Put a cap on it
Potato growers advised to cut back acreage in predicted soft market
Potato growers advised to cut back acreage in predicted soft market.
The time has come for all P.E.I. potato growers to get in a room, close the door and come up with a number.
That number is how many acres of potatoes will be grown in 2016 — a year already predicted to be flat in the marketplace and offering few alternative cash-growing crops.
If Jerry Wright had a magic wand, he’d slash a tasty portion of acreage from the entire North America production.
“You won’t make yourself more profitable by planting more potatoes,” said the president and CEO of the United Potato Growers of America.
“You can pray someone else somewhere (in the potato growing world) gets nuked by the weather this year …, but your best option is to plan a strategy.”
Wright was a guest speaker at the United Potato Growers of Canada gathering at the Red Shores racetrack and casino Wednesday. He said all potato growers would be better off, and have more price control, by planting less rather than delighting the retailers.
Bear River potato grower Kevin MacIsaac agreed. He’s the chairman of the Canadian arm of the group and told P.E.I. growers an individual acreage cap would raise wholesale prices. Both speakers however, knew they were not speaking to the converted.
“You have to understand the real market and how you have to be the low-cost producer,’’ said Wright to a room packed with growers. “You can’t do this by planting more potatoes.”
The mighty pomme de terre is a billion-dollar industry in P.E.I. with over 83,000 acres planted. It is still the most consumed veggie in North America, but, like the Canadian dollar, worldwide consumption is falling.
However, the loonie slide may actually help.
“Agriculture products are a high-value commodity, and people in China and India want high quality food as they get richer and you (here) seem well placed to do that,’’ said Eric Santor, chief, economic analysis department with the Bank of Canada, during a seminar on the dollar decline.
And a lower dollar always seems to increase exports.”
Wright said the potato industry data doesn’t lie and when supply goes down, local grower return goes up.
“If you produce a balanced supply, you will get a better return, but if you act with independent self-interest like we all do, you will likely plant more.”
P.E.I. Potato Board chairman Alex Docherty said a low Canadian dollar expected to increase exports is a tempting prospect.
“We’ve tried cutting back acreage,” he said. “But I can’t see it happening … we’re an independent bunch and if I cut 10 acres another guy is going to plant 10 more.”
But Wright said a potato oversupply is a retailer’s delight allowing them to make a 65 per cent profit margin.
“Growers are giving away all their margins for the privilege of growing potatoes,” he said.
Former P.E.I. Federation of Agriculture chairman Alvin Keenan said it’s a fine balance between what the market wants and what the supply can produce.
“There are some great opportunities ahead, and luck is when opportunity and preparation meet.”