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A Time of Transition

It’s been wet and cold here in Idaho through the month of May. This was the coldest May in recorded history here, and over Memorial Day weekend we had a cold front come through with dropping temperatures, howling wind and freezing rain that turned to snow.

The weather was so inclement on Saturday that an ultra-marathon, a 50-mile race, was cancelled in the middle of the day due to the terrible conditions. Summer can’t get here soon enough. Bring on a little solar heat.

We don’t have any control over the weather, but potato growers do have some control over market conditions and University of Idaho agricultural economist Paul Patterson has some suggestions on what measures need to be taken to return the market to profitability.

Paul spent part of a morning the first week of June discussing the current state of the potato industry with me. He’s been a keen observer of economic cycles in the industry for over 25 years and he has some sobering and strong suggestions for growers and the future health of the industry. You can read my interview in this month’s newsletter.

Finally, I want to remind everyone that Spudman will be hosting another webinar this coming Tuesday, June 15, from 1–2 p.m. EST. Sponsored by Valley Irrigation. Howard Neibling, an associate professor and Extension water management engineer at the Twin Falls, Idaho Research and Extension center will discuss how to improve irrigation application. Click here to register for the event. Registration is free but limited to the first 100 registrants.


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Paul Patterson
University of Idaho

Lifestyle changes.

That’s the summary conclusion from University of Idaho agricultural economist Paul Patterson when discussing what steps growers must take to manage potato supplies in today’s market conditions.

Patterson uses the analogy of someone who has lost weight and wants to maintain the weight loss while discussing the current conditions supply and demand in potato markets.

“You can lose the weight but if you don’t change your lifestyle permanently, you’re not going to achieve that, and that’s the attitude of some of these growers, we lost the weight now I can go back and eat the way I used to, no you can’t. You need to make a permanent change in how you approach things in the potato industry in order to go back to where you can achieve prices that are going to allow you to recover your cost of production,” Patterson said while discussing the current state of the industry from his office in Idaho Falls during the first week of June.

Patterson has been studying the cyclical trends of the potato industry for more then a quarter century and he said that the industry is fundamentally different from what it was 20 years ago, or even 10 years ago.

“There’s an assumption, particularly among growers, that whatever the industry was in the past will come back. Therefore, whatever their production practices were, or how they wanted to market things, that their past success will also be something they can rely on in the future,” he said.

With demand continuing to decline while yields continue to climb Patterson believes that growers cannot continue expanding their operations to take advantage of economies of scale to wring out further profits with higher efficiencies.

“Getting bigger is not going to gain you any advantage,” he said. “I think all the economies of scale, particularly on the machinery side of things have been pretty well wrung out of the system.”

Patterson said that if demand isn’t growing then you have to reduce potato planting every year to compensate for the increased production to balance supply and demand.

Until the 1980s there was a continuous increase in demand and the market could absorb greater supply but that is no longer the case said Patterson.

Growers need to be targeting production to demand thereby returning to a profitable cost of production. That will require an overall reduction in acreage in production.

To see a return to profitability Patterson said the industry needs to see a 60,000 to 75,000 acre reduction nationally with Idaho reducing its acreage by 25,000 to 35,000 acres.

It’s a matter of changing your business operation to accommodate the changing lifestyles.

 

Market Report

Efforts by state and national organizations to cut fall potato production by 15 percent for 2010 may have fallen short of projections made by grower organizations and agricultural economists.

North American Potato Market News (NAPMN) latest market forecast predicts a 5.5 percent national reduction in 2010 fall potato acreage.

Preliminary estimates of 2010, fall potato planting is 886,000 acres, down 51,100 acres from last year, a 5.5 percent reduction.

Bruce Huffaker, editor of the NAPMN, warns that the projected acreage cuts may be insufficient to raise russet prices to profitable levels unless average yields decline.

The largest reductions appear to from the Pacific Northwest region, with an estimated reduction of 15 percent. Much of that cut is coming from the process sector, and that could be a soft 15 percent.

With some process growers planting non-contracted acres in anticipation of a possible shortage in the process sector. Should that shortage not materialize, those potatoes could end in the fresh market. Huffaker estimates that process growers in Idaho may have planted as many as 10,000 acres of “open” potatoes that will be available to the strongest market, either process or fresh.

The cited acreage totals are estimates with the USDA releasing its first fall acreage report on July 9 with the July Crop Production report.

A USDA National Agricultural Statistics Service press release on May 14 said that the as of May 1, the 13 major potato producing states held 87 million cwt. in storage, up 11 percent from 2009. Processors in the nine major states have used 142 million cwt. potatoes this season, down 5 percent from last year and dehydrating usage, at 26.6 million cwt., was down 6 percent from last year.

 

Industry Innovation

USDA’s Agricultural Research Service (ARS) recently announced its continued development of a blight resistant potato like the Defender variety and continuing research on the health benefits provided by potatoes.

At the Aberdeen, Idaho, ARS research station, Rich Novy and Jonathan Whitworth’s research into the late blight fungus Phytophthora infestans resulted in the development and release of the Defender variety in 2006, and there is another late-blight resistant variety that is now being trial-tested in Idaho, Oregon, Washington, California and Texas.

At the ARS station in Prosser, Wash., geneticists Chuck Brown and Roy Navarre are studying increased antioxidant activity and elevated levels of phytochemicals in potato varieties.

Brown, Navarre and their colleagues have devised new analytical methods for detecting and measuring phytochemical concentrations in tubers. They have found phenolic concentrations in wild and cultivated potato varieties ranging from 100 to more than 1,500 milligrams per 100 grams dry weight.

The antioxidant activities of phenolic acids and compounds and their potential use in preventing heart disease, cancers, respiratory problems and stroke have created a lot of interest in developing high-phytonutrient potatoes.

Some of the potatoes being tested have high levels of antioxidants that rival vegetables such as spinach, Navarre said.

For more information on these developments, click here.