A record potato crop and export restrictions are weighing on Canadian potato markets.
Last fall, the Canadian potato industry was seeing high potato prices with plentiful supplies in eastern Canada. At the time, the industry’s main concern was how to ship potatoes to areas in the west which were lacking. That all changed though in November.
On Nov. 21, the Canadian government placed a Ministerial Order on potato exports from Prince Edward Island. The order suspended exports of all P.E.I. potatoes to the United States, seed potato exports to the rest of Canada were suspended and fresh potato shipments to other Canadian provinces required extra cleaning before export. This was all due to the discovery of potato wart in two fields the previous month on the Island.
Potato prices in Canada then started falling. Since the restrictions were put in place, Kevin MacIsaac, general manager of the United Potato Growers of Canada, says prices have dropped around $1 to $1.10 per hundredweight (cwt).
“That’s the result of more pressure on the Canadian market since the product can’t be shipped out on the East Coast. P.E.I. has limits to try to go in Canada, and the market just can’t absorb that additional product,” he explains in a phone interview.
Canadian growers produced a record potato crop for the 2021 season. According to Statistics Canada, 123.1 million cwt of potatoes were produced in 2021, up 18.2 per cent from the previous year. The bulk of that production came from P.E.I. at 23.2 per cent, due to an ideal growing season. Dry, hot weather in Western Canada reduced the potato crop there requiring extra potatoes to be shipped in.
“Back in November, we were trying to put a plan in place, a pack plan, where you see how you could ship that extra production into the areas that needed them. And that all changed on November 22,” MacIsaac explains. “We don’t have any opportunity there to do that anymore. They all have to be marketed in Canada, or I guess more significantly if they aren’t able to be marketed, they’ll have to be destroyed. Because the issue today is that we don’t have enough days of packing time left in the year to deal with the crop.”
In the U.S., with the large P.E.I. crop unable to be shipped there, potato prices are on the rise. The hot, dry weather also affected U.S. potato production. According to the U.S. Department of Agriculture, the 2021 American potato crop was down 1.6 per cent from the previous year at 413.16 million cwt.
“What typically happens is into that harvest window when all those potatoes start to flood onto the market it has a drastic dampening effect on price,” Mark Klompien, CEO of United Potato Growers of America, says during the Potato Business Summit in Anaheim, Calif. on Jan. 5, 2022.
Potato prices only dipped slightly at around 10 to 12 per cent during harvest with a fast recovery post-harvest, Klompien explains. Since then, prices have remained fairly stable across the U.S.
2022 Growing Season
Plans for the 2022 growing season are still up in the air. P.E.I. growers are worried they’ll have leftover crop come planting time and increased production costs are weighing on growers across the country. Variable potato production costs, led by sky high fertilizer prices, have increased by 30 to 35 per cent over the past two years, MacIsaac says.
Seed sales are also a worry, with seed potato sales from P.E.I. looking unlikely due to the potato wart issues.
“What we’ve been working on has been for washed, fresh, sprout-nipped potatoes to move on the table side into the U.S. and territory of Puerto Rico. So, I think the requirements are even more stringent on seeds. I’m not optimistic at all,” MacIsaac says.
Canadian Potato Holdings 20 Per cent Above Average
Tight Supplies Drive U.S. French Fry Sales Slowdown