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Cooperative effort

The chief operating officer of the United Potato Growers of America came to Grand Forks, N.D., this month, extolling the benefits of his national organization's database to red potato producers in the valley region.

The chief operating officer of the United Potato Growers of America came to Grand Forks, N.D., this month, extolling the benefits of his national organization's database to red potato producers in the valley region.

"It's grower-oriented, grower-owned, and if United has a place in North Dakota and Minnesota, it's because it can help a grower," Buzz Shahan says. "If it can't help a grower, obviously it would have no place."

Shahan, who grew up in Arizona on a chip potato and cotton farm, raised potatoes for more than 30 years before signing on with United. He says the national organization offers a way for growers across the country to share information legally and gain some level of control over the extraordinarily difficult potato market.

Last man standing

"Today's fresh potato market reflects the 'last man standing' paradigm," Shahan says. "That's a mentality suggesting that attrition will essentially establish the market. The last man standing will inherit enormous profits by conquering every other grower and finally be able to dictate price."

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He adds that the "last man standing" paradigm in potato production actually is intensifying because yields keep increasing while consumption is declining. Shahan says per capita consumption of fresh potatoes has dropped 27 percent since 1965.

He says that while acreage has remained constant, in-home usage of fresh potatoes has dropped an average of 1.5 percent per year, with the biggest annual decline last year at 5.2 percent.

"Why is that?" Shahan asks, and answers that no one has been able to get a handle on factors influencing the nationwide potato market. But he quickly adds that United is taking important steps in that direction.

Market nuances

"In the last six months, 84 percent of supermarket promotional ads did not mention potatoes," he states, and says there was no previous data to compare that with. He says United spoke with seasoned marketers, who remembered that potatoes "always" have been included in supermarket ads.

Meanwhile, Shahan says U.S. potato farms are producing more pounds per acre, an average annual increase of 8 hundredweight per acre per year in the fresh potato market.

"In production efficiency alone, we produce a nine-day excess of supply without increasing acres," he states.

Shahan says, with most goods, increased productivity typically means higher profits, but that isn't the case with potatoes, a market he describes as "inelastic" and driven by "zero sum competition."

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Essentially, that means one seller must be displaced in order for another seller to enter the market (zero sum competition) and lowering of prices does not increase volume (inelastic market).

"The penalty for oversupply in an inelastic market is lower prices," he warns.

Farmer's role

Shahan says that from a strictly economics standpoint, farmers have less control over their income than others in the food production chain.

"Farmers are residual payees. They occupy the lowest position in the economy because they get paid after those above them subtract their expenses and risks," he says.

While United has been working with russet potato producers for a couple of years, the meeting was the first time they formally approached growers of red potatoes. Shahan says market trends seem to indicate that Red River Valley producers are already doing something right, but he is encouraging them to participate in the national database.

This month's informational meeting was organized by the Northern Plains Potato Growers Association. President Duane Maatz says he expects the Minn-Dak growers co-op to discuss United at its annual meeting next month.||?Page=031 Column=005 Loose,0008.09?||

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