United Potato Growers of America asked its members to hold 2009 plantings at 2008 levels.
Nevertheless, U.S. acreage increased 1%. Worse, national average yields increased 4%.
“Unfortunately, growers are losing money with that extra 4%,” said Lee Frankel, president and chief executive officer of United Potato Growers of America, Salt Lake City.
“It shows you how a slight change can impact the system. It’s something we preach all the time. Slight changes in supply or a few extra acres can tip the market one way or the other. We try to be real specific with our acreage recommendations.”
Frankel said United Potato Growers of America members did hold their acreage steady in 2009, but the association represents only 70% of the nation’s fresh potato volume.
“The issue has been that we can cut back hard for a year, and prices won’t be so low, but that attracts nonpotato growers and encourages expansion by nonmembers,” Frankel said.
“If no one had increased acreage last year, prices would be steady. Nonmembers have come to expect that members will decrease operations.”
UPGA is asking members to plant 70% to 75% of their 2004 acreage for the 2010 season, which Frankel called a marginal cut from 2009.
Of course, the association can’t control what nonmembers do, but UPGA is striving to reduce the 30% of growers that aren’t members.
Frankel said Nov. 2 that the association planned meetings in November and December with non-members in Michigan, Ohio, Pennsylvania, North Carolina, Virginia, Delaware, New Jersey, New York and Florida, states where the association is under-represented.
“Ultimately, it comes down to face-to-face meetings to explain the value of working together and the anti-trust exemption that exists,” Frankel said.
“Knowing the amount of potatoes in the market and when it’s coming to market delivers more money to the grower at the end of the day. It’s a pretty simple message. It’s a matter of seeing the value of cooperating with the people who market right before and after you.”
On Dec. 1, the U.S. Department of Agriculture reported prices of mostly $3.50 for russet burbank U.S. 1 2-inch or 4-ounce minimum baled 5 10-pound film bags nonsize A from Idaho, and prices of $5.50-6 for 50-pound cartons of 40-100s.
Mike Carter, chief executive officer of Bushmans’ Inc., Rosholt, Wis., said growers need to take action.
“The point needs to be made that cutting volume needs to occur, not talking about it,” he said.
“We also need to continue to give potato marketing organizations the tools to sell the crop through the U.S. Potato Board to help increase demand. If we take care of both increasing demand and decreasing supply, the price will take care of itself.”
Acreage is only part of the picture. Not only did several states have record yields, they were well above their trend line average. Idaho, for example, was 6% above trend, while Wisconsin was 8% over, according to USDA.
“Increase in yields are a fact of life in the potato industry,” Frankel said. “The technology gets better, and growers zero in on the best varieties for them. Potato seed develops, evolves and has higher amounts grade out as U.S. No 1. We’re going to have increasing yields.”
Thus, growers went from record returns in 2008 — when there was little carryover from the 2007 storage crop and a cold, wet spring in many growing areas — to a difficult 2009.
Frankel said prices were below the cost of production in the Northwest and break even in Wisconsin, Colorado and the Red River Valley.
That likely ended a trend of four profitable years in a row for the average grower. Frankel said he combed through USDA statistics dating back to the 1930s and could not find a similar four-year run of success.
“The best scenario is finding the balance between supply and demand,” said Randy Shell, vice president of marketing for RPE, Bankroft, Wis.
“This will give fair returns to growers and allow retailers to market the product at prices that will move the crop,” he said.
“As a former retailer myself, it is always better to a have some consistency in pricing year over year. This allows you to make better decisions to drive sales and profits.”