As french fry sales plunge and fresh potato and chip sales surge due to the COVID-19 pandemic, processors are struggling to gauge future market demand leaving farmers in the flux as they start planting this year’s crop, the April 1 issue of North American Potato Market News says.
As restaurants have shutdown or closed in-restaurant seating, french fry sales globally have dropped. Fries are starting to pile up and plants are slowing operations with closures possible in the next few weeks if market conditions don’t improve, the report notes. “Fryers are releasing growers from con- tracts to allow them to pack the potatoes for the fresh market, but some observers are afraid that processors will still have 2019-crop potatoes in storage during October.”
While there isn’t any certainty about how much processing demand will drop this year, processors are expected to make significant reductions for 2020 contracts, the report says. About 75 per cent of the Columbia Basin processing potato crop has already been planted, though growers don’t have any volume commitments. Fryers are now encouraging growers to stop planting until they can make decisions on 2020 volume. Some industry experts are predicting a best-case scenario of a 15 per cent volume reduction for this year.
While fresh potato sales have climbed in recent weeks as shoppers have stockpiled spuds with some fry bound potatoes being rerouted to the fresh market, not all spuds are suitable. Due to production and handling differences only about 40 per cent of fry-quality potatoes are able to be used in the fresh market. Additionally many of these potatoes are hundreds of miles away from a packing facility, the report notes.
Looking into the 2020 growing season if there are too many fry potatoes rerouted for fresh sales, the market could become over-saturated and drive down prices making grower returns below the cost of production.
Potato chip sales have also been on the rise as consumers have been snacking while in self isolation at home. Sales have started too slow but retail demand is expected to remain strong as long as self isolation lasts, the report says. Storage chip potato supplies are likely to run out four weeks earlier than originally planned — raw product supplies may be tight from the middle of May through June.
