Negotiations are underway for next year’s potato grower contracts in Washington. Dale Lathim, executive director of Potato Growers of Washington, provided an update during his comments Dec. 11 at the Washington Potato Summit in Airway Heights, Washington.
The voluntary organization negotiates pre-season contracts on behalf of 65 member growers representing more than 80% of the frozen processing contracted acres in the state. Assessments are 13 cents per ton. The annual budget is $300,000, Lathim said. The organization is negotiating with Lamb Weston, J.R. Simplot Co. and McCain Foods.
“We have made what we think is a very reasonable offer that would restore your profit levels back to where they were in the 2013 crop year.”
“That was the last year profits were really good.”
Lathim said the organization asked for a figure that would restore growers’ profitability without negatively impacting the processing companies’ returns. Wall Street analysts have looked at his offer and said they believe the number could be absorbed by the industry without negative impacts, he said.
Lathim said he couldn’t share figures due to confidentiality while negotiations are underway. 'I can tell you it’s well over a double-digit percentage increase,' he said.
When one of the major processors previously asked growers to give up some of their margin to help the company compete in the world marketplace, growers did it, Lathim said. Processors also asked for relief following the West Coast port slowdown to help restore markets.
“The margins have eroded down to where they’re too tight.”
“With the profitability that’s in this industry, and as much money as the processing companies are making, they can certainly afford it.”
“We would hope that this year would be no different and we would be done in that same timeframe.”
Lathim told the negotiations will last 'however long it takes,' to the point where they are agreeable to both growers and processors. Typically, negotiations are resolved before planting begins at the end of February or first of March.