Potato acres likely to drop as contract talks continue

Manitoba still without agreement | Companies aiming to lower prices

PORTAGE LA PRAIRIE, Man. — Manitoba potato growers and processors haven’t reached an agreement on price, but both sides know fewer potatoes will be grown in the province this year.

Keystone Potato Growers Association manager Dan Sawatzky said processors have completely cut ties with several growers, and overall volume will be down.

“We don’t have our volumes in place. We know there will be another decrease in volume so (there’s) a lot of concern in the potato industry,” Sawatzky said at a Keystone Agricultural Producers meeting in Portage la Prairie April 11.

Manitoba farmers grow processing potatoes for a Simplot french fry plant in Portage, McCain Foods’ plants in Carberry and Portage and a Cavendish Farms plant in Jamestown, North Dakota.

“Simplot has given the volumes … so has Cavendish,” Sawatzky said. “McCain’s is the one we’re waiting for.”

Sawatzky said Cavendish, Simplot and McCain have severed contracts with a number of Manitoba farmers.

“With Cavendish, there were five growers affected with complete cuts,” he said. “McCain’s … the best I could say is probably half a dozen farms were affected completely. Simplot has also cut a couple growers, with 100 percent volume (reductions).”

Simplot is cutting potato volumes by 10 percent in Manitoba relative to 2013.

McCain’s has committed to a temporary volume agreement, promising to contract at least 65 percent of the volume from last year.

“We were able to (get) them to commit to a minimal level of 65 percent of last year,” Sawatzky said.

“We expect they’ll be quite a bit higher than that.”

Cavendish has cut its Manitoba volume by 50 percent. Sawatzky said the contract with the company is small compared to McCain and Simplot.

“(It) represents less than five percent of our total contracts. Fifty percent of a contract sounds high, and it is. We take it seriously.”

McCain and other companies have said their customers expect lower prices for french fries and other processed potatoes, which is putting pressure on Canadian growers because yields in Washington state can reach 600 to 700 hundred weight per acre, double the yields in Manitoba.

“We are trying to ensure that our growers understand the urgent need to narrow the gap between the price of raw potatoes in parts of the U.S. and prices in Canada,” a McCain spokesperson said last year.

“We’ve already seen volume reductions in Canada as our customers demand product from some of our less costly centres. So if we don’t deal with the price gap, we are going to continue to lose Canadian volume to the lower cost region.”

The volume cuts will reduce Manitoba potato acreage from the 70,000 acres grown last year.

The price per pound will also decline because potato growers in other regions of North America have agreed to price cuts, including Idaho and Washington.

“It’s anywhere from 3.5 to four, or 2.5 percent, all downward,” said Kevin MacIsaac, general manager of United Potato Growers of Canada.

Prince Edward Island growers settled their contract with Cavendish Farms last week, agreeing to a 3.3 percent price cut for new crop and surplus potatoes from last year.

“It’s (been) a really difficult year for negotiating. We say that every year, but this year there’s been a lot of pressure, right from the get go, to move price downwards in all areas,” MacIsaac said.

“It came out as a blanket statement (from processors) across the country.”

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