MONTE VISTA — “We are in a rough situation, and chances are things will get worse before they get better,” Crystal Carpenter, senior economist with CoBank, told attendees at the SLV Potato Business Summit on Monday in Monte Vista.
“Those who are holding on need to hold on a little longer.”
This year will likely see a decent business cycle but not as robust as 2018, Carpenter said. “There’s a lot of things on the horizon, risk elements, that could tip us into a recession.”
In the labor market, the U.S. has more open jobs than unemployment for the first time since 2000, she said. More people are working, and people who might have previously given up on the job search are now back on the market, she said.
Finding workers for agricultural jobs is tougher, she explained, because many crops are labor intensive, and agriculture is having a hard time competing with other industries for workers.
“Agriculture is having to pay more to get that labor,” she said.
Colorado has a higher wage rate growth than the U.S., 3.2 percent versus .09 percent nationally. In the San Luis Valley unemployment is a little higher than the state average, she said.
Truck driver shortages continue to be a problem, she added.
Factors to consider are increasing federal interest rates; trade war in China; the effect of Brexit in the UK; economic downturns in Italy and Germany; and the U.S. dollar value, which has been rising, but as the dollar rises, exports become more expensive; and trade tariffs.
The U.S. ag economy for the past few years has experienced slow margins. “We don’t expect that to change,” she said.
The bright spot, she said, is that farmland values have not declined. However, farm secured debt is increasing with farmers taking out debt and using their land as collateral.
Cropland values have remained fairly stable in Colorado, as opposed to the Corn Belt, she added.
Carpenter said the potato market is not experiencing the same decline in exports as some other commodities. Potato growers are not as reliant on exports as some other commodities, she said.
In 2018 through October, potato exports relative to other commodities “definitely held a lot better than other commodities, didn’t see the same decline in exports as others did.”
Of course potato growers would like to expand their markets to countries like China, Mexico and Japan, she added, but there are obstacles such as increased tariffs in Mexico.
Bruce Huffaker, North American Potato Market News, also spoke about economic challenges.
“The biggest thing that drives your table potato prices is the volume of shipments each year, and that changes year to year,” he said. “It doesn’t take much of a shift in movement to make a big change in pricing.”
He said shipments are projected to be a bit higher for the remainder of this season than they have been in the past few years.
Shipments of russet potatoes are projected to be somewhat less than the year before. Prices have been lower in the Columbia Basin and Idaho for russets than for Colorado and Wisconsin, Huffaker said.
For red potatoes, shipments are behind what they were a year ago and prices are not as high as last year. The forecast will be quite a bit below last year in terms of shipments, Huffaker said, primarily in the Red River Valley.
He said United Potato Growers is predicting $12.08 per hundredweight for the remainder of the season for the San Luis Valley, but the average so far has been $10.80.
“I don’t see prices dropping from where they are but I don’t know that they will get to $12.08 on average, either,” he said.
He also did not think shipments would be as high as in the forecast. He said until December the Valley was shipping at a pace slower than the year before.
As far as acreage in 2019, Huffaker expected to see more acreage but advised, “We have a surplus of table potatoes. We need to be cutting back on the table potato side of the equation for the coming year.”
He said if usage remains pretty flat and yields increase, “acreage has got to come down.”
He encouraged cooperative marketing; learning about niche markets but being cautious; and keeping up with trends and staying ahead of them.
Other speakers during the summit on Monday included:
• Dr. Darren Anderson, president and co-founder of Vive Crop Protection, who discussed the use of a new technology for agricultural purposes, nanotechnology, which can be used to more efficiently deliver crop protection chemicals for insecticides, fungicides, herbicides and other applications. Vive offers AZteroid FC, for example, with other products pending EPA approval. Anderson said AZteroid should be available through local suppliers. Nanotechnology has been used in other areas such as pharmaceuticals, Anderson explained, to target a medication to the area of the body for which it is intended, such as the heart. Similarly to pharmaceuticals, crop protection chemicals are delivered through a polymer “shuttle” that delivers the product to the intended target, whether it is weeds, soil or the crop itself.
• Dale Lathim, executive director, Washington Potato Growers, who described the growth in the frozen potato market, which serves markets such as restaurants, schools, prisons and military. He attributed one of the reasons for the growth in that market to restaurants such as McDonald’s serving breakfast all day, with a corresponding demand for hashbrowns. Exports to other countries have also increased demand, he added.
• Dr. Zena Buser, professor of business with the agribusiness department at Adams State University, who spoke about successful management and leadership skills and building employee relationships. She said it is important to hire employees that fit the business, listen to employees, share goals with them and lead by example.
• Dick Okray, United Potato Growers of Wisconsin, chairman United of America, who appeared via video since he was snowed in Wisconsin, who spoke about the benefits of being a part of United Potato Growers, which is in its 14th year. Some of the benefits include access to accurate and timely data and trends; participation in conferences and conventions that provide informative speakers and other opportunities; united marketing efforts and “the ability to chart our own course.” United Potato Growers of Colorado does one of the best jobs of marketing, he said.
“We are in this together,” Okray said.
United Potato Growers of Colorado Chairman Brian Neufeld agreed. “We can work better, get through this together.”