Just before the COVID-19 pandemic brought physical meetings to a standstill, the board of directors of United Potato Growers of Canada held a face-to-face meeting in Ottawa to review potato stocks and discuss the market situation across the country.
General manager Kevin MacIsaac noted stocks nationally were down 1.9 percent or 1 million hundredweight over the three-year average as of March 1.
However, the former chair of the P.E.I. Potato Board noted Island holdings were up 3.9 percent.
“Crop movement is up in Canada and the U.S., but down in export markets,” he said. “Movement has picked up in the last few weeks with particularly good movement on large size profiles. The 10-pound price is down 24 cents below last year at $2.67 FOB, but the fresh weighted average on long whites is $28.59, which is up 44 cents per hundredweight over last year, and GRI is $17.93 which is up 37 cents from a year ago.”
MacIsaac said storability has been a concern since harvest. Processing stocks on March 1 were 0.9 percent above the three-year average. He noted french fry contract negotiations have started with growers laying out their position. Chip contracts are under discussion as well.
“For seed, post-harvest tests have been a little later coming back but even with 10 percent more seed in storage than a year ago, supplies are expected to be tight, as some newer seed orders are being shipped to customers in Manitoba this year,” he said.
Mr MacIsaac said the 2020 planted acreage in P.E.I. is expected to be the same, around 85,500 acres; however, it ultimately depends on the contract settlement and whether growers see increased value and return on their investment.
Turning to New Brunswick, he said holdings in all categories were 7.2 percent below the three-year average. Some sheds have been dealing with pink rot issues, but he noted demand has been heavy on the processing side with very few open potatoes available.
“Contract negotiations have started with one meeting with McCain Foods and one with Old Dutch. Growers have indicated to processors their cost of production has risen significantly since their last settlement and need to be recognized in this round,” said MacIsaac.
On the fresh side, inventories on March 1 were 7.3 percent below average. Seed movement has started, and quality is good with some of the lowest post-harvest virus tests out of the last 10 years.
Fresh holdings on March 1 in Quebec were 2 percent below the three-year average. Fresh demand and movement has been good with packers now looking towards a shorter crop. MacIsaac noted fresh prices are good at $3.40 per 10-pound package on whites and $3.85 per 10 pounds on colors. Comparable prices a year ago were at the $3.65/10lb level.
The size profile is better this year than last with count cartons bringing premium prices. Processing inventories on March 1 were 8 percent above average, but still appear to be under supplied, with ministerial exemptions being signed to allow imported potatoes to enter the province. Chip negotiation is underway with both sides still at the table and French fry discussions have not yet begun. Quebec’s acreage for 2020 will need to increase this year in the 2,000-acre range.
In Ontario, March 1 fresh holdings were 11.3 per cent above the three average. Movement has been mediocre on the fresh side but will likely clean up ahead of the chip sector. Processing inventories destined for chips on March 1 were 7.2 percent above average so it is anticipated that there will be more chip stock to ship later in the season.
“Better recoveries and specific gravities are likely contributing to this year’s raw chipstock inventory. The chip industry is also reacting to the smaller size profiles being requested by manufacturers as they move to smaller package sizes in the upcoming months,” he said. “Chip negotiations have been completed with Frito-Lay.”
Fresh inventory was 4.3 per cent above in Manitoba with most of that in the red category. Record prices are being recorded with red As going to the US currently bringing $26 to $27 per hundredweight, and red Bs in the $36 to $40 range. MacIsaac said yellows are moving stateside at $25 to $27 pre hundredweight with good movement on Bs.
“Red creamers seem to be the only category a little sluggish in movement,” he explained. “There were a few quality issues related to last fall’s harvest, but the trade seems more willing to accept that dynamic this year. Seed appears short and is becoming more compounded by the attraction to move some of that seed category to the fresh side, given current table prices. “
On the processing side, MacIsaac noted processors are trying to utilize every potato they can, to get as far into the season as possible. Processing holdings on March 1 were 15.5 percent below average at 6.8 million hundredweight. Storage issues continue, particularly with those potatoes dug after the frost.
He added that even with these measures, extensive downtime will be required by both fry plants, bringing an early end to the processing season. Currently, eight to 10 loads of potatoes per day are being imported into the province from the United States. Contract negotiations have begun with a couple of meetings already held.
“With the new J.R. Simplot expansion, the province will require an additional 5,000 acres of potatoes, which may be a struggle to get, even with creative incentives,” the United general manager said. “Some dry land acreage and pivot corners which were taken out back in 2006-07 may need to go back into production. There have only been three new grower entrants in the last two years as producers size up the increasing levels of risk.”
He added grower organizations continue to ask for yield and production improvements to Crop Insurance and Business Risk Management Programs which have not adequately protected potato growers in recent years. Seed to plant the processing crop is scarce and a lot of imported seed is required, coming from as far away as Prince Edward Island.
Saskatchewan, which is largely a seed-growing province, was pretty much unscathed by the weather issues last fall, allowing most of the crop to get into storage before the weather hit. Seed acreage has been similar over the last three years with good prices, and significant shipping already done for 2020 customers. Acreage is expected to remain around the 6,300 level.
Alberta stocks on hand on March 1 were 1.7 percent above their three-year average. Processors are just now getting through crop inventory damaged by hail last summer. Two processors are importing raw product into the province, but he noted each plant will need to take extended down time to finish the season.
In total there are six contracts to settle in Alberta this year. One french fry contract offer has already been taken to the growers for their approval. PGA officials were not at liberty to share further details at this time, but growers do seem eminent that it is time to receive a raise as they focus on additional pricing for increased volume and return per acre.
An additional 3,500 acres will need to be planted this year to meet the needs of the Cavendish Farms’ expansion. Alberta’s seed crop grown on dry land, received just the right amount of rain last year, producing great yields. A month ago, Alberta’s seed inventory was almost 21 percent above their three-year average, however thanks to rapid movement, seed stocks on March 1 were only 0.8 percent above average. In addition to increased demand, customers seem anxious to take their seed home earlier this year. Some growers also feel that seed supply seems a bit short in Alberta this year.
“Stocks on hand on March 1 in British Columbia were 17 percent below their three-year average, so disappearance has been excellent for this crop. Supplies of whites and yellows are on track to clean up by June,” MacIsaac said. “Prices are 8 percent above normal, and russets are being imported from the U.S. to keep store shelves filled. Spuds for the 2020 marketing season have already been planted in the last week of February. These early Warbas should hit the market in May. Potato acreage in British Columbia is expected to remain at 6,700 acres.”