Probably no factor is more important in determining a fresh grower’s financial return than total area planted to potatoes. We witnessed this past year that, although fresh market shipments increased slightly more than four million hundredweight from areas that report to the USDA Market News Service, prices declined far more than this extra volume would suggest.
The main driver behind this phenomenon was likely the vast quantity of potatoes that could not find a home in any of the traditional fresh or processing markets throughout the country.
For instance, in Idaho alone, an extra six to seven million hundredweight likely went for livestock feed or found no home at all, compared to the year before.
An even greater quantity of potatoes from throughout the country that did not have a traditional market home acted like an anvil over the market with the potential to provide even more product for the fresh and processing market if prices were any higher than they were. In several areas, this product without a home corresponds closely to the increase in acreage from the previous year.
The potato industry must use as a starting point what the demand is from the market and determine the appropriate level of production. In the fresh market, the right number of acres can be determined by taking the desired shipment number and factoring for the trend line yield, expected pack percentage and storage shrinkage.
Of course, every year nature will push a specific region away from its predicted yield level and quality for that particular season. However, the overall national production will be close to the long-term averages. If the main storage areas have the right number of acres to begin with, the winter, spring and summer potato areas will increase or decrease slightly their planted acreage to keep the market in balance.
To complicate matters, a fresh market potato only truly becomes a fresh market potato once it has finally been sold in the fresh market. Sometimes, potatoes originally intended for the fresh market are used by dehydrators and even frozen and chip processors, while at other times potatoes flow from those sectors into the fresh market.
For this reason, it is important that the Potato Marketing Association of North America chapter in your area is armed with strong member support and clear data on the processing needs by the plants in your area to make sure the right number of acres is planted to meet the needs of the processors.
United will be working with its chapters to review the fresh market shipping levels appropriate for long-term economic stability based on production costs and grower returns. United grower participation in these discussions and meetings over the next few weeks and months is welcomed.