Posted: Thursday, September 15, 2011 10:00 AM
Consumers uninterested in paying premium for larger potatoes
By SEAN ELLIS
SUN VALLEY, Idaho -- Increasing the minimum size of potatoes in retail bags would increase revenue to Idaho's potato industry by $150 million a year, according to an analysis by University of Idaho researchers.
But a separate study found that consumers don't care whether the minimum size is increased from 4 to 5 ounces and shoppers said they wouldn't pay more for the larger potato.
Potato growers and shippers asked the Idaho Potato Commission last year to conduct a consumer study to determine whether the minimum size of potatoes in retail bags should be increased and also whether the minimum size of the Grown in Idaho seal should be larger.
The consumer study, which was conducted this year, definitively answered the question of whether the minimum seal size should be increased.
As Idaho growers and shippers learned during their annual conference in Sun Valley Aug. 31 when the results of the study were released, consumers said the seal is very important to them when they shop for spuds and they overwhelmingly supported increasing the minimum width of the seal by 50 percent, from 1.5 inches to 2.25 inches.
But they were ambivalent about whether Idaho shippers should increase the minimum size of potatoes that go in a 5-pound retail bag. Consumers said if they wanted larger potatoes for baking or mashing, they would pick them from bins of loose potatoes.
"No real consumer problem needs to be solved by increasing the minimum size in a 5-pound bag," said Jeff Ewald, CEO of Optimization Group, the Michigan company that conducted the consumer study, which was based on responses from nearly 6,000 people across the nation through focus groups and online quizzes.
While consumers don't seem to care about the issue, Idaho spud growers and shippers do. The question has been argued for years.
Travis Blacker, president of the Idaho Grower Shippers Association, said the assumption by a lot of people was that consumers wanted bigger potatoes in their retail bags.
Since the results of the study were released, "I've talked to a lot of people who were pretty surprised that consumers like a wide variety of potatoes in their bags," he said.
The UI study found that switching to a 5-ounce minimum would result in a 54 percent price increase for fresh potatoes because 5 million hundredweight of spuds would be diverted to dehydrators, reducing fresh shipments in Idaho by 15.4 percent. The study found that total revenue to Idaho shippers would increase $130 million as a result of the higher prices, even factoring in a smaller number of total fresh potato sold.
While prices for the dehydrated market would decline 6.3 percent because of the additional potatoes that would be switched to that industry, overall dehydrated revenue would increase $20 million due to higher quantity.
The study was based in part on discussions with industry officials who would be directly impacted by a larger minimum size.
UI economics and marketing researcher Joe Guenthner, who led the study, pointed out it didn't analyze some important factors, such as whether the supply of fresh potatoes in other states would increase because of the higher prices that would result from a switch.
IPC Commissioner R.J. Andrus said the argument for increasing the minimum size has gone on for years, with dehydrators generally supporting it and potato sheds generally disagreeing.
The argument for increasing the size gains steam in years with a small profile crop, he said, and goes away during years with a large profile crop.
"You can argue both sides of that thing easily. It's a pretty tough issue," he said. "I think there will be a lot more discussion on that."
The industry requested the answer to the minimum seal and potato size questions during the IPC's annual whistle-stop tour last year and IPC officials will discuss the results of both the consumer and UI studies during this year's tour in November before making any decisions.