For the upcoming 2012 crop, United Potato Growers of America has chosen to not promote specific planting guidelines for its members. In forecasting the 2012 potato crop, UPGA's data analysis suggests that growers prepare for the following:
1) Expect trend-line yields to return: The last two years saw reduced production in key North American growing areas. Today's market is benefiting from the reduced supply. Don't bank on this happening for a third year in a row.
2) Increased demand for process potatoes in Washington, Idaho and Alberta could lead to increased processor contracting in those areas. If the 2012 crop returns to trend-line yields compounded by an increase in contracted acreage, the excess will likely spill into the fresh channel.
3) With no change in total planted potato acres from 2011 to 2012, a return to trend-line yields alone will produce a 5.5 percent increase in total North American production. Expect excess volume will spill into the fresh market.
4) A 5.5 percent increase in overall production will result in 25-30 million more hundredweight of consumable potatoes than were produced in 2011. While processors need and will use much of that increase, they cannot use all of it. UPGA anticipates that an excess of 5-7 million cwt will end up in the fresh market, significantly depressing the supply/demand dynamics of the last two years.
5) Should the above circumstances occur, the coming 2012 market has the real potential to be similar to 2009, where growers nationwide dumped over 7 million cwt to cattle feed and open washed processor grade averaged less than $1.
6) Reliable economic forecasts for 2012 indicate fresh growers, depending on region and market proximity, could likely see grower returns similar to 2009 levels, substantially below cost of production.
Today's potato growers have built significant equity over the past several years. This was the goal when UPGA began, and it has been accomplished. In light of the seriousness of the above circumstances, all growers would be wise to protect and minimize equity loss in the coming planting season by converting a percentage of 2011 potato acreage to an alternative crop in 2012. Additionally, before a single acre is planted in 2012, know exactly where, when and to whom it is dedicated, preferably by contract.