why I don't grow spuds in the garden - 07/19/19
They're so cheap in the stores that the ground can be better used for other things. My wife bought a 20lb sack last week for under $3. They're so cheap now that farmers can hardly afford to harvest them.
HEYBURN — Rod Lake grabs a shovel out of his truck and walks down a row in one of his deep-green potato fields. He throws the shovel into the soil and tips over a plant; roots around in the dirt and pulls out a few fist-sized spuds. They’re big for this time of year, he says.
But for Lake, owner of Lake Ag, this healthy field probably won’t fetch him the return he’d like come fall. Persistently low spud prices, rarely higher than the break-even point, have plagued Idaho farmers for years. Low prices have even pushed some growers to consider getting out of potatoes in favor of other crops.
While potato economics are incredibly complex, influenced by yearly acreage fluctuations, weather, the strength of the dollar, international trade agreements and other factors, the low prices have one primary cause.
“We have too many people selling the same thing,” Idaho Potato Commission Chairman Randy Hardy said bluntly.
Simple supply and demand?
Oversupply isn’t a new problem for Idaho spud growers. Lake said the last time prices were good was five years ago. Prices are trending up right now simply because it’s July, far away from the harvest season, but in general, farmers are settling for prices barely above break-even.
Lake has heard from farmers happy with a price of $6.50 for a hundred-pound sack, which strikes him as disappointingly low. In an ideal world, he’d like to see $7.50.
The oversupply issue isn’t a national one, Idaho Farm Bureau Federation Director of Commodities Zak Miller said. Idaho’s supply issue is especially problematic.
Hardy compared the situation to having 17 Ford dealerships in one town.
“The only way to sell your truck is to lower your price,” he said.
The natural solution would seem to be to limit production, but that’s easier said than done.
“You’re not going to get Idaho farmers to cut production,” University of Idaho Extension Agricultural Economist Ben Eborn said.
Growers end up competing with each other directly. Lake explained that if one farmer lowers their price, it can force a neighbor to accept a lower figure, too. The same applies to potato packers. If everyone held firm on a high price, everyone would benefit, but when one person sells lower, it can end up impacting everyone.
Coordination would likely help growers, but it’s probably a long shot. For one, farmers can’t fix prices — that would be illegal. And the odds of getting Idaho’s 600 spud farmers to join one big co-op are exceedingly long.
Figuring out how to encourage farmers to coordinate, without breaking the law, is a challenge.
“That’s not a million-dollar question,” Miller said. “That’s a billion-dollar question.”
Fostering more dialogue and better relationships between growers is the best tool the Farm Bureau has, Miller said. If farmers get along better, compete in a friendlier way, it could lead to better profits for everyone. At the same time, there are laws that prohibit farmers from colluding, so it’s difficult.
Spud growers have little power over their own market. Typically, high prices come when one potato-producing region experiences a natural disaster. For example, if Midwestern growers have a difficult year, Idaho and other western states would likely benefit.
A lack of processing capability also contributes to low prices for Idaho growers. But processors don’t want to have to fight for potatoes, instead preferring an ample, guaranteed supply.
“That’s the No. 1 rule for any processor,” Eborn said, “and the No. 2 and No. 3 rule: Do not run out of potatoes.”
An oversupply benefits processors, because it allows them to operate continuously.
Some experts said increased processing capacity would be beneficial, and noted that Idaho is an attractive, cost-effective state for the industry. Still, Eborn thinks the benefits, while helpful, would be temporary.
“If we get a little expansion, we will just plant more potatoes and we’ll be in the same boat that we’re in,” he explained.
Market drivers
Some industry experts said that U.S. Department of Agriculture reports haven’t been helping Idaho farmers. The USDA’s National Agricultural Statistics Service over reports potato production, Hardy said. According to the Potato Commission’s count, the report overestimated production by 7,000 acres and 2 million sacks last year. An acre of potatoes can produce about 410 sacks.
That can hurt farmers because processors might point to the reports when negotiating contract figures, although some say the impact of the reports has been overblown.
The Trump Administration’s trade policies play a role as well. Hardy said that President Donald Trump’s withdrawal from the Trans Pacific Partnership has hurt the Japanese french fry market, and if the issue isn’t resolved soon, growers could feel more pain in the future.
Not small potatoes
The field Lake stands in, backdropped by the South Hills, covers 40 acres. The field makes up just a small percentage of the 1,500 acres of potatoes he’s growing this year. Nowhere in that acreage will you find the variety farmers call fresh potatoes.
For potatoes destined to become french fries, potato chips or dehydrated potatoes, prices are negotiated beforehand. Fresh potato prices tend to fluctuate more, so in the past, Lake would dedicate half a pivot of his crop to fresh potatoes.
At these prices, there’s no point.
“I just got tired of the fight,” he said.
While Lake is still growing potatoes, he’s strongly considering getting out of the crop. It’s just the right business decision, he said, and he doesn’t get attached to potatoes just because he’s an Idaho farmer. Others are more set in their ways, and will grow potatoes regardless of the market.
Miller said it’s concerning to see farmers have to leave potatoes, even if they might not want to. Potatoes have a high cost of production, he explained, which means smaller farmers, who might have limited financial resources, are typically the first to stop growing spuds.
The total acreage doesn’t end up changing, but the number of growers declines. In fact, the number of Idaho spud farmers has declined by half in the past 25 years, Hardy said.
The commodities market in general is compounding farmers’ woes. There’s money in alfalfa right now, and sugar beets are doing well, but wheat and corn are low like potatoes.
Still, there’s some cause for optimism. Hardy said that, while prices aren’t where farmers would like them to be, they’re up a bit. Eborn pointed out that exports have been generally strong.
In addition to a few positive signs, September is still a couple of months away.
“A lot can happen between now and harvest time,” Eborn said. “We’ll wait and see how it goes.”
HEYBURN — Rod Lake grabs a shovel out of his truck and walks down a row in one of his deep-green potato fields. He throws the shovel into the soil and tips over a plant; roots around in the dirt and pulls out a few fist-sized spuds. They’re big for this time of year, he says.
But for Lake, owner of Lake Ag, this healthy field probably won’t fetch him the return he’d like come fall. Persistently low spud prices, rarely higher than the break-even point, have plagued Idaho farmers for years. Low prices have even pushed some growers to consider getting out of potatoes in favor of other crops.
While potato economics are incredibly complex, influenced by yearly acreage fluctuations, weather, the strength of the dollar, international trade agreements and other factors, the low prices have one primary cause.
“We have too many people selling the same thing,” Idaho Potato Commission Chairman Randy Hardy said bluntly.
Simple supply and demand?
Oversupply isn’t a new problem for Idaho spud growers. Lake said the last time prices were good was five years ago. Prices are trending up right now simply because it’s July, far away from the harvest season, but in general, farmers are settling for prices barely above break-even.
Lake has heard from farmers happy with a price of $6.50 for a hundred-pound sack, which strikes him as disappointingly low. In an ideal world, he’d like to see $7.50.
The oversupply issue isn’t a national one, Idaho Farm Bureau Federation Director of Commodities Zak Miller said. Idaho’s supply issue is especially problematic.
Hardy compared the situation to having 17 Ford dealerships in one town.
“The only way to sell your truck is to lower your price,” he said.
The natural solution would seem to be to limit production, but that’s easier said than done.
“You’re not going to get Idaho farmers to cut production,” University of Idaho Extension Agricultural Economist Ben Eborn said.
Growers end up competing with each other directly. Lake explained that if one farmer lowers their price, it can force a neighbor to accept a lower figure, too. The same applies to potato packers. If everyone held firm on a high price, everyone would benefit, but when one person sells lower, it can end up impacting everyone.
Coordination would likely help growers, but it’s probably a long shot. For one, farmers can’t fix prices — that would be illegal. And the odds of getting Idaho’s 600 spud farmers to join one big co-op are exceedingly long.
Figuring out how to encourage farmers to coordinate, without breaking the law, is a challenge.
“That’s not a million-dollar question,” Miller said. “That’s a billion-dollar question.”
Fostering more dialogue and better relationships between growers is the best tool the Farm Bureau has, Miller said. If farmers get along better, compete in a friendlier way, it could lead to better profits for everyone. At the same time, there are laws that prohibit farmers from colluding, so it’s difficult.
Spud growers have little power over their own market. Typically, high prices come when one potato-producing region experiences a natural disaster. For example, if Midwestern growers have a difficult year, Idaho and other western states would likely benefit.
A lack of processing capability also contributes to low prices for Idaho growers. But processors don’t want to have to fight for potatoes, instead preferring an ample, guaranteed supply.
“That’s the No. 1 rule for any processor,” Eborn said, “and the No. 2 and No. 3 rule: Do not run out of potatoes.”
An oversupply benefits processors, because it allows them to operate continuously.
Some experts said increased processing capacity would be beneficial, and noted that Idaho is an attractive, cost-effective state for the industry. Still, Eborn thinks the benefits, while helpful, would be temporary.
“If we get a little expansion, we will just plant more potatoes and we’ll be in the same boat that we’re in,” he explained.
Market drivers
Some industry experts said that U.S. Department of Agriculture reports haven’t been helping Idaho farmers. The USDA’s National Agricultural Statistics Service over reports potato production, Hardy said. According to the Potato Commission’s count, the report overestimated production by 7,000 acres and 2 million sacks last year. An acre of potatoes can produce about 410 sacks.
That can hurt farmers because processors might point to the reports when negotiating contract figures, although some say the impact of the reports has been overblown.
The Trump Administration’s trade policies play a role as well. Hardy said that President Donald Trump’s withdrawal from the Trans Pacific Partnership has hurt the Japanese french fry market, and if the issue isn’t resolved soon, growers could feel more pain in the future.
Not small potatoes
The field Lake stands in, backdropped by the South Hills, covers 40 acres. The field makes up just a small percentage of the 1,500 acres of potatoes he’s growing this year. Nowhere in that acreage will you find the variety farmers call fresh potatoes.
For potatoes destined to become french fries, potato chips or dehydrated potatoes, prices are negotiated beforehand. Fresh potato prices tend to fluctuate more, so in the past, Lake would dedicate half a pivot of his crop to fresh potatoes.
At these prices, there’s no point.
“I just got tired of the fight,” he said.
While Lake is still growing potatoes, he’s strongly considering getting out of the crop. It’s just the right business decision, he said, and he doesn’t get attached to potatoes just because he’s an Idaho farmer. Others are more set in their ways, and will grow potatoes regardless of the market.
Miller said it’s concerning to see farmers have to leave potatoes, even if they might not want to. Potatoes have a high cost of production, he explained, which means smaller farmers, who might have limited financial resources, are typically the first to stop growing spuds.
The total acreage doesn’t end up changing, but the number of growers declines. In fact, the number of Idaho spud farmers has declined by half in the past 25 years, Hardy said.
The commodities market in general is compounding farmers’ woes. There’s money in alfalfa right now, and sugar beets are doing well, but wheat and corn are low like potatoes.
Still, there’s some cause for optimism. Hardy said that, while prices aren’t where farmers would like them to be, they’re up a bit. Eborn pointed out that exports have been generally strong.
In addition to a few positive signs, September is still a couple of months away.
“A lot can happen between now and harvest time,” Eborn said. “We’ll wait and see how it goes.”