It costs a pile to grow a potato

Published on August 16, 2014

potato harvest

Following the announcement that the McCain french fry processing plant in Borden-Carleton was closing, there was a plethora of letters to the editor offering any amount of gratuitous advice. A lot of it leaned towards abandoning the way potatoes are grown and turning P.E.I. into a million-acre organic farm.

This may be a good idea. But, on the surface it seems a tad idealistic and it ignores what many people forget, or wish to ignore; farming, first and foremost, is a business, not just a way of life.

Organic produce is available in most Island supermarkets. But, it is not a main stay. Most shoppers buy regular, non-organic produce for a variety of reasons, including price and appearance. Island potato farmers grow in excess of 2 billion pounds of potatoes a year, even if they could grow 2 billon pounds of organic potatoes, finding a market for them would be a challenge, and a huge gamble.

It is doubtful many Islanders understand what a capital intensive business potato farming is. With exception of seed, and some speciality growers, the rule ‘go big or stay home’ applies in spades to potato farming. Hence, in the last 20-30 years there was a tremendous consolidation in the industry. Fewer farmers are growing more potatoes today than were grown on the Island 30 years ago.

A farmer growing 500 acres of potatoes isn’t unusual on the Island. To grow 500 acres of potatoes requires a minimum of 1,500 acres, because of the need for crop rotation. Depending where it is, good potato land sells for between $2,000 and $3,500 an acre. The means the cost of the land for that size farm is somewhere between $3 million and $5 1/4 million. Even if the farmer leases a portion of his land those leases will be based on the value of the land.

There is also the cost of equipment. Modern equipment requires large tractors which sell for approximately $1,000 per horsepower. Most tractors of potato farms are in the 150 to 200 horsepower range and about a half dozen are needed. Another million dollars. Then there are plows, disc harrows, planters, tillers, sprayers, diggers, wind rowers, harvesters, escalators, a fleet of trucks with potato boxes, graders, baggers, fork-lifts, etc, etc. Easily another million or so. For the sake of argument lets say $2 million for equipment.

A modern storage facility with computerized climate control to hold 10 million pounds of potatoes will cost between a million and a half, and two million dollars.

So without planting a single spud, the land, the equipment and storage for the crop will cost approximately seven or eight million dollars. Then add another million dollars or so, every year, to cover the costs of seed, fertilizer, sprays and labour.

If you include the cost of land, equipment, seed, chemicals, fuel, labour and the cost of money for working capital, people involved in the potato industry feel that $3,000 an acre is a reasonable ballpark figure to estimate the costs of planting, growing, harvesting, storing and selling a crop. Costs for table potatoes may run a bit higher than potatoes grown to supply the french fry plants.

If everything goes right and a grower is able to produce a crop of 300 hundredweights, or 30,000 lbs., to the acre, he would need to be paid 10 cents a pound, just to break even. But, yields vary from approximately 250 hundredweight to 320 hundredweight per acre, depending on the grower and on the variety of potatoes being grown.

And then there’s disease. Diseases can effect the yield and the storage capability of potatoes. Because of soil conditions, in some instances caused by poor rotation practices, and because of our damp climate, potatoes grown on the Island need a lot of chemicals to deal with blight and other problems.

The money potato farmers have tied up in their land, storage facilities and equipment is a long-term investment that won’t be paid off for years. But, they’re the ultimate optimists. If they don’t have a contract with a plant, they don’t know what price they will get for their crop. Even if a grower has a contract this year, it doesn’t mean he’ll have a contract next year, as the growers that supplied McCain’s found out a few weeks ago. But, the bank still expects to be paid.

Economics will dictate how the industry evolves. However, the chances of P.E.I. becoming an organic garden won’t happen soon.

- Alan Holman is a freelance journalist living in Charlottetown. He can be reached at: acholman@pei.eastlink.ca