Afrustrating year lies ahead for Manitoba potato farmers as they face severe price cutbacks for a crop off to its best start in years.
Growers of processing potatoes were still without 2010 production contracts from the province’s two largest processors as of early this week.
Over 80 producers last week rejected a contract offer from McCain Foods containing sharp price cuts. Producers at the time had yet to receive an offer from Simplot Canada Inc.
A “very strong turnout” at an April 30 meeting voted to turn down the McCain offer, which contained price reductions producers felt they could not accept, said Gary Sloik, Keystone Potato Producers Association general manager. “Growers looked at it and it was just more than they were prepared to do,” Sloik said.
Further meetings with both processors were scheduled for earlier this week.
Growers stand to lose both in price and volume as the North American potato industry struggles with oversupplies and declining consumption caused in part by the global recession.
McCain earlier this year announced it would cut potato contracts by 15 to 20 per cent. Sloik said the company is advising growers to take home only 70 per cent of their seed until a contract is negotiated.
“We’re hoping that the cuts aren’t near that severe,” he said.
Sloik said growers are reconciled to lower volumes and reduced prices which averaged $11/cwt last year.
But producers still need to recoup production costs, which have fallen only slightly in the past year. Fertilizer is less
“It was just more than they were prepared to do.”
– GARY SLOIK, KPPA
expensive but most other inputs haven’t come down, he said.
Price cuts are general throughout North America because of a drop in french fry consumption and excess stocks resulting from a record crop in 2009. Sloik said Alberta growers recently settled for a 12 per cent price cut. Price reductions in the U. S. range between 14 and 25 per cent.
Most growers this year have given up 70 per cent of the price gains they achieved in 2009, said Sloik.
Prince Edward Island, Canada’s largest potato-producing province, recently adopted a mediation and arbitration formula in negotiating contracts with processing companies.
But Manitoba has no arbitration legislation for settling potato contracts, as do P. E. I., Ontario and New Brunswick, said Sloik.
Keystone Potato Producers Association asked the province for the measure when it became a marketing board in 2006 but was turned down, he said.
Ironically, growers’ contract problems come just as the potato crop is off to its earliest, and perhaps best, start in recent memory.
As of April 30, over half the crop had been planted, unusually high for the time of year, according to Manitoba Agriculture, Food and Rural Initiatives.
Growing conditions were nearly ideal, especially after welcome rains over the weekend. Above-normal temperatures in April meant warm tubers went into warm ground, increasing the chances of good germination and above-average yields, said Brent Elliott, a MAFRI spokesperson.
“It lends itself to much better yields coming a little bit earlier in the fall than they traditionally do,” Elliott said. [email protected]