This column discusses potato production’s principal market factors (crop value). Ancient Greece produced an excellent paradigm for discussions like this. In fact, men like Aristotle refused to participate in any discussion without its recognition. Its components are:
- Participants must be people of good will, anxious to discover the truth of an issue through reasoned logic;
- Participants must accept that objective reality (fact) exists, and that reasoned logic will find it; and
- Participants must be willing to change their minds as objective reality comes to light.
Today’s topic: stabilizing margins in potato production. Let’s dive in.
People of good will
As a potato producer of good will, you have an open mind. As a potato person of good will, you are willing to start from scratch regarding how you view the potato production business. As a person of good will, you view fellow producers as teammates, not as competitors, allowing a forum-based approach to stabilizing potato-production margins.
Potato production’s objective realities
Foremost is potatoes’ supply/demand/value reality. Potato demand is inelastic: Consumers, including processors, want what they want and no more. Forcing excess supply upon the consumer results in glut. Glut always threatens the producer’s margin. A second reality is the effect of collaborative production and negotiation on a potato crop’s value compared to that of fragmented production and negotiation. Another reality is that prosperous producers produce a higher-quality product than financially squeezed producers. Finally, the adage, “The guy with the gold makes the rules.” In the potato industry, which entity produces the gold upon which everyone else in the industry depends? What sort of negotiator would fail to leverage potato production’s vital position at the base of the potato industry’s economic pyramid?
Potato market objective realities
Balancing supply with demand stabilizes a potato crop’s value. This only happens with structured collaboration. Collaborative negotiation is more effective than fragmented negotiation. Compensation commensurate with production risk stabilizes supply. Compensation commensurate with producer/packer investment results in superior farms producing superior product.
Facing objective reality can be challenging. As an example, if physical conditioning is an issue, the only way to conquer it is to determine the objective realities of diet and exercise, and put them into practice; follow fitness realities and get fit, or don’t follow them and take your chances. Potato production is a business governed by the same objective realities that govern every business; follow them and prosper, or don’t follow them and take your chances. Setting the potato production business on firm economic footing is not complicated. It only requires people of good will to make it happen. When it happens, all in the potato supply chain benefit: from producer to teenagers eating fast-food french fries (and all handlers in between); from producer to upscale diners (and all handlers in between); from producer to fans at sports stadiums (and all handlers in between); and from producer to moms preparing nutritious family meals (and all handlers in between).