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Future demand for potatoes remain uncertain; UPGC planting recommendations for 2020 potato crop

The United Potato Growers of Canada (UPGC) published a document outlining planting recommendations for Canada’s 2020 potato crop.

Kevin MacIsaac, general manager of UPGC), writes that “growers are asked to consider all available information as they make their planting decisions this spring,” but “ultimately it is up to each individual grower to make those planting decisions which have the opportunity to provide better prosperity and sustainability for their farm business and family.”

With planting season starting, uncertainty still lies about the future demand for potatoes because buying and eating habits have shifted in response to the COVID-19 pandemic.

Processing demand slows significantly

Processors who manufacture french fries have seen a decline in sales because sit-down restaurants have closed and fast-food restaurant have limited operations to only delivery/drive-thru options. As a result, according to UPGC, French fry companies have reduced the volume of potatoes they will need to contract from growers not only in Canada, but from around the world.

Unfortunately, depending on which markets these individual factories supply, UPGC states that the cuts could range from 15 per cent to 30 per cent below last year’s contracts. When fryers are able to make these final estimates available to their growers, producers in turn should only plant what is required for those contracted volumes.

Cavendish Farms has already advised P.E.I. producers under contract to supply the company with spuds to “sell to other markets if they can” according to a CBC report. Terence Hochstein, executive director of Potato Growers of Alberta (PGA), in an interview with The Western Producer, explained that processors will try and stretch Canada’s 2019 potato crop as long as they can while cutting volume for the 2020 crop. Normally a year’s crop can satisfy 12 months of demand, but with a drop in demand due to COVID-19, a season’s worth of potatoes can satisfy processor demand for 15 to 16 months.

Fresh potatoes faring better, but not much

UPGC states that while cuts to demand for fresh potatoes are not as substantial as in the processing sector, information to date suggests the table market will need 10 to 15 per cent less potatoes than last year. MacIsaac notes that there is difficultly in predicting these numbers because they rely on the start-up date for when businesses will be allowed to re-open and also how fast the market will return to previous levels.

“At this time, it is estimated that it could take from six months to a year to reach historical consumption and sales levels,” MacIsaac notes.

In addition to a decrease in demand, UPGC states that producers of fresh potatoes which are sold into the table market should be aware of the following:

• The demand for fresh potatoes in retail stores was good at the start of COVID-19 because more consumers were staying at home and cooking.
• More recently, the closure of sit-down restaurants has slowed sales of potatoes in the carton category. These larger count size potatoes typically sold into the food service sector have been backing up as a result of fewer consumers choose their potato menu selection.
• Some potatoes grown for the processing sector are having to find a different home and are being offered to the table market.

UPGC’s recommendation is that growers plant only those acres for their market that has a known volume at a known price.

Adjusting intentions in seed production

Seed growers have the important task of supplying the basic start to processing, table and chip crops. Unfortunately, UPGC notes, they will need to adjust their planting intentions because their markets to some customers in other sectors have declined substantially below last year.

Seed growers are being asked to consider all the available information as they make their planting decisions this spring. Despite slowdowns in demand currently, last year’s potato supply was significantly reduced in North America and Europe due to adverse weather conditions at harvest. If growing and harvest conditions were different, the planted acreage could have provided a much larger inventory of potatoes. The question then becomes whether poor harvests in some areas in 2019 could be a good thing because there is less potatoes in storage to shift around.

In early March, in Manitoba, seed to plant the processing crop was scarce and a lot of imported seed was required, coming from as far away as Prince Edward Island. As a result, seed in P.E.I. was expected to be tight because the Island is fulfilling seed orders for customers in Manitoba. Part of this seed demand from Manitoba was in response to a poor harvest which saw roughly 13,000 acres left unharvested, but now with a drop in processing demand, planting intentions might shift.

In Manitoba, McCain Foods scaled back production at its Carberry and Portage la Prairie plants in response to COVID-19. Now, many producers have potatoes in storage, with no place to go.

MacIsaac, in an interview with CBC, said many processors are still sitting on potatoes imported from the United States last fall after shortcomings in the Canadian market due to heavy fall rain and an early dump of snow in Manitoba. J.R. Simplot Company’s (Simplot) french fry processing plant in Portage la Prairie, Man. was also expected to be fully operational in 2020 but hasn’t commented on what it would be doing.

“Collectively, the industry will need everyone’s support to work together as it moves out of these uncertain times in the world,” MacIsaac concludes the UPGC report.