The negotiations between potato growers and French fries factories in Canada are not progressing well this spring. The planting season has started, but not every contract has a signature. This makes it difficult to predict the movement of the area. The cultivation is supported by a strong market and growers are also positive.
Insiders expect the potato area in Canada to increase by 2% to 3% this year to more than 160.000 hectares. That is an increase of 3.500 hectares compared to last year. There is a big but mentioned. Because contract negotiations have not been completed everywhere, it is impossible to say at the beginning of May which way things will go. The situation differs per province.
Good season on Prince Edward Island
With 34.400 hectares, Prince Edward Island (PEI) is the most important province for cultivation, which is increasing slightly there by about 3%. Despite a difficult season last year, growers have had an excellent season for all segments (french fries, chips, seed potatoes and table potatoes). Almost all contracts with processors have been signed and according to growers, significantly higher prices have well compensated for the extra costs.
Relatively dry weather conditions ensure that planting can start on time. Potato growers are currently waiting because it is still relatively cold, especially at night. Insiders think that full planting can take place in mid-May.
Little water
In Manitoba, where with 33.000 hectares the most potatoes are grown after PEI, growers and processors are still busy negotiating. Processors are aiming for more tons of potatoes, but growers are hesitant because they are afraid that not enough water is available for irrigation. One factory is solving that by contracting more potatoes from Alberta and Saskatchewan for their Manitoba lines.
In New Brunswick and Alberta, contract negotiations have not yet been completed. It is therefore difficult to say exactly what the area is doing, but it is estimated that not much has changed compared to last year. The weather here is also favorable to farmers and it is estimated that planting work can start on time. Fewer French fry potatoes are grown in Quebec, but contract negotiations are still ongoing.
Seed potato bottleneck
Another bottleneck for processors is the availability of seed potatoes. “That's the first time in decades,” said Victoria Stamper of United Potato Growers Canada. It is estimated that the seed potato area in Alberta and Manitoba is expanding slightly. "That is not easy for growers," says Stamper. "The cultivation costs are high, there is not enough water everywhere and the land is not available."
The largest Canadian processor McCain made in March known to double its production capacity in Lethbridge, Alberta. The investment amounts to $600 million CAN. The company did not announce what the total production will amount to with the two planned new lines. It does say that an additional 6.000 hectares of potatoes will eventually have to be grown, on top of the 22.000 hectares of chip potatoes that are already grown for the factory by 155 growers.
McCain's expansion will have an impact on production in Canada, Stamper says. In addition, competitors Pepsico (FritoLay) and Lamb Weston also have factories in Alberta.