Idaho potato growers have rejected processors' contract offers, convinced they were insufficient to cover rising input costs and prevention of the emerging disease zebra chip.
Dan Hargraves, executive director of Southern Idaho Potato Cooperative, said ConAgra Foods Lamb Weston offered growers a 10.7 percent increase in their contracts from 2011. SIPCO wanted a 15 percent hike. J.R. Simplot Co. subsequently matched Lamb Weston's offer, he said.
The rates growers received in 2011 varied by processor, variety and region. Simplot, for example, paid $7.35 per cwt for Russet Burbanks in southeast Idaho.
A majority of SIPCO growers voted against the contract offers on Feb. 27. Hargraves said McCain Foods tentatively offered a 13.4 percent increase, but it was contingent on SIPCO's ability to bring the other processors up to that level.
Hargraves believes the processors will soon take contract offers directly to the growers.
Only H.J. Heinz Co. has reached a contract with Idaho growers. It spans two years and includes variable rates, based on the actual input costs growers incur.
"I think the growers are concerned as we head into the 2012 crop year," Hargraves said. "We really weren't that far apart, but it's that extra 2 (percentage points) that would have made this thing pencil out from our perspective."
Hargraves noted the processors requested the right to reject potatoes with zebra chip, a disease new to the Pacific Northwest vectored by potato psyllids. It causes dark stripes to form in spud tissue. Hargraves said contract offers, however, were too low to cover the increased costs of preventing the disease.
"We felt like we came to the table with a good set of credible evidence that demonstrated what our costs were," Hargraves said. "A big part of that whole disconnect is this zebra chip. It is going to be extremely costly to control. It's not an option for us not to spend the money to control it."
An official with Simplot declined to comment. A McCain spokeswoman also wouldn't comment, indicating negotiations could resume. Lamb Weston officials couldn't be reached.
Koompin Farms of American Falls sent a representative to the meeting who voted to support the contract.
"The contract was close, but it did lack enough money to cover the increased risks," Klaren Koompin said. "There's more risks to raising spuds now with the advent of zebra chip, just like there was with the advent of late blight. This one is potentially more costly. With zebra chip, you can get your whole field rejected."
Koompin intends to treat his seeds to prevent zebra chip. He'll also set sticky traps in his fields to detect bugs and will have them inspected routinely.
American Falls grower Jim Tiede, chairman of the Idaho Potato Commission, intends to wait and see if psyllids surface in warmer climates west of his farm before deciding if he'll engage in preventative spraying. Regarding contracts, Tiede remains hopeful SIPCO will find common ground with processors.
SOURCE: John O'Connell, Capital Press