Here we go again.

Potato harvesting season is just around the corner, and once more grower-shippers, industry officials, buyers and other interested parties are left to wonder: What can we expect this year?

Industry wary as spud harvests near
Andy Nelson
Markets Editor

Last year at this time, the industry was faced with a situation it probably doubted it would ever see again, given the years of overproduction and deflated markets.

Spuds were scarce, and shippers were doing all they could to stretch the last of their storage crop until late summer and fall harvests began. For the first time in no doubt a long time, many retailers were putting the brakes on potato promotions.

Then harvest came, and a funny thing happened: markets didn’t do an about-face. They came down, sure, but not nearly as far down as growers had become wearily accustomed to. It seemed that the industry, with the considerable aid of the Salt Lake City-based United Potato Growers of America, had at last cracked the supply/demand code.

That was then. This is now.

Through no fault of the industry, the recession began to take its toll. At first, it seemed like spuds might be spared. After all, people have to eat. And among all the different categories of things they can eat, fresh fruits and vegetables, which provide a disproportionate bang for the buck, are among the last things many consumers cut back on.

Taking it one step further, within produce, it’s hard to beat spuds for value.

But I’ve talked to a lot of potato growers and industry officials from Washington, Wisconsin, Oregon and other states in the past month, and their message has been clear: We are not recession-proof.

A lot of fresh spuds wind up in restaurants, and foodservice has taken a huge hit. Many shippers told me even retail sales are flat or down.

On top of that, growers are dealing with a strange, and heavily ironic, situation related to U.S. Department of Agriculture volume reports.

Last year, one of the reasons supplies were ridiculously low in the summer was, many growers and officials said, because USDA holdings reports throughout the 2007-08 season consistently claimed that storage supplies were higher than they actually were.

Ignoring the warnings of United Potato and others, shippers and retailers cranked up the promotions and by spring, it became clear they were running out of spuds.

This year, unbelievably, it seems the USDA is erring in the other direction. According to the June 1 storage report, holdings in the 13 major growing states were 11% lower than last year at the same time.

Even with lower demand, you’d think that would mean another summer of robust markets and tight supplies.

But based on the grumblings I’ve heard from growers, that’s not the case — not even close. In late July, many were concerned about the large number of spuds still in sheds in Idaho, Colorado and other states.

Prices were so low, in fact, that a Wisconsin grower told me he couldn’t even compete with Idaho spuds in Chicago. You don’t need a geography degree to know that, with transportation costs factored in, that’s a head-scratcher.

Of course, this problem could wind up being small you-know-whats if, once harvests get under way, it becomes clear that growers did not heed the warning of United Potato and others to cut back on acreage again this season. Particularly if yields bounce back to more normal levels, following last year’s below-normal levels in several growing areas.

I had a conversation July 2 that seemed to encapsulate the industry’s mood heading into the ’09 harvests. I was talking to a shipper about the hailstorms that hit Idaho hard in late June. Thousands of acres were potentially damaged, he said. And yet, regardless of the losses, he said there will still be plenty of Idaho spuds in the coming year.

From his tone of voice, I could tell “plenty” might very well wind up meaning “too many.”

Email anelson@thepacker.com

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