The situation changes every day, but potato acres in Canada and the United States could take a dramatic hit in 2020.
Potato production may drop by 25 to 30 percent because of closed restaurants, a sharp decline in french fry consumption and the economic fallout from COVID-19.
“I would say across North America … the processors are going to ask us to seed between 70 and 75 percent (of normal),” said Terence Hochstein, executive director of Potato Growers of Alberta. “Some (regions) are more and some are less.”
The potential acreage cuts are for process potatoes, which are used to make french fries and other frozen potato products. Process potatoes represent the bulk of potato acres in Canada and the United States.
Tens of thousands of restaurants are now closed in North America because of the risk of spreading the coronavirus. As a result, Canadians and Americans are eating fewer french fries than usual.
“It doesn’t take a great scientist to figure it out. Once the sit-down portions of restaurants closed … then all you have left is drive thrus to (sell) french fries,” said Kevin MacIsaac, general manager of United Potato Growers of Canada.
The immediate consequence is that potato processing plants operated by McCain Foods, Cavendish Farms and J.R. Simplot have cut production of french fries, hash browns and frozen potato products.
Cavendish Farms, which operates a french fry plant on Prince Edward Island, has instructed growers in that province to sell potatoes to other markets.
“While food remains an essential item for everyone, we have seen a significant drop in the demand for french fries as a result of coronavirus (COVID-19),” Mary Keith, spokesperson at Cavendish Farms, told the P.E.I. Potato Board.
“This has meant curtailments of production at Cavendish Farms in New Annan.”
MacIsaac said the situation is similar across the country. Processors have filled up their freezer space and slowed or stopped production of french fries and hash browns.
The short-term impact on Canada’s potato industry is clear, but the mid-term consequence is more complex.
In the spring, companies and provincial potato grower associations hold meetings to negotiate the volume and price of processing potato contracts. Those negotiations are messy this year because of COVID-19. It’s difficult to predict how long restaurants will remain closed and when demand for french fries will be restored.
“These losses are expected to be severe at least through May and will probably take at least six months before returning to normalcy based on industry projections,” said Potatoes USA, which represents American potato growers.
On its website, the group said foodservice accounts for 85 percent of all frozen potato sales. A significant percentage of french fries produced at Manitoba plants are exported to fast food restaurants in the U.S. Midwest.
The economic upheaval from COVID-19 will constrain potato acres in 2020 as french fry processors use up potatoes from the 2019 crop. If french fry sales remain weak for months, that stockpile will last much longer than usual.
One way to think about it, Hochstein said, is to consider the time period from Aug. 1, 2019 to July 31, 2021.
The 2019 crop would normally cover 12 months of that two year period. Now that processors have stopped frying potatoes or cut production, the 2019 crop could satisfy demand for 15 to 16 months.
“The processors will do everything in their power to stretch that (2019) crop as long as they can,” he said.
“What’s that doing … is you’re taking the remaining eight or nine months out of that (two year) calendar and that is your 2020 crop. That’s where you’re finding the volume cuts for the 2020 crop across North America (for process potatoes).”
The cuts to volume come at a time when Manitoba and Alberta’s potato industry was poised for expansion.
Only a month ago, processing plants in Canada's the Prairie provinces were planning to contract more acres of potatoes. More spuds were needed because Cavendish Farms opened a
$400 million plant in Lethbridge last year and J.R. Simplot spent $450 million to double the size of its facility in Portage la Prairie.
“An additional 3,500 acres will need to be planted this year to meet the needs of the Cavendish Farms Expansion,” United Potato Growers of Canada said in a March report.
In Manitoba, about 5,000 more acres were needed to satisfy the Simplot plant.
The acreage expansion is now on hold as Canadian growers and the potato industry wait for french fry consumption and the world to return to normal.
In 2018-19, Canada exported $1.42 billion in frozen potato products, based on Statistics Canada data.