French fry processors will pay Idaho potato growers a slightly higher price this year, but will order fewer because of lower demand from restaurants and foodservice outlets closed by the COVID-19 shutdowns.
Idaho leads the nation in potato production. More than one-third of the state’s crop is grown for processing.
The annual contract between growers and processors calls for a 2% price increase from 2019, in response to growers’ higher labor and machinery costs, said Dan Hargraves, acting executive director of the Southern Idaho Potato Cooperative. He would not disclose the 2020 price. SIPCO negotiates contracts on behalf of growers.
“Growers have been notified by processors that there will be a reduction in preseason contract volumes of 15-25%,” he said. Some processors distributed the acreage reductions equally, “which was greatly appreciated by growers.”
The volume drop reflects the shutdown of the foodservice sector and significantly reduced demand in the quick-service restaurant category in response to COVID-19 concerns, Hargraves said.
“It came at a time when growers already made significant investment to grow the crop-year 2020 crop, so some costs will be difficult if not impossible to recover,” he said, as fixed costs are spread over fewer acres. Many seed potatoes, for example, have been delivered and prepared for planting.
“There is no game plan to follow here because there is little experience to draw on, on how this is going to play out in the next months and years,” Hargraves said.
“SIPCO appreciates the processors working with (growers) during this uncertain time,” he said.
Negotiations concluded recently. A contract was yet to be signed as of April 9. Last year's price increase was about 3%.