US Potato chip manufacturers feel crunch of rising potato costs

It's not the Great Irish Potato Famine of the 19th century, but the summer of 2008 has turned into a major test for potato-chip producers across the country.

The price of a bushel of chip potatoes has doubled in the last few months, going from $9 to a current rate of $18.

Floods along the Mississippi River in the Midwest destroyed large swaths of potato crops, forcing large buyers into East Coast markets and creating scarcity.

The potato shortage has become so great that some chip producers, including Middleswarth Potato Chips in Snyder County, have had to shut down production.

Dick Farneth, a potato buyer for E. K. Bare &Sons of Bird-in-Hand that supplies most of the region's potato-chip producers, said there have been rougher times with catastrophic crop failures, but he said the pricing of potatoes has become "obscene."

Instead of inflation, Farneth said "agflation"has taken over with the rising costs of fertilizers, fuel and transportation.

"The farmers are really having a tough time, and consequently anyone that buys anything in agriculture feels it,"Farneth said.

Although the East Coast crop of potatoes has not been bad — an average growth year, Farneth said — other factors have made the shortage and high prices more pronounced.
Farneth said farmers have been focused on growing corn, soybeans and wheat this year because of the guaranteed high prices they are commanding.

In past years, farmers would plant a few extra acres of potatoes and take a chance that the price would be high, Farneth said, but the continued maintenance and labor-intensive harvest of potatoes has not made the crop attractive.

"There was no incentive for any farmer to plant any extra acres of potatoes,"Farneth said.