Leader Q&A: Lee Frankel

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Weather Worries
Parts of Iowa are underwater after a few rounds of severe storms, northern Michigan got dumped on with almost a foot of rain and wet, cool weather has delayed Prince Edward Island plantings. Even Washington and Idaho are behind schedule from cold, wet weather.

At the same time, storage potatoes are trading at record prices and processors are reportedly looking for supplies. Although high prices for potatoes are a good thing, swings in price show that demand is not in line with supply. In an environment of wide price disparity, it’s just as possible to get two cents a pound as it is to get 50 cents a pound.

But what causes these price fluctuations? Some of it is caused by confusion in the marketplace from inaccurate information. eSpudman spoke with Lee Frankel with United Potato Growers of America about what the cooperative is doing to make sure everyone uses the same numbers and how USDA’s number can be improved.

With acreage reduction and the possibility of further weather-related reductions and reduced yields, maintaining accurate production and storage numbers is vitally important to having a stable and profitable potato market.

Leader Q&A
Lee Frankel,
President and CEO, United Potato Growers of America
What has United been doing to make sure growers, shippers and processors have the best information?

Five weeks ago United hosted a meeting with the state commissions as well as NASS administrators at the state and national level to put all the issues on the table.

United particularly focused on improving the accuracy of acreage and inventory data. By improving the harvested area data, production data will be closer to the actual number once the yield data is used to make the calculation. NASS agreed to observe the United Potato Growers of Idaho project to map and count every potato acre in Idahoto determine if this method will produce accurate data on a cost effective and sustainable basis. This will help guide the decision to supplement or replace the current survey methods used by NASS.

United has also looked for ways to legally make sure the industry as a whole has access to accurate inventory data throughout the year. NASS conducts only a single survey of stocks per year in important storage states. United is working with NASS to see if monthly United surveys of fresh stocks on hand could be verified and published by NASS or if it is possible financially for NASS to conduct more frequent or even monthly surveys in all of the major storage areas so that all parts of the potato industry have a complete and more accurate picture of the stocks of potatoes around the country.

The other area of concern is with the stocks on hand numbers. At this point NASS is working at United’s request to come up with a budget to see how much it would be to increase the survey frequency. Washington and Idaho, at this point, are only surveyed once per season, whereas some other production areas have one survey per month.

This may be something on which United will have to work with NPC [National Potato Council] to get funding through Congress. United does conduct stocks-on-hand surveys for fresh potatoes but not for processing, but we’re seeing if it would be possible to have a breakout. We’re going back and forth [with NASS] to see if there’s a chance to use the fresh market data and something similar for processing.

There are additional privacy and confidentiality issues, at least at this point, for the fresh market data. NASS is reviewing and considering it and getting ready to reply to us. We should know in a few months.

How far off are USDA’s numbers and what effect has that had on the potato market?

NASS market reports have overstated storage numbers by up to 20 percent. While United did have accurate data, not everyone is a member, so basically a number of sales organizations thought their situations were unique in terms of having less production or a lower packout, so they figured if NASS has a lower packout then they won’t raise their prices. That was part of the cause of the large price spike that began in May. In an ideal situation, if the market has the right information then the prices and promotion can be set at the correct level.

The fresh industry feels they lost $60 million in Idaho and $20 million in the Columbia Basin by too many people responding to the NASS numbers instead of the United numbers. The last time there were similar stocks on hand, prices were much, much lower – like two cents per hundredweight low, and we’re not seeing that this time. So I think a considerable number in the industry did go by the United numbers.

It is critical that United works with NASS to make sure the numbers are as accurate as possible. Twenty percent accuracy just doesn’t cut it any more. We’ll work with NASS and state administrators to make sure that the margin of error is close to zero. TEXT


Market Report
Cool, wet weather from the West Coast to the East Coast has set back the 2008 crop seven to 14 days. Coupled with reduced acreage, prices for 2007 storage potatoes have been increasing since May and shipments of the 2008 crop out of Florida and California have outpaced last year at this time. The Top 5 regions shipping potatoes, in order, are Idaho, California, Colorado, Washington and Florida, according to USDA’s National Agricultural Statistics Service in mid-June.

Prices for Idaho russets have hit record highs, but it’s not all good news as rain has delayed plantings in higher elevations. Low temperatures have delayed the 2008 crop, with emergence finally visible as far north as Idaho Falls. Shipments of the 2007 crop are strong, with 50-pound cartons moving at $20 to $22 for 40s, 50s, 60s and 70s.

The Kern district of California is shipping heavy volumes of 2008 crop potatoes, with volume expected to increase as the russet harvest begins. Norkotah 50-pound cartons are moving at $24.30 for 70’s and $22 to $24 for 80-count. Yellow potatoes are selling for $16.45 for a 50-pound carton of size A potatoes and long white varieties are $14 to $17 for 50-pound sacks.

Prices for 2007 potatoes from the San Luis Valley of Colorado are also higher. Eighty-count 50-pound cartons are selling for $21 while 40- to 70-count cartons are trading at $22.

Washington growers have nearly completed plantings and the crop has mostly emerged. Potato plants in southeastern Washington are in bloom but still days behind. Cartons and bales of the 2007 crop are trading at higher prices, with 50-pound cartons generally trading at $21 to $22 for 40’s through 80’s.

Florida is nearing the end of its harvest so shipments from the state should begin to decline. Shipments of the 2008 crop from Florida in mid-June have been 29 percent white potatoes, 12 percent yellow potatoes and 59 percent red potatoes.


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