Column: Breaking down the 2019 fresh potato crop
In August, when the 2019 potato crop’s fresh shipments were estimated, its volume was projected to be one of the most balanced in recent memory. At this point, the 2019 North American fall potato crop is in storage and the actual volume likely has physically measured and confirmed.
By any reasonable thread of logic, because trend line yields were used to estimate the 2019-20 fresh potato supply and because trend line yields are unlikely due to a cool, wet spring, this crop could indeed bring further stability into the fresh potato market. This means that consumers will get all the fresh potatoes they want at a fair price and that, even if a September glut temporarily oversupplies the market, growers across North America will get a fair return on investment. Take into account, also, that the 4% greater 2018 fresh supply returned even Idaho growers with their record large crop, if not ownership costs, at least immediate growing costs.
In further support of balancing this year’s fresh potato crop, Europe’s 2019 record-breaking summer heat has put a lid on yields in that part of the world. None of this is to suggest that markets will produce runaway pricing; such is not needed for growers to get returns required for financial sustainability. Additionally, because large portions of this crop have been contracted, a supply base has been somewhat guaranteed for domestic use in both process and fresh sectors.
Red and yellow potato prices, having surged to abnormal spring and summer highs, have now settled into fair trading values that should continue throughout the remainder of the 2019-20 shipping season, only threatened by internal regional issues.
With Mother Nature’s help in more exactly matching this year’s crop to demand, growers have the opportunity to take from her a reasonable idea of what their particular farm’s production should be in order to supply the potato market such that on-farm pricing gives a fair return. Process growers should also be able to see how not over-supplying their market improves contract negotiations.
If potato-growing history teaches anything, it is that following a year of good pricing growers increase production and cause the following year’s market to fall on its face. The illogic of saying to one’s self, “If only I’d had twice as many potatoes to sell last year, I’d have made twice as much money” is hard to follow. In fact, it’s hard to qualify such thinking without insulting the grower who thinks that way. Clearly, if growers had had twice as much volume in the good year, the good year never would have happened; the market that rewarded them so well would have been an over-supplied disaster. It is unlikely that people who think like that would have been in the front row at college graduation being awarded Phi Beta Kappa status. What is likely is that growers who understand the supply-demand paradigm that their region must meet to prosper — examples annually observed in areas that prosper for the precise reason that they do understand supply/demand balance — will continue doing so.