May 2008
Idaho potato growers predict good season for grain, weak for potatoes

Idaho’s potato farmers are talking about high market prices. High market prices for wheat, that is. In the past, wheat has always been considered a rotational crop with marginal profit, but this year wheat has taken on the status of a cash crop for many farmers.

The price of wheat has farmers throughout the state shaking their heads in amazement. Potato farmers across the spectrum fresh, processed, value-added and seed agreed that current prices of wheat and grains in general are a much-needed financial boon for potato farmers and could help alleviate the glut of potatoes on the market by taking some fields out of potato production.

At the same time, escalating prices of fuel, fertilizer, herbicides and insecticides are blunting the profit picture for all farmers.

Merrill Haney, a fresh potato farmer from Blackfoot, Idaho, said he’s planning on planting about the same acreage of potatoes as last year. Haney’s concerns for the 2008 potato season include water availability, overproduction, declining markets and high fuel costs.

“Even though we’ve had a wetter season, the reservoirs are still low,” Haney said.

The Snake River drainage is only 50 percent in the middle of March, he said.

“Fuel costs that affects every aspect of everybody’s life,” Haney said. “Inflation, nearly every time, is tied to fuel. Everybody has to readjust prices.”

Haney contrasts today’s rising fuel costs with the 1970s energy crisis. Then, supplies couldn’t meet demand at any price.

“Today, I can get all I want,” Haney said. “But back in the 70s, it just wasn’t available. You’d have to wait until your supplier would get his allocation. It makes you wonder apparently they are producing enough fuel in the world to meet demand and they’re getting a premium price. It’s just interesting compared to 30 years ago.”

Haney spoke positively of United Potato Growers of America’s efforts to curb overproduction of potatoes, but expressed concerns that “we are still at a break-even level. We haven’t reached profitability yet.”

Declining market demand for potatoes is a major concern for Haney.

“If you handed the average person a raw potato and a flat tire,” Haney said, “more people would know how to fix the flat tire then how to cook the potato. The potato industry has to adapt to changing life trends.

Clen Atchley, a seed grower from Ashton, echoes Haney’s concerns about declining demand for potatoes.

“I think we’re growing potatoes that consumers don’t like to eat,” Atchley said. “Russet Burbank is still an important potato, but it’s a shrinking market.”

The wheat market has been the saving grace this year for Atchley.

“It’s been nice. We used to use wheat and barley as rotation crops more than as income producers,” he said. “I’ve sold a lot of wheat in advance. You have to lock in on a price that shows you a profit. We may wind up cutting back on potatoes because it’s up in the air what we’re going to make on potatoes this year.”

The impact of increasing fuel costs is a major concern for Ray Tominaga. Tominaga, president of Potato Growers of Idaho, grows one-third for fresh market and two-thirds for processing in fields in Fort Hall, Firth and Wapello.

“I don’t know anything that isn’t related to energy,” Tominaga said. “We’re just barely starting to get into the spring season and diesel seems to be rising daily.”

This year is all about wheat prices.

“I haven’t seen these kind of strong prices since the 70s,” Tominaga said. “When you went to the bank, potatoes were your bread and butter. This year, it looks like grain is going to be our bread and butter.”

Despite the high grain prices, Tominaga said he’s not changing his plans for this year.

“We’re just going to follow rotation,” he said. “Some guys are going to chase the market. I hate to guess what the market is going to do.”

American Falls farmer Klaren Koompin sees a marginal market for fresh-market potatoes.

“I think contracts are barely paying the bills,” he said. “But anyone with a fry contract or dehy contract is going to be OK.”

Koompin agrees that potato demand has declined on the fresh side, but the value-added market (fry and dehydrated potatoes) is continuing to increase.

“The value-added side has continued to increase. It’s a little flat in the United States,” Koompin said, “but worldwide it’s up. In the last 15 years, it’s up 15 percent.”

Koompin attributes part of the growing export market to the devalued dollar.

“The exports are just phenomenal with the cheaper dollar,” he said. “If you go back seven or eight years ago, 10 percent was exported. Today, it’s 15 percent and that’s in the last four years.”

Koompin predicted a reduction in acres for the 2008 potato season. Despite the economic uncertainty of the times, he maintains a positive outlook.

“That’s one of the nice things about farming, we produce something that everybody needs. Farming doesn’t suffer in the recessionary times that we’re entering,” he said.”

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