Potato sector struggles with demand dip

Industry must find ways to entice consumers

Potato growers have realized that they must take action to improve fresh potato demand in North America, says an industry spokesperson.

Otherwise, American and Canadian growers will have to permanently cut acres to accommodate declining demand.

The situation is particularly acute this year because a glut of supply has pushed fresh potato prices below the cost of production, said Kevin MacIsaac, general manager of United Potato Growers of Canada.

Canadian growers have received about $1.30 for a 10 pound bag of fresh potatoes over the last several months, which is down from the $1.80 to $1.90 per 10 lb. bag they re-ceived at the same time last year.

“You’d have to be getting $1.50 (per 10 lb.) just to meet the cost of production,” MacIsaac said.

“Anything that is contracted is (priced) hopefully at a reasonable price that will allow growers to have some profit. Anything on the fresh (potato) market, in most areas across Canada, is selling below the cost of production.”

He said the situation has forced producers to understand that they have to do something about falling demand.

“We’ve now come to the realization that there is a severe problem.”

Based on Statistics Canada data, growers harvested 101.1 million hundredweight of potatoes in 2012, compared to 92.4 million cwt. in 2011 and 97.2 million cwt. in 2010.

Most farmers produced average yields last summer, but acreage of table and processing potatoes rose to 373,400 acres, the highest since 2008.

Acres and yields were also higher in the United States than in previous years, creating a surplus of fresh potatoes in most regions.

“I was in Manitoba visiting some of the fresh (potato) sheds about a month ago. I would say in Western Canada some of the supply is getting cleaned up…. Guys are starting to see the end of the bin,” MacIsaac said.

“In Eastern Canada, that’s not the case. There are obviously lots of potatoes going on the market because that’s reflected in the price.”

The overabundance will definitely drive down potato acres in most regions of North America this year, MacIsaac said.

“In Canada, I think we’d be looking at a five (percent decline),” he said.

“That’s the number they’re talking in the U.S…. (but) the reality is the U.S. would need to (cut) by 10 or 15 percent, but they’re talking five.”

The entire industry would benefit if potato farmers cut acres more drastically, but growers don’t readily switch to other crops because the capital costs of potato harvesting equipment and storage facilities are substantial, MacIsaac said.

The glut of spuds this year will also weigh on growers’ contracts with french fry and chip processors.

“The buyers, the processors, will look at the open market and say, ‘well, why would I need to give a big increase when there is a glut of potatoes?’ ”

Jerry Wright, president of United Potato Growers of America, said the potato industry has to revive demand for fresh potatoes. If not, potato acres will have to fall.

“Fresh potato (demand) continues to decrease at about 1.1 percent annually equal to one million cwt. each year, or the production of about 2,500 acres,” Wright said on the potato growers website.

“One factor in the fresh potato volume decline is the consumer’s move to smaller packages: 10 lb. consumer bags are being replaced by five lb. and three lb. consumer bags at an alarming rate.”

MacIsaac said french fry, potato chip and processed potato consumption has been steady over the last decade or so, with the exception of the 2008-09 recession.

However, consumers are eating fewer fresh potatoes because they don’t have time for meal preparation.

United Potato Growers of America expects average yields to increase five cwt. per acre each year as consumption sags.

“Depend on it,” said Wright. “When enough growers fail to recognize and act on this paradigm, each then contributes to a major disaster like the one that is now underway. And this is not opinion. This is fact.”

MacIsaac remains hopeful the industry can revitalize demand for fresh potatoes because spuds are loaded with healthful attributes, such as vitamin C and potassium. Nonetheless, money and a sustained effort are needed to support a potato comeback.

“We have to see if there is a will to do that,” MacIsaac said. “Avocados are the big success story in the food industry. Their consumption and sales have tripled…. If they can do it, we can do it as well.”

About the author

Markets at a glance


Stories from our other publications