This column appears in the January 2021 issue of Potato Grower.
The owner of a New York City grocery chain remarked, “I could never do what many potato farmers do: put significant equity into a potato crop without having control over what it will be worth when it comes time to sell it. I know what every can of peaches costs me, and I precisely control what it will sell for. I don’t understand a kind of thinking that overlooks this fundamental business element. It makes no sense to me. What kind of person does that? Where did that person learn business economics, anyway?”
By the way, this gentleman’s wife owns a large Hunts Point produce distribution center. So he knows firsthand how the deal works due to the countless railcars arriving at her rail siding every year loaded with unpriced potatoes.
Whichever graduate school one chooses for learning business administration or obtaining am MBA, from a top-tier business school like the one Harvard University offers or an online school, an entire section of study will be dedicated to understanding what a supply chain is, how supply chains work, and how to manage them. Why such emphasis on supply chains? Because that’s where the money is! A plan formulated without supply chain considerations cannot be called, nor considered to be, a business plan. Such a plan is nothing more than a hopeful notion. Yet it happens every day. Every day, certain potato growers—the ones whose potatoes wind up unpriced in Hunts Point—pore over endless production details. They ponder field rotations, potato varieties, irrigation techniques and water availability and cost. This, along with myriad additional crop inputs, form the basis for the many, many production decisions that must be made, and made right. But what about the economic factor that dwarfs by many times all production aspects combined in determining a crop’s value and profitability? When the time comes to sell a crop, for a grower to capitalize on his expertise, investment and risk, what then?
Here’s “what then.” The late and legendary Texas potato farmer Frank Barrett had this to say when he learned that a group of potato growers were creating a potato market supply/demand/price database: “I have planted many, many potato crops. I did so without knowing on the day they were planted what market conditions would be when the time came to harvest and sell them. How smart was that? I’ll tell you how smart that was: My farm is surrounded by farms that used to grow potatoes—farms that went broke because they rolled the dice year after year. No business plan, just plant them and hope. Not very bright!”
Barrett continued, “Such market information is long overdue. From here forward, we can plan how to fit our crop into the market in the best possible way. To not do so makes no sense, and certainly makes no real money. Just look around.”