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Cutting Costs

Although potatoes still are receiving high prices on the open market and contract pricing, some growers are concerned about the market. Fortunately, the economic conditions are looking up in some sectors that are important to the potato industry.

Foodservice establishments haven’t fared well in this recession. High end restaurants especially have suffered, as have quick casual operations. But fast food has actually benefited as customers trade down for value-priced meals. McDonald’s is approaching three months of positive same-store sales, which the company attributes to its value menu. As the largest market for frozen fries, it’s a positive sign for processors and growers.

There’s still reason to be cautious, with summer fuel prices rising and regulatory issues up in the air. Growers might be wise to evaluate their businesses for efficiencies that can reduce costs or labor.

That’s being done not only in the farms and packinghouses, but at the associations that represent the industry. Groups like the Produce Marketing Association and the United Fresh Produce Association are looking at ways to provide more value to members, and the United States Potato Board is continuing to work on its goal of increasing consumption of potato products.

But USPB recognizes that growers faced with a potentially soft market and rising costs might resent spending hundreds of thousands of dollars of their money in this economy, so the board is focusing on its long range plan and cutting costs where possible. One way the board is reducing expenditures is by eliminating raises for employees this year.

The staff at USPB does a great job representing the potato industry to American consumers, and the programs that have been developed in the last couple of years have been top-notch. We can all appreciate the sacrifice of the USPB personnel, and know that when the time comes to send in assessments, the board is using that money wisely to help growers remain profitable by expanding the market.

Originally posted Wednesday, Aug. 5, 2009

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