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By Ben Eborn, Publisher, North American Potato Market News
Growers have several things to consider when making planting decisions on 2023 potato acreage. Some of the factors include contract volumes, current and projected prices, production costs, prices for alternative crops, crop rotation and irrigation water supplies. Growers also might want to consider past scenarios. Since 1949, U.S. potato production has only dropped two years in a row four times. However, U.S. production has fallen during each of the past four years (2019-2022). Past years with similar production patterns may provide some insight into 2023 planting decisions. In this article, we review the current situation and past scenarios following two consecutive years of declining production.
The Current Situation
U.S. potato production has fallen by 6.5 percent since 2019. The four-year slide has been gradual, though the overall decline is substantial. The reasons for the downturn vary from year to year. Production has declined even though acreage increased slightly for the 2019 and 2021 crops.
2019: U.S. growers planted 3,500 more acres to potatoes during 2019. However, the average yield fell by 1.3 cwt per acre. That resulted in a 424.4 million cwt potato crop, down 1.7 percent from 2018 production. The Idaho Grower Returns Index (GRI) averaged $9.73 per cwt for the 2019-20 marketing year, up 42.3 percent from a year earlier.
2020: Yields rebounded for the 2020 crop to a record 460.7 cwt per acre. Strong yields were not enough to make up the acreage reduction. Growers planted 44,800 fewer acres to potatoes during 2020. The 2020 crop totaled 420 million cwt, a 1 percent decline relative to year-earlier production. The Idaho russet GRI averaged $6.51 per cwt, down 33.1 percent during the 2020-21 marketing year.
2021: Adverse growing conditions in the Pacific Northwest pulled down the U.S. average yield to 443.7 cwt per acre. Though growers planted 14,500 more acres to potatoes, it was the second smallest planted area since 2010. The 2021 crop fell 2.4 percent short of 2020 production to 409.8 million cwt. The Idaho GRI averaged $11.61 per cwt for the 2021-22 marketing year.
2022: Despite strong prices, U.S. growers planted 21,000 fewer acres to potatoes during 2022. Most of the reduction came in Idaho. Rising production costs, strong alternative crop prices and water supply limitations were the major factors in the decline. Cold spring weather and record-breaking temperatures during the growing season held back yields in Idaho and the Columbia Basin. The U.S. yield fell to 438 cwt per acre, which is 28 cwt below trend. The 2022 potato crop came in at 396.9 million cwt (according to USDA’s November estimate), down 3.2 percent from a year earlier. It was the smallest U.S. potato crop since 2010. The short supply situation caused prices to surge. As of press time, the marketing year average GRI for Idaho russets is $20.81 per cwt, 79.2 percent above the previous year average.
1981: Growers Increased Planted Area by 8.6 Percent
U.S. production fell 7.5 percent during 1979 and then dropped 9.9 percent during 1980. Growers reduced their planted area by 95,400 acres and 97,900 acres during 1979 and 1980, respectively. The 1980 crop totaled 262.7 million cwt. At the time, that was the smallest crop since 1973. The Idaho marketing year average GRI climbed to $7.87 per cwt, from $3.13 a year earlier, a 151.4 percent increase. Extremely strong prices encouraged U.S. growers to plant 82,300 more acres during 1981 than they planted in 1980, an 8.6 percent increase. Production climbed by 12.4 percent for the 1981 crop and the Idaho GRI dropped to $5.79 per cwt, a 26.4 percent decline.
1973: Growers Increased Planted Area by 4.8 Percent
U.S. potato production fell a combined 6.5 percent during 1971 and 1972. Acreage reductions were responsible for the decline in production. Growers reduced their planted area by 13,200 acres in 1971 and by 121,300 acres in 1972. We do not have comparable price data going back to 1972; however, growers planted 49,100 more acres to potatoes during 1973, 4.8 percent more than the previous year.
1969: Growers Increased Planted Area by 3.9 Percent
The only other period with two consecutive years of declining production came during 1967 and 1968. The downturn was not as large then. Production fell 1.9 percent for the 1967 crop and 2.7 percent for the 1968 crop. Growers planted 8,900 more acres during 1967, but they trimmed their potato acreage by 60,400 acres during 1968. In 1969, they planted 43,000 more acres to potatoes than they did the previous year, a 3.9 percent increase.
Conclusion
Since 1949, U.S. potato production has only fallen for two consecutive years four times. In each of the three years (1980, 1973, 1969) following previous production downturns, growers responded by planting 3.9 percent to 8.6 percent more ground to potatoes.
Sometimes when markets adjust to extreme supply and demand situations, we convince ourselves that there has been a “paradigm shift.” We often believe that in the future, the market will react differently than it has in the past. That could be true. However, if U.S. potato growers respond to the current market situation like they have in the past, they may expand acreage for the 2023 crop by 36,000 to 78,000 acres. If the U.S. yield returns to trend (470 cwt per acre), which is statistically most likely to occur, that could boost production by 48.5 to 68.6 million cwt, or 12.2 percent-17.3 percent. A 12.2 percent increase in production would be the largest year-over-year increase since 1996, while a 17.3 percent increase would be the largest jump since 1965. Both scenarios would put substantial downward pressure on prices.
While the current situation is similar to past production downturns, it is unique in some ways. It is the only time in modern history that U.S. potato production has declined for four consecutive years. Both acreage and yield reductions have been factors in the downturn. Though U.S. growers planted more ground to potatoes during 2019 and 2021, the expansion was not sufficient to offset yield reductions in key growing areas. Production has fallen short of industry needs in several key growing areas. Potato prices, so far this year, have been much stronger than they have been in the past. They could encourage growers to plant more ground to potatoes in 2023. Planting decisions for the upcoming crop year could be the most complex in generations.
