KEY POINTS:
Thrilled by the potential the free trade agreement with China brings, potato chip-maker Steven Wong is spending $2.8 million on new machinery to double his factory's production.
But the chief executive of Fresher Foods is now faced with a new problem - New Zealand does not have enough potatoes to meet China's demands.
"The free trade agreement opens up an almost unlimited potential," he said.
"But many New Zealand companies will not be able to meet the demand of a market with 1.4 billion people."
Mr Wong, 60, who was in Beijing as part of the delegation accompanying Prime Minister Helen Clark, said the new machinery at his East Tamaki chip factory to be installed this month would double weekly production to 800 tonnes.
But his company would still struggle to meet Chinese orders, which are expected to skyrocket when tariffs are removed.
"The lowest price I can offer for the chips at the moment is still about 5c above what the Americans and Europeans charge, but all that will change when the tariffs are eliminated," Mr Wong said. "Who knows what the demand will be like then."
He said the factory already faced a shortfall of about 4000 tonnes this year.
"China wants 25 tonnes of potato chips from us every week, but we can only supply them with that quantity in a month."
Horticulture New Zealand's potato product group manager, Ron Gall, said the cold spring and extremely dry summer had resulted in an annual potato yield that was 15 per cent lower than the 500,000 tonnes New Zealand usually produces.
Potatoes fetched about $220 a tonne and New Zealand could easily produce more if demand rose.
But whether more farmers would grow the crop would depend on the price China was prepared to pay.
"New Zealand has the potential to increase production of potatoes but competition for land use here is fierce," he said.
"So, if the price is right, more will grow potatoes, but don't expect them to switch crops if they are going to be paid rock-bottom prices."
