Big Crop, Trucking Woes Hurt Potato Prices

Published online: May 01, 2018 Articles Mikkel Pates
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Source: AgWeek

A big 2017 crop of table-stock potatoes and trucking woes have led to lower prices and concerns about how northern Red River Valley storage sheds still filled with spuds will be emptied in coming weeks.

"In June, we'll have a feel for it," says Paul Dolan is general manager and chief executive officer for Associated Potato Growers in Grand Forks, N.D., of the storage situation. 

He calls the situation a "perfect storm" of market consequences. Associated Potato handles about 30 percent of the valley's "fresh" or tablestock potatoes and is the largest player in the regional market. High yields in the Red River Valley last year were followed by a near-record crop in Florida that have helped drive prices down. Stored potatoes have dropped sharply in a few weeks.

"We were getting $15 to $16 per hundredweight free on board (meaning the buyer pays the shipping costs) until the end of February, and early March; now we're getting $9 to $10 (per cwt.) f.o.b.," Dolan says. "We're just doing our best to move as much product as we can. I know we'll be washing potatoes through the month of July."

Associated Potato typically ships until late June or July 1. But some sheds in the valley are normally done or near-done by late April.

As of mid-April, Dolan thought there were 25 percent more potatoes in Red River Valley sheds than usual for this time of year. "There's definitely more potatoes than is the norm," Dolan says.

The U.S. Department of Agriculture's National Agricultural Statistics Service, on April 1 reported that fresh potato shipments nationwide fell 3.2 percent off last year's pace during the same period. North Dakota potato stocks were 8.9 million hundredweight — 18.7 percent higher than that date in 2017, but 3.2 percent lower than 2016. NASS reports indicated stocks were backing up in storage, but "except for table potatoes in the Red River Valley, that does not appear to be the case," writes Bruce Huffaker, editor of North American Potato Market News of Meridian, Idaho, in its April 18 issue.

A Lot in Sheds

"We've never had quite this much hundredweight (for this time of year)," Dolan says. "We've been close to that. We've had a lot of nice potatoes we've been marketing this year, but it's been the combination of things that have taken place through the marketing season so far that have made it a real challenge to getting them moved."

Potatoes are holding up well in storage, he says. In some past years, the co-op has had to dump "unmarketable" potatoes but Dolan said he couldn't remember that it has ever been a "significant" amount.

Associated Potato is a cooperative, owned by the about 15 grower "entities." There are about 25 fresh potato growers in the region. Most of the producers involved with Associated market most of their potatoes for the "fresh" or tablestock market through Associated, but are marketing "processed" potatoes elsewhere for french fries and other frozen products.

Started in 1948, Associated Potato Growers has three facilities in the Red River Valley, all in North Dakota, including Grand Forks, Drayton and Grafton. Growers grow potatoes, and individually own the storage sheds or bins. The co-op maintains the potatoes in storage, runs the wash plants and packaging bags and markets them.

Fresh potatoes have to be shipped in certain timeframe. This past season, with a truck shortage running from October to March, the company was unable to supply some customers with products. "Because of that we've lost business, of course, just because of not being able to ship and also because their customers went to other products or other areas to receive that product, or promoted a different product because they could not get the supply of potatoes that they needed," Dolan says.

Trucking Issues

Truck driver shortages and a new electronic logging system for driver hours have exacerbated the marketing challenge for potatoes in the Red River Valley and elsewhere.

A strong economy overall has meant more competition for trucking and drivers.

With electronic truck logging, a driver can drive only a certain period of time before the vehicle shuts down. If a truck is loading, that static loading time — two or three hours — can count against the driver's driving time. A load that in the past took two or three days now is taking three to four days.

"Once they get used to it, I don't think it will be as big a problem, but it will always be a problem for that period of duration where they need to get to their destination to load, and have to wait to get loaded," Dolan says. "This truck shortage is real. It's not going to go away."