The potato industry faces issues like all of agriculture, including the pandemic, supply chain disruptions, and the War in Ukraine. A new forecast shows COVID-19-related foodservice closures and the sector’s lagging full recovery still loom over growers upstream, increasing uncertainty and keeping a lid on acreage growth. Almuhanad Melhim, RaboResearch Analyst for Fresh Produce, says it really started in 2019.
“We started in the fall of 2019, we had short supply. The following year, we planted less acreage because of COVID. So, that led to a smaller area which meant less supply. Then, last year, we had a very dry and hot season in the North Pacific region, and that led to one of the weakest yields in the last 10-15 years, which also led to a smaller crop. You add in the equation short supply, strong demand, that equates strong prices.”
Add to that—the war in Ukraine is impacted planting decisions this spring.
“The impact was indirect. Ukraine and Russia, there is not much going on with the potato being imported from them or exported to them. However, through the impact on grain markets and energy markets, the potato sector here in the U.S. was like any other agricultural sector affected to a large degree. For example, the high prices of wheat, which potato growers who on rotational years, they could grow wheat out of their rotation. The rate at which the prices of grains have gone up since the war is faster than the one of potatoes.”
He says those growers found growing wheat or even corn was more economically beneficial to their operation.
“In fact, the USDA projections of planted potato area, the numbers are very startling. in Idaho, there is about a drop of seven, eight percent in acreage, you know, that mounts to about 33,000 acres less potatoes in Idaho. Wisconsin’s about 6,000-7,000 acres less potatoes planted this year than last year.”
Thus, the forecast from RaboResearch says high input prices, a bullish post-pandemic market, and diminished weather concerns combine to boost 2022 projections. Rabobank analysts predict the annual average fresh potato and processing potato prices to increase to $13.70 and $11.00 per hundredweight, respectively. Average potato yield is expected to rebound around 6.6 percent year-over-year.
