Manitoba potato growers received an ideal Valentine’s Day gift this year: strong spud demand for the next 15 years.
On Feb. 14, J.R. Simplot announced an investment of $460 million to expand its potato processing plant in Portage la Prairie.
The expansion will more than double the capacity of the french fry plant, thus driving up demand for Manitoba potatoes.
“Simplot has been an outstanding corporate and community partner since establishing its operations in Manitoba,” said provincial Agriculture Minister Ralph Eichler.
“This investment further cements their reputation as a pillar in Manitoba’s agriculture and food processing sector. The plant’s increase in capacity also presents a tremendous opportunity for Manitoba farmers to strengthen their partnership with a reliable local processor and increase potato production in Manitoba.”
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Simplot chose to expand in Manitoba because of a number of factors, including the quality of potatoes produced in the province.
“(There’s a) strong grower community, availability of highly skilled employees and distribution routes that continue to expand our footprint,” Mark McKellar, Simplot food group president, said in a statement.
“We are convinced Manitoba’s business-friendly environment made this the right decision for the J.R. Simplot Company.”
There may be another reason why Simplot chose to invest in Manitoba. The company operates two potato-processing plants in Washington state, and there have been reports of the private company building another facility there. However, Simplot may be backing away from those plans.
“There’s more to the story as to why they’re not going ahead with their original plan, with that one in the Columbia Basin,” said Kevin MacIsaac, United Potato Growers of Canada general manager.
“(That) expansion was announced some time ago for the Columbia Basin, and they’ve now postponed that…. Instead, Simplot has made this announcement to build a plant in Canada.”
MacIsaac said the Simplot investment in Manitoba was a bit of a surprise. He regularly meets with U.S. potato industry representatives and the Portage la Prairie expansion wasn’t on the radar.
“I’m in the industry (and) fairly close to a lot of people. I wouldn’t have heard anything about this until very, very recently,” he said.
Chris Voigt, Washington State Potato Commission executive director, said he hasn’t heard that Simplot is cancelling its plans to build a new processing facility in the state.
“It would actually surprise me,” he said.
“Washington state is ideally positioned to supply the growing markets in the Pacific Rim.”
Regardless of how it happened, Simplot’s investment in the Portage la Prairie plant is fantastic news for Canada’s potato industry, MacIsaac said.
“We’ve had some years where the (industry) was pretty stagnant and pretty slow, but lately it’s been straight up and ahead,” he said.
“There’s been a lot of expansions announced that have been going to the Pacific Northwest. This is our turn, again, today.”
Last fall Cavendish Farms broke ground on its $360 million potato processing plant in Lethbridge. The Manitoba and Alberta investments are huge boosts for Western Canada’s potato sector because they could spur strong demand for potatoes over the next 15 to 20 years.
A Manitoba government news release said the expansion would increase the size of the Portage plant from 180,000 to 460,000 sq. feet and require an additional 80 full-time employees.
When the construction is complete, scheduled for the fall of 2019, the plant will also need many more potatoes from Manitoba growers: likely double the current supply.
Companies such as Simplot and Cavendish Farms need to increase their processing capacity because potato plants across North America are running at full tilt.
“With the demand (for) french fries today and frozen product, they can’t physically meet that with the current plant capacities, so they have to build more plants.”
Much of the demand growth is coming from Asia, but North Americans are also consuming more french fries and frozen potato products.
That growth is likely related to the stronger economy because Americans and Canadians have more money to spend on restaurant meals than they did eight years ago, during the 2008-2010 recession.
