Like Yogi Berra might say, "This potato market is déjà vu all over again." How many times have we seen this happen-too many potatoes for too few buyers? But it is not just today's poor market that's worrisome, even though an estimated $500 million of grower equity will drain away between now and next summer. What is absolutely mind-boggling to any logical thinker is that this period of overproduction and loss was predicted with plenty of time to adjust one's crop mix and avoid the agony of this experience.
Quoting from a slide presented to fresh potato growers across North America last winter: "Expect a 5.5 percent increase in potato production in 2012 over 2011. A 5.5 percent increase will result in 25-30 million more cwt of consumable potatoes than were produced in 2011. While processors will use much of that increase, they cannot use all of it. UPGA anticipates that an excess 7-9 million cwt could be overproduced in the fresh market alone."
Prior to 2005, a grower could sit innocently across the desk from his loan officer during this sort of market and plead ignorance, because, prior to United Potato Growers of America's formation, no reliable information source existed capable of predicting a future market. Such is no longer the case either for the grower or his banker.
Yogi Berra also said, "If you don't know where you're going.you might wind up someplace else."
We knew one year ago exactly where we were going. We knew we were going to overplant, and we did. Now the question is: "Where do we go from here?"
Quoting the late Steve Jobs, "Corporate America [potato farming] has a need that is so huge and can save them so much money, or make them so much money, or cost them so much money if they miss it, that they are going to fuel the information revolution." According to Jobs, information is vital to making-or keeping-money and equity.
Bill Clinton agrees with Jobs: "In today's knowledge-based economy, what you earn depends on what you learn." Said another way, you won't earn more than your information allows. Both Clinton's and Jobs' quotes absolutely apply to formulating a crop plan. What have you learned that will influence your crop plan for 2013? What information source do you plan to consult?
When those who conceived the United Potato Growers movement across North America designed their business model, they discovered, not surprisingly, that in all potato markets, most lacking among growers was a clear understanding, measurement and management of the supply/demand/price relationship. Consider this, too: In the potato supply/demand/price equation, demand continues to decline; millions are spent on demand annually and it keeps falling. Price is the dependent variable-it is determined by the supply and demand. That leaves only one variable for you to manage: supply. Adjusting supply adjusts price.
So, what have you learned? How will you decide your 2013 crop mix? Do you know what your portion of the 2013 supply should be? Perhaps the logic here is too simple. What's your opinion?