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Spud co-op takes credit for national price improvement

Tam Moore, Capital Press Staff Writer 12/23/05

MERRILL, Ore. – Part pep rally, part celebration, United Potato Growers of the Klamath Basin held its first annual meeting here last week and heard a message to stay the course in an acreage-reduction program that turned around spud markets in less than a year.

This isn’t your typical agricultural promotion organization. United Potato this year formed marketing cooperatives, reaching about 70 percent of the fresh-market acreage in the United States and getting cooperation with some Canadian fresh-market producers. Spud prices are up, potato acreage is down and a glut of stored spuds that this past spring threatened another year of red ink for growers vanished.

Formed in Idaho last spring, United Potato bought surplus spuds off the market and got its members to pledge 10 percent reduction in fresh-market acreage.

Results were dramatic, said Jerry Wright, the chief executive officer for United’s Idaho branch and acting CEO for the umbrella United Potato Growers of America.

“Economic conditions and the good Lord helped United along,” he said to the Klamath growers. Wright is making the rounds of local associations, urging them to take another 10 percent acreage cut to further boost spud prices.

Ed Staunton, chairman of the local branch of United Potato Growers of America, estimated that the doubling of net grower returns, from $4 per hundredweight last fall to about $8 cwt. in the first two months of this new season, put nearly $10 million in the pockets of his 52 members.

But for all the success, the turnout of about 30 persons made Klamath leaders nervous, and they set aside a vote on the 2006 assessment until they can get greater participation. This year, members paid $5 an acre to the marketing cooperative.

The Dec. 1 estimates of U.S. potato stocks, released while Wright was in Oregon, show 253 million cwt. in storage, down 6 percent from last year and down 5 percent from 2003. About 68 percent of the fall potato production is in cellars, which probably means handlers will have to allocate the spuds for release if they want to continue offering fresh potatoes until early harvest begins in July 2006.

United, in addition to financing the removal of surplus spuds through assessments on its members, is gathering a database on spud prices that will allow national co-op directors to suggest marketing strategies to members. The computers with that data will move to Salt Lake City from Idaho Falls this winter. United of America’s new CEO, Julia Cissel, will set up what will probably be an international cooperative, aligned with Canadian spud growers holding their own talks in Canada.

The national headquarters has a $1.7 million budget for 2006, which will add about $6 an acre to whatever assessments local co-ops set.

Wright said the potato industry has an ongoing problem: Americans are eating fewer potatoes with their dinner meals. Consumer research done for the National Potato Board shows about one-fifth of all home-prepared dinner meals now include spuds.

While the Potato Board works on promotion, United is concentrating on supply and on a message to growers that good prices for russet potatoes – far and away the most popular with consumers – are good for producers of white, red and specialty spuds and have an impact on contracts for processing potatoes.

To make United work, Wright said, the confidential information from handlers is critical.

“You’ve got to be not afraid to give information,” he said. United consolidates acreage, yield, stocks and other data together, then plugs it into computer economic models.

Klamath handlers got praise from Wright for showing restraint in shipping spuds this fall. Idaho, on the other hand, apparently broke ranks just before Thanksgiving, causing a brief oversupply that drove down prices across the country.

By this week, discipline appeared back in the market with 70-count cartons of No. 1 russets bringing from $15 to $16.50 at Idaho shipping points, and $13.50 to $15 at Colorado sheds. The smaller Klamath fresh market doesn’t publicly report prices on a daily basis.

Wright predicted that the Klamath handlers “will be ready.”

to pick up the business next spring when Idaho fresh market shippers run out of spuds.

“I keep telling my Idaho guys you are giving away your market at the lowest prices,” Wright said.

Tam Moore is based in Medford, Ore. His e-mail address is tmoore@capitalpress.com.



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