Idaho growers reject process contract
Idaho process growers rejected contracts for the 2012 season extended by ConAgra Foods Lamb Weston and the J.R. Simplot Co. The companies offered growers a 10.7 percent increase over 2011 contracts.
Dan Hargraves, executive director of the Southern Idaho Potato Cooperative (SIPCO), said that the organization originally was seeking a 15 percent increase from the three processing companies. McCain Foods USA had tendered an offer of 13.4 percent, contingent upon ConAgra and Simplot agreeing to the same terms.
Additionally, the three process companies wanted to include new language in the contract to reject potatoes for zebra chip defects.
Hargraves said that with production costs averaging about $3,000 an acre, no growers could accept the risk of zebra chip rejection without additional compensation for the inputs necessary to protect potato crops from psyllids, the insect that carries the bacteria responsible for zebra chip.
Hargraves said that growers in 2012 are facing rampant inflation and rising fuel costs, along with zebra chip defects.
According to Hargraves, they hadn't even included zebra chip costs in their budget numbers and the original cost of production.
"We were willing to take that off of our margin requirements," Hargraves said, "but we felt that the level that McCain agreed to was our bottom line. We didn't want to go below that.
"It's unfortunate. We would have liked to have had an agreement that worked for both sides. We're disappointed. That's the best way I can describe it."
Hargraves said that following the rejection of the contracts, the companies indicated that they would not be making revised offers. He expects they will be going directly to growers with the contracts.
Doug Gross, president of SIPCO, said that a small percentage of potatoes coming out of storage in western Idaho now are showing signs of zebra chip.
Gross said that growers in western Idaho will have to step up their systemic insecticide program to combat the likelihood of more psyllid outbreaks in 2012. He also noted that they are counting on assistance from the University of Idaho with scouting and insect trapping.
"We're budgeting to have to spend $75 to $150 more per acre on insect control than we spent in 2011," said Gross, who is hoping that growers and processors will yet bridge their contract differences.
"There's still time for more discussions with the processors," Gross said.
Nate Schroeder, a potato grower in southeast Idaho, said he heard that some of the contract incentives would have been hard to meet.
"You'd almost have to have the ultimate perfect spud," Schroeder said. "It's going to be interesting. They (processors) haven't talked to me yet."
Over in Wisconsin, Duane Maatz, executive director of the Wisconsin Potato and Vegetable Growers Association, said that there has been no real progress in contract talks with McCain, but they have discussed new avenues beneficial to both growers and processor.
"Every week that goes by, the price of potatoes goes up," said Maatz, "because the cost of production is going up every day."
Maatz said that with temperatures in the 60's this week, planting season is fast approaching and farmers are going to have to decide what to plant.
"The decision now that is being made is, 'Am I going to grow a competing crop or am I going to grow French fry potatoes?'" said Maatz.
Maatz hopes to have further negotiations with McCain this week.
While process negotiations in Wisconsin have just begun, Dana Wright, executive director of the Agricultural Bargaining Council of Maine, expressed concern with current contract offers in the West.
"Maine is watching developments in Idaho and Wisconsin," said Wright. "We're concerned about these areas. Wisconsin is going to be big for us."
In another important story coming out of Maine, Wright said the retirement of Sen. Olympia Snowe is a big loss for potato growers there.
"We'll miss her," said Wright. "She and Sen. Collins worked well together and were a strong voice for the potato industry."