[Banner Top] KeyBank - August, Expires 8/31
Share

Summit Looks at Future of Potato Industry

More than 200 people traveled to Colorado Springs, Colo., in December to attend the first-ever Potato Industry Outlook Summit. Held in conjunction with National Potato Council’s Seed Seminar, the Outlook Summit looked at the future of the potato industry in the United States and brought together leaders from all aspects of the nation’s potato industry.

“Growers asked us to bring a group of experts together to analyze the current industry structure as well as supply and demand conditions facing the nation’s growers and shippers,” said John Keeling, executive director of the National Potato Council (NPC). “The unanticipated outcome was how all the presentations mirrored what the U.S. Potato Board (USPB) has been saying for the past five years – that the long-term issue remains increasing demand and that we, as an industry, must work together to meet the needs of consumers.”

Supply and Demand

The daylong summit kicked off with a presentation on the supply outlook by Bruce Huffaker from North American Potato Market News.

Huffaker estimated the 2004 U.S. potato crop would be at 450.2 million cwt. – down 7.6 million cwt. from 2003. With these numbers, the 2004 crop would be the second smallest crop since 1997.

“If potato production across North America is this low, why aren’t market prices much higher than they are today?” Huffaker asked.

The challenge, he said is in finding new demand for potatoes and developing new markets.

“Unless we find some way of developing new demand for potatoes, we are going to be struggling as an industry with the need to reduce acreage on a continual basis year to year,” he said.

The same sentiment was echoed by the rest of the day’s speakers. Bruce Axman, president and CEO of Perishables Group, spoke to the fresh-market outlook. According to Axman’s presentation, more than 30,000 new items are introduced each year – a “new product explosion.” Of those, 75 percent fail in the first year. But, 60 percent of the growth comes from new items.

“The retail environment is changing,” Axman said. “There’s great opportunities for potatoes to get on that bandwagon and increase value for the end consumer.

“We must keep the end consumer in mind.”

With that comes knowing who the customers are. Sixty-five percent of households are one- to two-person households, which needs to be considered when developing packaging and product offerings, Axman said.

Among the suggestions Axman made were to update packaging to make it more appealing to consumers; innovate product offerings; and to increase value-added availability.

Patrick Davis, with McCain Foods USA, discussed the nation’s frozen potato outlook.

“It’s not about capacity, it will be about capability,” Davis said of the frozen industry.

Dennis Conley, from Basic American Foods, spoke about the dehy outlook.

Ten percent of the U.S. potato crop is used for dehy. And though Conley said there is great potential for using dehy potato products as a building block for many products, there is not an equal balance between supply and demand.

“Anytime we get close to meeting demand, we build more capacity – and that is not good,” he said.

Among the issues, which Conley said are not unique to the dehy industry, are energy, varietal changes, competition for low-cost product, wastewater requirements, competition with other starches and a limited ability to pass on the increasing costs to the consumer.

John Toaspern, with USPB, spoke of the board’s efforts to improve the export outlook for potato products.

“There’s a lot of people out there who you could be selling to who are consuming more potatoes,” he said.

In addition to these speakers, Bob Shearer of Shearer’s Foods discussed the chip outlook.

Eating Trends

Mac Johnson, with USPB, spoke on national eating and sales trends. There has been a decline in pounds of potatoes sold. And, large bags of potatoes are selling more at lower prices than the smaller bags, which bring in more money.

For example, Johnson said, when potatoes are being sold in 10-pound bags for buy one get one free, the consumer is being taken out of the market for two to four weeks because they don’t need any potatoes.

“We are not losing consumers, we are losing frequency,” he said.

But, he said, there is hope on the horizon as more growers, packers and shippers are getting innovative with their offerings.

“I think there is reason for optimism, but I’d be cautious,” he said.

European potato growers, too, are finding reason for cautious optimism as they find ways to specialize the potato market.

UK Innovation

John Chinn, a UK potato producer, has a 3,000-acre farm with 1,000 acres dedicated to potatoes.

“I can’t make money growing commodity potatoes,” Chinn said. “We’re focusing on growing what the customer wants, and that is decreasing yields.”

Chinn has seen a 5 percent increase each year with his baby new potatoes. He also offers his potatoes in a microwave steamer pack that is freestanding, has a valve and cooks in two minutes in the microwave. The pack has loose water in it that, when microwaved, steams the potatoes.

Though these specialized potato products are allowing some potato growers in the United Kingdom to thrive, others are not able to stay in business.

U.S. Case Studies

To keep the same fate from happening to U.S. growers, the industry is working to find out what consumers want. Tim O’Connor spoke on U.S. case studies USPB currently is working on.

USPB’s strategies are increasing innovation, developing new markets and focusing on the nutrition campaign. Innovation spans all sectors of the potato industry from developing new varieties, improving packaging and adding value.

“The future of the industry is the one we create,” O’Connor said. “How much money do we have to lose before we find out we have to do things like the rest of the produce industry?”

O’Connor said retailers are not helping the potato industry’s fate. Though the industry tries to improve product offerings, retailers still display and sell potatoes the same way.

“They’re (retailers) putting potatoes in a traditional-meal rut,” he said. “They love ’em, but they love ’em in the same old ways.”

But those growers, shippers and processors who are ready and willing to take the lead may be able to turn the industry around.

“The winners are those who are going to step up and play the game,” O’Connor said.

Originally posted Saturday, Apr. 7, 2007

[Banner Middle] House-Buyers Guide 2013
[Banner Bottom] House-Media Services - 2014