Supply estimates released from the United Potato Growers of Canada indicate that, compared to a year ago, there is a 10 per cent decrease of potatoes in storage across the country. Eastern Canada is showing the sharpest decline in stocks, with over 15 per cent fewer potatoes compared to this time last year. According to Bruce Huffaker’s North American Potato Market News, at 49.5 million hundredweight (cwt) across the country, stocks haven’t been this low since 2002.
“The impact will be that we may not have quite enough potatoes to supply the market as late as we would like, given that the shipping pace is the same as other years,” says Kevin MacIsaac, general manager of the UPGC. “If we can slow down the shipping rate we can extend [supplies].”
MacIsaac says Alberta is the only province with a substantial amount of potatoes available. “But when you get into the mechanics of it, a lot of them were forward-contracted by processing companies and picked up last fall, even though on paper it indicates that we have more supply there,” he says.
“[The supply situation] will definitely move pricing upwards. We’re seeing only a slight movement in [prices] now. We’re not complaining that prices are poor—prices are above the cost of production—but compared to what we’re anticipating the supply to be later on, they’re not as high as they could be.”
Supplies south of the border also indicate shortages. The United States Department of Agriculture’s latest data indicates a decrease in February fresh use and chipstock potato stocks, although NAPMN forecasts a 3.9 per cent increase overall from last year in its February 2012 potato stocks estimate, and a 10 per cent increase in processing stocks specifically.
“The processors are grinding through a lot of potatoes,” says Jerry Wright, president and CEO of the United Potato Growers of America. “They’ve ground through whatever increases they had in the western part of the country. With the loss of production on the eastern side of the country, they’re out in a major way trying to buy potatoes in the western states.”
According to Wright, prices should start to increase significantly toward the end of the crop year cycle. “The reality is that no one really knows when that will happen, because the pricing today does not really reflect the true supply and demand situation,” he says. “It’s pretty hard to predict, but if it’s true to its historical patterns, sometime in late April or May the market will move, but no one really knows because the market is not behaving in a rational way.”
The Canadian acreage outlook for 2012, according to MacIsaac, depends on trend-line yields, the Canadian dollar and the profitability of the crops. “Growers have more [crop] options this year, which doesn’t happen every year,” says MacIsaac. “The UPGC is consistent in its message to Canadian growers: plant only the acres you need to meet your known markets. We realize they are entrepreneurs, they need to compete and do what they can to supply the market—however, open or speculative acres are not always a good investment.”
