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Record-High US Potato Prices Expected in 2022

Fresh Common Potato
United States
Price Trend
Demand
Supply Yield / Stock Quantity
Feb 24, 2022
Written by
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Juan Carlos
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According to recent data from the Farm Bureau, record US potato prices are expected into 2022 as demand will continue to rely on smaller supplies. By the end of 2021, US potatoes were able to buck the price drop trend among vegetables with a 14% price increase YoY despite a fourth consecutive annual decline in production. However, for 2002, without any signs of domestic production recovery and a decrease in storage potato stocks of 5%, the price has started the year with a 40% increase YoY by week 7.

The 2% YoY decline in potato domestic production in 2021 and a strong North American and international processing demand have lifted potato prices above USD 0.5/kg (USD 10/cwt) for an average 14% price increase between 2020 and 2021. The moderate price increase is due to a more significant consumption from the processing industry for stored potato stocks that allowed the price to oppose the decreased trend among US vegetables.

According to the latest USDA Cold Storage Report, increasing demand from the processing potato industry has tightened stored potato commodity stocks. After 2021, US potato stocks have dropped 5% from last year and 6% from the five-year (2015-2020) average. This is significant as the processing potato industry drives potato consumption in the US. It is estimated that about 63% of potato sales are to processors for French fries, chips, dehydrated potatoes, and other potato products.

According to Tridge’s Price Chart, in Week 7 of 2022, the price of common fresh potato for the Russet variety in the Los Angeles wholesale market was registered at USD 0.72/kg (USD 16/cwt), which represents a 40% increase YoY compared to the USD 0.51/kg registered the same week last year. The upward potato price trend started Nov-21 when the USDA confirmed a 2% YoY decrease in potato production and forecasted a similar decrease of 1.6% for the 2022 crop.


Source: Tridge

Potato Production Outlook will Push Prices Up

The 2021 decline in potato production marked a fourth consecutive annual decline for the US. Droughts in large potato-producing states like Washington and Idaho, which account for 55% of US production, dropped in their potato production rates by 9% and 7%, respectively. The 2022 forecast still foresees a continuous decrease as the main regions haven’t recovered in full from the drought. Additionally, North Dakota is estimated to have a 12% decrease YoY in production due to unfavorable bad weather conditions expected and the possibility of infected crops.

Potato Trade will Need to Resume to Support Supply

The US only allows Canadian and Puerto Rican potato imports into the country, which in 2020 represented 420K mt of Canadian potatoes worth USD 252.7M. However, on Nov-22, the Canadian government imposed a ban on the export of table-stock potatoes to the US as part of their effort to prevent the spread of potato warts. The Canadian ban, which is still in place today, will be reviewed by the US Department of Agriculture to see if it is possible to resume imports. A very similar case happened with Prince Edward Island potatoes from Puerto Rico, as they were also banned since Nov-22 following the discovery of potato warts in two of the shipments.

The US Department of Agriculture has announced recently that will allow the resumption of potato shipments from Prince Edward Island to the US. It is expected that Canadian shipments will follow. Puerto Rican and Canadian supply will be crucial for the US market all through the year to support price hikes. However, despite imports resumption, with continuous production declines and potato stocks shrinking, record-high potato prices are expected in the US this year. 

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