Manitoba’s potato acres will take a hit this year in the wake of the COVID-19 pandemic and plummeting demand.
According to multiple industry sources, McCain Foods has dropped 16 per cent of acres from its contracts with Manitoba farmers, while Simplot has also made smaller cuts from its agreements.
Why it matters: As demands shrinks, less processing potatoes will go into the ground this year, as well as sending up a cloud of uncertainty for seed potato growers.
North America’s potato industries have taken a big hit from the COVID-19 pandemic. Lockdown of restaurant dining rooms, bars and other food-service locations have sent demand for products like french fries or hash browns, and therefore, potato consumption among processors like McCain and Simplot, into a nose-dive.
In an April 24 release, the United Potato Growers of Canada estimated processor cuts could range from 15 to 30 per cent compared to last year, while demand for table potatoes could dip 10 to 15 per cent, both from lower food-service sector demand and from some of those orphaned processing potatoes flowing into the table market.
Manitoba producers were expecting a boost in acres in 2020. Impacts of the pandemic come soon after major producer Simplot was expected to ramp up production. In 2018, the company announced a $460-million plant expansion at Portage la Prairie. Potato growers this year were expecting to queue up additional acres to feed the expanded plant.
Neither McCain Foods nor Simplot responded to requests for comment.
Dan Sawatzky, manager of the Keystone Potato Producers Association, said that the downturn has hit producers already reeling from a hard harvest last year.
The Keystone Potato Producers Association estimated that 12,000 acres of potatoes were left unharvested last year thanks to wet weather and early snow, while 1,000 acres were harvested with frost damage. The potato sector later reported storage losses due to potatoes harvested under poor conditions.
“Some producers are finished their deliveries — they may have had some issues where potatoes had to be moved early — while others are sitting on most of the crop still from last year,” Sawatzky said.
Some of those producers left with most of their 2019 crop are also those who struggled to bring crop in last fall, he added, although producers fighting storage issues may have been forced to move potatoes earlier.
“They may have only harvested half the crop, but that half of the crop is still sitting in their sheds,” he said. “It’s certainly a huge concern as to how things will all pan out in the end.”
Sawatzky estimates that up to a third of the 2019 potatoes still stored by producers may not be processed. Some of those potatoes may go into cattle feed, he noted, “but a lot of it may have to be thrown out.”
The downturn has come as an abrupt shift from expected demand for Manitoba potatoes. In fall 2019, the sector noted the second straight year of reduced yield, thanks to poor weather. In 2018, processors in Manitoba were forced to ship potatoes from out of province when producers were unable to harvest expected volumes. Harvests were similarly down last year.
“The processing crop, we went from being short to being long in a two-week period, it was really strange,” Russell Jonk of Swansfleet Alliance said.
Seed potato surplus
Cuts to contracted acres have also left producers with an unexpected surplus of seed. Seed supplies were initially expected to be tight this year, following the last two years of challenging falls.
Some producers already had their seed potatoes delivered when cuts were announced, Sawatzky noted.
“Those growers who had their seed home won’t be able to find a market for that seed, as well as the seed that was still sitting in the seed growers’ premises,” he said. “Of course, that seed won’t move anywhere either.”
Jonk, also the president of the Manitoba Seed Potato Growers Association, says it is not yet clear how large the seed potato surplus in the province will be.
“We don’t know yet,” he said. “Depending on how long the spring drags out, it might change the number of acres people plant because their target yields will change. We know we will be left with some amount of seed that will be unsold, but we’re just not sure how much yet.”
Jonk says his own farm has yet to finalize seed needs from customers. Some customers have picked up a portion of their order, he said, but have yet to confirm whether they will be picking up the remainder of the seed.
That unsold seed will have little market opportunity, he noted.
“Especially after how we spent extra money and effort to get it out of the ground last year, if we have volume left over that we thought was sold, that will be the biggest hit,” he said.
At the same time, uncertain demand has seed growers wondering how many acres to put to seed potatoes this year.
As of yet, there are few concrete answers to that question, Jonk said.
“We’re going to need support from either the processors or government to pick up some of the slack if we’re left with extra volume this year,” he said. “Especially because we’re selling a reduced volume because of unharvested acres last year. It’s sort of a double hit this spring.”
Talks with customers, seed growers and processors are ongoing, Jonk noted.
The Keystone Potato Producers Association is also hoping for government aid. Sawatzky suggested the introduction of a buyback program, while surplus processing potatoes might go to food banks or be otherwise donated, he said.