Fresh potato prices in late November were well above late 2020 levels while shipments of potatoes were lagging below year ago-levels, according to U.S. Department of Agriculture statistics.
“Right now, we are in a pretty strong market situation with demand at retail remaining strong,” said John Toaspern, vice president of international marketing for Potatoes USA. Toaspern said that retail potato strength is shared by all forms, including fresh, dehydrated potatoes, frozen and refrigerated potatoes.
Retail demand has come off a little bit from peak pandemic demand in 2020 but remains very strong, he said.
Quick service restaurant demand is vigorous currently, he said, with frozen fry demand exceptional.
“Processors are out there, beating the bushes for any open potatoes they can find, because between domestic and export demand for the frozen product, (demand) is well above what our supplies are,” he said.
Full-service restaurants and travel and leisure businesses are recovering, but still not close to fully back, Toaspern said. While demand from some foodservice sectors is still a bit soft, suppliers who serve those markets have adjusted, he said.
Suppliers have directed more business to retail, or have moved a bit more supply to processors, he said.
Toaspern said Potatoes USA continues to conduct research that reveals very favorable consumer opinions about potatoes.
“(Shoppers) are recognizing the versatility of potatoes and the consumer sentiment is quite positive and that is very gratifying,” he said.
From a supply and demand perspective, Toaspern said the market is tight but not undersupplied. Growers are receiving decent prices and continue to keep the supply moving, he said.
“I think what retailers need to continually be reminded of is that the potato is the number one vegetable item sold,” he said. “It is the reason many people go to the store; it always has a much higher basket than just about any other vegetable.”
Merchandising research shows that retailers who have a full assortment of potatoes and merchandise the commodity well can see big sales gains, he said.
Tracking the potato market
The USDA reported that fresh potato shipments the week of Nov. 14 to Nov. 20 were 4.895 million 50-pound packages, down about 6% from 5.19 million 50-pound packages the same week a year ago.
The USDA reported that season-to-date fresh potato shipments as of Nov. 20 totaled 66.37 million 50-pound packages, down about 5% compared with 69.94 million a year ago.
Meanwhile, the USDA market news survey of over 30,000 retail stores had 17,061 ads for potatoes for the week of Nov. 17, which is 4% lower than the previous week about and 37% lower than the same week a year ago.
The USDA's shipment report indicated season-to-date movement of Idaho fresh potatoes totaled 15,805 50,000-pound truckloads as of Nov. 20, down 15% from 18,536 truckloads shipped at the same date a year ago.
The shipping point price for size 60s Idaho russet norkotahs in late November was $16-17 per 50-pound carton, while size 100s traded at $13-14 per carton. Last year at the same time, size 60s russet norkotahs ranged from $9-10 per carton, while size 100s were $6.50-7 per carton.
In Minnesota and North Dakota's Red River Valley, 50-pound packages of Size A round red potatoes traded at $12-13 per carton on Nov. 26, with size B round red potatoes at $20-22 per carton, and creamer size $30-33 per carton.
Last year at the same time, Red River Valley size A round red potatoes in 50-pound packages traded from $11.50-$13 per carton, with size B reported $16.50-18 per carton and creamer size at $27-32 per carton.
Minnesota's truck shipments of fresh potatoes totaled 3,088 (50,000) truckloads through Nov. 20, down 12% compared with 3,502 truckloads moved the same time a year ago. North Dakota truck shipments totaled 974 truckloads, down 29% from 1,363 truckloads shipped at the same time a year ago.
Red River Valley potato suppliers experienced a good harvest period, said Ted Kreis, marketing and communications director at the Northern Plains Potato Growers Association.
“Harvest was excellent,” he said. This year, for the first time in several years, growers avoided weather moisture or temperature extremes during harvest.
Growers in the Red River Valley have been adjusting their acreage to keep up with growing demand for yellow potatoes, he said.The region has gone from about 4% yellow potatoes a decade ago to close to 20% or more of fresh output this year. The balance of the fresh crop are red potatoes, since russets are sold to processors rather than the fresh market.
Fresh shipments of potatoes from the Red River Valley typically extend as late as July, but the lighter crop this year could mean sheds finish by late May or June, Kreis said.
Idaho shippers are a bit tight with supplies but provided a tremendous amount quality of potatoes for Thanksgiving retail promotions, said Ross Johnson, international marketing director for the Idaho Potato Commission.
“The biggest thing that that our growers and our sheds are dealing with right now is labor,” Johnson said. “We've been working with our retailers to make sure that they're communicating with their shippers ahead of time to make sure that they've got everything lined up.”
The headwinds of a tight labor market and high trucking costs are slowing movement, but the industry remains optimistic about the 2021/22 season, he said.
Consumers continue to prepare and consume potatoes at home during the pandemic, he said.
“People have started to realize the fun of preparing meals at home, and we see that continuing,” he said.
“As we get more into the winter, we're going to see people really utilizing their potatoes at home, and we hope to see people taking advantage of Idaho's quality,” he said.
There has been some drop off in potato ad support from retailers, mainly because of inflationary pressure, Johnson said.
“Our shippers have been doing their best to not pass on that additional cost to the retailers,” he said. Johnson said both suppliers and retailers are dealing with the reality of paying their employees more money.
“When those additional costs come to the retailer, it makes it more difficult for them to promote it at some of the crazy holiday pricing that we've may have seen in the past,' he said. “Retailers are promoting but they're promoting more conservatively.”
Retailers don't need to promote a 10-pound bag at 99 cents to generate excitement, but Johnson said promotions are needed to make consumers aware that potatoes are a strong value and to allow retailers to raise the ring value of any shopping basket they enter.
Johnson said russet norkotahs have shown bigger sizing this year because of hot growing conditions that stressed plants and reduced the number of tubers per plant. That may give suppliers and retailers the chance to promote larger sizes more aggressively, he said.
Larger potatoes can be merchandised in both bags and in bulk, he said.
“A lot of times retailers get comfortable advertising is 70-count but imagine what your customers would do if they came in and saw a 40 or 50 count potato in their both display; you could charge a premium for that,” he said.
“There is an opportunity there for them to charge a little bit more and really, really have some fun with consumers because it is a lot of fun to kind of come across a pound and a half 40 count potato,” he said.
Labor challenging
Tight labor conditions are causing the industry operators to automate where they can, said Kevin Stanger, president at Wada Farms Marketing Group.
That could mean new machines for stacking boxes, building pallets or adding sorting and packing automation equipment, he said.
“The bottom line is that you can't get enough people to work so a lot of guys are turning to more and more automation.”
Stanger indicated Wada Farms will slowing down its potato movement to make sure the storage supply can make it to next year's crop.
“I'm not saying we don't want to sell them we do but we're just not getting overly active and trying to run any kind of volume promotions; we don't need to move the volume,” he said. Beyond the fresh demand, frozen potato processors are looking to buy up fresh potatoes to use in their plants, he said.