Red River Valley potatoes weather recession

10/25/2012 04:12:00 PM
Jim Offner

The U.S. economy may be in the doldrums, but it’s a good time to be in the potato business, according to growers in the Red River Valley.

“Through the recession era, I’d say the food category has probably been the silver star,” said Randy Boushey, president and chief executive officer of East Grand Forks, Minn.-based A&L Potato Co.

That’s because potatoes are long-established staple, he and other suppliers said.

“There might be a shift from restaurants to eating at home, but overall I don’t think the economy has much to do with it,” said Ted Kreis, marketing director for the East Grand Forks-based Northern Plains Potato Growers Association.

Lower markets

The potato market this year, running around $10 per 2,000-pound tote bag Oct. 1, presents an even better value than a year earlier, when prices were about twice as high, Kreis said.

“Prices are down because the growers across the country have too many potatoes this year,” he said.

If the economic conditions across the U.S. continue to sag, Boushey said, the Red River Valley potato industry likely will continue to have plenty of spuds at relative bargain prices.

“Going into the fall market now, with the lower markets, I’m anticipating that the volume will be above average or very good because we’re very competitively priced compared to russets and other commodities out there, so you would anticipate demand for our products will go up,” he said.

Returns may not be as high as desired, but lower prices are crucial in keeping product moving in a big-volume year, said Paul Dolan, general manager of Associated Potato Growers Inc., Grand Forks, N.D.

“Economic factors maybe had an effect in the foodservice industry, where people aren’t going out to eat as often, but in the same breath you would think the cheap potatoes that are out there right now should help the potato industry, as far as movement,” Dolan said.

Last year’s higher markets hindered movement, partially because of economic pressures, Dolan said.

“It had to be close to record levels,” he said of the market a year ago.

Some retailers have offered special prices on potatoes as a lure to money-challenged shoppers, but the practice hasn’t been universal, said Kevin Olson, a partner in Becker, Minn.-based Ben Holmes Potato.

“Spuds are cheap right now, but I don’t see that savings being passed on to the consumer,” he said.

The falling value of the dollar enhances the value of potatoes in the consumer’s view, said Bryan Folson, president of East Grand Forks-based Folson Farms.

“I think it’s still kind of supply and demand, but you should have decent movement because people are hard up,” he said.

Business steady

Some growers say business has continued at a normal pace, regardless of economic pressures on consumers.

“I’d say we haven’t noticed much change here. We’ve been doing our thing steadily all along,” said Steve Tweten, president and chief executive officer of Buxton, N.D.-based NoKota Packers.

Of course, economic factors affect growers and shippers, and they have to deal with those pressures, said Chad Heimbuch, president and sales manager at Cogswell, N.D.-based Heimbuch Potatoes.

“I’d say (the economy has affected the company) more on the trucking aspect of it than anything,” he said.



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