WINNIPEG – Potatoes may be cheap to put on a plate, but planting them in a field is a different story.
Veteran grower Don Kroeker said there’s opportunity in spuds, but farmers need access to a lot of money to get into the industry. For a 350 to 400-acre operation, capital costs can add up to $1.5 million, not including land.
Kroeker was part of a panel discussing the booming potato business at a recent agrologists’ conference. Manitoba is second to Prince Edward Island in potato production, mainly due to expansions in the NestlŽ-Simplot and McCain plants in Carberry and Portage la Prairie.
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In 1994, the plants used most of the province’s 57,000 acres of spuds, said Reg Curle, Manitoba Agriculture’s potato specialist. Along with the smaller markets for fresh and seed potatoes, the industry was worth more than $74 million that year.
In the next couple of years, processors are expected to expand their contracts by about one-third, to 80,000 acres. Kroeker and Curle said many of the province’s 130 growers plan to expand, but 25 to 50 new potato farmers are needed to meet demand.
Irrigation provides some security
Bob Hyra, a manager with NestlŽ-Simplot, explained the new contracts are for irrigated production where there’s less chance for crop failures, deformities and size problems.
Prospective growers are concerned about the costs and availability of irrigation.
But Curle hinted his government may present a plan in its spring budget to help growers with the costs of setting up irrigation systems.
“In many parts of North America, governments get fairly deeply involved in irrigation infrastructure,” Kroeker said. “In the past, Manitoba hasn’t done that so we’re at somewhat of a disadvantage to other areas.”
His farm near Winkler includes 3,500 acres of potatoes, 40 percent of it irrigated. He plans to expand the area under irrigation, but doesn’t know whether he’ll increase his total acreage of potatoes.
Kroeker said skyrocketing costs of production over the past couple of years show producers must be careful about expanding.
- Late blight is more of a concern and growers are spraying twice as much as they used to.
- Fertilizer costs have increased.
- With high grain prices, land rental costs have gone through the roof.
According to estimates, Curle said a 450-acre potato operation runs up production costs of close to $571,000 per year, including operating, fixed and labor expenses. That works out to more than $1,200 per acre.
But Kroeker said processors haven’t figured higher production costs into their contracts with farmers, not only in Manitoba, but in most of the continent.
“If processors feel they can’t increase the prices, then I think growers have very tough decisions to make,” he said.
Farmers looking to diversify should consider alternatives, Kroeker said. Projections for livestock operations show about 20 percent return on investments, he said.
Since potato growers need about $500,000 to get into the business, they would need to earn $100,000 from 400 acres to make it as worthwhile as getting into livestock.
But despite daunting costs, Kroeker and Curle said they don’t foresee a shortage of growers.
“There are obviously some pretty aggressive growers in other agricultural commodities who are willing to look at this,” Curle said. “In spite of the high capital investment, there’s opportunity there.”
