With one giant processor expanding its production capacity this spring, the outlook for Manitoba potato growers looks bright.
Simplot Canada Ltd.’s french fry plant, which opened in 2003 in Portage la Prairie and employs 230 workers, is reportedly adding 40 new jobs April 1 to serve new markets in Australia.
The plant now requires six million hundredweight of potatoes each year, or roughly the yield from 20,000 acres. The expansion, which will result in a production increase of about 20 percent, will require an additional 2,500 acres of potato production.
Garry Sloik, secretary-manager of the Keystone Vegetable Producers Association, said the Simplot expansion would make up for volume reductions by McCain’s two plants and steady production by Cavendish Farms.
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He said the province’s total seeded area for potatoes this spring will likely be similar to last year, which stood at roughly 86,000 acres.
“The acreage may have taken a dip if we hadn’t had the Simplot increase,” said Sloik.
Higher prices for other crops may lure producers away from potatoes. Some growers have been looking to diversify their rotations in the past but couldn’t justify it with low returns from other crops.
“It’s at a time when producers have other options and are pushing their yields,” Sloik said. “We’re producing more per acre. That’s what producers realize they have to do to continue to be profitable.”
Apart from rising fertilizer and fuel costs, good workers are becoming difficult to find and more expensive to retain, he added.
The Canadian dollar’s rise against the U.S. currency has affected the Manitoba industry, which ships more than 85 percent of its french fries to the United States.
Fears of an economic recession south of the border have yet to crimp demand for Canadian potatoes, he said.
“Washington and Idaho have been exporting because of their low dollar. So that leaves an opportunity for us to fill in because we have a freight advantage to the eastern U.S. versus the western U.S.”
Last year, widespread drought and late summer heat gave a boost to the United Potato Growers of America’s campaign to cut production, which has succeeded in reducing the supply of spuds hitting the North American market, he said.
Tom Gonsalves, a Manitoba Agriculture potato specialist, said that last year’s crop delivered a last minute bumper yield averaging 260 cwt. per acre.
“Last year saw pretty much record yields in Manitoba. It snuck up on us, at least to me personally,” he said.
“We were expecting reasonable but not fantastic yields, but once the storage holdings started coming, it was like ‘holy smokes, that’s a lot of potatoes.’ “
Potatoes, as a high value crop with costly infrastructure investment, probably won’t be pushed aside in a rush to plant canola, he said, although good margin opportunities in other crops may be alluring for use in rotations.
“In contract potatoes for processing, you sign a contract and you know your price based on delivery date,” he said.
According to the latest Statistics Canada data, Canadian potato production for 2007 was down two percent from 2006 to 109.6 million cwt. There were decreases in Prince Edward Island, New Brunswick, Ontario and Saskatchewan but increases in Manitoba and Alberta.
U.S. production rose 2.5 percent to 409.1 million cwt.
