Study: Potato packing costs soar
By Sean Ellis
Idaho Farm Bureau Federation
POCATELLO – The cost of packing Idaho’s most famous commodity, potatoes, has risen at least 36 percent over the past two years.
That’s according to a new report funded by the Idaho Grower Shippers Association, which represents shippers, growers, marketers and processors of Idaho potatoes.
“That’s a pretty big increase,” said IGSA President Shawn Boyle. “It’s pretty drastic.”
This is the first time this type of study has been done on the potato packing side of the industry and he said it’s likely that 36 percent increase is greater than the total increase over the previous 20 years combined.
“It’s hit us hard and quick,” Boyle said about the increased cost of packing spuds over the last two years. “Potato producers are facing abnormal price increases, to fertilizer and fuel and every other input, and packing warehouses are seeing the same thing.”
The report, which was conducted by agricultural economist Ben Eborn, owner of North American Potato Market News, looked at what it costs to pack potatoes in Idaho after the spuds are harvested.
To keep it simple, the report looked at just five main cost categories involved with potato packing: the cost of packaging spuds increased 47 percent over the last two years, the cost of labor went up 28 percent, the cost of repairs rose 17 percent, the cost of chemicals increased 48 percent and the cost of scooping and hauling potatoes from storage rose 31 percent.
It’s not just the cost of packing potatoes that has risen, but the cost to grow and harvest Idaho spuds has also risen dramatically, according to industry representatives.
“The cost of growing potatoes is up substantially,” said Travis Blacker, industry relations director for the Idaho Potato Commission.
He said the cost to grow potatoes in Idaho this year will be the highest ever.
In an annual study funded by the Idaho Potato Commission, Eborn also calculates the cost of growing Idaho potatoes each year.
That report hasn’t been finished for 2022 yet but Eborn said it appears the cost of growing spuds in Idaho will increase by another 15-20 percent this year, at least.
It’s hard to know just how high the increase will be, he said, because the cost of major inputs such as fertilizer, chemicals and fuel are not nailed down and changing fast.
The price that farmers are receiving for their potatoes has risen significantly over the past year but costs have risen at least as much, he said.
“Growers and packers have to get a high price just to break even,” Eborn said.
Data for the report was collected from input suppliers, machinery and equipment dealers and potato shippers.
The IGSA plans to continue the report on an annual basis and track potato packing costs over time.
One of the missions of the IGSA is to educate and advocate for the potato industry, said chairman Klade Williams, who is involved on the growing and packing side of the potato industry.
The board decided to fund the report to educate stakeholders in the industry about the steep cost increases faced by the potato packing industry, he said.
“The packing sheds can no longer keep pushing these increased costs down to their growers and the growers can no longer shoulder the burden of increased costs,” said Williams, chief financial officer for Arrowhead Potato Co. out of Rupert.
The farming side of the equation has been hit with even greater percentage increases, he said.
“At our current levels, it’s difficult to be sustainable when we’re faced with these types of cost increases,” Williams said.
Boyle believes most people, from consumers to major buyers, will understand that “what our industry is dealing with in cost increases is just like what everybody else is dealing with. If they want to stay in business and remain relevant, they have to pass that cost on.”
He said the report is a direct, easy way for people to understand the magnitude of the cost increases the industry is dealing with.
“When your costs go up like that, it’s hard to keep operating like you have been,” Boyle said.
Blacker said the increased cost of growing and packaging potatoes is indicative of what is happening across farm country.
“It’s definitely not just potatoes; it’s everything,” he said.
“These types of increases are probably a good indication of what the whole potato industry in the U.S. is dealing with and, really, what all of agriculture is dealing with,” he said.
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