Maine’s potato industry received good news Friday when one of the state’s three potato processing companies announced a $7.5 million expansion that will increase the amount of potatoes it’s buying from farmers at a time when demand from the state’s largest potato processor is falling.
Naturally Potatoes plans to make a number of improvements to its processing plant in Mars Hill, Maine, that will allow it to increase its production by 25 percent next year, according to CEO William Haggett. The facility is on track this year to process 40 million pounds of Maine potatoes for the refrigerated potatoes market, but expects to do at least 50 million pounds next year, he said. The expansion will provide the space to increase that volume to roughly 90 million pounds, which Haggett said the company could potentially do within five years.
The company, which also operates a 900-acre farm in St. Agatha, will hold a groundbreaking ceremony June 4 at its Mars Hill facility.
“We really think we have something going that’s good for the potato industry in Maine and agriculture in Aroostook County, and good for the overall economy of the state of Maine,” Haggett said. “The company is profitable and paying taxes. It’s been a good way to add value to the potato industry, which is exactly the objective that was set 15 years ago when the company was founded.”
Naturally Potatoes sells refrigerated potato products—everything from mashed potatoes to diced potatoes—into the retail and restaurant markets. Besides the potatoes grown on its farm in St. Agatha, Naturally Potatoes buys potatoes from between 12 and 15 other growers in Aroostook County, Maine, Haggett said.
“The refrigerated potato market itself is growing rapidly and we think we’re gaining some market share, but we think we’re also growing with growth in the industry,” Haggett said. “The quality of the potato product by Naturally Potatoes ranks with the very best produced in America.”
Shoppers can find Naturally Potatoes’ products in freezers at grocery stores across the country. On the restaurant side of the business, Applebee’s is one of the company’s largest customers, Haggett said.
“We have major accounts that read like a Who’s Who in the restaurant industry in the United States,” he said.
Rodney McCrum, the company’s president and chief operating officer, founded the company in 1995 along with a group of other Aroostook County farmers to give northern Maine potato growers another outlet for their potato crop. The business was sold in 2005 to California-based Basic American Foods, which operated the business for five years before placing it back on the market. McCrum, Haggett and the Libra Foundation, which owns Pineland Farms, partnered to repurchase the business in 2010. Since then, sales have grown at a compound annual growth rate of 15 percent, Haggett said. This expansion will push the company’s annual revenue into the $30 to $50 million range, he said.
The company is wrapping up a $1.2 million investment to improve the efficiency of its existing production line, but that will not be enough to meet demand, hence the expansion, Haggett said.
The announcement from Naturally Potatoes comes on the heels of a blow to Aroostook County’s potato farmers. McCain Foods, which operates the state’s largest potato processing plant in Easton, in early May concluded negotiations with about 60 local potato growers that will see the french fry maker reduce the price it pays to growers by 5 percent and the volume of orders by 20 percent.
The expansion at Naturally Potatoes offers “a much brighter picture” of Maine’s potato industry than did the news about cutbacks at the McCain plant, according to Don Flannery, executive director of the Maine Potato Board.
“Anytime you look at an expansion within the industry, it’s a very positive thing,” Flannery said. “My understanding is they’ll increase the volume of potatoes they buy, so that’s a positive that will make up for some of the loss that was due to McCain.”
Maine has three potato processors. In addition to McCain and Naturally Potatoes, there is also Penobscot McCrum in Belfast. While it’s clear McCain is the largest, Flannery couldn’t comment on whether Naturally Potatoes is the second or third largest. He said McCain processes roughly 40 percent of all the potatoes grown in Maine.
The back-to-back news is a reflection of the changing market for potatoes in the country. While french fries are dropping in popularity because of changing consumer habits, the market for refrigerated potato products is growing, Flannery said.
“(Naturally Potatoes’ expansion) is a reflection of the marketplace and a reflection of what people are buying,” he said.
Naturally Potatoes is the third- or fourth-largest player in the country in the refrigerated potatoes market, according to Haggett.
Maine potato farmers planted 55,000 acres of potatoes in 2013, which yielded more than 1.5 billion pounds of the tubers, according to the U.S. Department of Agriculture. That crop was valued at $168 million, which makes it by far the most profitable crop farmed in the state, according to the USDA data.
Source: Portland Press Herald