“It’s the least cut of any McCain plant in Canada.”
– GARY SLOIK, KEYSTONE VEGETABLE PRODUCERS ASSOCIATION
The final word is out on McCain Foods’ volume reductions to Manitoba potato growers and the pain isn’t quite as bad as feared.
The McCain plant in Portage la Prairie is cutting volumes for processing potatoes by 12.5 per cent this year, lower than the 15 to 20 per cent cut previously expected, according to Keystone Vegetable Producers Association.
“It’s the least cut of any McCain plant in Canada,” said executive director Gary Sloik.
Sloik said McCain had earlier told growers to take home only 70 per cent of their seed, leaving them to wonder if volume cuts could be as high as 30 per cent. Producers are relieved it wasn’t nearly that bad, he said.
McCain earlier this spring announced sweeping cuts to its processing potato contracts across the country because of a sharp downturn in french fry demand.
Sloik said McCain plants in Borden, Prince Edward Island and Coaldale, Alberta will experience respective volume cuts of 25 and 20 per cent this year.
As well, the Borden, Coaldale and Portage la Prairie plants will each see one production shift eliminated. About 40 jobs at the Portage facility will be lost, said Calla Farn, a McCain spokesperson.
“It’s really the result of a softness in our export business,” Farn said from company headquarters in Florenceville, New Brunswick. She cited a slump in U. S. french fry consumption because of the recession, the high Canadian dollar and the low cost of raw potatoes in Europe as reasons.
“All those have an impact on the amount of potatoes that we buy. In turn, if we’re buying less, we’re processing less. So that translates into some shift reductions across the country, including Portage.”
Manitoba growers at a May 7 meeting voted to accept price reductions from McCain that will severely eat into their financial margins.
Sloik said the contract reduces the average price to producers by $1.55/cwt. Prices for 2010 are about 15 per cent lower than last year.
Price cuts range from $1.25/ cwt for Shepody, $1.40/cwt for Russet Burbank and $1.60/cwt for storage potatoes, he said.
A similar contract offer was expected from Simplot Canada earlier this week. Simplot told growers two months ago its volumes, which were lowered in 2009, will remain unchanged this year.
Growers had rejected a previous McCain offer but felt they had no choice but to accept the latest one, said Sloik.
“We had to accept it to move on so that we would get to know our volumes.”
The price reductions make producers’ margins very slim, although some may still see a profit this year, according to Sloik.
“It ranges from grower to grower,” he said. “For some growers this will work. For others, it’s extremely tight.”
Sloik said MCain is contracting for about 30,000 acres of processing potatoes this year. Simplot is contracting for around 18,000 acres.
Manitoba growers are expected to plant 72,000 acres of potatoes in total this year, down from a peak of 103,000 acres in 2003. That includes table, chip and seed potatoes as well as processing. [email protected]