Klompien: Tight but stable fresh potato outlook expected
The Packer's Tom Karst recently asked Mark Klompien, president and CEO of the United Potato Growers of America, several questions about the current supply and demand outlook for potatoes.
Potato fob prices have reached into the rarefied air of $40-plus per 50-pound carton range in mid-August, as the storage potato crop dwindles and new crop harvest is just beginning. Klompien reviews with Karst what factors are at work and what can be expected next.
Tom Karst: I have heard that Idaho potato acreage is down 8% this year. Are other states also experiencing acreage declines and what type of effect will that have on the fresh market? What is the main reason for Idaho’s acreage decline?
Mark Klompien: Yes, Idaho potato acreage is down 25,000 acres from last year, roughly an 8% reduction. That reduction was the result of multiple influences, including the rapidly rising cost of crop inputs, the highly favorable returns in other crop alternatives, concerns over water availability and just a better overall marketplace understanding of supply conditions that drive fair grower returns.
The Columbia Basin (Washington/Oregon) acreage is up overall, but that is driven by processing acres; we believe fresh acreage declined slightly. As for the other major fresh shipping areas, Colorado is mostly flat in acreage and has a good crop coming on. Wisconsin's fresh acreage also declined in the 4% to 5% range, but likewise has a good crop coming. Those four regions typically ship between 80% and 85% of the total fresh market russet potatoes consumed in the U.S., so the result of this supply landscape should make for a tighter but stable fresh market moving forward.
Karst: Are the fresh prices we are seeing the highest ever for fresh potatoes?
Klompien: Current fresh potato returns during this late summer window are some of the highest that I have ever seen, but potatoes being in shorter supply during August is not a completely unusual situation.
This year, the tighter supplies were occurring a little bit earlier than in some other years, but harvest of new crop potatoes in Idaho began last week and will be ramping up over the next several weeks. The Columbia Basin has been shipping new crop potatoes for three weeks already and the other regions have also started or will be soon.
Karst: Is demand for frozen/processing potatoes still running strong?
Klompien: Demand for frozen processing potatoes also remains very strong, both domestically, as well as internationally.
Karst: How might that affect the fresh potato market?
Klompien: That could create an additional pull on any ‘open’ potatoes during this coming year, as well as on potatoes that may have been destined for the fresh market, further contributing to a more tightly balanced and stable market. Even at higher prices, potatoes are still a tremendous nutritional value for consumers.
