Potato Grower

38 POTATO GROWER | APRIL 2024 Producer or Businessman? Who is asleep at the wheel? United Potato Growers of America Buzz Shahan What is happening today in potato production is striking, appalling in fact. Throughout last year, potato-producer in- vestment achieved a fair return and did this at the same time that retailers prospered, processors never lacked raw product, consumers never had it better, and lenders got their money back. Supporting this market was a balanced supply. Who were the geniuses that made that happen? Across the board, producers took credit for such brilliance. The potato pro- ducer had finally ascended to a business mentality from a production mentality. Lenders were happy. Potato-equipment manufacturers were happy. Tractor manufacturers were hap- py. Employees were happy. Input suppliers were happy. And dealerships that sold pickup trucks were especially happy. Woops! Not so fast! If a potato producer were asked if he considers himself a businessman, his answer would likely be "yes," because his fo- cus is to maximize yield at the lowest cost per unit produced. To him that looks like business. Whether his production is profitable or not figures in after the fact. Remember the adage that says, "To a man with a ham- mer everything looks like a nail?" Give a potato producer the chance to produce and he's going to produce to the limit possible. Why will he do that? He will do that because that's who he is. He's a producer, not a businessman. A businessman would frame production within a supply limit that would make his production profitable. If a producer can't figure that out, his lender should certainly suggest it: "Mr. Producer, will your production level repay the loan I'm giving you?" Today's potato glut makes clear that many potato producers and their lenders do not understand that the producer is the very man upon whom every entity in the potato supply chain depends. Therefore, it is him alone that manages the supply side of a market whose demand side is viciously inelastic. This is true for both fresh and process markets. No position in the supply/demand/price equation of any market with inelastic demand is more enviable. Relying upon, and supported by, reliable market data provided by UPGA and local process-grower organizations, many producers have been successfully managing their supply for years and are fairly compensated for doing so. In noting what happened with the 2022 crop, was not a production standard set for each region that returned fair val- ue for the crop? Was a producer's portion of that production standard not worth acknowledging? What does operating in a market information vacuum say about a producer who does such a thing? What does it say about the lender who finances him? The actual numbers are these: The break-even production number for the current fresh-potato crop may be in the 83M cwt. range. This crop's actual production is more in the 91M cwt. range. This pushes the supply chain to sell, and consum- ers to purchase 8M more cwt. of fresh potatoes than what would be considered a more balanced supply and creates competition in the marketplace fierce enough that the current crop's value is less than 40 percent of what it was one year ago. As our beloved Yogi Berra once said, "If you don't know where you're going, you might wind up someplace else." For producers and lenders to not know and heed these numbers has led the current crop's value "someplace else." PG

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