Othello, Wash., is poised to become the world's largest producer of frozen potato products in the next few years.
In 2021, McCain Foods will add a new facility, which will produce nearly 400 million pounds a year, on the same property as its current plant, said Dale Lathim, executive director of Potato Growers of Washington in Richland, Wash.
Lathim talked about recent potato processing expansions in the Columbia Basin and North America during the Dec. 11 Washington Potato Summit in Airway Heights, Wash.
The full impact of the expansion will be felt in 2022, Lathim said.
McCain's facilities are near the J.R. Simplot Co. plant in Othello, Lathim added.
Othello will host a production capacity of between 1.3 billion to 1.4 billion pounds of frozen potato products, he said. Burley, Idaho, has a capacity of 1 billion pounds.
The expansions are to keep up with increased demand as a result of McDonald's expanding its all-day breakfast menu.
The industry added 200 million pounds of new capacity just to make hash brown patties and other products.
McDonald's switching to all-day breakfast in 2016 led to other companies attempting the same thing, Lathim said.
"That all-day breakfast created a situation where demand increased rapidly for cut and formed products, and it moved the needle," he said.
North America needed more processing plants to keep up with domestic and overseas demand. The region's share of world production in 2012 was 46%. Today, it's about 34%.
"Even though we're growing, we're losing our share of the world marketplace because it's growing faster than we are," Lathim said. "We didn't have the capacity to keep up with it, while the Europeans were putting in plant after plant after plant."
Lathim pointed to various production problems throughout the continent.
"For all of those years we couldn't keep up because we didn't have the capacity," he said. "Now we have the capacity; this year, unfortunately, North America doesn't have the crop, so we're in the same boat that we were where the world market will continue to grow faster than we will."
The Columbia Basin has gained 950 million pounds of incremental production growth in the last five years. It would take 22,000 additional acres for potato production to serve that growth, Lathim said.
More than 1 million acres are suitable for potato production in the Columbia Basin, Lathim said. This year there were 130,000 acres of contracted potatoes, or 13% of available acres.
The industry is trying to stay on a four-year rotation, Lathim said.
Use of those acres comes down to economics and competition with other crops, he said.
Volume increases have come from varieties with better yields, Lathim said.
Some existing potato acres in other markets have been switched, with some fresh potato and chipping potato growers converting to contracts with processors.
Many acres devoted to tree farms for paper pulp, orchards and wine grape production have been converted back to annual production, he said.
As potato growers need more land, they're competing with other crops, driving up the price of land rents. Lathim said he's hearing more than $1,000 per acre rent for premium ground and $900-plus for average ground.
"That's what they've had to pay to compete, but that's what they've had to do to get the acres for their contracts," he said.
Lathim also pointed to acres that will be converted from well water to surface water, offering a more consistent water supply to increase production.
Processors have hundreds of millions of dollars invested in their processing plants, while growers have tens of millions of dollars invested in their operations.
"It's a symbiotic relationship — they need you, you need them," Lathim told potato farmers gathered at the summit.