U.S. Cooperative Brings Potato Growers Together
Only four weeks after its formation, United Potato Growers of America had already completed its first program: the acreage bid buy-out program, which ended in mid-April.
United’s goal with the buy-out program was to take 12.3 million cwt. out of production for the next crop year, said Jerry Wright, United of America CEO.
After a detailed analysis, we determined there would be at least 12.3 million cwt. excess (this year),” Wright said.
The period for accepting bids ended in mid-April, but Wright said the results would be reported with the USDA’s planting report.
“We feel very encouraged by the national response,” he said. “We’ve already made the decisions, and we’ve effectively awarded the bids nationwide and will give an official report in conjunction with the USDA reports.”
As a follow-up to the buy-out program, which will directly affect 2005’s crop, United of America is hoping to have some impact on the remaining 2004 crop.
“We came into a crop that was significantly long, and we’re not going to stand back and do nothing,” he said. “In the coming weeks, United (of America) will announce that we have removed the excess inventory that existed in the fresh potato category, and it is under the control of United of America.”
In addition, United will be creating a price advisory, which Wright encouraged growers, shippers and sales organizations to support.
“In a short market now, we advise growers and sellers everywhere to anticipate that prices are going to rise,” he said.
Rising Tide
Though not all potato-growing states in the United States are members of United of America, Wright said that all growers would feel some effects of the new cooperation in the major growing areas.
“A rising tide lifts all boats,” he said. “And the truth is, with 70 to 75 percent of the national crop cooperating, we will be able to move the market and have a positive impact on the market.”
But the task is not an easy one.
With the lowest potato consumption rate seen in years, marketers of potatoes are going to have to work hard to get more people buying potatoes, Wright said.
“Until we get consumers consuming more potatoes, the industry doesn’t really go where we want it to go,” he said. “Consumers are walking away from potatoes because they have other alternatives.”
Combine the declining consumption rate of potatoes with the increased production capabilities of U.S. potato growers, and the situation looks worse.
“Over the last 20 years, (growers) are producing 10 percent fewer acres, but the increases in yields have produced an oversupply equivalent to 20,000 more acres,” Wright said. “That excess supply is just not coming out any faster at the consumer end, and excess supply is what drives prices down.”
Wright said attacking the issue at both ends by increasing promotions of potato products and working to keep supply down will give growers more control of the whole market situation.
Coming Together
As United of America continues to build steam, growers are coming together to approach the situation. And even those whose states do not have organizations are joining in.
So far, the following states and regions have formed cooperatives and belong to United of America:
• Washington and Oregon
• Klamath Basin
• Colorado
• Idaho
• Mid-Atlantic states
• Wisconsin
• Midwest (forming)
• Southwest (forming)
In addition, there is an at-large group that represents growers whose states do not belong. United of America also is in discussions with Prince Edward Island and New Brunswick growers, who have expressed interest in forming cooperatives.
Wright estimated that United represents about 70 to 75 percent of all potato acreage in the United States.
“The idea was, if we can unite and balance supply with demand, we can control our own fate rather than being at the whim of the market and at the whim of Mother Nature,” he said. “What I didn’t expect was once you get this many entrepreneurial farmers together and you get them to stop competing against each other and start competing together, I’ve been astounded by the unleashed creativity that comes out of these groups to solve about any problem we face.”
United under the Capper-Volstead Act, which allows the formation of cooperatives in the farming industry has a board that is made up of two representatives from each formally-organized cooperative as well as from the at-large district.
The principle of the organization is that United of America establishes policy and the state organizations manage the members and the money. The states, Wright said, are where “the rubber meets the road.”
The national staff is Wright as CEO and a minimal support staff, which has helped United hold down its overhead.
“The reason this is going to succeed is the momentum is real, and the determination is resolved, and this is grower propelled,” Wright said.
Wright also serves as CEO for United Fresh Potato Growers of Idaho.
For more information about United of America, visit www.unitedpotatousa.com.”
