Potato acres across Canada are expected to be down for 2020, due to contract volume cuts in March as the pandemic lockdown hit North America.
After a three-month long rollercoaster ride for the potato industry, there’s good news on the horizon.
“The rebound is happening faster than anyone anticipated,” Kevin MacIsaac, general manager of the United Potato Growers of Canada, says in a phone interview. “We thought we would have far too many potatoes in the market and now, the opposite is happening in many areas.”
MacIsaac explains french fry manufacturers in particular are frantic to buy stock from growers to meet the rapidly increasing demand as pandemic restrictions begin to lift and more people head out to restaurants.
While the rebound is encouraging news for the long-term future of the industry, production for the 2020 crop year will likely be down significantly — this simply came down to unfortunate timing.
“We won’t know the exact numbers until the Statistics Canada results are released in July, but we can say that we’re at least down by 10,000 acres,” MacIsaac says. In 2019, Canadian growers planted 362,000 acres.
The reason for the reduction was a glut in the market early in the pandemic. Manufacturers cut their contracts with growers as crops were on the verge of being planted. But in the last week of June, the market ticked up significantly, it was too late for growers to add more acres for the 2020 production year though.
Mother Nature is now in charge. “If we have an excellent yield this year, the market may be able to shorten that gap and make up for the decrease in acres planted,” MacIsaac says. “If yields are in line for historic numbers, manufacturers and buyers will need to do a bit of a balancing act to ensure there are enough potatoes to meet all market including processing, table (fresh) and chips.”
“It’s been particularly tough for growers who have had to deal with inconsistencies in the market,” MacIsaac says. “They saw contracts cut in January and February and then highs and lows since then.”
Regionally, Alberta may take the biggest hit. They are typically first to plant in the country and many contracts were cut deeply while they were planting. MacIsaac thinks there could be a 25 per cent reduction in production there. Meanwhile, Quebec may fare much better thanks to a strong chip industry along with good fresh potato sales.
“The demand for chips continues to grow. Sales are up 22 per cent and show no signs of decreasing,” he says.
Adapting in Real Time
As the pandemic took hold early in 2020, it became clear planting plans for the potato industry would have to change, largely because of significant demand reductions for french fries. The service industry accounts for about 70 per cent of the fry market, and with restaurants shuttered and festivals on hold, demand slid.
“I don’t think we’ve had a single regional major manufacturer or growing region that hasn’t been somehow impacted by this as it has slowly become such a major part of our lives,” Peter Dawe, chief strategy officer for McCain Foods, says in a phone interview.
But as demand from the food service industry dwindled, fresh potato sales skyrocketed across the country with grocery stores scrambling to keep spuds in stock, according to produce packers across the country.
New potatoes start to come to market in the third week of July with Ontario first, MacIsaac explains. The other provinces follow with Manitoba bringing up the final stocks toward the end of August.
It usually is a balancing act to ensure all of last year’s stocks are sold before the new potatoes are ready. But this year is different as manufacturers hunt for remnants of the 2019 crop. When word of the cuts first came to light, many growers sold to the dehydrated or livestock feed markets.
“I think growers all been very, very worried,” Dawe explains. “There has been a lot of uncertainty over the reduction in acreage for this coming summer. We’ve tried to provide input as our demand plans change.”
“We’re really cognizant that without the growers, there is no processing sector. And it’s incredibly important to us that we work to support the agriculture sector so that it’s better for the agri-food sector thereafter.”
Global Demand, Shuffling Stocks
The United Potato Growers of Canada has been working closely with the United Potato Growers of American for at least a decade in order to better predict market fluctuations, MacIsaac says. Canada currently exports a small percentage of fresh potatoes into the United States market but sends a significant amount of frozen potato products there.
“The U.S. sends a great deal of its processed crop to markets like China and Japan,” MacIsaac says. “Canada acts as a backfill supplier.”
Fresh potatoes from the U.S. tend to come into the Canadian market, mostly into the western provinces, in the early summer when homegrown stocks are typically low and the new crop is still in the field, MacIsaac adds.
Each year, the Crop Transition Conference is held near the end of June to predict the market needs of both countries as the old crop dwindles and the new crop comes to market. MacIsaac, like all other interested parties, attended virtually this year.
“This year we were expecting to be dealing with a glut in the market and wondering how we would dispose of last year’s crop,” MacIsaac explains. “But things changed so rapidly that we’re know trying to balance the small stock that remains.”
Province by Province
Comments are provided by United Potato Growers of Canada as of June 24, 2020
Prince Edward Island: Planting on the island finished almost two weeks ahead of when it did last year with most fields now emerged and in need of rain. Preliminary surveys have acreage down 2,500 acres to 83,000 acres. This is mostly due to a six to seven per cent reduction in processing contract volume. Chip acreage is up slightly, while fresh acres are relatively unchanged. Old crop is expected to be cleaned up with processors having committed to take the remaining available processing potatoes and some seed potatoes also. Due to lost seed sales, there is still around 11,000 tonnes of seed remaining in warehouses.
New Brunswick: Growing conditions are dry with the planted acres down due to processing contract volumes reductions of around 16 per cent. Stocks of old crop are becoming more reduced with large volumes having gone to the dehydrated market or having been disposed of.
Quebec: Hot temperatures are pressuring yield potential with fields in need of a rain. Acreage is up by 2,000 acres due to an increased demand for fresh and chip potatoes.
Ontario: Fields are dry with sporadic rainfall having fallen. The earlier planted chip acres are looking good with emerging fresh potatoes looking even. Initial observations suggest an increase in chip acreage and a slight decrease in fresh acres. Not much old crop is left, with the first of new crop potatoes expected to come to be harvested around July 20.
Manitoba: Planting of fresh crop started 10 days later than usual. There has been lots of dry, hot and windy days. Fresh acreage is around the same as last year. Early planted processing acres were frost damaged. Acreage cuts aren’t as large as previously estimated with a five to seven per cent reduction now expected. Processing plants are ramping up production with Simplot set to resume importing potatoes from the U.S. and McCain resuming running at full capacity as of July 6.
Saskatchewan: The southern part of the province has been really dry, while the northern part was quite wet during planting. Overall the crop is coming along nicely with good emergence.
Alberta: The processing crop in southern Alberta was one of the first planted in Canada is growing rapidly, however a hailstorm in the Taber area wiped about 2,000 acres. Acreage is estimated to be around 20 per cent less than last year with no reductions having happened in seed acres, while fresh may have increased as growers switched processing acres to fresh.
British Columbia: The early planted crop is looking good after having received timely rains. Harvest of early Warba’s has been happening for three weeks. Overall potato acreage is expected to be