Tight supply spells good news for Canadian potato markets, but rising production costs limit upside.
Following pandemic setbacks and trade restrictions, markets for the Canadian potato industry are looking positive. The upside though is tempered as production costs have increased making prices not look as lucrative.
“Demand continues to be strong. We have the opportunity for export into the U.S. with their tight supply situation. Processors still seem to be on board with contracts. So overall, the feeling I’m getting is positive,” Victoria Stamper, general manager of the United Potato Growers of Canada (UPGC), says in a phone interview. “People are still shipping, and the demand is still strong.”
Stamper does note shipping issues are holding back the market slightly. With fuel costs on the rise, shipping from east to west isn’t feasible. The supply constraints affecting global shipping are also reducing international export prospects.
During the Crop Transition Conference in Bloomington, Minn. on June 10, 2022, Dale Lathim, executive director of the Potato Growers of Washington, Inc. noted potato growers across North America received a 20 per cent increase on processing contracts this year.
“Twenty per cent sounds like a lot, right? It’s not all that much with costs going up what they are,” he said. “We accepted that 20 per cent because at that time, our costs were projected to be up about 18 per cent overall. Today, they’re up about 22 to 23 per cent. So still 20 per cent’s not bad, could be worse, but it’s not like we’re gaining anything on that.”
Overall, he said acreage and contract prices are up in 2022 compared to 2021. But Lathim noted they aren’t as high as they were back in 2019 before the pandemic hit. This is happening despite processing capacity across North America having expanded with new plants coming online.
“The processors are absolutely fearful of ever getting a surplus of potatoes. Because if we do, prices are going to go down, they have a hard time getting it back. It’s just ugly and so they’re doing everything they can to try to keep tight supplies going for as long as they can,” he said.
In Canada, Stamper says growers did see an increase in processing contract prices. Looking at acreage across the country, she has generally heard it’s flat this year. Acreage is expected to be slightly down in Quebec and Prince Edward Island, while Alberta is seeing a jump.
“Movement of P.E.I. seed is currently restricted by the CFIA. However, Alberta growers are predicting increased acreage for seed potatoes ,” Stamper explains. “They know there’s a really good, strong demand domestically and in the U.S. including for processing. So, overall acreage will be on the rise in this province.”
The latest potato storage holdings from Statistics Canada for June 1 show that the eastern Canadian provinces have more spuds on hand then their western counterparts.
“The late planting season and delayed growth may give more time to deplete these additional stocks. The additional three hundred million is doable given good demand and both fryers and fresh packers are currently making arrangements to deliver later into the season,” a report on the numbers from UPGC said, adding figures are close to spring 2020.
There are higher stocks of fresh potatoes in the east with much higher-than-average numbers in New Brunswick. The report noted this may include some processing potatoes that were switched to fresh after contracts to ship out west were halted. Processing stocks nationally are right on three-year averages, however most of that supply is in the east.
There’s an increase in seed stocks, which wasn’t unexpected due to P.E.I. seed exports still being blocked. The report noted how the wet conditions in Manitoba delaying planting has increased seed stocks in the province. A later spring across the country has pushed up seed stocks from where they usually would be as of June 1.
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