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Getting it Right

“This is the year that potato farmers must get it right,” says Merrill Hanny, a 56-year-old third generation fresh market potato farmer as he sits in his home office at Merrill Hanny Farms east of Shelley, Idaho. Here in the rolling Snake River Valley, potatoes are such a core of the community’s identity that the local school and mascot are known as the Shelley Russets.

Hanny foretells his spring planting guidelines based on recommendations from the United Potato Growers of Idaho. “It’s crucial for us to balance fresh inventories with market demands.”

Due to a carryover from record yields of the 2009 spud crop, coupled with a declining consumer demand, Merrill plans to follow United of Idaho's guidelines to plant 9 percent fewer acres of Russet Burbanks in late April than he did in 2009.

Merrill says a catch phrase that sums up the potato industry in the past few years is “you can’t market hope. Facts and trends set market prices balanced against supplies. We must make rational decisions based on solid information rather than speculative hope, if we are going to succeed in returning profitability to fresh markets.”

As he glances at information listing historical and trend line data provided by United, Merrill expects this year’s profit margins to be slim, about 20 cents a cwt.

“This year, United is projecting costs of $6.53 a cwt. and a sale price of $6.73 a cwt. for 2010. The sad reality is no one gets rich doing this,” says Merrill, who will plant about 450 acres instead of 500 acres. He projects a total yield of 160,000 cwt.

He has decreased his potato production significantly since 2004 when he joined United. “I used to plant about 700 acres,” Hanny said, who has replaced potatoes with high protein hard white wheat, which is becoming popular with consumers and the millers.

For 2010 United has advised growers to plant 30 percent less then they planted in 2004. Merrill would like to see United change its base from 2004 acres to acres planted in 2008.

“Grain was such a viable alternative that people planted only the potatoes that they actually needed to in 2008,” he said, “and I think that would be a good baseline to use for future calculations for planting allowances.”

Hanny painfully understands how oversupply can affect prices. After joining United in 2004, he plowed under $100,000 worth of perfectly good potatoes in three days to reduce supply, and says he can still remember the sickening crunching sound the potatoes made as his tractor wheels drove over them.

He plans to never do that again, instead relying on United’s production guidelines.

“Do I have regrets? No. I’m glad we took that step. Every year, it gets a little easier to make the decision to target your own potential production to match market demand.”

Despite slim profit margins, Hanny still grows potatoes, like his late father Grant, and his late grandfather, Frank, both did. He and his wife, Bethea, who were married in 1975, both wanted a farming lifestyle to raise a family.

“Merrill has always been available to support our children's activities,” said Bethea of their seven girls and two boys. “The farm has allowed us to have a lot of family togetherness and has taught the kids responsibility, too.”

After their marriage, Hanny began farming 160 acres a couple of miles from where he grew up.

“My dad let us share some equipment and helped us get started with our own enterprise. In 1997, when he died, I bought his farm, about 400 acres, from mom,” he said.

In addition to that land, Hanny leases acreage, growing 100 acres of alfalfa and 1,100 acres of high protein hard white wheat. After a field is in spuds for a year, he rotates to wheat for two to three years.

Like his dad, he grows Russet Burbanks for consumer appeal.

“The Russet Norkotah has made some inroads in the potato industry, but it doesn’t seem to have the flavor and substance that a Burbank has,” he said.

During his decades of farming, Hanny has seen efficiency increase for potatoes, while demand has declined.

“Every year, growers have become better at what they do. Technology continues to result in higher production year after year, about 4 cwt. of potatoes more per acre. At the same time, consumer demand for potatoes has decreased. In 2004, the average person consumed 130 pounds of potatoes a year. By 2008, that number had dropped to 115 pounds,” Hanny said.

The decline in consumption, especially in the last year, is partly due to the recession.

“I’ve read studies that show restaurant numbers are down about 25 percent. Consumers can’t afford to eat out as often. When they do, most entrees include a baked potato or french fries,” he said.

Consumer lifestyles have changed as well, Hanny said. Instead of baking potatoes for supper in an oven, Americans have become a microwave society, relying on whatever food can be fixed in two minutes in the microwave.
To try to increase consumption, the United States Potato Board has launched national ad campaigns promoting the healthy aspects of potatoes and is working to develop products to fit the microwave society.

Hanny is encouraged about the upcoming season’s production costs. “Fuel prices have declined, so the cost of fertilizer and chemicals should go down. Those prices seem to be related to fuel. Seed prices should be lower also, due to the prices we’re getting.”

Labor costs are stable this year, Hanny said, who generally hires six Hispanic summer employees through the H2-A federal government program.

“It’s a win-win situation for everyone. We have a lot of the same workers from Mexico coming back every year.”
As for the water outlook, Hanny, a board member of the Idaho Irrigation District, believes there is enough carryover water in Palisades Reservoir to meet farmers’ needs even though snow pack levels are at about 50 percent of normal for this time of year.

“We definitely need more moisture before spring. Being in a drought year like we are, the ground should warm up and dry out quicker than last year, so we may be in the fields sooner than usual,” he said.

Hanny considers himself blessed to still be in the spud business.

“A few years ago, a devastating potato virus flared up overnight and some growers around this area lost 30 percent of their production. The cause was traced to seed potato sources, and corrections have been made. We were fortunate it didn’t affect us,” he said.

Just like he did as a child, Hanny and his children look forward to harvest every fall.

“Our kids still love coming back as often as they can to be a part of the harvest,” he said. “It’s fulfilling and nostalgic for them.”

The Shelley School District traditionally dismisses school the last week of September and first week of October, so teens can help with the spud harvest.

“We hire about 12 people for harvest, including many local kids. They can earn about $800 or $900 in two weeks, sorting potatoes or driving truck. They work some long days, from about 8:30 a.m. to 9 p.m., but they love it.”

Two Hanny children, Austin, 18, and Aubrieanna, 16, still live at home, but the Hanny’s doubt there is much future for them to earn a living by farming.

“We’ve always encouraged our children to get a good education, so they have a career other than farming,” Bethea said. “Our oldest son Kendrick is 29 and would love to farm, but he works for an international marketing firm in Rochester, N.Y. Austin plans to study business at Utah State University.”

This year’s harvest is absolutely crucial, Hanny emphasizes. “If we don’t match planted production with needed demand this year, the results will be devastating, and we could see farmers forced into liquidation to satisfy bank notes.”

With 80 percent of fresh growers belonging to United, Hanny is optimistic there will be enough participation to have an impact on the market.

“Relying on United’s formulas for production projections, we won’t be on a roller coaster ride from profitability to despair in a single year,” he said.

Originally posted Monday, Mar. 29, 2010

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