Columbia Basin potato growers have reached an agreement with several processing companies despite receiving a lower price than they were seeking, a negotiator says.
Growers accepted by a one-vote margin a contract offered by Lamb Weston, said Dale Lathim, executive director of the Potato Growers of Washington.
Contracts are negotiated every year. Lathim says the 120,000 acres of potatoes involved represent hundreds of millions of dollars, and more than $1 billion in processed frozen potato products.
The processors’ offer was down 4 percent in price, Lathim said, but included many language improvements farmers sought.
Growers expected prices to be down 2 percent due to a lower projected cost of production. The change in cost of production is used as a price-setting model, Lathim said.
Processors also wanted to recoup a 2 percent increase from last year. Lathim said the Columbia Basin usually negotiates first in the nation, but last year processors in the eastern U.S. did not follow suit with the increase, and processors in the Columbia Basin felt they were at a disadvantage.
“In the past, we’ve reached an agreement for that year, and that year alone,” Lathim said. “This is the first time that I can remember that they made an adjustment on a current year for a prior year’s settlement. We’re concerned that this is opening a door we don’t want to go through, because if they do it this year, they may do it again in the future.”
The risk involved in trying to force the companies to restore 2 percent was too great for the growers, Lathim said.
“One grower summed it up the best when he said, “If you think I’m going to put my contracts and neck on the line for 2 percent, I’m not going to do it,’” Lathim said. “My personal opinion is it’s not what we hoped, but it’s definitely a fair deal.”
The growers’ decision to accept the contract passed by one vote, Lathim said. He believes many of the people who voted no did so because of the possible precedent the price adjustment sets.
“We’re going to be very careful to try to make sure anything like that does not happen again,” he said. “We think it was very unfair, but it happened and it’s accepted and now we embrace this contract and move forward.”
The growers reached a tentative agreement with the J.R. Simplot Co. dependent on the outcome of the grower vote with Lamb Weston, Lathim said. That contract is also down 4 percent.
“Once we vote on the first one, it sets the price, then we don’t even fight over price any more—that’s going to be the price for the rest of the contracts,” Lathim said.
The growers will meet with McCain Foods and Heinz later in the month. With the question of price settled, it will be a matter of language changes either side may want, Lathim said, noting he expects relatively brief meetings.
Source: Capital Press