Spud glut bad for cash crop
By MIKE FERGUSON
Of the Baker City Herald
Its a problem brought about, in part, by their own efficiency and by last years excellent growing season.
Potato growers farm just 3,300 acres in Baker County, but theyve contributed to the nations enormous potato stock, which now stands at a record 198 million hundredweight (cwt). That glut has driven down prices to about $1 per cwt on the open market, according to Baker City grower Craig Ward, down from the usual $5 per cwt.
The overproduction naturally makes local growers nervous, and the large potato processing companies, including Simplot and Heinz, which owns Ore-Ida, waited especially long this season before agreeing to contracts.
But they have come around, Ward said. His brother Mark is a member of the Malheur Potato Bargaining Association, which late last week agreed with Simplot to a contract that would maintain last years prices but at a cost.
That cost, Craig Ward said, is a 17 percent reduction in acres planted.
We were fortunate to take just a 17 percent cut, he said. (The processors) held most of the cards this year. Some growers in Idaho took 50 percent. This will weed some people out.
Now that Simplot has signed the contract, other processors are sure to follow, Ward said.
They were just waiting for the big boys, he said.
The problem with cutting acreage, Ward said, is that farmers have to spread their fixed costs over fewer acres. Costs for storage, equipment and irrigation are nearly as high for 250 acres as they are for 2,500.
We get nervous, and our bankers get real nervous, he said. You can only tighten your belt so far.
Even though a relatively small number of Baker County acres are devoted to potatoes, spuds were by far our biggest cash crop, said OSU extension agent Jay Carr. With $8.2 million in gross potato income, farmers realized income that averaged nearly $2,500 per acre.
We havent heard any brainstorms of what could replace potatoes economically, Carr said. Its a very lucrative crop. Even though Baker County production is just a drop in the bucket, its a problem that has been building. Last year was the best year ever for production.
Oregon, the nations third-leading potato producer (after Idaho and Washington), saw its potato stocks the amount of potatoes remaining in storage rise to a March record 865,000 tons, according to Homer Rowley of the Oregon Agricultural Statistics Service. Stocks account for 56 percent of production in the year 2000.
That kind of over-abundance could lead area producers to consider less lucrative alternatives, such as alfalfa, grain and mint, Carr said. The first two will result in only about $500 per acre income, he said.
Like grain, mint prices have plummeted. The price on peppermint has fallen from about $15 a pound to around $8 a pound on the open market, Ward said.
Farmers who choose summer or winter wheat can tap into government support programs, but with prices hovering around $3.30 per bushel in Portland for soft spring white minus about 60 cents per bushel in shipping cost margins on wheat remain quite low. Baker County farmers grow about 5,000 acres in grain annually, Carr said.
The news is not all gloom and doom. It is possible, he said, that the reduced potato acreage will prove to be a blessing in the long run.
With fewer acres and increased power prices, we could get rid of the glut in the next year or two, Carr said. That will get things in better balance.