News Release

Planting 2003: PGI Cautions Restraint

BLACKFOOT, ID — Citing widespread concern that the 2003-2004 potato market cannot bear an increase in planting, PGI is cautioning growers to be certain they have a market for any spuds they plant this year.

All the indicators point toward a lot lower demand for potatoes this year, said acronym title="Potato Growers of Idaho">PGI Executive Director Keith Esplin. We don’t want to paint a doom and gloom picture, but we need to realize that we have it within our power to determine what kind of prices we’ll be getting for our investment.

Esplin points to Simplot statements that the company will cut contracted potatoes in Washington and Idaho by 25% this year. In fact, Simplot is cutting about twice what would be accounted for in just the Heyburn plant closure. Esplin emphasizes that Simplot is not just cutting contracted acreage, but also cutting production due to its Canadian expansion. He also cites the reality that demand for frozen process potatoes is down between one and two percent. If those two factors are not all the proof we need that growers must be prudent in making their planting decisions this year, Esplin has more.

A year ago a well-placed source within Simplot told us the company might be closing as many as three plants in the Pacific Northwest because of excess capacity. We can’t rule out the possibility that more cutbacks may be on their way this year, said Esplin. Heinz has also announced reductions in contracted acres.

Another factor to consider is the tough stance processors are taking on contract bargaining. Wisconsin growers got a significant increase after their negotiations, but processors so far have been refusing to give Northwest growers the same kind of increases. Furthermore, Wisconsin growers are still without acreage commitments. Some growers may be tempted to believe processors will eventually have to buy more, and at better prices on the open market. However, as they have shown this year, processors are very adept at managing supply and demand to avoid paying more than they want to pay for raw product.

Finally, Esplin sounded one further note of caution for growers. They shouldn’t be fooled by news coverage of impending water shortages into thinking that some growers will cut back on potato acreage for lack of water. Esplin said that the water outlook continues to improve, and that even without improvement on that score, growers have never been known not to plant for lack of water.