The Idaho House Agricultural Affairs Committee on Feb. 26 endorsed legislation that would formalize the process grower associations have used for 50-plus years in negotiating annual contracts with processors of fried potato products.
Supporters said House Bill 121 would help keep processors from negotiating directly with individual members of grower associations, as they contend a processor did last spring, striking unfair deals that ultimately impact market-wide pricing.
Opponents said the processor did nothing illegal or in bad faith, and that the legislation is not needed since the longstanding voluntary negotiations between associations and processors work well overall while preserving free-market opportunities. Moreover, HB 121 is vague and does not impose non-compliance penalties, they said.
The bill establishes an Oct. 31-March 15 negotiating period for grower associations and processors. Negotiations between processors and individual grower members of the association would not be allowed until after the period passes with no agreement in hand. Associations must be nonprofit cooperatives with at least 40 member growers.
The committee briefly considered sending the bill back for revision or amendment — Rep. Jerald Raymond, R-Menan, questioned its lack of oversight and penalties as well as its consequences — but ultimately voted to send it as-is to the full House with a do-pass recommendation.
“The pricing imbalance in the market is real, and I have never seen it in my 30-year career,” said Dan Hargraves of the Southern Idaho Potato Cooperative. Membership in SIPCO is voluntary. The cooperative represents about half of Idaho growers and impacts the market broadly. Some growers will be at an approximately 50-cent-per hundredweight price disadvantage as a result of negotiating independently, he said.
Negotiations between grower associations and processors have worked well over many years, benefiting the parties while providing a price benchmark for the broader industry including seed potatoes and dehydrated products, Hargraves said.
Without such negotiations, small and mid-sized growers could lose access to reliable price discovery.
Duane Grant, speaking on behalf of his own sizable farm and three others in south central Idaho, said he opposes the legislation for reasons including that it essentially creates a blackout period for independent negotiations while encouraging processors to suspend negotiations with anyone except a cooperative, the specified negotiating period is too long, and such a law should apply to other players including potato dehydrators while also having state agriculture department oversight.
“The state can do better,” he said.
Many growers are tied into one processor customer, so an artificially low price has a big impact, said Keith Esplin of Potato Growers of Idaho. If the traditional association-processor negotiating process effectively becomes unavailable to one grower, it won’t be long before it is not widely used, he said.
“A vote for the bill is a vote for free, fair and equitable markets for processors and growers,” said Mike Telford, a potato seed grower in south central and eastern Idaho.