Feb 28, 2017Seed growers face uncertainty
Commodity prices are in the tank. Fresh table-stock potato returns in the West are a disaster; returns are below production cost for the fifth year in a row. Red and yellow potato prices are good but growers generally had a disaster on the farm side like what happened in the Red River Valley with heavy rains last summer. Fresh table-stock prices are higher in areas where United Potato Growers of America chapters actively pursue the market. Frozen-process contracts remain unsettled with negotiations swirling around from flat to down prices, and acres to be planted remain uncertain. All of this in spite of strong demand and finished product prices being up.
Process growers nowadays not only have to know the volume and price of their contracts, but increasingly are uncertain about which variety they will need to grow for their customers. Net farm income is down which means farmers are once again farming their equity. Add to all of this the fact that potatoes are perhaps the highest input-cost crop grown, and also the crop with the highest risk. Is it any wonder there is a lot of uncertainty with seed growers’ customers? What is the seed grower to do?
As we all contact our customers and make calls and visits to potential buyers-which we must do-the perception can be created that there is a glut of seed, which isn’t true. This adds to the feeling among our buyers that there is no urgency to tie up seed as they wait for the dust to settle with all the uncertainty out there.
All of us need to take a deep breath and not panic. History teaches us that most of the seed will get used. Our anxiety will not change that, nor will drastic price cuts change the volume of seed that will get planted. With hundreds of varieties and generation and disease issues, seed is an input cost not a commodity. Patience is the order of the day. Keep in close contact with your customers. Be there when the clouds clear and final decisions are made.
Pushing a rope is a difficult thing to do, and often leads to creating an auction with yourself. As we face these market uncertainties, we must be wise in our planting decisions. We must be willing to make those adjustments in what we plant to accommodate the market’s changing reality. What acreage and varieties, exactly, must we plant to assure the greatest profitability when we market 2017’s crop down the line? Planting to known markets is the best insurance against uncertainty. Meanwhile, exercise the virtue of Patience. In past years like this one, a lot of seed purchases were finalized with the planters already in the field. Those sales can still be profitable.
One more thing: Weather patterns in early planting areas like Kern County and the Columbia Basin have been abnormally cool and wet, delaying planting for weeks. Is this a weather prediction for the rest of the nation? This crop is far from in the ground, and the longer it takes to get it planted, the lower the expected yield. Such conditions usually mean additional acres will be planted to make up for lower expected yields.
— Mike Telford, Seed Division, United Potato Growers of America
Source: NPPGA Potato Bytes