Bigger market to absorb potato increase

Potato industry watchers expect production to jump significantly in Canada and the United States this year, barring a bizarre weather event.

That’s because acreage may be five percent higher than last year, and the 2012 crop could produce bumper yields.

“All indications we would have is that the potential is pretty good for a larger crop than what has been received in the last couple of years,” said Kevin MacIsaac, general manager of United Potato Growers of Canada.

The U.S. Department of Agriculture released its potato acreage estimates July 11, after The Western Producer’s deadline, but Bruce Huffaker of North American Potato Market News had earlier predicted acreage in Canada and the U.S. would rise by two to five percent from last year.

MacIsaac agreed that a five percent acreage gain is feasible.

“I think that’s a realistic number.”

Statistics Canada will release theCanadian potato acreage estimate July 20, he added.

Acres have increased on both sides of the border, partly because North American potato processors contracted more production this year. The processors need the extra potatoes to meet demand for french fries and other potato products, MacIsaac said.

“There probably is some excess acres, but that’s fine. In one side of the equation there are additional markets this year, particularly on the processing side,” he said from his office in Prince Edward Island.

Potato and french fry demand shrunk in the U.S following the 2008-09 U.S. recession because fewer Americans had disposable income to eat in restaurants, MacIsaac said.

However, that trend is starting to reverse, and potato processors are also seeing demand from other parts of the world.

“We’re seeing a return to more traditional market share … and the U.S. has seen an increase in (french fry) export potential to the Asian countries,” MacIsaac said.

“So instead of cutting back like they’ve done in other years, they (processors) have returned to normal or slightly increased their volume requirement.”

In Manitoba, McCain’s and Simplot have increased their contracted potato acres by five percent, said Brian Wilson, a potato specialist with the provincial agriculture department.

Manitoba growers didn’t produce enough potatoes to satisfy processor needs last year because spring flooding and a hot, dry summer restricted acreage and crop yields in the province.

Manitoba potato growers have averaged 280 hundredweight per acre over the last five years, but last year they averaged only 240 cwt. per acre. Overall production in the province was 17.5 million cwt., down 8.5 percent from the 19 million cwt. produced in 2010.

Consequently, McCain’s french fry plant in Carberry, Man., and the Simplot and McCain plants in Portage la Prairie had to cut back on production last year or import potatoes.

“When they (yields) go less than you expect, than you’re short of supply,” Wilson said.

“(In 2011,) we had acres that were lost because of flooding and we definitely had a crop that was lower (in acreage) than farmers had planned on putting in.”

Nonetheless, a potato shortage is unlikely in Manitoba this year because the crop is ahead of schedule and yield potential is high.

Favourable conditions in the spring allowed growers to plant earlier than usual. As a result, potato plants in Manitoba were flowering in early July and crop progress is ahead of schedule.

“We’re definitely one to two weeks ahead of normal, as far as crop maturity,” Wilson said. “That’s really significant because potatoes are a long season crop.”

The story is similar in Idaho, Wisconsin, Washington and Colorado, the major U.S. potato growing states, where crops are ahead of schedule and yield potential is robust.

“Crops (were) planted very early in the U.S., so that always gives you better potential for yield,” MacIsaac said.

As well, Canadian yields should return to normal compared to last year, when New Brunswick growers were dealing with excess moisture, the Ontario potato crop lacked moisture and the Manitoba crop was hammered by a wet spring, dry summer and an early frost, MacIsaac said.

“Right now the potential is good for our crop to return to what we would call a trend line yield.”

A bumper crop is good news for growers of french fry potatoes because they have a contract with processors, but producers of fresh potatoes in the U.S. are worried about falling prices.

U.S. potato sellers are still trying to move old stocks of potatoes into the market, which has caused a price crunch because harvest of the new crop will begin in mid-July in Washington state.

“There are considerable volumes of potatoes in the U.S. yet to be marketed of the old crop,” MacIsaac said.

“That’s what is different from Canada. We will clean up our (old) product much earlier because we had less to ship.”

Huffaker said fresh potato prices in Idaho have dropped 50 percent since April. Potato buyers can now buy a 50 pound bale of potatoes for $4 to $4.50.

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