Thursday, March 28, 2024

Potato growers heading south

Avatar photo
Potato growers and processors are moving from crowded Pukekohe to open, irrigated Canterbury. Production is rising and more contracts options are pending but will growers be better off? Tim Fulton reports.
Reading Time: 3 minutes

THE average retail price of potatoes rose from $1.50/kg to $2.10 in the past five years, Potatoes New Zealand says.

“We’re seeing growth in the cost of potatoes in the marketplace because the pack size is dropping,” chief executive Chris Claridge said.

“Small packs are being sold for more because of the presentation.”

Growers will probably continue to be paid an international price but unlike others growing fruit and vegetables they aren’t wholly reliant on fresh produce, he said.

The potato industry values itself at $982 million in domestic receipts of $852m and exports at about $130m.

Demand for fresh, fried and crisps is rising so Potatoes NZ wants to double the value of its exports by the end of the next proposed levy round in 2025. 

Potato production is heading south to Canterbury with Auckland housing and industrial sprawl spilling into Pukekohe’s living room.

Canterbury irrigation storage schemes will intensify the trend in the next five to 10 years, Claridge and growers predicted at an industry consultation meeting in Darfield. 

Central Plains Water is laying pipes in the area and it seems likely new processing plants will appear to handle higher spud production.

There is already growing competition between multinational processing firms and NZ-owned, family-run processors and marketers in domestic retail, food service, restaurants, takeaways and exports.

Two of the standout NZ firms are the South Canterbury Bowan family which grows, processes, packages and markets Heartland and the Balle family from Pukekohe with Mr Chips. 

Potatoes NZ chairman and Sheffield farmer Stuart Wright said farmers need to capture more of the contract price for their processed, fried and fresh products.

“It’s all about capturing value. 

“You talk to all the big fry growers and they’re struggling because the processors give them only enough to survive,” he said at a Potatoes NZ meeting in Darfield.

At best, regardless of the processor and contract, growers are paid “enough to live comfortably”.

Potatoes NZ represents both farmers and affiliated trade partners including processors and seed merchants. 

The country’s 170 commercial growers pay 0.085% in commodity levy on their production. Next month they will be asked to vote on renewing that deal until 2025. 

Wright turns over about $400,000 of potato value at point of sale – about $4000 in commodity levy.

He is in a minority of smaller growers. Big farmers in Pukekohe earning $20 million annually pay $170,000 in levies.

As a lamb finisher and former chairman of the levy-funded Foundation for Arable Research Wright recalls disenchanted sheep farmers axing the wool levy. 

Potato growers need to see levies as an investment rather than a cost, he said.

In November 2017 Wright started irrigating with the Sheffield arm of the $400m Central Plains Water irrigation storage scheme. 

He expects to see more potatoes around Darfield where CPW is laying pipes for the next phase of its multi-year rollout.

North Island investors might also see CPW’s potential. 

Wright understands a Pukekohe farmer recently bought the 275ha Midway Farms near Darfield.

Real estate marketing said Midway had mostly been in cereals, process peas, grass seed, radishes and carrot seeds. It is irrigated with centre pivots and a fixed boom and has about 3200 CPW shares.

The irrigation carrot is new to Darfield but Wright predicts it will soon become the norm. 

“We’ll see much more of that … I reckon there will be a big push on.”

Still, CPW users will have to be more profitable to afford their piped supply, he said.

“The reality is, a lot of these farmers (between Christchurch and Darfield) are sheep and beef with a bit of dryland cropping. They’re going to have to go to intensive farming to make that pay. This isn’t cheap water and they won’t be able to keep doing what they’re doing.”

At the market end, seed potato merchant Kerry Hughes, managing director of Selwyn-based Alex McDonald, said his sector also battles to capture retail value. Supermarkets, food writers and cooking shows, in particular, tend to transform seed potato varieties like Agria and Nadine into general brands, lessening their commercial value to the developers.

He could think of four or five potato varieties sold in supermarkets as Agria-type or Agria-cross, for example.

“It’s become a brand and we struggle to replace that variety,” he said.

Total
0
Shares
People are also reading