Potato Grower

WWW.POTATOGROWER.COM 25 PATRIOT SPX 4440 SPRAYER Rear Mounted Engine Unmatched Performance Superior Cab Visibility and Comfort Even Weight Distribution Superior Suspension Maximizing yield potential means understanding and addressing eight key agronomic needs: timeliness, crop residue management, soil tilth, seed bed conditions, seed placement accuracy, plant food availability, crop protection and harvest quality. Case IH equipment is engineered and built with an eye to those key areas, to help producers get the best return on their investment. For a sprayer, that means accurate rates, precision placement, consistent droplet size and the ability to cover more acres in narrow application windows. Because every plant is important, and every hour counts. AGRICULTURE Distributing Company, Inc. SALES@AGWESTDIST.COM 4212 North Star Blvd. #4 Great Falls, MT 59405 950 East Broadway Ave. Moses Lake, WA 98837 199 W. 2nd N Burley, ID 83318 (406) 453-0010 (800) 452-0010 (509) 766-6638 (800) 996-2863 (208) 678-3589 (800) 334-9120 www.agwestdist.com BUILDING MACHINES THAT BUILD THE BOTTOM LINE. 163345AgWest12v.indd 1 11/29/16 11:23 AM is achieved. Thus, fresh price becomes the leader and processing prices the follower over the long run. The implications of these findings are varied; however, all pertain to the way in which producers monitor and interpret prices in order to make production and marketing decisions. Fresh potato producers over the short run should not only remain attentive to the condition of the fresh crop, but also pay close attention to the processing crop in the field or storage. Any disruption—positive or negative—to the processing market will have an effect on the fresh market during the current crop year. Conversely, processing producers should be aware of pricing in the fresh market for the previous crop year, as those prices will in large part determine contract prices with processors in the current year. By being well-informed and understanding these relationships, the producer stands to gain by making improved production decisions and minimizing some of the ambiguity that often accompanies negotiating processing contracts and fresh price. very large, dominant firms that handle the bulk of the processing crop. The driving forces behind the leader-follower relationship lie in these key differences. Imagine a scenario in which a major processor discovers late in the storage season that its previously contracted supply will not be adequate. At that point, the processor must seek out uncontracted potatoes, which will be found predominantly in the cash market for fresh potatoes. In this way, the fresh market acts as the safety release valve for the processing market, and prices will rise accordingly. The opposite is not possible because if a packing shed in the fresh market discovers a need for more potatoes, 1) it is likely the quantity needed to make up the shortfall is small relative to size of the market as a whole (remember, hundreds of independent packing sheds versus a handful of large processors), and 2) they cannot make potato purchases on the processing market because those potatoes are ostensibly under contract by the processors. In this way, any shock in the processing market has an outweighed effect on prices in the fresh market over the short term. Over longer periods of time, the relationship actually reverses. Processing potatoes are typically only committed under contract one year at a time, meaning processing acreage may be substituted for fresh acreage. Changes in fresh price over the short term signal to the processors and producers that their contract prices must be adjusted in the next contracting period for processing potatoes, and a semblance of equilibrium

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