Potato production costs rise
Updated: Wednesday, December 19, 2012 11:51 AM
Increase in costs will be difficult for farmers to absorb, economist says
By JOHN O'CONNELL
IDAHO FALLS, Idaho -- Idaho potato growers saw their production costs rise 5 to 8 percent in 2012 and spent considerably more on pesticides, fertilizer and custom chemical applications, according to a new economic study.
University of Idaho Extension economist Paul Patterson compiles the report annually, surveying growers and input suppliers to develop model farm scenarios for each region of the state.
The increases are modest compared with the double-digit input jump of last season but will nonetheless be tough to absorb, given current low prices for spuds due to a large crop, Patterson said.
"It shows the challenges for growers with cost of production continuing to go up, and in a year like this, with fresh market prices going down significantly and contract prices that were inadequate to cover the increased costs. This creates the cost-price squeeze growers have to deal with to stay in business," Patterson said.
His model farms produce Russet Burbanks, with yields based on a three-year rolling average to calculate costs per hundredweight.
Growers saved on seed, which dropped 4 to 5 percent. Rent for land increased from 4 percent in southcentral Idaho to 7 percent in southwest Idaho. Labor increased more than 6 percent from last season.
Fertilizer costs provided the greatest surprise to the economist, who had predicted declines after price increases approaching 40 percent last year. Instead, they rose from 11 percent in southcentral Idaho to 14 percent in eastern Idaho, likely because buyers, hoping for price declines, waited to place orders and clogged the supply pipeline, Patterson said.
Though costs of many chemicals stayed flat or dropped this season, Patterson said growers had to expand their chemical programs to protect crops from zebra chip. The disease, spread by tiny aphid-like insects called psyllids, first arrived in the Pacific Northwest last season and ruins the value of spuds with bands in tuber flesh that darken when fried.
Patterson estimates zebra chip resulted in increased costs of $35 to $85 per acre for eastern Idaho growers, $85 to $125 per acre for southcentral growers and $125 to $175 per acre in the southwest. He doesn't believe contracts with processors this season fully compensated growers for increases due to zebra chip.
Aberdeen, Idaho, grower Ritchey Toevs considers Patterson's estimates on zebra chip to be conservative.
"I don't think he came close to capturing the actual cost of insecticide for Magic Valley. For people in those hot areas, I think it's over $200," Toevs said.
Dan Hargraves, who negotiates with processors on behalf of Southern Idaho Potato Cooperative, agreed with Toevs' estimate but believes Patterson's other numbers were well within the ballpark.
"They're very helpful as a barometer to us," Hargraves said. "He puts a lot of work into that, and it's good unbiased third-party data for all the industry to look towards."
Per acre costs without storage ranged from just under $2,800 in eastern Idaho to over $4,000 in western Idaho.