Development of potato processing industry in China from perspective of industrial integration

Abstract: Potato processing industry is an important carrier for implementing potato staple food strategy, which was launched in 2015 in mainland China. Ulanqab City located in Inner Mongolia, which is one of the main producing areas of potato and located in the North of China. Ulanqab City is a prominent leader of China's potato production and is often referred to as "China's Potato Capital". Based on a survey among potato processing companies and factories in Ulanqab City, the current study analyzed the factors that influenced the development of Chinese potato processing industry from a perspective of industrial integration. First, vertical cooperation based on contracts between farmers and processors has still lagged by now, and therefore efficient, intensified and large-scale planting haven't yet been formed in the Ulanqab City. Second, processing in a lower level, lacking of recycling and reusing of wastes and insufficient utilizing of by-products, seasonal overcapacity, and periodic idling of processing equipments were common problems faced by the surveyed potato processing enterprises. Furthermore, compared with the potato enterprises in developed countries, those in China fall behind in processing equipments, production technologies and management concepts. Third, higher logistics costs, the underdevelopment of cold-chain logistics, lacking of financial supports, the change of foreign exchange rates and the implement and enforce of international trade control had great influence on the development of potato processing industry. In addition, the proposal of "potato staple food strategy" offers a new opportunity and points the way for the development of the potato processing industry. Potato staple food strategy involves the potato processing industry and its upstream and downstream industries. The potato farmers' responses to the policy will surely promote the development of potato production technology and provide quality raw materials for the processing industry. The research institutes, incentive by the guidance of the potato staple food strategy, will do more research in the related fields of technologies and policy. Most importantly, the strategy will bring more changes for the potato processing industry and thus boom the industry. Also, more Chinese consumers will accept potato products as staple food with the implementation of the strategy and thus increase the demands of potatoes from the source. Thus, the strategy is undoubtedly the driving force behind the rapid development of the potato processing industry in China. In terms of policies, it is urgent and of vital importance to put the potato staple food strategy into practice. Specifically, first, the government agencies should treat the production of potato as those of staple crops, such as wheat and rice, and offer rational subsidies for the planting of potato. Second, the government agencies should provide more supports to the potato processing companies. Third, the government agencies should increase research and develop investment in the potato planting areas for more sustainable production and ecological protection. Finally, the Chinese government agencies at all levels should attach importance to the top-level designing before formulating relative policies, by focusing on the coordinated development of the primary, secondary and tertiary industry and therefore promoting a healthy and sustainable development of the Chinese potato industry.