Idaho potato prices down more than 40%

Economists worry about the small towns that depend on the crop.

(IDAHO FALLS) POST REGISTERJuly 9, 2014 

In the first week of June, a grower could expect to receive between $7.75 and $8.25 for 100 pounds of potatoes, depending on quality, according to data. In the first week of July, prices had fallen to between $4.25 and $4.75.

Growers are facing substantial losses because the price of a potato, even during the June price peak, has been less than the cost of producing it, said Paul Patterson, an agricultural economist with the University of Idaho Extension.

He estimates the current cost of production, including shipping and storage, at between $8.50 and $9 per hundred pounds.

Kevin Stanger is vice president of sales and marketing with Wada Farms, which produces potatoes on about 10,000 acres of land in Idaho.

"It doesn't take a brain surgeon to realize when prices get this low it's a negative return for growers," he said.

EXCESS SUPPLY

Tony Sorenson, market reporter with the U.S. Department of Agriculture, said this year's growing season will put a new crop of Idaho potatoes on the market one or two weeks sooner than usual.

"For the most part, this season has had ideal growing conditions, and not only is the new crop of good quality … but it is way, way early," he said.

Sorenson said this could be driving down demand for leftover stock from the last growing season, since buyers prefer new potatoes.

Stanger said this could be causing growers to dump their remaining spuds.

"I think a lot of guys just all of a sudden increased their (sales to shipping companies) and put a little too much supply on the market," he said.

Patterson said one factor driving the collapse is the fact that potatoes can't be stored forever, and growers want to avoid a total loss.

"The potatoes, at a certain point, need to be shipped, or they're going to deteriorate to the point where they're no longer going to have value," he said. "When we get into a situation like that, oftentimes the growers end up pushing more potatoes onto the market than the market can readily absorb. … That's probably what we've seen, at least in terms of Idaho."

THE LONG VIEW

Patterson said the latest drop comes during a time when Idaho potato farmers are already reeling from an "abysmal" season last year.

"Overall, the market has been below cost of production, with the exception of the beginning of the shipping season," he said.

Sorensen said in the long run the problem facing potato farmers is weak demand.

"Demand is far less than current supplies," he said.

Sorenson attributes this long-run decline to changing American lifestyles.

"Demand continues to erode overall because we are eating in drive-thrus and restaurants. We're cooking less," he said.

EASTERN IDAHO IMPACT

Dan Cravens, a regional economist with the Idaho Department of Labor, said the falling prices could hit entire rural communities hard in eastern Idaho, where much of Idaho's potato production is concentrated.

"Obviously, (it's) not good news for farmers," he said. "That's significant, and that means that a lot of the potato producers throughout eastern Idaho will have less income. And that decline in income will indicate that there will be less money in our local economy, and could affect a lot of different sectors - retail, particularly."

In communities such as Idaho Falls, Cravens said, the effects will be smaller, since other employers such as Idaho National Laboratory contribute significantly to the economy.

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