BusinessMarkets & PricingVaccine Offers Hope for Potato Market

Vaccine Offers Hope for Potato Market

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With COVID-19 vaccinations rolling out across North America, the potato industry is hoping it will mean a boost in consumption as society inches closer to a return to normal.

With the first vaccines having been doled out across North America, the potato industry is feeling hopeful demand will pick up as society slowly returns to a normal world.

“That will bring back demand to a big level for processed products, for the french fry industry. Right now, we’re probably at 85 to 90 per cent of where we were a year ago,” Kevin MacIsaac, general manager of the United Potato Growers of Canada, says in a phone interview. “Processors in general were pretty nervous about the second (wave), because there has been shutdowns in restaurants and when that happens, that brings down demand.”

The second wave of the COVID-19 pandemic, which hit North America in late 2020, has led to lockdowns. However, circumstances are different during this lockdown than the first. With the pandemic having started in North America in March, people are starting to get tired of cooking at home which has pushed more people to ordering takeout and delivery, MacIsaac explains.

Overall restaurant demand has still not completely rebounded with many restaurants having been forced to close permanently during the pandemic, Stephen Nicholson, an analyst with Rabobank, says during a presentation at the Potato Business Summit in January.

“The National Restaurant Association is saying, about 110,000 restaurants have closed in the United States… So, you’ve seen a huge drop off in restaurants,” Nicholson explains. “We have to think about that in the broader picture. And that’s going to be a while before that comes back, or if it even does come back to level it was before coronavirus.”

Throughout the year, demand for fresh potatoes has increased as more people have cooked at home during the pandemic, however some holiday demand has been tempered. Demand was down for American Thanksgiving as many big gatherings didn’t happen due to the pandemic, with the expectation Christmas would be similar.

“We really expect to see some decrease in demand in terms of the actual supply that’s used. However, demand is still good on the fresh side, demand is excellent on the chip side, and like I say it’s able to maintain itself almost on the french fries,” MacIsaac says.

The pandemic wasn’t the only thing that weighed on the Canadian potato marked in 2020. A drought though out the Maritime provinces caused production to drop. Statistics Canada pegged the 2020 Canadian potato crop at 102.5 million cwt, down 3.9 per cent from last year. The hot, dry growing season caused production to drop by 20.8 per cent to 8.76 million cwt in the Maritime provinces. Overall, Canada’s 2020 potato yield is the country’s lowest since 2012 at 286 cwt per acre.

With the production drop in the Maritimes, there is concern about seed supplies for the 2021 growing season. Prince Edward Island and New Brunswick are large seed producers for North America, along with the state of Maine, all of which saw production drop due to the drought.

“We know that supplies will be tight. There was an increase in production in Western Canada, but demand is there as a need to feed the processing sector with additional supply,” MacIsaac explains. “I would say the advice to growers would be to book early. Don’t leave that, particularly on some varieties that may be shorter than others.”

The certified potato seed area in Canada fell by 2.3 per cent to 56,716 acres, the North American Potato Market News (NAPM) says in a report. NAPM notes growers reduced the seed area for fry-quality varieties by 210 acres, although the downturns for Russet Burbank and Shepody varieties were larger. HO2000 and Goldrush also saw large acreage reductions, while seven new varieties climbed into Canada’s top 50.