Potatoes

Potato updates

Potato growers express concern about contract prices and securing favorable contracts.

Potato markets are facing uncertainty due to risk in fertilizer price and mixed market performance in 2024. Prospects for 2025 are influenced by production costs and other market dynamics.

The potato market in 2024 showed mixed results. Domestic retail sales of potatoes increased by 3.1% year over year, with volume sales growth in all categories. However, by value, fresh potato sales totaled $4.07 billion, down 4.9%. Prices averaged $0.92 per pound, a 7.7% year-over-year reduction. U.S. restaurant sales peaked in August 2024 and declined through the rest of the year. Global frozen potato and French fry exports have improved from the previous year but remain below pre-pandemic volumes.

Looking ahead to the 2025 growing season, growers anticipate reductions in planted acres with overall flat to down potato production. Open market potato returns fell by over 8% from October to December 2024 compared to 2023. Contract prices are anticipated to be 5% lower than the previous year, with few more profitable crop alternatives available. Potato growers face headwinds as they cannot anticipate spring fertilizer prices due to potential tariffs and trade disruptions impacting local fertilizer and chemical suppliers. With fertilizer making up about 20% of potato operating costs, estimating actual production costs becomes challenging.

Profitability

December 11, 2024

Potatoes (Contracted): Slightly profitable - Neutral 12-month outlook
Potatoes (Uncontracted): Breakeven profitability - Neutral 12-month outlook

Stable pricing agreements benefit contracted potatoes, and decreases in input costs are expected to support profitability over the next 12 months.

Tight profit margins and weaker consumer demand may discourage potato planting in 2025, potentially supporting uncontracted prices.