Supply is strong on potatoes right now. "We're working through one of the largest crops we've seen, with strong volume across most segments and size profiles," says Craig Fields, SVP category sales–potatoes for Grimmway Produce Group.
Compared to this time last year, supply is noticeably higher with more overall volume in storage. This in part is due to better pack-outs and stronger yields in key growing areas. "Last year we were more focused on managing tight spots and balancing programs. This year the focus is on how to move the crop efficiently and create demand to keep product moving," says Fields.
This strong crop follows favorable growing conditions for potatoes this year. Adequate moisture and generally moderate temperatures helped drive strong yields and good tuber set. While there were some local weather issues such as heat or excess moisture in spots, there was nothing widespread enough to significantly limit the overall crop and that's left the industry with high yields, good quality, and a lot of volume to move.
© RPE, LLC/Grimmway Produce Group
Normal season's course expected
Meanwhile, the timing this season is generally average to slightly early, depending on the region–major supply is coming from the traditional potato belts such as the Northwest, upper Midwest, parts of Canada, Idaho and Colorado. "A reasonably cooperative spring and growing season allowed fields to progress without major delays. Good planting windows and generally favorable weather supported strong stands and high yields," says Fields, noting that with a crop this size, the season is expected to run its normal course or even extend a bit as shippers work through inventories.
As for demand, it's decent. "Retail is steady, with good movement on value-oriented packs and everyday potato items," Fields says. "Foodservice demand is healthy but not enough on its own to tighten up such a large crop. There's normal demand against an unusually large supply, which naturally keeps the market on the softer side."
That means shippers will be focused on keeping product moving with promotions and program volume. If demand cooperates via retail ads, foodservice features, holiday or event bumps, the market can stabilize at reasonable levels.
Creativity is also in order to keep the crop moving. "Some suppliers, including us, are using the big crop to lean into new or expanded offerings, such as more value packs–larger bag sizes, family packs; specialty or convenience items such as microwave-ready, petite potatoes, specific varieties, or branded lines; and program flexibility, so the ability to support more frequent or larger retail ads," says Fields. In fact, Grimmway Produce Group™ is expanding its Cal-Organic Farms® portfolio of organic vegetables to include a new bite-size potato program of product that is sustainably grown, available year-round, and packed in sleek mesh pillow packs that showcase premium quality and freshness.
© RPE, LLC/Grimmway Produce Group
Update on pricing
As for pricing, both the large crop and the strong competition between shippers means that prices are pressured in most categories. "Compared to a few weeks ago, prices are steady to slightly softer, especially on items where inventories are heaviest," says Fields. "Prices are lower than this time last year on many items, particularly on bulk and some carton business. Promotional opportunities are more available now than they were a year ago, simply because there's more product to support ads and programs. From a buyer's standpoint, this is a value-heavy market. From a grower/shipper standpoint, margins are tighter."
Looking ahead, with such a large crop, prices are likely to remain defensive to sideways, unless there is a meaningful pickup in demand or unexpected quality issues that tighten usable volume later. "The challenge is making sure we move volume fast enough to stay ahead of storage issues and align freight, labor, and customer demand with the pace we need to ship," says Fields.
For more information:
Craig Fields
RPE, LLC/Grimmway Produce Group
Tel: +1 (800) 678-2789
[email protected]
https://www.rpespud.com/
