long-shelf life for U.S. families accustomed to fast-food meals and school cafeteria lunches.

The main hurdle is the extra-large size of foodservice packages that are meant for kitchens that turn out dozens if not hundreds of meals each day.

"Think Costco, but bigger," said International Foodservice Distributors Association (IFDA) CEO Mark Allen, referring to the oversized products sold at warehouse retailer Costco Wholesale Corp (O:COST).

Nondescript foodservice packaging also does not have the ingredient and nutrition labels required by the U.S. Food and Drug Administration (FDA) or the bar codes needed in grocery checkout lanes.

While the FDA has said it would temporarily relax labeling rules and protect consumers with food allergies, foodservice suppliers still face significant hurdles switching to retail-friendly formats. New equipment for packing and labeling product is expensive, and plastic containers are in short supply.

FREEZERS FULL OF FRIES

Kraft Heinz Co's (O:KHC) Ore-Ida, the main producer of frozen fries for supermarkets, is rushing to bolster supplies.

"Our Ore-Ida factory is running at full capacity to keep up with demand," Kraft spokesman Michael Mullen said.

At the same time, major fast-food french fry suppliers McCain Foods, J.R. Simplot Co and Lamb Weston Holdings Inc (N:LW) are canceling potato orders.

Fast-food suppliers' freezers are full of frozen fries, hash browns and potato skins and their storage sheds are packed with potatoes, farmers and experts told Reuters.

Their demand is down because four in 10 U.S. restaurants are closed, as are schools, hotels and workplaces. Fast-food chains are doing drive-through only, and with no set date for lifting stay-at-home orders, the outlook for the foodservice industry is dim.

Lamb Weston, McCain and Simplot - which supply the lion's share of McDonald's french fries - did not respond to requests for comment. Lamb Weston also does retail sales.

Pink, who farms near Pasco, Washington, said fast-food french fry suppliers canceled orders for 1,000 acres of potatoes. He has already invested $2.5 million on those crops. Each acre produces roughly 30 tons of potatoes and getting them ready for sale would cost Pink another $1.5 million. He may have to plow the potatoes under - adding to food destruction in the U.S. produce and dairy sectors.

"Do I continue to invest or do I stop and try to minimize my loss?" asked Pink. "It's just devastating."

The National Potato Council said there are $750 million to$1.3 billion in potatoes and potato products clogged in the pipeline.

"It's a huge challenge. Nobody was prepared. Nobody could imagine that this could happen," Rabobank food analyst JP Frossard said.

Grocery consultants and retailers told Reuters that foodservice products like toilet paper, cleaning supplies and meat have found their way into the retail channel, while many others have not.

Compounding problems, most foodservice operators do not have connections at supermarkets - where adding a new product can take several months.

"It would be a Herculean task," Allen said of rerouting supplies. And with all the uncertainty around demand, he added, "the investment would be tough to justify."

Here's why you can't find frozen fries, while U.S. farmers are sitting on tons of potatoes
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email