Since the mass introduction of commercial fertilizers following World War II, potato trend line yields have increased on average 1.7 percent per acre per year. Paralleling that increase over the same period, but in the opposite direction, has been a decrease in consumer demand also averaging about 1 percent per year.
These two occurrences have staged an ongoing market collision: Constantly increasing production on top of constantly decreasing demand has equaled constant market chaos. Until the United Potato Growers of America inserted itself into robust potato-market analytics, no database existed to expose—much less quantify—this disastrous clash. But, happily, this long and counterproductive trend appears to be leveling out. This is how fresh potato demand looks today compared to 10 years ago, and there is a bright spot:
Ten years ago, growers could ship 103 million cwt. of fresh potatoes into the U.S. market and expect a profitable return. Last year, it appeared that growers could only ship 95 million cwt. into the market and expect a profitable return, but something remarkable happened: Last year, for the first time in over six decades, the fresh potato market actually accepted 2 million-plus more cwt. of fresh potatoes than statistical analysis suggested could have been profitably shipped, and still returned a profit. What caused this surprise reversal?
Market shipments suggest that shifts from russet to red and yellow potato volumes explain the change in course. From 2008 to today, russet shipments are down 1 percent, red shipments are up 17 percent, and yellow shipments are up 89 percent. Last year alone, russet shipments were down 6 percent while red shipments were up 7 percent and yellow shipments were up 21 percent. In actual volume, 2013 red and yellow shipments exceeded 2012 volumes by over 2 million cwt. Clearly, this made the difference. While these varietal shifts explain how and where total volume increased, here’s the real news: At last, Americans are eating more fresh potatoes, not fewer—and they are willing to buy them at above their cost of production.\
What does this mean to the potato grower? If the supply/demand imbalance of the past 60 years really is abating (and the above evidence suggests that this may be the case), growers can now stabilize price by simply stabilizing production; that is, stabilizing price by cutting annual production may no longer be necessary. Said another way, the grower who stabilized his 2014 production at his 2013 level stabilized the market. The grower who increased 2014 production above his 2013 level destabilized the market.
United preached this doctrine repeatedly throughout the past winter and spring. If you as a grower didn’t hear the message, you probably weren’t listening. Again, this scenario assumes that demand has improved and that a grower’s 2013 production was profitable. In an area where 2013 market returns disappointed, additional adjustments are likely still necessary. But from there, the future looks brighter than it has in a long, long time. How refreshing, after six decades of countering a shrinking market with production cuts, to switch to stable production to enjoy stable pricing!