The Colorado potato crop looks excellent, but prices are stagnant, raising hopes that the Trump administration’s much-discussed renegotiation of the North American Free Trade Agreement (NAFTA) will make headway in opening greater access to the Mexican market.
“It’s an opportunity to see our issues addressed,” says Jim Ehrlich, executive director of the Colorado Potato Administrative Committee. “The Mexican market holds a lot of promise for us.”
American potato consumption is 114 pounds per capita per year, while in Mexico that figure is only 25 pounds. The disparity is caused by a lack of supply, Ehrlich says.
“They’ve kept their prices high to protect domestic producers, but we think there’s some middle ground there,” he says. “We think if we could expand the supply of potatoes in Mexico, everybody would benefit.”
Mexico’s close proximity makes it an attractive market, but so far U.S. exports have been limited to the border zone. Despite a temporary breakthrough in 2014, Mexico’s domestic potato industry has been reluctant to grant access. Three weeks after Colorado agriculture officials announced growers would be able to ship potatoes to a few of the largest Mexican cities, Mexican growers sued and got an injunction against the agreement.
That dispute is still working its way through the courts, but Ehrlich is hopeful that upcoming NAFTA renegotiation talks—scheduled to begin Aug. 16—could offer a separate opportunity to push for a resolution.
In an 18-page summary, the White House released renegotiation goals that include maintaining duty-free status on agricultural exports to Mexico and Canada and eliminating other non-tariff barriers to trade.
Though potato prices haven’t been as depressed as some other commodities, domestic demand for fresh potatoes has been steadily declining for the past 25 years, due to changing lifestyles and preferences, Ehrlich says. Nearly all the potatoes produced in southern Colorado’s San Luis Valley, which makes up the overwhelming majority of potato production statewide, go into the fresh market. The half-dozen big producers who still grow potatoes in northeastern Colorado mostly sell into the french fry or processed food market, Ehrlich says. While acreage is down in Idaho, it is up slightly in Colorado this year.
“Prices have been in the break-even area for most growers, but here in Colorado we have the lowest cost of production of anywhere in the nation,” he says.
Production-wise, the year is shaping up to be a good one.
“The season’s been going really well,” Ehrlich says. “The crop is ahead of schedule, because it’s been warmer than usual, just like it has been across all of Colorado.”
Unlike eastern Colorado, however, the San Luis Valley has been dry heading into the monsoon season that started in mid-July.
Source: Ag Journal