Potato processors in the United States are crying out for potatoes. Due to the current shortage, table potato prices have also risen by more than 50%. In addition, grains are an attractive alternative for growers. They suffer from the considerably higher cost price. Potato growers are faced with their toughest decision in decades: grow more or opt for an alternative?
Both potato growers and processors in the United States are largely in the same boat as their European colleagues. The demand for the end product is extremely good. This causes a lot of pulling on the potatoes. In America, the chip potato harvest fell 1,6% last year stock (18,7 million tons) with a growing area. Meanwhile, cultivation costs are skyrocketing. Almost all inputs have risen sharply in price. Alternative grain and forage crops are relatively well priced and require less input. What will the potato grower choose this year?
Alternatives beckon
Wheat in particular has good cards to create a positive balance compared to French fries potatoes. All alternatives require less input, which is especially felt on the energy and fertilizer front. Another alternative for arable farmers can be grain maize or alfalfa. An additional advantage is the crop rotation and the role of dormant crops in this. More potatoes is not a given everywhere. Especially in the state of Idaho and the Columbia Basin area. Most potatoes are grown here and cultivation is very intensive.
Based on alternative crops, American analysts assume a shrinkage in area. In a year with high product prices, the area decreases in half of the cases. In the other half it rises. A maximum decrease of 2% is taken into account. That goes against the strategy of processors. They have a dire shortage of potatoes. A consequence of accumulating factors. Sales of fries and other potato products are very good. The processing capacity is also expanded. Potatoes are needed for that.
Is there enough seed potatoes?
The availability of seed potatoes is another factor that can moderate an increase in acreage. However, a connection between the availability of starting material and the area cannot be established. Another factor is the table potato price, which is about 50% higher than a year earlier. In Idaho and the Columbia Basin, prices are even higher, up to 75%, from a year earlier. Potato growers can therefore choose between Russet potatoes for the table market and for fries.
Last season, the cost of potato cultivation in Idaho increased by 15%, according to recent figures from this 'potato state'. What doesn't help is the lower yield per hectare. Before 2022, the costs of fertilizer, crop protection products, mechanization and labor will increase again. Processors take this into account in their contracts, but exactly how much is not known. Prices are not discussed and growers are obliged not to disclose information. This year, a minimum of 15% cost increase is expected, although this varies greatly per growing region.
Fewer potato chips
For now, the best opportunity for expanding the area lies with potato chip cultivation. Contract prices here are increasing by about 20%, but the committed volume and area are decreasing. Estimated by 5% to 10%. Some of the potato chips are destined for fries, due to the shortage here. There are no shortages in this segment. There is also hardly any free trade. There is therefore a very good chance that growers in this segment will opt for the table or chip market.
As mentioned, the situation is very similar to that in Europe. Processors could use more potatoes, but arable farmers are not always willing to grow them. The contract prices do not sufficiently cover the cost price increase, the margin for other crops is better or the free market offers more opportunity. If there is a plus in the area, this will at most compensate for last year's minus. And while demand and processing are both increasing.