Keeping an Eye Out

NPC Calls for Consistency in Food Safety Rules

Published in the January 2014 Issue Published online: Jan 17, 2014
Viewed 2960 time(s)

A myth can be compared to an air mattress: There is nothing in it, but it is wonderfully comfortable. When deflated, it drops you with a jolt.

Prevalent among certain personalities is the myth of the last man standing. In potato parlance this means that when poor pricing has driven competition from the marketplace, this fellow (or marketing organization) believes the myth that he (they) will inherit the entire category and that economic Nirvana will finally come to pass. Clearly, this mentality missed the lesson of Econ 101: Capitalism, an economic system in which capital freely shifts from an area of lesser productivity to one of greater productivity, thereby increasing competition and narrowing the margin that attracted capital to that area in the first place.

From the consumer’s point of view, nothing could be better. When profit attracts capital into a food category, that category becomes more competitive. Competition among producers not only decreases margins, it increases production efficiencies.

Agricultural capital is so anxious to be productive that potato growing doesn’t have to actually be profitable to attract capital. It only has to be rumored that it is about to become profitable, and capital immediately invades the category. Hence, the notion of becoming the last man standing is economic fiction.

Indeed, rather than moving to the last man standing, the potato marketplace will constantly move—as it has for decades—to the most efficient growers, packers, marketers and sales methods. But before allowing this revelation to drive you from the category, consider this:

Regardless of who or even where the potatoes are grown, the overwhelming driver of price—given that demand is constant—is supply. Fortunately for fresh potato growers, United Potato Growers of America daily gathers, parses and makes available the precise data that a grower-member—and the entire fresh potato industry for that matter—should have to achieve a consistently profitable supply level. This number is readily accessible for each grower-member in each potato-producing region. The excuse “I didn’t mean to oversupply the market and destroy price” no longer exists.

Further, Capper-Volstead statute provides legal basis for a cooperative in the fresh potato category to be “United,” as it were, to assume literal corporate structure and methodology in matching supply with demand. The supply/demand/price equation is as absolute as gravity. Remember, the guy who owns the supply holds the key to price. All else in determining profitability pales in comparison to keen supply management. Tattoo these words onto the back of your hand: Balancing supply with demand equals profitable price.

Feel free to invoice United for the tattoo.