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Oregon Grower Rallies to Survive Loss of Big Account

Sherwood, Ore., potato grower/packer/shipper Jay Hoffman, who loves baseball and even has a regulation diamond on his farm, is not going to let the loss of his best customer shut him out.

For more than 15 years, Hoffman’s Tualatin (Too-WALLA-Tin) Valley Potato supplied gourmet chipmaker Kettle Foods of Salem, Ore., with Russet Burbanks.

When Kettle Foods first began operations in the early 1980s, it bought a lot of its raw spuds from central and north Willamette Valley growers within 50 or so miles of the plant.

Hoffman Farms was at one time the biggest supplier, and more than a few times was able to keep the plant running with just-in-time shipments.

But as Kettle Foods began growing, it started buying from larger producers in the Columbia River Basin on the other side of the Cascades, where growing conditions are better, center pivots rule and sugar levels are more in line with what the company is looking for.

Hoffman wasn’t the only valley grower to lose business.

“It’s a very, very competitive market,” Hoffman said. “Most of the production has shifted to east of the (Cascade) mountains.”
Big Appetite

As Kettle Foods grew, so did its appetite for spuds.

“When I first started shipping to Kettle Foods, a semi load (50,000 pounds) lasted three days,” Hoffman said. “Now it barely lasts four hours.”

He said that the split between the company and himself was not driven only by quantity and price.

“We had some issues with weather and our sugars weren’t just right,” he said. “We fight that all the time here in the valley. With inconsistent weather, your sugars can be a little bit off.”

When sugars run too high, potato slices cook up too dark.

“It’s going to be a tough transition,” he said. “We got hurt pretty bad. I’ve got a thousand tons left in the cellar that Kettle doesn’t want. The flake plant won’t even take them. They’ll be spread out over a field.”

Last year he had to dump 3,000 tons that didn’t meet Kettle’s specs.

“We would have loved to have Jay’s potatoes work for us,” said Jim Green, Kettle Foods public affairs manager, “(but) sugar levels are huge in our world. Jay was a great supplier, (only) 45 minutes from us. I’m sorry to see that didn’t work. He’d turn on a dime for you – a great grower.”

Green said that he tells people that the good thing about Russet Burbanks is that they have a lot of sugar, and the bad thing is that they also have a lot of sugar.

One point brought home to Hoffman after the Kettle Foods incident is that it’s best to spread out your accounts.

“They were probably 50 percent of my farm operation, two-thirds of the acres,” he said. “I should not have let one customer account for that much.”

Hoffman now grows around 225 acres of mostly reds and Yukon Gold spuds on owned and leased land, down from a high of 600 when he was going strong with Kettle Foods.

He said that unlike the bigger spud growers east of the Cascades, who are closer to major processors and can find other customers if one dries up, insular Willamette Valley growers don’t have that option.

What’s more, it costs more in inputs to grow spuds in the unpredictable, soggy valley, where blight is much more of a problem, Hoffman said.

“We could go up to $200 an acre (eight applications) just for the blight,” he said.

A Fresh Answer

After the Kettle Foods account went south, Hoffman decided to deal more with local fresh-market buyers, most of whom are heavy hitters.

In addition to Albertson’s, Sysco, United Grocers and Safeway, he sells through a broker into WinCo, a huge price-leader grocery chain headquartered in Idaho.

Unlike his arrangement with Kettle Foods, there are no contracts with the stores. It’s all month-to-month open buying, and buyers are forward thinking.

“The toughest thing in this business is quoting prices a month in advance,” Hoffman said. “And you’re only as good as your last order.”

Tualatin Valley Potato is mostly a repacker of red potatoes, which it buys from growers in several other states, including Arizona, Washington, North Dakota and California. For that reason, Hoffman is able to ship year round.

“We’ve been out of our own potatoes since January,” he said in mid-May.

Hoffman is but one of a handful of Willamette Valley potato growers who have seen the processed industry all but vanish in the area, as companies like Frito Lay and Nalley’s have pulled up stakes. Most of the survivors are hanging in there by switching to higher-paying, fresh-market outlets, but competition is tough.

Diversity Helps

Like most valley farmers, Hoffman raises other things. His diverse crop portfolio includes blueberries, u-pick strawberries, grass seed, wheat and a few Christmas trees. Even though he’s sworn off Russets, potatoes are where his heart lies.
Hoffman said that competition has become so fierce in the Northwest potato industry, he told potato breeders at a recent meeting that he’d like to see them develop a potato that not everyone could grow.

“When you have a potato that everybody can raise, it takes a disaster in farming to make money,
he said. “We have such an oversupply.”

Hoffman, who farms on well-drained, Hillsboro sandy-loam soils, plants around mid-March and starts digging abut the first of August. Operations wrap up toward the end of October.

He tries to sell many out of the field without storing them. By January, his own crop is mostly out the door and he’s repacking and shipping.

Hoffman’s wife, Kelly, helps oversee the family’s farm stores, assists with PR and provides much needed emotional support. All three Hoffman children also help out at the store and on the farm.

At one time, there were 4,000 acres of potatoes grown in the Willamette Valley, for the fresh market but mostly for processing. That’s now down to around 600 acres, most of that grown for the fresh market.

Originally posted Saturday, Apr. 7, 2007

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