Report: East Idaho Growers Breaking Even

Published online: Jan 28, 2019 Articles John O'Connell
Viewed 566 time(s)

Source: Idaho State Journal 

Idaho potato farmers are getting paid about the same amount for their spuds as they're investing in raising them, according to a University of Idaho Extension agricultural economist's recent report.

Economist Ben Eborn presented his annual estimates on the cost of producing potatoes in Idaho Jan. 23 during the Idaho Potato Conference, hosted at the Idaho State University Pond Student Union Building.

Potato production costs rose 3 percent throughout the state in 2018, except in Southwest Idaho, where higher yields helped hold them flat, according to Eborn's report.

On a field-run basis, which doesn't factor in storage costs, Eborn placed the cost of production in Southeast Idaho at $6.86 per hundredweight of potatoes with fumigation and $6.57 per hundredweight without fumigation. Northeast growers invested $6.43 per hundredweight without fumigation, which isn't typically needed in that region, he said. The highest production cost estimate in the survey was $7.07 per hundredweight for Southwest growers using fumigation.

Eborn obtained estimates for specific farm costs through interviews and surveys with farmers, bankers, insurance agents, fertilizer and chemical dealers and irrigation districts. He made his yield estimates for each region of the state based on a three-year average from USDA reports.

Eborn then plugged those numbers into mock budgets for region-specific model farms -- selected to be large enough to be profitable and representative of farms in each area. His Southeast Idaho model farm, for example, includes 2,400 acres with 800 acres in potato production each season.

Agricultural economists who follow the industry estimate the current grower return index, which is the gross amount farmers are paid for their spuds, is about $7 per hundredweight for russets.

"Costs were up 3 percent, which is not a lot, but the point is the price they're getting paid is the same price they're paying to raise them," Eborn said. "They're not very profitable."

On a per acre basis, Eborn estimated the cost of production with fumigation at $3,569 in Southwest Idaho and $2,865 in Southeast Idaho. He estimated the cost of production without fumigation at $2,345 in Northeast Idaho.

"That is a tremendous amount of capital to come up with to grow a crop that's very risky to grow," Eborn said.

According to Eborn's research, farmers' costs increased by: 20 to 30 percent for fuel, 14 to 17 percent for machinery, 6 percent for equipment repairs, 3 percent for fertilizer, 0 to 5 percent for chemicals, 7 percent for labor and 3 to 4 percent for storage. Eborn said an increase in interest rates of about a half a percent led to a 7 to 11 percent increase in per-acre operating costs.

American Falls potato farmer Kamren Koompin believes Eborn's estimates were close to his own farm costs, and he believes many costs will continue to rise this year. Koompin said the current cost of fertilizer is about 15 to 20 percent higher than this time last year. He believes labor costs were up 10 percent during last fall's harvest.

"Last year, everyone I talked to around American Falls was paying more just to guarantee they had people around," Koompin said.

Koompin emphasized that the return to grower index also includes earnings of fresh potato growers, which have been below contract rates paid by processors lately. His contract price was $7.80 per hundredweight, which nonetheless, leaves a small profit margin.

"We've noticed over the last three years at the end of every year there's less left over to either buy new potato equipment or basically recapitalize," Koompin said.