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By Dale Lathim
Hyperinflation is never a good thing when you are a price-taker like all farmers are. Most growers fully understand and accept that costs are rising on most, if not all, of their inputs. However, there are some indirect added costs that are sneaking up on growers farming on rented land.
This is not a totally new phenomenon, but in the past, it was not a big enough deal to really call attention to it. The situation involves the fertility levels of the land being rented.
Tenant farmers often only have control of a piece of land the year in which it is in potatoes. In between potato crops, other growers farm rotation crops on the land, and some do a better job than others in keeping up the fertility. Now that fertilizer prices have more than doubled in the past 12 months, we are hearing from fertilizer suppliers that many of the growers who are raising the rotation crops are opting to roll the dice and put on very little, if any, phosphorus, potassium or micronutrients.
We started to see a little of this last year as prices were on their way up. Growers who have leased some of these fields for potatoes this year are getting stuck with having to put hundreds of pounds of some elements on fields, and overall fertility costs will exceed $1,400 per acre this year for their potato crop. This is between $500 and $600 per acre more than the average field in the Columbia Basin that has had the fertility properly managed.
Potato growers on leased land already have an uphill battle financially because of the high rent that many have had to pay this year and, in many cases, because of the need to spread out further or accept lesser quality fields due to the lack of available land for lease. Tacking on an additional $500+ to those costs makes an already thin margin even thinner.
To compensate for the mining of the nutrients by the rotation crops, some growers are opting to rent as much ground as possible on longer-term leases. Even getting the land on a two-year lease and starting to restore the fertility the year prior to potatoes makes a lot more agronomic sense than taking everything to near zero and then trying to fully reload it in the current crop year.
Others are trying to tie the rental price they pay for the ground to the fertility levels to give the landowners an incentive to keep the fertility levels up and stable. However, in years like this when rental land is hard to come by, potato growers have very little leverage, and it comes down to a decision of taking the chances and the financial hit on the low fertility or not growing those contracted acres.
I am focusing this discussion on leased land as I am assuming that growers who own their land are properly maintaining fertility levels each year. This is something that we as an industry need to keep in mind and address going forward. Currently, potato farmers still rent close to 20 percent of the land to grow potatoes on short-term leases.
Grown on rented land or not, this year’s crop is obviously getting off to a slow start because of our cool, wet spring. I am sure that most of you have seen that April was the second coolest April on record for the entire state of Washington. Focusing more closely on the Columbia Basin, April set a record for the Tri-Cities for being the first April that had an average daily temperature that was colder than the preceding month of March. Add in the fact that it was one of the top five months of April in history for precipitation, and the cold, wet soil was not conducive to rapid growth and development. As I write this in the middle of May, I believe that crop development is at least 10 days behind. This is obviously a big concern to growers in the region. But looking at the big picture, this has to be a huge concern to the entire industry.
We are coming off a very short 2021 potato crop in terms of yield and quality for the western half of North America where the majority of the frozen potato processing takes place. The short crop coupled with labor and logistics issues has resulted in the pipeline to supply the worldwide network of restaurants with frozen potato products at an all-time low in relation to consumption.
The western half of North America which had the shorter, lower quality crop is off to at least as slow of a start as we are in the Basin. Without perfect weather between now and the end of the storage harvest, there are not nearly enough contracted acres of potatoes to begin to refill the pipeline. Based on today’s outlook, we will be doing well just to maintain the current supply levels and do very little inventory rebuilding.
So, buckle up, everyone. This is going to be a wild and bumpy ride through 2022.
