Production by Region and Season

Potatoes are grown commercially throughout North America (Fig. 3). Harvested potato land area in North America expanded and peaked in the first quarter of the 20th century. The greatest amount of land in potatoes in the U.S. was in 1922 with 3.9 million acres (1.6 million ha) harvested. The record in Canada, appears to have been in 1921 when 702,000 acres (284,210 ha) were planted. Between 1900 and 1941 there were only four years when less than three million acres (1.2 million ha) of potatoes were harvested in the U.S. The changes that occurred between 1925 and 1950 were dramatic. During that period, the land in potatoes in the Midwest declined from 1.3 million acres to 496,000 acres (0.5 million to 200,810 ha), a drop of 60 percent (Table 5). In the Northeast, the reduction was over 40 percent. In total, harvested area during the period fell by 1.1 million acres (0.4 million ha).

FIGURE 3. Principal potato producing regions in the United States and Canada. Source: Potato Health Management, APS Press.

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Table 5. Potato production, yield and acreage by region in the U.S.

N.E. Includes: ME, NH, VT, MA, Ill, CT, NY, NJ, PA
M.W. Includes: OH, IN, IL, Ml, Wl, MN, IA, MO, ND, SD, NE
S.E. Includes: DE, MD, VA, WV, NC, SC, GA, FL, KY, TN
South Includes: KS, AL, MS, AR, LA, OK, TX
West Includes: CA, NV, UT, AZ, NM, CO. WY
PNW Includes: ID, OR, MT, WA

Data obtained from USDA, Bureau of Agriculture Economics, Statistical Bulletin 122 and USDA, Agricultural Statistical Board, Crop Production

The only increase in planted area from 1925 to 1950 occurred in the West and the Pacific Northwest. The gain in harvested area in the eleven western states comprising these two regions was only 141,000 acres (51,085 ha). In 1950, the combined harvested area in the two western regions was still less than the area in the Midwest 1452,000 vs. 496,000 acres (183,000 vs. 200,810 hall.

During the period of 1950-1975 only the Pacific Northwest increased in land planted to potatoes. The area in this region doubled [from 245,000 to 490,000 acres (102,834 to 198,380 ha)] during that period. The net change in the U.S. during this same period was a decline of about 400,000 acres (161,940 ha).

The statistics from the 1980's suggest that the longterm decline in land in potatoes appears to have ended. The 1980 harvested area at 1.14 million acres (0.5 million ha) was the low point. During the 1980's, U.S. harvested area was in the 1.2 to 1.3 million acres (0.46 to .53 million ha) range.

Data obtained from USDA, Bureau of Agricultural Economics, Statistical Bulletin 122 and USDA, Agricultural Statistical Board, Crop Production

Part of the reason for the dramatic decline in land planted to potatoes in the U.S. has been the steady increase in yields that has occurred in all parts of the country. The U.S. average yield improved 456 percent between 1900 and 1990. The West region improved the most (471 percent) while the Midwest improved the least (306 percent).

As a result of the area and yield changes, production levels have also changed. The Pacific Northwest has gone from producing 3.4 percent of the U.S. crop in 1900 to producing 52 percent in 1990. The combined production of the West and Pacific Northwest states accounted for 65 percent of the 1990 U.S. production.

At the turn of the century, 81 percent of the U.S. potato crop grown was in the Northeast and Midwest. The share of those regions in 1990 was 29 percent. The Midwest, which alone had 51 percent of the production in 1900, had only 20 percent of the crop in 1990.

The shift in production to the Pacific Northwest is a result of the combination of a number of factors. Improvements in the U.S. transportation system made it possible for producing areas at a great distance from the major markets to be competitive with other producing areas near population centers. The decline in consumption of fresh potatoes coupled with the advantages associated with processing potatoes in the Pacific Northwest has been a major factor in the shift in production since 1950. Inherent in the more recent shift is the environmental advantage in the Pacific Northwest, including weather and ample opportunities for expanding acreage as the processing industry has grown. Low power, tax, and labor costs are also advantages.

The shift of potato production to the west has been significant, however, the increased diversity of consumption patterns will provide ample opportunities for market expansion in other production areas over time.

Changes have also occurred relative to the season production patterns (Table 6). The fall crop has registered consistent increases in production since 1950 while all other seasonal production is lower. In the last ten years, however, some increase in the other seasonal production has occurred. The ability of fall producing areas to store potatoes longer while maintaining quality, has eaten away at the fresh markets supplied by producers during the other seasons. The year round market presence of fall crop potatoes and the decline in fresh consumption were major factors in the loss of market share by the other seasonal areas.

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Table 6. Production by season in U.S.

Processing utilization has been the major growth factor for the fall crop. Processing use has exhibited steady upward growth since 1950 and this growth was particularly strong during the 1980's (Table 3). The first year processing use of the fall crop exceeded fresh consumption was in 1989.

The recent upturn in the size of the spring and summer crop reflects the effects of two markets. The fresh market decline has ceased and actually increased slightly (if for no other reason than population growth). Potato chip consumption has also increased requiring an increasing volume of potatoes from all seasonal crops.

Potato production in Canada, like the U.S., was originally located near the major population centers. In 1925, the provinces of Quebec and Ontario grew 61 percent of the Canadian area. Over time, the land in potatoes declined until 1972 when 243,000 acres (98,380 ha) were planted. Since then, there has been a recovery with yearly figures in the 275,000 to 295,000 acres (111,000 to 119,000 ha) during the latter part of the 1980's. In 1925, Prince Edward Island was a distance fourth to Ontario and Quebec in land planted to potatoes. It is now the leader in planted area, yields, and total production. New Brunswick potato production, is now second in planted area and production.

The majority of the growth in yields has occurred since 1950. The significance of the improved yields is demonstrated in statistics for New Brunswick and Alberta. The planted area in those provinces was 15 to 20 percent higher in 1989 compared to 1925, but production in both provinces was nearly triple 1925 levels.

Processing Market

The growth in potato utilization in processing has been phenomenal. Prior to 1960, reports on potato utilization did not differentiate between snack foods (chips and shoestrings) and fresh consumption. By 1970 U.S. processed utilization was nearly equal to that of fresh (Table 3).

Major processing uses of potatoes now are: chips, dehydration, and freezing. By the late 1980's, these three accounted for about 98 percent of all processing in the U.S.

The geographic dispersion of the processing industry varies according to product form. Typically frozen and dehydration processing occurs in the vicinity of the sources of supplies. Accordingly, the freezing and dehydrating industries of the U.S. are concentrated in the Northeast, upper Midwest, and the Pacific Northwest. In Canada, the location is widely distributed from east to west with a slightly higher concentration in the eastern area.

In contrast, the chipping industry is more evenly spread. Chipping plants can be found in every region. The fragility of potato chips and the high cost of shipping low density products, makes long distance shipping undesirable. As a result, chipping plants tend to be centered in the more populated areas.

Similarly, production of chipstock is more dispersed. Prior to the drought in the late 1980's, North Dakota was the largest chipstock producer in the U.S. Florida ranked second. Other major producing areas included Arizona, central California, Maine, and Michigan. By 1989, Florida had displaced North Dakota as the largest producer.

The market for processing potatoes exhibits some characteristics that are quite different from the fresh market. Since French fry processors are concerned about finished product quality, processing contracts place emphasis on those raw product characteristics which influence finished product quality. Specific gravity is of particular concern and processors pay premiums for high specific gravity and penalize for low specific gravity. Other characteristics, such as tuber size and grade, have also generated premiums. Contract provisions have changed over time in response to changes in processing technology, production practices and the appearance of new quality factors in individual growing areas.

Contracts are used by processors to guarantee some portion of their raw product needs. Typically, processors will contract for 50 percent or more of their expected requirements. The remainder of their needs are met by purchases on the open market.

Contracts offer some advantages to growers as they allow the producer to concentrate on production with emphasis on those practices which have the biggest impact on returns. Further, the contracts specify price and payment policies. Over time, contracts tend to stabilize grower prices and to a lesser extent returns. Returns are less stable than price because of the vagaries of weather each year.

The freezing industry makes frozen potato products from the usable potatoes delivered to the plant. The dehydration industry operates a bit differently. Some dehydrators segregate potatoes according to suitability for the fresh market. That portion that can be profitably sold on the fresh market is shipped fresh and the remainder is processed. Other dehydration firms purchase off-rade material from fresh packers.

While growers produce potatoes for specific markets such as freezing, fresh, and seed, the returns for potatoes that are dehydrated seldom are sufficient to attract growers.

The processing industry is a major and expanding market for potatoes. While problems do exist, as they do with every industry, the processing market has benefited both the producer and the consumer. Grower returns from sales to processors have added some stability to an otherwise highly volatile market.

Processor demands for high quality raw product has encouraged production research that benefits the fresh consumer as well as consumers of processed products.

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Fresh Potato Markets

The decline in fresh potato consumption has bottomed out and appears to be heading back up. One reason is that microwave ovens have made it much more convenient to prepare baked potatoes. Another reason is that fresh vegetables in general are seen as healthy foods. Successful promotion by the National Potato Board has changed public opinion away from the image of potatoes as a fattening food. Still another factor is that many fast food restaurants have added baked potato entrees and baked potato bars to their operations.

Fresh market potatoes in North America can be classified as russets, reds and whites, based on skin color. Regardless of their classification potatoes sold in North America are almost exclusively white fleshed. Yellow-fleshed potatoes, however, have been popular in many regions of Europe for many years. Blue, purple, even black potatoes have been eaten in South America for centuries. Although markets for these "exotic" potato types have been small, that may change in the future as consumers acquire more global food tastes.

The structure of the fresh potato market varies only slightly between different parts of North America. In general, eastern potato growers are also shippers. In the West, these are usually separate businesses. Western shippers compete with processors in the market for potatoes at the grower level. In the East, many growers operate their own fresh pack operations.

Fresh potato sales are made in a variety of containers and grade specifications. Russet potatoes are usually packed in three general size categories: consumer packs, count cartons, and institutional packs. Consumer packs consist mainly of 4-8 ounce (113-227 g) (non size A) potatoes packed in plastic, paper, or mesh bags.

The most valuable potatoes are the 8-4 ounce (227397 g) tubers that are packed in 50-pound (22.7 kg) cardboard boxes. These are called "count cartons" and each carton has a number that tells how many tubers are in a box (60, 70, 80, 90, 100, 110, 120). Retail stores, as well as restaurants, buy count cartons. Count carton potatoes are typically used for baking.

Institutional buyers such as government military bases like to buy 100-pound (45.4 kg) bags of large potatoes to minimize packaging, handling and peeling costs.

Although some reds and whites are sold in the same three size categories as russets, it is more common to pack a wider range of sizes in one container. Only the very largest (jumbos) and smallest (B-size) are typically sold separately. The russet non-size A consumer packs are usually the closest competitors for the reds and whites.

Some fresh potato production areas, have mandatory inspection for fresh shipments. The rules are usually administered through marketing orders that require all fresh shipments of potatoes leaving the state meet grade standards via required inspection. Strict quality control has been an important component in some state advertising and promotion campaigns.

Seed Potato Markets

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Costs of Production

Table 7 shows typical costs for producing potatoes in eastern Idaho during the early 1990's. Costs are divided into two broad categories: variable and fixed. Variable costs, also known as operating costs, are the direct costs of producing the crop. Fixed costs are incurred regardless of production. They include such things as depreciation, interest on land and equipment, property taxes and insurance.

Table 7. Estimated potato production costs per acre eastern ldaho, 1990.

Source: University of Idaho

Fixed costs account for one-third of the costs of growing potatoes. This is because of the high value of land and equipment that is necessary for potato production. Expensive, specialized planting, harvesting and handling equipment that is required for potato production cannot be used with other crops. This is unlike grain drills and combines whose costs can be shared among wheat, barley, oats and other grain crops that a farmer might produce.

Break-even prices can be calculated by dividing marketable yield into costs per unit area. This is the same as calculating costs per cwt or kg. For a yield of 300 cwt/acre (33.6 t/ha) the break-even price for the costs in Table 7 is $4.18 per cwt (45.4 kg). The break-even price for a 250 cwt/acre (28 t/ha) yield is $5.01. At 350 cwt/acre (39.2 t/ha) the break-even price is $3.58. Break-even prices can be useful to growers when they decide how much to plant, how much to contract and when to sell on the open market.

Costs of production vary between production areas and can vary from year to year and from field to field within an area. There can also be large cost differences among growers. The costs in Table 7 might be quite close for some typical or average eastern Idaho growers, but others might have much lower or higher costs.

Production costs also vary among the different production regions. Table 8 shows estimated production costs and yields for some of the major fall potato regions. These costs were estimated in 1985, and are outdated, but it is likely that the relationship between the regions is still accurate.

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Table 8. Estimated 1985 potato production costs, 13 fall production regions.

Source: USDA ERS Potato Facts

The Red River Valley of Minnesota and North Dakota has traditionally had the lowest production costs per unit area. Due to relatively low yields, however, the Red River Valley's costs per unit weight were about in the middle of the range. Washington has the second highest costs per unit area but due to high yields, costs per unit weight were the third lowest.

Costs of Storage

Costs associated with potato storage are: the off-the-field price of potatoes, storage rent or capital costs, operating expense, interest and the field value of the potatoes and storage shrink. Table 9 provides an example of what storage costs might be for storing 60,000 cwt (2,722 t) of potatoes for 6 months. The largest cost is the cost of potatoes which is the off-the-field price at harvest. In this example, the grower could have sold his potatoes for $5.00/cwt (45.4 kg) if he had decided not to store.

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Table 9. Potato storage costs.*

* 60,000 cwt (2,724 t), 6 ma, $5.00/1cwt (45.4kg)1 harvest-time price

The second line in the storage cost table is rent of the storage facility which was estimated at 30 cents per cwt (45.4 kg). If the facility is owned, the rent costs would be replaced with ownership costs such as depreciation, interest, taxes and insurance.

The operating expense category includes such things as electricity, labor and chemicals. The interest cost was estimated at one percent per month times the $300,000 value of the potatoes. Storage shrink was estimated at six percent for the six month storage period. This means that the 60,000 cwt (2,722 t) that went into storage shrunk to 56,400 cwt (2,558 t) after six months.

The bottom line of Table 9 shows that the break-even price for storing the potatoes for six months is $6.45/cwt (45.4 kg). In this example, storage is profitable only if the grower receives more than $6.45/cwt (45.4 kg) six months after harvest for potatoes that were worth $5.00/cwt (45.4 kg) when they went into storage.

Storage costs and break-even prices can be estimated for each month of the storage season. This can help growers make decisions on when to sell their potatoes out to storage. Due to variable potato prices during the storage season there are times when storage can be quite profitable and other times when it can be quite unprofitable. Growers need to analyze both storage costs and potato price movements.

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