The potato processors in the United States (US) need more potatoes for the coming season. However, the lower contract prices and more favorable alternatives mean that potato growers are reluctant to expand their cultivation.
Despite the fact that contracting the chips potatoes in North America is very different than in Europe, this does not guarantee satisfaction. The negotiations are difficult and cause unrest.
Raw material requirement
French fries producers Lamb Weston and McCain have invested in new French fries production lines and in increasing capacity. The current season is not yet running at full speed, but that is the intention for the 2019/2020 season. The insiders estimate that an additional 175.000 to 242.500 tons of potatoes are needed (depending on quality and origin) to fully utilize the lines in both plants. This corresponds to an area increase of 5.600 to 9.000 hectares.
Besides potatoes, there are a number of alternative crops: wheat, barley, grain maize and alfalfa. Cereal crops in particular have a small advantage in terms of price, as is expected based on current pricing. However, the crop rotation is even more important. If the acreage in Idaho and Columbia is increased, this is an attack on the soil.
potato price
Whether it is better to grow potatoes or sow grain differs per company and cultivation area. The prices of Russet chips potatoes are in any case lower. Looking at the current situation and the historical data, insiders consider it more realistic that the acreage will decrease slightly (based on statistics). Current potato prices are supported by the situation in Europe and closer to home: Canada and some US growing regions.
If the coming growing season does deliver high yields, the negative impact on prices can be (very) large. Potato growers are therefore advised to be careful with any expansion plans. A higher or lower yield has direct consequences for the price. If a surplus arises, it will be sold on the table potato market. And it then suffers the disadvantages of that.