BURLEY —The old adage that for a farmer to have a good year, another farmer as to have a failure seems to come true for the U.S. potato market.
“There are a lot of issues in the global potato market that will impact the U.S.,” Bruce Huffaker told participants during the University of Idaho Ag Outlook. He heads the North American Potato Market News, Inc.
While the Pacific Northwest, including Idaho, had a great crop; the rest of the U.S., Canada and European Union suffered widespread crop losses and poor quality.
Europe production losses are estimated at 20 percent including a 32 percent drop in Belgium, one of the world’s leading french fry producers. Not only is the crop smaller but so are the tubers with almost half having diameters of less than two inches. To complicate matters, glassy tubers are also a problem in Belgium.
Fry exports from Europe have become a huge part of the global market growing from under 500 million pounds in 2003 to 3.661 million pounds for the marketing year ending June 30, 2018. But given the production losses, those exports could be down 360 million lbs. next year.
At the same time, demand is projected to increase 360 million pounds. That could create a shortfall of 720 million pounds in the coming year.
While American growers may be salivating at the prospect of turning their potatoes into fries, the reality is that the North American crop is too small and processors don’t have enough capacity to make fries to fill that demand. Fry exports from North America have been flat for the last three years, largely due to capacity constraints.
“We don’t have enough capacity for North America to make the french fries the world needs,” Huffaker said.
Losses in Europe will also impact the dehydrated potato market. The U.S. has been importing cheaper industrial potato flakes from Europe last 10 years or so while U.S. dehydrators have focused on higher end, higher value flakes. End users are starting to realize they can’t get product from Europe and are starting to turn to the U.S. to fill needs. Filling that need may also divert some potatoes from the fry market.
Potato chip processors are also looking to the Pacific Northwest for supply.
Wisconsin is a leading grower for the chip market but is expected to harvest just 26.8 million cwt, down 5.9 percent from 2017. Huffaker has heard that the four largest Wisconsin growers abandoned 7,000 acres this year.
“They had the harvest from hell,” Huffaker said. The region saw 16 inches of rain in September and October and then was too warm when potatoes went into storage. That was followed by a hard frost that caused 25 to 30 percent damage.
“That doesn’t make for good storage,” Huffaker said. He’s already hearing reports of Wisconsin farmers dumping potatoes because they are melting in storage. That may explain why chip potato shipments are running ahead of last year as chip processors try to salvage as many potatoes as possible. He expects shipments to fall 4 percent for the rest of the year.
The western U.S. is awash in chip potatoes and those potatoes are moving east despite the added transportation cost. A chip company is also shipping potatoes from Nevada to Orlando, Fla. to keep their plant running. A fry company in Prince Edward Island is buying potatoes from Idaho and shipping them by truck, rail and boat to keep its plant operating also.
Although processors have the opportunity to make money this winter, Huffaker does not expect to see higher prices for growers unless the supply is smaller than forecast. He thinks it will take 18 months to straighten out the potato processing supply chains — provided that Europe can harvest a normal crop in 2019.
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