There has been a significant increase in the Grower Return Index for virtually all of the major potato growing areas south of the border.
"Returns last year were not bad but we are projecting they will be up this year," Mark Klompien told a recent seminar held at Red Shores in Charlottetown by United Potato Growers of Canada. "That is really positive news."
Klompien is the chief executive officer of United Potato Growers of America. He told the Island industry the market for yellow potatoes appears to be leveling off, with Canadian export increasing by 70,600 hundredweight in the last shipping season compared to the year before.
He said shipping of yellow varieties is down 12 per cent from the same point last year and four per cent below the three year average, adding that is the first time in recent memory that has happened. He explained no single geographic region is dominating the market and some states are seeing a 10/5 bound bake price in the $14-$16 range.
"The crop is down in Idaho and the Red River Valley," he noted.
Turning to red varieties, he said Canadian shipments south were up 40,900,000 cwt compared to the previous year. Red production last year was 13.8 million hundredweight with this year's projections coming in at 12,717,000.
"The Red River Valley is the dominate player and there were some significant losses last year and production was down almost 35 per cent," Klompien told the industry group. "Idaho was down over 20 per cent but on the flip side, Texas was up 40 per cent and Canadian imports were up 20 per cent."
When it comes to Russet production Canadian imports increased 34,700 cwt last year. American production was 69.8 million hundredweight and the projection for the 2020 growing season is 65.7 million.
Idaho produced 30,623.8 million cwt last year and had a Grower Return Index of $10,49 compared to $6.68 the previous year. In the San Louis Valley, production was 11,312 million and the index rose from $11.40 to $14. The Colorado Basin produced 7,362.7 million cwt and saw the Grower Return Index move from $7.87 to $10.84. Wisconsin saw its Russet production increase last year to stand at 5,209.8 and the index went from $12.03 to $13.26.
The guest speaker noted Russets are very elastic in terms of demand and a price change up or down can have a more significant impact on the market than for most varieties. He said the 10 per cent lower supply in the market resulted in a 63 per cent greater return.
"Put it another way, a grower would make more growing 90 acres this year with the average index of $11.41 than growing 100 acres last year with last year's $6.99 index," he explained.
He noted there has been a significant expansion in processing capacity in the last several years including plants in Idaho by JR Simplot and McCain Foods, Lamb Weston plan in Oregon , Washington State and the new Cavendish Farms plant in Lethbridge, Alberta. Currently, JR Simplot is building a new plant in Portage la Prairie, Manitoba and Klompien is expecting the same company will be building a plant in the Columbia Basin within five years.
The United of America CEO said there has been increased demand for what he called cur and form products like hash browns and tater tots. He said all of the new plants built within the last 5-7 years have the capacity to produce these products.