December 2005
New Waves
of Opportunity Ahead
“New waves of opportunity” are
ahead for those willing to think globally and adapt to changing market
conditions.
Speaking during the 40th Annual Montana Seed Potato Seminar, held Nov.
10 and 11 at the Holiday Inn-Parkside in Missoula, Dr. Joseph Guenthner
warned growers that the seed potato industry faces both challenges and
opportunities between now and 2030. While consolidation and shrinking
markets at home will require adjustments, potato production around the
world is expanding.
Guenthner is a professor of agricultural economics at the University
of Idaho.
Emphasizing opportunities for future business ahead, the speaker categorized
them into the following three categories:
(1) New Markets – Not long ago the Russet Burbank
was so popular that there were few opportunities to market new varieties,
he said. The decline of the the variety has changed the variety mix and
created opportunities to take advantage of variety product life cycles.
Exports also offer potential new markets. The global industry is expanding,
particularly in developing countries.
(2) New Technology – “Our society is at
the beginning of a new technology wave, the information age,” Guenthner
said. “Biotechnology is part of that wave, but there was a dramatic
market failure with genetically modified potatoes. This is only a temporary
set back; GM foods will become more acceptable around the world. New
production technology also will change the traditional seed potato generation
program with cost-cutting technology compressing field generations.”
(3) New Business Models – Guenthner used the United
cooperative movement in the fresh potato market as one example of new
business models that will change industry structure. In the future, growers,
including seed potato growers, may be participants in supply changing
management programs that offer profitable opportunities, he predicted.
Plant variety protection (PVP) and other intellectual property rights
will also create opportunities for new business models for seed potato
growth.
2005-2006
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PMANA Members Call for a Contract Increase of at Least 15 Percent
Members
of the Potato Marketing Association of North America (PMANA) met Nov.
11 in Ottawa, Ontario, Canada, to discuss the disparity in
the returns their grower-members are receiving from their pre-season
potato contracts and what to do about rapidly increasing production
costs.
“
Over the past five years, growers have received only small price increases
while experiencing an unprecedented rise in their costs of production,” said
Dale Lathim, PMANA president. “These are the growers who produce
potatoes for the processors who make frozen potato products, including
french-fries, for major quick service restaurants such as McDonald’s,
Burger King, and Wendy’s.”
Putting the price increase into perspective, Lathim said that in order
for growers to keep pace with the sharp rise in the cost of production,
they would need to receive a contract price increase of at least 15
percent. Such an increase would equate to a price increase of less
than 1.5 cents per pound of potatoes, he added. For consumers, that
would be less than one cent per serving of french-fries.
PMANA members voiced strong dissatisfaction with the declining returns
that their growers are receiving and the need for improved prices to
sustain the process potato growing industry.