Potato processors announce major volume cutbacks in potato contracts as French fry demand declines

Food Processor News Network
January 2009

Boise, ID - Potato processors quietly announced to potato grower associations late last week that they are immediately cutting volumes on potato contracts in 2009 as a result of increased costs, a weak economy and changes in fast-food menus - all of which are causing French fry demand to significantly decline.

According to potato grower groups in Idaho, Washington and Oregon, the resulting cutbacks in potato contracts could cause potato acreage in the Pacific Northwest to decrease by as much as 20% in 2009.

The proposed cutbacks in potato growing contracts were not a complete surprise to grower groups. At a recent industry meeting, officials of Lamb Weston (the potato- processing division of Con-Agra Foods) indicated that they first saw a decline on the food-service side of its business at the end of October due to slower restaurant sales.

The company even saw a drop-off of 13 percent on the retail side of its business in December.

In addition, Quick Service Restaurant chains have begun a trend of offering fewer combo meals with fries.

Processors used 4.6 percent fewer potatoes in December than they did a year, according to industry analysts.

Dehydrators used 2.3 percent more potatoes, but other processors - mostly french fry producers - saw a 6.7 percent decrease in usage compared with December 2007.