Before the new growing season, potato growers in the United States (US) find themselves in the same boat as colleagues on the other side of the ocean. Potato prices are under pressure due to an increasing acreage. However, alternatives are not available.
The potato area in the US walks a fine line between too much and too little. With a potato area of 1,016 million acres (411.169 hectares) there is insufficient raw material available, especially for the French fries industry. The situation is dire. Factories in North America are also focusing on growth and that requires potatoes.
Area increase
The area of early and medium early potatoes is expected to decrease slightly (nationally). This has to do with a smaller contracted volume for processing into chips. The area of 'fall potatoes' (main crop), intended for the French fries industry, is growing. An initial estimate for the total area (after pluses and minuses) is +2%, good for 8.500 hectares.
Alternatives
Arable farmers are inclined to grow more potatoes this year. However, caution is required. This certainly applies to the Russet breeds. Alternatives to potatoes include wheat, malting barley, corn and alfalfa. Due to the long-term low grain prices, these crops offer little financial return compared to potatoes. Even when prices decrease, the potato has an advantage. In the largest potato producing state (Idaho), wheat hardly offers an alternative.
The demand for chip potatoes is clearly present. In the important growing regions: Idaho and the Columbia Basin, processors are building new chip lines. Last fall, Lamb Weston started a new production line in Washington that produces 300 million pounds of fries per year. This line was put into use at the end of 2017, so that other factories could be shut down for maintenance. Full capacity utilization is expected for the 2018/2019 season.
Investing
Plans for a 300 million pound capacity production line in Oregon have now been presented. It should be ready between March and May 2019. Analysts expect that Lamb Weston will have to contract up to 3.200 additional hectares to meet its raw material needs.
McCain Foods will open a 400 million-pound chip line in Burley, Idaho, in August or September. An area of 5.600 to 6.000 hectares of potatoes is required to fully utilize the factory.
Tight stock
The current tight potato supply does not help processors. To compensate for a shortage of potatoes and end products, factories are trying to schedule more early potatoes. This means that chip production can be significantly expanded in the new season. This replaces the current reductions. There is therefore room for an increase in area.
Analysts expect an increasing acreage for the Pacific Northwest (PNW) potato region. Elsewhere in the US, surface area is expected to continue hovering around 2017 levels.