1 Changes on Consumption
Structure of Domestic Sweet Potato Products
1.1 Obvious Increase on the
Postharvest Processing
Currently, 70%-80% of China’s sweet
potatoes have been processed into starch products, including starch, starch
vermicelli, whole starch flour, and dried sweet potatoes. The new mode for
developing the industrialization of sweet potato industry is “rural cooperative
+ base + enterprises”. The specialized households are able to process 500,000
to 1 million kilograms sweet potatoes within about 30 days, among which the net
profits could amount to RMB50,000 to 100,000.
In recent years, China has strengthened the
research and promotion on the processing machinery and techniques of potato
starch, which, as a result, propelled the development of starch processing
industry and the economy of potato area. At present, the annual consumption of
nationwide starch processing is about 35 million tonnes.
1.2 Urban Residents rather than those in
Rural Areas turned to Major Consumers
In the era when the sweet potato was the
staple food, 80% sweet potatoes were consumed by farmers, while currently, the
fresh sweet potatoes, with the consumption increased year by year, turned to be
a healthy accessary food that popularized among urban residents.
The consumption of fresh sweet potatoes in
South China is higher than that in North China, and a phenomenon of
South-to-North sweet potato transfer occurred during the anti-season. For the
sweet potatoes cultivated by farmer, 60.04% directly entered into the market,
33.83%, for home processing; 3.5%, reserved as seeds; while the
self-consumption, fodder, and rotten ones only accounted for about 1%
respectively.
From the nationwide, consumption of fresh
sweet potato accounted for about 12%, with the consideration that the rural
residents consuming the fresh sweet potatoes have hugely increased, the actual
consumption proportion of fresh sweet potato may has already amounted to 30%,
with the total consumption of 20 million tonnes.
In 2013, the per capita consumption of
potato products in China was 2.3 kilograms. China has not only a large demand
on the quantity of sweet potatoes, but also on its varieties. With the emerging
of aged society, more and more people that focused on the healthy-eating-habit
would turn into the target customers of fresh potatoes.
1.3 Proportion of Fodder has Reduced
In the past, 30%-50% of sweet potatoes were
used as fodder for pig breeding. In recent years, the figure has obviously
reduced. The primary cause lied in structural adjustment of breeding industry
in rural areas, among which the individual breeding was replaced by large-scale
breeding. Although the potato residues of sweet potato starch processing have
still been used as fodder, the corn was applied as main feed. Currently, the
fodder consumption of fresh sweet potato was about 7 million tonnes.
2 Trading Channels for Domestic Sweet
Potato Market
2.1 Farmers --- Consumers
Farmers cultivate the sweet potatoes and
then directly sell those products to consumers. This is a usual deal that
happened in local farmer's market, accounting for about 30%.
2.2 Farmers --- Processing of Family
Workshop --- (Small Retailer) --- Consumers
Farmers process the sweet potatoes that
cultivate by themselves through the family workshop and then sell them to small
retailers or the farmer’s market. This is very common among the main producing
areas, especially the concentration areas of processing, of sweet potatoes,
accounting for about 20%.
2.3 Farmers --- Processing Enterprises ---
Retailers --- Consumers
The retailers refer to terminal
supermarkets, country markets, and individual retailers. The farmers sell the
sweet potatoes to processing enterprises that process the products and then sell
them to customers through retailers. This order-oriented sale is the main form
for sweet potato’s circulation at the moment, accounting for about 35%.
2.4 Farmers --- Wholesalers --- Processing
Enterprises --- Retailers --- Consumers
In this form, some enterprises help to
organize the raw materials for large leading enterprises, as the demand from
the large enterprises is too huge to be satisfied by its own base, which
accounts for about 15%. For a mature market, driving the industry by leading
enterprises would be the tendency for further development.
3 Transaction Price of Domestic Fresh Sweet
Potato and Its Components
According to the investigation and study
materials of national sweet potato industry technology structure, the annual
average price of sweet potato is RMB1.93/kg, higher than that of 2012
(RMB1.8/kg). The peak of the price was RMB2.54/kg on February, and the bottom
occurred on October, which was RMB1.49/kg. Analyzing from the structure of
sales volume, the sales peak of sweet potatoes, on nationwide, occurs on
November and December, among which the price in November is the highest, taking
up 30.4% of a year.
According to United Nations Food and
Agricultural Organization (UNFAO), in 2009, China’s sweet potato price was
USD263.5/t, which was 7.7 times compared with that of 1991 (USD34.2/t). The
price slightly decreased after 2010, for example, in 2012, it was USD 311.6/t.
3.1 Domestic Price of Sweet Potato Starch
and Its Influence Factors
Generally, with the supply exceeding
demand, the domestic demand is weakening in recent years. Many of the low-end
and small-size starch processing enterprises were shut down due to the market
constraint and the intensified environmental inspections. The productions of
wet sweet potato starch were mainly in October and December, with the
production cycle of about 40 days.
The low-priced cassava has an obvious
substitution effect on sweet potato starch, and it is usually applied by some
low-end starch vermicelli processing enterprises to replace the relatively
high-priced sweet potato starch.
3.2 Influencing Factors of Domestic Sweet
Potato Starch Market in 2014
3.2.1 Cost Factor
The starch output ratio of fresh sweet
potato, which mainly related to the starch ratio of the potato variety, is
1:5.5 to 1:6. The market price of freshly produced sweet potato has adjusted
around September and October each year, and the purchase price of raw
materials, with the rise and fall around RMB0.2/kg, and as a result the
processing price would fluctuate in a range of RMB1100-1200/t. The cost of raw
material of sweet potato starch is about RMB500/t, while the market price of
dried processing starch is about RMB6000/t, from which we can easily get to
know that the net profit is about RMB1000/t. The price of the refined
processing starch is about RMB6,500-7,000/t, with the net profit of RMB1,500-2,000/t.
3.2.2 Supply and Demand Factor
The supply season of starch market is
around mid-September to early December, while the demand from the downstream
enterprises lie on December to February of the next year. Generally, the market
is very active in the purchasing season, during which the producers tend to
push the price upward; while during later period since the starch processing
enterprises start operation, the price would gradually decline with the
increasing inventory pressure and fierce competition among the producers.
3.2.3 Capital Factor
The enterprise has a strong tendency in increasing
the quotation. But, there are various factors that may cause a falling price in
starch market, including the loan repaying, payment of wages, and the
expenditures on water and electricity in December, inventory pressure during
May to June, and capital pressure on the raw material purchasing during the
production season of August and September.
3.2.4 Substitution Factor
Sweet potato starch is mainly used as the
raw material for processing starch vermicelli. The products of mid-and-low-end
applied cassava and corn starch to replace the sweet potato starch, while the
high-end products are influenced by the price of potato starch.
3.2.5 Environmental Protection Factor
In recent years, the environmental
protection administration has compulsively shut those enterprises that caused
environmental pollution during the manufacturing process down, which, with no
doubt, would impose restrictions on the low-end sweet potato starch processing
industry.
3.3 Major Competing factors
Corn starch, with low price and 23.5
million tonnes annual output in 2013, took the dominant position in the starch
industry in China. In the low-end vermicelli processing, there's an obvious
tendency that the corn starch would replace the low-end sweet potato starch, and
therefore the price fluctuation of corn starch would generate a great impact on
the market demand on sweet potato starch.
There's a long-term and obvious substitution
relationship between cassava starch and sweet potato starch. Sweet potato
starch embraced its peak production season during the mid of October to the end
of November. When a large amount of freshly produced sweet potato starch was
pouring into the market, the price of cassava starch was reducing; as a result,
the manufacturers may suffer a large-scale overstock. The weak and subdued
atmosphere of the sweet potato starch market was further strengthened by the
downstream starch vermicelli manufacturers due to the substitution of cassava
starch.
The domestic potato starch, which has had a
great influence in the high-end market of sweet potato starch industry, was
mainly applied in the high-end starch vermicelli industry. Among the areas of
Shandong, Jiangsu, Hebei, Henan, Anhui, and Sichuan, sweet potato starch and
potato starch were in a substitution relationship in vermicelli processing, and
the manufacturers preferred the low-priced one. The average manufacturer's
price of potato starch was about RMB6,500/t during January to November of 2014.
*The
article is edited and translated by CCM. The original one comes from Agricultural Outlook.
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Tag: potato