Potato production in the U.S. has fallen for the fourth year in a row, with this season’s crop being the smallest since 2010. Potato prices rose to their highest levels as a result. The high-pricing environment was also influenced by the increasing demand for frozen potatoes.

Solid open market pricing and robust demand for frozen potatoes are often enough reasons to raise contract prices, especially because heightened demand for processing potatoes has gone unmet for two years in a row and fryers have been able to pass on costs to customers without suffering a loss in sales.

„Competitive open market and higher contract potato prices, an improved water outlook, and crop rotation pressures are expected to increase potato planted area by 2% YOY and lead to a 7% drop in price in the 2023/24 marketing year,” Almuhanad Melhim, Analyst – Fruits, Vegetables, & Tree Nuts, at Rabo AgriFinance recently announced.

According to him, the U.S. spud growers are in an excellent position this year to negotiate improved contract pricing with processors through their cooperatives and associations.

“Fryers, who had to rely on imports and sourcing raw inventories from other regions with better supply situations, have strong economic incentives to increase contract prices and improve contract terms, given the strong demand for finished products. Although consumers will pay higher prices for fresh potatoes, french fries, and other frozen potato products, they are not expected to reduce their potato consumption. The potato is extra precious during a period of inflation when consumer purchasing power is eroded,” he concluded.