Idaho spud prices drop near production cost
By John O’Connell
IDAHO FALLS, Idaho — Idaho potato prices have dipped near or slightly below the cost of production, but the market appears to have bottomed out and may be poised for an upswing, according to University of Idaho Extension economist Paul Patterson.
Patterson suspects the size profile of the 2013 spud crop — which contained a larger percentage of potatoes over 14 ounces but a 2.5 percent decline in 4- to 6-ounce tubers — contributed to price declines. He believes more crop than normal had to move through fresh sheds to fill consumer bags with small-sized tubers in demand for Thanksgiving. The glut of larger spuds likely led to increased packing of consumer cartons, which were aggressively shipped to free floor space.
Prices paid to growers have dropped steadily since peaking at $15.70 in August, prompting growers to kill vines early and flood the market in their efforts to cash in. USDA estimated the average price paid to Idaho potato growers in October was $8 per hundredweight. Prices continued eroding through November. Patterson calculates production costs, factoring in storage through October, ranged from $7.79 per hundredweight in eastern Idaho to $8.08 per hundredweight in southwest Idaho.
During the second week of October, the retail price for potato cartons ranged from $19-$24. Carton prices dropped to $17-$17.50 by the third week of November. Consumer bag prices, however, rose during that same period from $9-$12 per hundredweight to $13.75-$16.50 per hundredweight.
Patterson said Russet Norkotah prices have begun to turn around, and he’s hopeful Burbanks will follow. He said there’s often pent-up demand around Christmas, when spud consumption increases and packing sheds close for the holidays.
“The market appears to be stable and does appear to be starting to move up,” Patterson said.
Kevin Stanger, senior vice president of sales with Wada Farms in eastern Idaho, agrees prices are currently close to production costs, but he’s not worried about the carton market and believes prices will pick up as supply dwindles in the spring and summer. Stanger said movement of potatoes was slightly ahead of the projected shipping schedule as of early November.
“I think the market is staying flat. In March and April it may pick up,” Stanger said.
In past years, processors have forced upward pressure on fresh prices by purchasing potatoes on the open market at the peak of fresh demand. Stanger anticipates they’ll get ample supply from contract grower overages and shouldn’t need to purchase on the open market this year.
Based on increasing yield trends, Patterson suggests 315,000 acres — roughly 2,000 acres fewer than the 2013 planted acreage — should be the top end of Idaho’s crop. He said soft grain prices and the prospects of strengthening 2013 potato crop prices could make spuds an enticing option.
Ritchey Toevs, an Aberdeen grower and an Idaho Potato Commission board member, believes water constraints could limited spud acreage and added “at $5.75 per bushel, I can still contract soft white wheat above break-even. We’re not in a position where cereals aren’t competitive today.”