Supermarket sales of fresh potatoes declined for a fifth consecutive quarter to start 2012, according to a recent Nielsen Scantrack report.
However, prices of potato products were up across the board from the prior year, led by a 15.5 percent jump in fresh prices resulting in a 7.7 percent increase in total fresh sales revenue.
Compared with the previous year, fresh pounds sold dropped 8.4 percent in the first quarter of 2011, 7.3 percent in the second quarter, 8 percent in the third quarter, 6.2 percent in the fourth quarter and 5.9 percent in the first quarter of 2012. The first quarter runs from January through March.
The data comes as no surprise to Kevin Stanger, senior vice president of sales with Wada Farms, which operates a fresh-packing facility in Pingree, Idaho.
"We run the numbers quarterly, and in some cases even more so. I think we have all noticed potato volume has been hurting," Stanger said. "Fresh potato consumption has remained flat or gone down a bit. Almost all fresh fruit and vegetables, except for a few, are actually in a declining mode."
Buyers have also reported to Stanger that business has been flat lately. He noticed fewer advertisements for potatoes during the holiday season and recalled Easter "didn't seem to be as big a deal as it has in the past few years."
Stanger said the Wada packing facility has been running fewer hours of production compared with early last summer, though no workers have been laid off.
"People think when you get a potato market so high like you had last year you turn demand off. You start changing buying attitudes," Stanger said.
University of Idaho Extension economist Paul Patterson agrees.
"When price goes up, demand will often decline unless the consumer has no other option," he said.
U of I Extension economist Joe Guenthner noted there's a diversity of fresh products, and the report also showed premium and organic bags under 4 pounds increased in both dollars and pounds sold.
He believes the overall decline in supermarket sales is supply driven.
"It shows something we've known in the potato industry for a long time. You get more revenue from a smaller crop," Guenthner said. "I'm not concerned with lower produce sales because price responds and revenue goes up. The difficulty is for some packing sheds that might not be running at capacity, not selling as many potatoes as they would like to spread out the fixed costs of operating."
SOURCE: John O'Connell, Capital Press
http://www.capitalpress.com/newsletter/JO-FreshDecline-060712