2009 Spring Planting Outlook

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April 10, 2009

Fresh and Seed Potato Growers:

Before the planters get rolling I wanted to give you an update on the 2009 Spring Planting Outlook. You are all aware of the developments in the past few weeks in the Processing Industry. What promised to be an early and straight forward bargaining process has turned into the most chaotic and uncertain spring in recent history. Con Agra has finally settled acres and price with some Idaho growers, but many were significantly and severely cut; some were cut 100%. Contracts have been or are currently being renegotiated with the other processors now that the survivors and the carnage has been assessed. It now appears that the other major processors haven’t reduced contracted acres. Growers….In the end, uncertainty has been the processors greatest weapon and he has used it brutally and with impunity. At least 10,000 PROCESS acres have been cut loose and conservative estimates are that PROBABLY some 5000 of those acres will likely be planted open. It doesn’t take a rocket scientist to see that those extra potatoes will crash both the fresh and process open markets.

On the Fresh side, we have just updated the planting intentions for members and non members alike. In 2008 we planted 153,000 acres for the combined fresh and dehy markets; Please, take a good look at the market today; the economy and a higher pack outs have turned what looked to be Idaho’s most profitable crop into an average year. Today we are at a low $7.00 GRI, that’s right at your 2008 cost of production. In short, we are struggling to profitably move this years crop while next year we INTEND to plant an INCREASE of 5000 acres. Does that make any sense? Gentlemen; those 158,000 acres next year will produce at least 4.5Million cwt MORE potatoes than fresh markets will need in 2009-2010. The wreck is right around the corner; you can clearly see it coming.

Please STOP and take a good look at what you are going to do. With the high probability of 5000 open process acres (that will produce 2MM cwt of open potatoes) PLUS the 4.5M extra cwt in next year’s Fresh pile, your GRI’s will be almost certainly be BELOW cost of production. I implore every one of you; PLEASE re-evaluate your planting options and change your plans. IT IS NOT TOO LATE. EVERYONE, every process grower, dehy contract grower, fresh grower and seed grower alike, needs to take a deep breath and use some common sense. We need to reduce next year’s fresh pile by a minimum of 4.5M cwt…not INCREASE it. That’s almost 12,000 acres we need to reduce next year, NOT increase. I implore everyone of you…cut an additional 8% OFF OF YOUR 2009 PLANTING INTENTIONS. It doesn’t matter what you think YOUR compelling reason or right is, EVERYONE NEEDS TO CUT AN ADDITIONAL 8%. Otherwise, you will most certainly get the market you have “sowed” and it will be a wreck! With that many extra potatoes next year, the $7.00 return we have today WILL BE A DREAM! Don’t you remember 2004? Its coming again!
Please, reduce you plantings by another 8% to AT LEAST a 35% or MORE reduction off your 2004 base. It is the only way for you to preserve your hard earned equity. UNCERTAINTY is NOT YOUR FRIEND. Be Smart; Be Safe. Cut an additional 8%.

Jerry Wright
CEO/President
United Potato Growers of Idaho