Poorer than average potato yields in western Canada, Idaho and the Columbia Basin have created contracting headaches and supply issues for the processing sector. The tight supplies are having big impacts on the retail channel, as well.
Potato production isn’t like any other commodity, where the processor can go out and source more product if they run out. Production is tightly aligned to contracts and the processor’s needs well ahead of the growing season.
“It’s a real difficult situation, because you think back to a year ago, going through lockdowns for the pandemic, demand was a little crazy on the processing side,” says Kevin MacIsaac, of United Potato Growers of Canada. “Restaurants were closed, fast-food restaurants’ sit-down portions were closed, so French fry sales were really unknown as to where that would go.”
The industry has come back to where it was pre-lockdown volumes, but as the industry was going through it all, volume was cut back, and now, the industry is facing supply challenges as production numbers are off in the west, in particular says MacIsaac.
Potato yield in Idaho and the Columbia Basin region in the U.S. is down significantly, a continuation of the weather pattern experienced by the west.
“That’s a significant issue that industry in Canada faces (as) where potatoes are potentially imported from are likely not going to come from those two areas,” says MacIsaac.
On the processing side, French fry manufacturers are asking their customers for price increases, relating it back to lack of supply. On the fresh or table side of the market, it’s a supply and demand story, bolstered by good supply from eastern Canada.
Growers have burdened a huge amount of risk in a situation like this, and for 2022, MacIsaac thinks that as an industry it’s not a big ask for some sustainability, and to ask for some of the profit to be passed back to the grower. Potatoes aren’t just a crop that can be jumped in and out of, it has highly specialized equipment and storage.
“It’s a matter of growers standing firm and asking for that, and industry would be better off in the long-term if we can do that,” he says.