Excess volume worries potato growers

03/05/2010 03:24:17 PM
Jim Offner

Potato growers, shippers and marketing experts agree there are too many spuds out there right now.

Big yields in many growing regions led to the increased volume, according to Lee Frankel, president and chief executive officer of the Salt Lake City-based United Potato Growers of America, which was formed several years ago as a means to control the amount of spuds hitting the markets.

“It’s important, especially to make sure growers are truly packing orders and if they have an excess of supply to start grading more strictly now rather than waiting to the end of the season and waiting for something more magical to happen in the markets,” Frankel said.

Scoping out the season

United Potato will continue to keep abreast of the market’s direction, Frankel said.

“The other aspect is for the other areas that sit out of field, we have an analysis of what the storage crop looks like as we get into the summer months (that) should help guide growers in Texas, New Mexico, Kansas and Kern County, Calif., on the early side, as well as Virginia and the Carolinas,” he said.

“We’re working to make sure accurate information is out there, making sure information gets to out-of-field growers to understand the marketing dynamics now and know what they’ll be when they’re harvesting,” Frankel said.

Kevin Stanger, vice president of sales and marketing for Idaho Falls, Idaho-based Wada Farms Marketing Group, said that not so good was a kind way to describe the market.

“There are too many on the market,” he said. “The acreage was up slightly. The yields were a record. Demand is fairly flat. Put all that together and there you go.”

What’s the solution?

“You’re always looking for market opportunities, contracts,” Stanger said.

“Those help, but on a year as bad as this year, it’s not going to stop the bleeding.”

And, he said, the bleeding is pretty serious.

“We’ve had other years that are minor paper cuts and some that are pretty tough, but this year is a main artery, based on f.o.b. prices and that the cost of production is at an all-time high,” he said.

Not all was gloomy, though, said Seth Pemsler, vice president of retail for the Eagle-based Idaho Potato Commission.

“If you look at the stats, the last Nielsen data, the market is up 11.2% over the last previous six months,” Pemsler said.

“Obviously, that’s encouraging.”

He said it’s helpful that there is plenty of product on the market for consumers.

“The important thing is, there’s potatoes at retail and in the total marketplace,” he said. “Potatoes at retail are up, but foodservice and french fries are down.”

Crop prospects

There’s nothing wrong with the quality of the crop, said Dick Okray, co-owner of Okray Family Farms Inc., Plover, Wis.

“Six months ago, we were worried the crop would be somewhat unmanageable and difficult to get through because of the sheer volume and also the size profile. There were a lot of large potatoes,” he said.

“We were going to try to engage retailers to do more promotions on large sizes and a value proposition of potatoes in general,” Okray said.

And, he said, he has seen results.

“What has happened since then is exactly what we had hoped for,” he said. “I think the lower retail price point is helping to move this crop in an orderly manner in the market. Everybody, aside from the grower, the retailer is still doing well with promotions.”

The down side, Okray said, is that growers likely are struggling to break even.

Colorado felt the crush of too many spuds, as well, said Jim Ehrlich, executive director of the Monte Vista-based Colorado Potato Administrative Committee.

“Colorado has too much supply, although our shipments to date have been pretty good and we’re doing a good job of managing what we have,” he said.

“Acreage was down by 1,000, but we still had too many potatoes.”

Growers likely will scale back production, he said.

Canadian growers are feeling the pressure, as well, even though production there in the last year was down by about 2%, said Greg Donald, general manager of the Charlottetown-based Prince Edward Island Potato Board.

“The fact is we’re in the North American, in fact, global, marketplace. I think it’s probably better to look at it from that perspective,” he said.

“Whether it’s a certain region in Canada or in the U.S., it has an impact on all the market we compete in.”



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