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December 15, 2005
Klamath Falls Herald and News
By HOLLY OWENS
MERRILL - Members of a new potato cooperative have
seen a 485 percent return on their investment in the past nine months,
according to Jerry Wright, interim chief executive officer with United Potato
Growers of America.
Wright met Tuesday with about 35 fresh market potato growers from the co-op's
regional group, United Potato Growers of the Klamath Basin, to talk about new
developments for the co-op and plans for 2006.
A CEO for the national group, Julia Cissel, has been
hired, and United's national headquarters should be operating in Salt Lake
City by March. Wright, who is CEO for United Potato Growers of Idaho, has been
serving as interim CEO for the national group that was formed in March.
The group's main focus has been on uniting farmers to reduce an oversupply of
potatoes that gluts the market and drives down prices.
So far, it's working.
About 35,000 fewer acres were planted in fresh market russet variety potatoes
in 2005 in the United States, which United estimates removed 16 million
hundredweight of excess potatoes from the market.
The average grower return index from September to November was $6.67 per
hundredweight, compared to $2.69 last year, according to sales statistics from
United.
“We created this market by not planting this year,” Wright said.
Yields have gone up 70 percent in the last 40 years from 200 to 350 hundred weight per acre, Wright said, and United estimates that growers produce 13 million hundredweight of extra potatoes each year.
“We grow more potatoes. Potatoes that no man, woman or child will ever
eat,” Wright said. “Consumption continues to decline and as an industry
we've been asleep.”
In the Klamath Basin, potato acreage this year was down by 11 percent,
according to Ed Staunton, chairman of United Potato Growers of the Klamath
Basin. Fourteen local growers took part in an acreage buy-down program through
the co-op.
In 2006, United is encouraging growers to reduce acreage even more, from 10 to
15 percent from their 2004 level. This year the national goal was 8 percent.
Klamath Basin growers are planning to maintain their 2005 level next year.
“We're going to shoot for the 10 percent from
2004,” Staunton said.
And for those who don't want to cut back, or for young farmers wanting to get
into the potato business, United is giving growers the option to buy or rent
the right to farm more acres, or a production base, from another member
anywhere in the country. This way potato acreage isn't increased, just
realigned.
United Growers in Idaho are creating a Web page where growers can post
acreage they're interested in renting from another grower.
Even though potato acreage is shrinking, the co-op is growing.
Nationwide, the United represents more than 1,000
growers in state and regional cooperatives in Colorado, the Klamath Basin,
Idaho, Nebraska and Kansas, Washington and Oregon. Other states discussing
joining include North and South Carolina, New Jersey, Pennsylvania, New York,
California and Arizona. A sister cooperative is being formed among the
provinces of Canada, United Potato Growers of Canada.
“We now represent 70 percent of russet acreage nationally,” Wright said.
Wright, who has in the past marketed products for
General Mills, Heinz and ConAgra, has been helping growers change their
marketing strategy, showing potato growers how buyers think.
“I'm the guy on the other side of the table who knows those strategies,”
Wright said. “We knew farmers weren't organized. That's exactly why we
picked them off.”
United is using a three-phase supply management program that includes
preplanting acreage reduction, post planting/preharvest acreage reduction, and
post-harvest supply management.
Not only are there fewer potatoes grown, growers also are removing excess
potatoes from the market.
“They would have crashed this year's crop,” Wright said.
Keeping track of data in order to control the flow of potatoes to the market
is key. Each week co-op members go online and input information about their
inventory, including variety, size, and actual average price.
“The No. 1 problem we've got right now as we're working with the data is
people don't tell you the truth,” Wright told the group Tuesday. “Full
disclosure of your information gives us power. We can raise it higher if we
have more data.”
And there is more to the potato market than just fresh russets.
A United Frozen Process Grower Division also was created this year and a chip
process division and a seed division are being developed. United also is
looking at supply management for round varieties such as reds and whites.
And as the co-op grows and prepares to open its national headquarters, dues
are increasing.
Klamath Basin co-op members paid dues of $5 an acre in 2005. With the
increasing costs of doing business, Staunton estimates that dues could go up
to $8 an acre. Wright noted that the figure will more likely be closer to $10
per acre.
The increase in dues will generate about $1.7 million, which will cover wages
and salary, office furniture, insurance, marketing and advertising,
professional services, travel, meetings, and working capital for the Salt Lake
City headquarters.
A meeting to discuss a 2006 plan for Klamath Basin co-op growers will be
scheduled within the next few weeks.
For more information, call Ed Staunton at 892-5263.
