Potato farmers in the United States, and to a lesser extent in Canada, are making the drastic decision not to dig up their potatoes. It is estimated that half a million tons are hanging on the market in the state of Idaho alone. A significant area expansion and a perfect growing season mean that potato processors cannot use additional product.
It has been clear in the US for some time that the 2023 harvest year will produce the largest potato yield in five years. In Washington and Idaho, the two biggest potato states, an all-time record is being talked about. The impact on the potato market and farmers is huge.
More than half a million tons hang above the market
According to Dale Lathim, president of the Potato Growers Association of Washington, Idaho has 10 to 13 million cents of potatoes hanging on the market without buyers. Changed, you are talking about 450,500 to 590,000 tons volume. We mainly know American farmers as companies that contract everything, but that’s not entirely true. A will be called Flex pile 300,000 tons is common in Idaho. They always find an owner, albeit at a different price than that charged for contract potatoes.
From a European perspective, American prices are not so bad. Russets averaged €18.76 per 100 kg. It is very less for farmers. As free market prices are expected to come under more pressure, they make the cruel decision not to hold them anymore. According to Lathim, it occurs in growing areas in the Columbia Basin (Washington State), Idaho, and Alberta, Canada. In Manitoba, growers and processors are choosing not to harvest all potatoes. It is about thousands of hectares.
The potato harvest is in its final stages in the US and Canada. Farmers are already thinking somewhat about the next season. According to Lathim, one app has already announced it will reduce its contract size by 10% next year. Factories are doing everything they can to get rid of large quantities of potatoes, but part of the old harvest will be carried over into the 2024/25 season. This will have an impact on the next season.
The grower return index (GRI) for russet growers in Idaho at the end of October was $8 per cwt, which equates to €16.67 per 100 kg. This is 50% less than a year ago. GRI shows what farmers do with their potatoes.
The department is now wondering what to do with those extra potatoes. The processing industry is undoubtedly trying to capture the positions that European processors have occupied in recent years in the domestic market and exports. The extent to which this is successful depends largely on the product price, which in turn depends partly on the dollar/euro exchange rate. The euro was still strong against the dollar last summer, but that has now changed. Analysts expect both currencies to reach the same level this year. A weak euro is good for European exporters, who also have enough products. Also, there is still some room for negotiation on the chip prices, which are quite high.
The largest amount of potatoes is about French fries, but there are also enough table russets. The United States is expected to export 4.08 million tons of table potatoes this year. This is 376,00 tons more than last year. US exporters are particularly confident in the Mexican market, which has made it easier to import US products. Efforts are being made to get consumers to eat more potatoes and supermarkets to offer larger packages. For example, supermarket chain Walmart is switching to 18kg bags under pressure from the United Potato Growers of Canada.
“Passionate analyst. Thinker. Devoted twitter evangelist. Wannabe music specialist.”