The US potato industry faces pressure from costs and consumer trends

After being forced to cancel the event last year due to the Coronavirus, the Growers Education Conference, sponsored by the Wisconsin Potato and Vegetable Growers Association and UW Extension, was successfully held this year at the Convention Center. Recommended Holiday Inn.

According to event organizers, attendance levels among growers, processors, industry professionals and exhibitors have returned to pre-pandemic levels, with a series of information sessions held. office for three days.

One of those sessions included an industry update by Blair Richardson, CEO of Potatoes USA.

Richardson began his presentation by noting that over the past few years the food service industry's purchase of potatoes has often been higher than what consumers bought potatoes for home use. “When I was here two years ago, I expected this trend to never change, but I have learned in the last two years not to use the word never,” he admits.

The potato industry, like much of the rest of the US economy, has changed dramatically over the past two years due to the coronavirus. “As with other food purchases, spending on potatoes has shifted sharply from restaurants and other areas of the food service industry to home consumption,” he said.

During the peak of the pandemic, 55% of potatoes purchased were for household consumption and 45% were used in the food service sector.

Increasing demand 

"Potatoes are still America's favorite vegetable," said Mr. Richardson. "It's the number one side dish at restaurants. The increase in consumption is continuing."

“Retail stores are still selling large quantities of potatoes, restaurants are buying again, but school purchases are still slowing down,” he added.

According to Richardson, current demand for potatoes is outstripping existing supply, and U.S. potato imports have increased by more than 130%.

“The European Union is exporting a lot of potatoes to the US – especially frozen ones for sale in grocery stores in the eastern half of the US like Trader Joes and Aldi's. We're really trying to understand what's going on here and why [American] companies aren't meeting this need," he admitted.

Supply chain challenge

There have been many examples of potatoes running out of supermarkets lately. “A lot of our customers around the country are contacting their suppliers and noticing a lack of supply,” Richardson reports. Many of these shortfalls are due to the impact of transportation."

Richardson says that US ports are not as efficient as other international ports. “Our ports are not as fast as ports in Europe and other countries,” he admitted. But even with the ports operating 24 hours a day, we still don't have time to get the product on the truck and get it on the road."

Over the past two years, the trucking industry has seen a shortage of drivers. This has created stiff competition for fresh fruit and vegetable shippers to ship their perishables across the United States, according to the United Vegetable Growers Cooperative (UVGC). And, as expected, has pushed the cost of transporting agricultural products to record levels.

In addition to overloaded supply chains and driver shortages, America's largest agricultural trading partner, Canada (the US exports 90% of Canada's fruit and vegetables during the winter months), has imposed regulations on a new vaccine for truckers, leading to massive protests by Canadian truckers. 

The Canadian Trucking Association estimates up to 16,000 drivers may be unable to work due to these regulations.

All of the above leads to an unfortunate truth: the negative impact on US growers.

Thinner profit margin

Making profit margins extremely thin is not a new phenomenon for growers. However, the sheer number of supply chain cost increases growers will face this crop - such as an increase in the minimum wage to $15/hour, overtime 40 hours a week, all Petroleum-related inputs, including fertilizers, diesel fuel, as well as health insurance - will be difficult.

Richardson advises that all growers be extremely diligent in all of their farming activities.

“On-farm efficiency will be more important than ever to achieve peak yields and superior quality in an effort to keep up with rising costs,” he stressed. “But current problems with supply chain channels can take a long time to fix.”

However, all the basic farming methods used to control costs will likely not be enough, according to the UVGC. "Growers must have the opportunity to offset some of the increased production and transportation costs to keep consumers supplied with the best and richest variety of vegetables."