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More than two dozen have ownership in Nebraska’s largest seed-potato company

Alliance, Neb., may best be known for Carhenge, a tourist spot featuring old cars stacked to look like the United Kingdom’s Stonehenge. But the small town in western Nebraska also is home to the state’s largest seed potato grower.

The state isn’t known for its potatoes – it’s the Cornhusker State for a reason – but in Box Butte County there are about 6,000 acres of potatoes, and Western Potatoes Inc., grows about one-third of them. The company farms on about 2,000 acres in the Alliance area, plus an additional 400 acres in Garden City, Kan., and 1,200 acres in northeastern Colorado.

Western Potatoes is employee owned, with about 25 people controlling shares in the company.
An employee stock ownership plan (ESOP) is commonly used as a benefit to employees, who typically don’t purchase stocks outright. An ESOP is a way to motivate and reward workers, and it’s frequently implemented when an owner wants to leave a company but wants it to remain in good condition and be a benefit to the remaining employees.

Usually, a board of directors – the members of which are nominated and approved by the employee-owners – runs the company. At Western Potatoes, Jim Allen, the president and general manager, handles the day-to-day operations. He’s been with Western Potatoes for about 17 years, and in that time the company has doubled in size. He’s watched as low prices and over-production caused the potato industry to consolidate, and it seemed like growers were either going out of business or getting larger, Allen said.

“It was a choice to either get bigger or do something else, and we chose to get bigger,” he said.

It wasn’t easy to grow, and there was a steep learning curve to increasing acreage and expanding to neighboring states.

“Once you get comfortable with getting big, you learn how to manage everything else,” he said.
Western Potatoes now employs about 20 people full-time, all part of the employee stock ownership program. During harvest, there might be as many as 60 seasonal workers on the company’s farms.

Production Issues

About half of the tubers Western Potatoes grows are seed potatoes, making it the largest seed growing operation in Nebraska. The company grows mostly generation one through four minitubers, and the seed is 100 percent certified by the state’s certification agency. About 85 percent of the seed potatoes are Frito Lay varieties used for Western Potatoes’ other operations or sold to customers in-state and in the Southwest.

Nebraska’s proximity to states like Texas and Arizona, where some of the seed crop goes, amounts to freight savings for customers and gives Western Potatoes a competitive advantage over other states that produce more seed tubers but are further away, Allen said.

The other half of the Western Potato crop is sold for chipping – again, about 85 percent goes to Frito Lay.

Potatoes grow well around Alliance, with few vectors to damage the crops.

“We don’t tend to have a lot of aphid pressure or disease pressure,” Allen said.

The biggest concern is potato scab, which is managed by keeping a long rotation. The growing area is fairly isolated and temperatures drop at night, reducing the disease pressure. The area also doesn’t get much snow cover, so there are fewer volunteer potatoes in the spring, Allen said.

But there is one pressure that is increasing in the area – the rising cost of renting land.

Renting Acres

Western Potatoes rents all of the center-pivot plots it grows potatoes on, and as soybean and corn prices have increased over the last year, so has the rent.

“Land rents right now have gone up, and justifiably so. Right now, there are other crops that are easier and more profitable to grow.” Allen said. “That’s a real problem for strictly a potato operation.”

Fortunately for Western Potato, Allen has worked with the landowners for many years, and the relationships he’s developed in that time have helped when negotiating rates for next year. One way the company builds those relationships is by planting a rotation crop after a plot of potatoes is harvested.

It’s not a necessity, but it builds goodwill and lets the company manage the fields with the best crops for building nutrients back up, Allen said. Western Potatoes typically plants dry beans as a rotation crop, but will also use wheat as a fill crop, which Allen said is doing even better than corn right now – and landowners appreciate the extra effort.

Originally posted Tuesday, Nov. 20, 2007

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