June often represents a month where farmers can observe the crops they planted
emerge from the ground, daily gaining strength on their way to reaching a yield
potential that everyone would be pleased with.
Although the new crop may be planted and growers are busy keeping it healthy in
the summer season, marketing does not end there. In comparison to bygone
times, much more volume both for fresh and processing is sold later in the
season. It is not uncommon for some growers to have planted, and maintained a
new crop (perhaps even carried out early kill down on seed potatoes), all before
shipping the last of their old crop to market.
Given that producers across Canada have generally received better prices in the
last two years, it could be very easy to become complacent in product pricing. It is
critical that old crop pricing levels not drop off and therefore harm pricing
potential for the new crop.
No matter what the commodity, all of us have experienced how easy it is for the
price to move down, and how painstakingly hard it is to inch it back up penny by
penny. Whether we like it or not, climate dictates a shipping window for most
regions; the earliest product starting in the south, moving to central, then north,
finally ending the crop out of refrigerated storages. When I first started growing
potatoes, our farm produced varieties for the “early market”. With great interest,
we followed the price up the eastern seaboard, as each area came into the
marketplace. Over time it became increasingly obvious that the price we would
receive was often much lower than the price received for those first entering the
market. The take home message has two components: Firstly, each region must do what it
can to maintain pricing throughout its marketing window, and to avoid dropping
the price as growers and packers in that area empty bins at the end of their
season. Dropping the price to move clean out inventory when buyers are moving
their focus to another area puts downward pressure on pricing for the new area
coming on. Secondly, price drops as each “new crop” area cleans up and the
action moves to the later harvesting areas can be exponential by the end of the
season (or when it becomes time for you to sell).
A final consideration in transition pricing should be its affect on the processing
market. Grower bargaining teams across North America have negotiated fair
contract prices with their processing buyers this year. Maintaining strong fresh
pricing helps processing growers and processors to maintain reasonable pricing
going into the next negotiating season. Surplus production and weak open prices
(for fresh or processing) hurts those efforts and destabilizes the pricing
environment for all sectors of our industry.
To help facilitate some of the transition from old crop to new, United Potato
Growers of America will be holding a Crop Transition Conference in Minneapolis
on June 13. The United Potato Growers of Canada would certainly encourage as
much participation as possible.