Global Potato News continued
Pasco, Washington, 1/29/09
KENNEWICK -- The first part of 2008 began as a banner year for spuds.
And how couldn't it?
A third of the world's french fries are made right here. Washington Potato reps said 87 percent ends up processed: frozen, dehydrated or made into chips. Most of those frozen potatos are french fries, and altogether they produce $3.47 billion worth in the state economy.
Demand was so high just four-months ago, that potato growers and producers squared away contracts months in advance.
"But then all of a sudden in the fourth quarter of 2008, things started to change," Dale Lathim said, Executive Director of the Potato Growers of Washington.
Despite how good the french fries are, the economy forced less of you to buy them. And it put a huge strain on potato growers and processors. By last month, sales dipped.
The spuds were in a recession.
"When processors saw those numbers, that put the brakes on everything. The potato world changed overnight," Dale Lathim said, Executive Director of the Potato Growers of Washington.
Suddenly, growers and processors scrambled to scale back. Dozens of orders had to be re-arranged. And too few acres of potatoes were now too many.
"There's a lot of uncertainty because people don't know what commodity prices going to bring," Clay Allen said, a sales representative for Double L.
Then last week, processors quietly announced they were immediately cutting the amount of potato contracts. French fry demand was way down. They blamed increased costs, a weak economy and changes in fast-food menus.
The big three processors, Lamb Weston (the potato- processing division of Con-Agra Foods), J.R. Simplot and McCain Foods could cut back as much as 20 percent.
"It's going to effect us all," Lathim said.
"There was some uncertainty because no one knows what the potato commodities are going to be right now," Allen said.
"The financial markets and property values really makes it interesting on farmers right now," Karen Bonaudi said, Executive Director of the Washington State Potato Commission.
Potato farmers haven't even started planting yet, and many growers know they're already in for a tough year.
But Lathim stays positive.
"This is our storm for 2009 and I'm sure we'll weather it just like the others."
Lamb Weston first saw a dip on the food-service side of its business at the end of October when people stopped going out to eat.
Plus, potato growers say, fast food chains starting offering fewer combo meals with fries and offered smaller packages of french fries, but still offered it at the same price.
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