A year ago it was PEI potato growers feeling frustrated and worried as a dry summer and endless days of wet and cold in the fall cut deeply into the potato harvest.
This year it is producers in other major potato growing areas in North America feeling the pain, and with the heartless rules that govern market economics, PEI farmers will enjoy a profitable year.
It’s not that PEI growers had it easy. Like the last two years there were many dry weeks through the growing season, and too much rain at times in the fall. Perhaps a thousand acres were left unharvested, mostly in western PEI. Compared to other regions though this was still pretty good.
Manitoba has taken over from PEI as Canada’s largest potato growing province, and it had brutal harvest weather. About 75% of the crop was dug when weeks of wet weather kept harvesters idle. Then a hard frost ended any hope of digging about 12,000 acres of potatoes. And the potatoes going into bins during the stretch of wet weather will have to be watched carefully for disease.
In Alberta, 3,500 acres were pummeled by hail, and an additional 4,000 acres frozen in the field. Like Manitoba, growers tried to recover what they could from frozen fields, but disease pressures will be high, and no one knows how much will be marketable.
Farmers in these provinces will make a case for government support to cover some of the losses, estimated at $50 million in Manitoba alone. However (and I know there will be few tears shed for this) it’s the big potato processors that face an especially tough winter. Hundreds of millions of dollars have been spent in the last two years by some of North America’s largest french fry makers to expand production in western Canada. They will be hard pressed to (many say they simply won’t) find enough potatoes to meet production demands.
PEI’s big processor, Irving owned Cavendish Farms, opened a $430 million dollar plant in Lethbridge Alberta in early October. Simplot spent $450 million to double the size of its plant in Portage la Prairie, Manitoba. McCain Foods is spending $75 million to upgrade its processing plants in Carberry and Portage la Prairie. All are looking at the advantages of a low Canadian dollar, irrigation, and growers anxious to expand production. Wet weather and now heavy frosts have stymied these best laid plans.
Here’s the challenge for these processors. Their customers, the big fast food companies we’re so familiar with, simply won’t accept “Sorry we can’t supply the fries you’re expecting.” We’re very familiar with how Cavendish fixed the potato shortage problem here over the last few years, by importing tens of millions of pounds of potatoes from other areas, especially Idaho. Here’s the rub: Idaho too has had a tough harvest, heavy frosts in October, damaging thousands of acres. In North Dakota (where Cavendish has a third processing plant, in Jamestown) snow and rain kept 14,000 acres unharvested. There was flooding in the Red River Valley, another important producing region, and the harvest is down. You get the picture.
This means buyers and brokers are hunting everywhere for potatoes, and growers are almost able to name their price. The only ones to miss out on this bonanza will be those who signed contracts last spring. Some processors like Cavendish have a reputation for trying to contract as much of their supply as they can, to have some price certainty. Others, like McCain, have been more willing to gamble on the open market, and will be stung this year anyway.
The other upside for farmers is that this tight market is obvious to everyone right from the get go. Some years market watchers see a shortage coming and try to encourage farmers to demand better prices. Buyers fight back with psychological warfare, trying to convince farmers if they don’t sell now, they’re won’t be any demand in the weeks ahead. That just won’t fly this time around.
Older growers do talk about a time when their relationship with buyers and brokers was more cordial, that both understood that they needed each other. Like our politics, that has changed. There’s much more suspicion and hostility now in a business that’s become “winner takes all."This year it’s growers that are winning, and given the staggering debt loads many are carrying it’s very timely.
With busy consumers less willing to start from scratch with a bag of potatoes, quick to cook frozen potato products have become increasingly important. The big plants that produce these products create thousands of jobs across the country, so we can’t ignore their challenges.
What’s even more important is that the unsettled weather, untimely rain and frosts, could well be what we can expect from climate change. Who wins and who loses will have little to do with planning and capability. Uncertainty and risk are all that we can count on.