IN THE TRENCHES: Potato industry deserves recognition in face of challenges
by Ron Pelger | July 22, 2010
In my opinion, potato farmers should be recognized as American heroes. Through the years, they have worked rigorously to put the best-quality product on our dinner tables under the most difficult circumstances.
The potato has been cultivated for over 6,000 years. It first arrived in North America in 1719 and has been a gastronomic favorite ever since. But the potato has also had its share of burdens.
You have probably seen those television commercials of people eating big, juicy cheeseburgers and monster-sized sandwiches, which almost always are accompanied by one of the more preferred accoutrements among American consumers today — french-fried potatoes.
Vacillating claims have sometimes been made about the nutritional value of consuming this type of food. One day it is bad for you, and the next it is not as harmful as originally claimed.
Fast-food restaurants have had pressure placed on them to cut certain foods from their menus. And among these items is the ever-popular french-fried potato.
It is no secret that potatoes are the United States' preferred vegetable. Each American consumes on average more than 140 pounds per person each year. In spite of this, the potato always seems to be a victim of circumstances in battling uphill challenges, especially those driven by a diet-crazed culture. Remember the anti-carb revolution a few years ago? That diet slowed potato consumption for a while, but it picked back up again.
One huge struggle that manages to linger in the potato industry is the high cost of production and the low return to growers. This past season is a fitting example. There was plenty of evidence throughout the retail sector — signaled in store ad flyers — that growers were going to lose their shirts on the recent crop. We saw retail prices so low in the stores that we had to wonder how depressed the cost of potatoes must have been. There were weeks during the winter where 10-pound bags of potatoes were featured at 99 cents. Even premium-sized russet potatoes were selling for as low as 28 cents per pound.
There is something wrong with this picture. It is just hard to imagine seeing 10 pounds of potatoes retailing at only 99 cents these days. I did some potato retail research and found that a 10-pound bag was selling for 99 cents back in 1965 — 45 years ago. The question is, how can anybody operating a business today make any money selling potatoes at 1965 prices?
What caused all the low potato prices? I made phone calls to a few of my potato industry friends and learned some very interesting facts.
Kevin Stanger, senior vice president of sales for Wada Farms Marketing Group LLC in Idaho Falls, ID, told me, "The potato growers are losing money. This may be the single worst year financially for many fresh potato growers. The basic problem is supply and demand. Last season, we had a slight increase in acres planted and record yields for most areas. To go along with that, potato consumption is flat or negative in some areas. The industry is trying to address this through organizations such as the United States Potato Board and National Potato Council along with state agencies like the Idaho Potato Commission, etc., to drive demand and consumption up. It’s unfortunate that it seems the industry has to have some major adjustments to the supply community with farms and families losing everything before production correction can occur."
Sales growth is the name of the game. Company growth is the only way to make money in any business. It is imperative to generate high tonnage product movement in order to grow. Taking advantage of marketing opportunities in the way of retail promotional activities will certainly pay off in sales growth.
Seth Pemsler, vice president of retail and international for the Idaho Potato Commission in Eagle, ID, noted, “Retail-level potato sales have been flat to slightly declining during the past five years. However, the last several months have shown an increase of 10 percent. The economic decline has impelled consumers [to stretch] their dollars and has been an opportunity for retailers to use potatoes as a draw feature in their ads. More people have chosen to eat out less and cook at home, which calls for more potatoes at the dinner table. Also, the low-carb fad has gone away, and potatoes are back on the list for most shoppers again.”
There is no doubt in the world that potato farmers use every ounce of blood, sweat and tears to produce the best-possible crop year after year. But when it comes to selling that product, it takes more than just a price these days.
Retailers are now giving close consideration to suppliers that offer them programs with beneficial solutions rather than only low prices. One way to improve business is to look beyond the old traditional proposal of price alone. Growers should give this a high priority when negotiating with customers. Nobody ever said this is an easy business. The pain and suffering the potato industry experienced over the past years has undoubtedly been excruciating. Potatoes are the farming product of emotional risk. But in order to make progress, it involves plenty of risk.
(Ron Pelger is the owner of RONPROCON, a consulting firm for the produce industry, and a member of the FreshXperts consortium of produce professionals. He can be reached by phone at 775/853-7056, by e-mail at firstname.lastname@example.org, or check his web site at www.power- produce.com.)