Canadian potato contract prices are rising for the 2023 growing season to meet climbing production costs.
Potato contract negotiations with processors are in full swing across North America with some in the west having already been settled. With production costs on the rise due to inflation and supply constraints, processors are taking the circumstances into account for contract prices.
“It’s always difficult to start. I know in Idaho, there had been some offers that actually one had been voted down, but they were back at the table,” Victoria Stamper, general manager of the United Potato Growers of Canada, explains in a phone interview. “It’s definitely been a back and forth. But the processors do understand the difference in the market since last spring.”
In Canada, negotiations start in the west and then move east. In Alberta, negotiations are wrapping up with Stamper having been told increases to cover higher input costs having been secured. In Ontario good progress has been made on the chip processing contracts.
Despite the contract increases, there are still concerns from growers about covering costs and securing the seed they need for planting. Stamper has heard from growers that they’re worried about ongoing labour shortages, water issues in some regions and land costs increasing with rising interest rates.
“With labour shortages pushing more growers to automate and invest more in automation and equipment, and the higher interest rates that go along with that type of investments… they’re definitely concerned and want to make sure that they can continue to plant potatoes in a profitable manner,” she explains.
Acreage may continue to rise in Alberta and Manitoba to cover increased demand from processors who have expanded capacity in recent years. It was tight across North America in the processing market for the 2022/2023 crop year with processors buying potatoes destined for fresh markets.
Stamper expects growers will consider planting more fresh potatoes but access to land and rising interest rates could hold them back from expanding. The one uncertainty is yields, if acreage is flat but growing conditions are good then there could be more potatoes available across North America in 2023.
“You can’t guarantee that yield increase from Mother Nature alone because you never know what nature is going to deal us,” Stamper explains. “Continued varietals research and availability of different varieties can impact that and what people grow.”
There is concern about ongoing tightness in the seed potato market. The increased demand from the processing market has outpaced growth in the seed potato market. Stamper adds that it takes a while for the seed market to catch up to increased demand, and despite seed growers getting more inquiries for seed, they may still be held back from being able to increase acres.
“People would want to do it because they’re getting calls for seed… are the growers there to be able to do it? They have the same cost that the processing or table grower has. So, they have to take that into consideration to make sure they’re going to get the money for their crop as well,” she explains.
Changes in fresh potato demand is also impacting seed supply. With more customers buying yellow over red potatoes in grocery stores, that also factors into the changing demand for seed.
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