Demonstrating just how complex the world has become, a fresh market grower’s planting mistakes in the past rarely resulted in immediate insolvency. But growers planning their 2009 acreage should factor in that input costs remain stubbornly high so overplanting and incorrect marketing strategies combined with even 12 months of poor prices can now bankrupt an operation in a single year.
As a cooperative, United Potato Growers of America has been offering planting advice going on to four years now. We have landed some impressive successes.
For 2009, our highly-informed, well-researched and data-driven advice is: freeze your fresh potato acreage levels. Plant no more acres then you planted in 2008.
In this column I will tell you why United is urging you to hold your acreage to 2008 levels. Following are four concepts to consider.
A careful analysis of industry, retail and government data, combined with the current economic slowdown, indicates that at best the total 2009 demand for fresh potatoes will be stable.
In 2008, bad weather caused a two-week planting delay in the northern growing regions, flooding in Maine and Wisconsin, severe and unusually large hail storms in Colorado, an early frost and snow in Idaho and vine-stunting hot winds in the Columbia Basin.
Even with these obstacles, the supply of potatoes for the fresh market from the fall 2008 crop are almost as large as the 2007 crop.
And this was a year that growers restricted or reduced their acreage to focus on profitable alternative crops. It is stunning when you think about it.
A return to normal trend-line yields in the major growing regions will bring volumes of fresh market potatoes not seen since 2004, the year when many growers lost their farms to bankruptcy.
In other words, we are counting on weather problems in some growing regions for growers to market their crops at break-even or better prices even if there is no acreage increase. If only two growers in each state (states with significant commercial potato production) were to plant an additional circle in 2009 compared to their 2008 acreage, fresh market shipments will further increase a devastating 2.5 million cwt.
U.S. growers experienced a few positive years in a row as a result of limiting their acreage and producing only for the known demand. Last year, due to reducing potato acreage and planting grains or soybeans instead, many U.S. growers came out ahead.
But growers in Europe, Australia, New Zealand and Mexico who had access to the same world grain markets did not enjoy profitable returns on their potatoes. It was U.S. growers’ self-discipline, potato acreage reductions and informed business decisions that made the difference.
I’m sure you can see why United is urging all fresh growers to freeze acreage to 2008 levels. Let’s have a prosperous 2009 by making the right planting decisions.