Processor Lamb Weston has returned part of the 2019 potato crop to Northwest farmers.
The company doesn’t have the ability to run all of the 2019 potatoes remaining in storage, said Dale Lathim, executive director of Potato Growers of Washington.
The voluntary organization negotiates pre-season contracts on behalf of 65 member growers representing more than 80% of the contracted potato acres for frozen products in the state.
Lamb Weston did not respond to requests for comment.
Like make other processors that cater to the foodservice sector, Lamb Weston has seen less demand for its french fries and other frozen potato products during the global COVID-19 pandemic. In its third quarter report, Lamb Weston, a publicly traded company, withdrew its financial outlook for the fiscal year.
“At this time, despite only two months remaining in our fiscal fourth quarter, we are unable to reasonably forecast frozen potato product demand because of the pandemic’s unpredictable near-term effect on restaurant traffic in North America and our key international markets,” said Tom Werner, Lamb Weston president and CEO.
About 30% of the potatoes still in growers’ storage has been returned to farmers, Lathim said. He said that’s about 4 million hundredweight of potatoes in Washington.
About 1 million hundredweight were returned in Idaho and 300,000 hundredweight in Alberta, Canada, a 20% reduction in those areas, Lathim said.
The three other major processing companies — the J.R. Simplot Co., McCain Foods and Cavendish Farms — aren’t likely to follow suit, but they also won’t be able to absorb the excess potatoes, Lathim said.
“Lamb (Weston) is the biggest and strongest processor in the Pacific Northwest,” he said. “If they don’t have any home for (the potatoes) to go to, then nobody else would, either.”
Farmers received an advance of $5.25 per hundredweight. Lamb Weston will let growers keep that, Lathim said.
If farmers were able to deliver the potatoes, depending on quality, they could receive as much as $10 per hundredweight, Lathim said.
Growers must dispose of the potatoes. Most markets are already full, Lathim said, so the potatoes will go to cattle feed or be ground up and used on farms for their nutrient value.
“I don’t see many of them going to into human food channels, because those are already plugged,” Lathim said.
Chris Voigt, executive director of the Washington Potato Commission, said the industry is requesting $300 million in assistance from the USDA and Congress to purchase the excess supply and send it to food banks.
USDA recently made a $50 million purchase of potatoes and potato products under its Section 32 program to support farmers, Voigt said.
By the time Lamb Weston is done with the old crop, the new 2020 crop will be ready, Lathim said.
If everything goes as anticipated, industry predictions indicate all of the 2020 crop will be used up, Lathim said. There shouldn’t be as large a carryover next summer to impact the 2021 crop.
Lathim and Voigt both say grower morale has taken a hit.
Some farmers had their contracts cut by 50% to 100%, Voigt said.
“Kind of the frustrating part of this is the potatoes they hold until the end are usually from the best growers with the best storages and best potatoes, and those are the ones we’re having to feed to the cattle,” Lathim said. “Those growers feel like, ‘Wow, I’m almost being penalized. If I wasn’t such a good grower and didn’t have such good storage, they’d have already used up my potatoes and I’d have gotten paid on all of it.’”