BusinessMarkets & PricingPotato Production Costs on the Rise

Potato Production Costs on the Rise

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Potato production prices have been rapidly increasing this year which may have growers considering last minute acreage adjustments, the March 17 issue of North American Potato Market News (NAPM) says.

Prices for fuel, fertilizer, chemicals, machinery, and labour have skyrocketed, the report says. Diesel prices are up 24 per cent since Jan. 1, while nitrogen prices have increased between eight to 20 per cent since last year. The biggest jump has been with phosphate fertilizer which is up 49 to 56 per cent from a year ago, while potash prices are up 13 per cent.

All of these costs are equating to an increase of about US$100 per cent or US$0.25 per cwt since Jan. 1 for potato production. Strong alternative crop prices could make growers reluctant to plant more contract potatoes than they had planned, NAPM notes. Corn, soybeans, wheat and other crops are seeing their largest prices in seven to eight years which has many convinced this could be the largest acreage since the 2011/13 commodity boom.

“Increased planted acres, coupled with profitable crop prices, record government program payments, forgivable PPP loans, and newfound optimism have spiked demand for production inputs. Fuel and fertilizer costs have risen since January, and chemical, machinery, and labor costs are certain to follow,” the report says.

Some growers have been asked plant more contract potatoes than they had planned, NAPM notes. Contract prices are down three per cent from last year, making increased potato acres not as attractive as planting other crops. This may cause processors to not receive as many contract potatoes as they have planned for.

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