Most of us love fries and chips. Other than ketogenic, most diets don’t discriminate against the mighty potato. It’s even in the new Canada’s Food Guide.
Most dishes using potatoes are loved by Canadians, especially in winter, when colder weather encourages us to seek heartier meals.
But North America is experiencing potato shortages and processors – particularly in the West – are scrambling to get potatoes into their plants. So we soon may pay more for one of our favourite staples.
A cold and very wet fall has hurt potato crop yields. Almost 20 per cent of potatoes were left in fields due to poor quality.
The United States Department of Agriculture projects a 6.1 per cent decline in total potato crops from a year ago, making it one of the lowest yields since 2010. In Manitoba, more than 18 per cent of potato crops were unharvested, while in Alberta 6.5 per cent of potato crops were damaged by early frost.
In addition, while buyers always look for larger potatoes, harvested potatoes were much smaller than usual this year.
But it’s difficult to tell whether retail prices will be affected, since potato prices have already gone up in the past year. Retail potatoes are 20.7 per cent more expensive than just 12 months ago. According to Statistics Canada, a 10-pound bag of potatoes in Canada retails for an average of $9.77, up from $8.11 a year ago. Frozen fried potatoes have gone up 17.1 per cent as well, retailing now at $3.02 for one kg.
These are the most significant increases ever recorded and they’re difficult to explain. Potato production over the last five years in North America has been quite steady. In 2010, when the harvest was even worse than this year’s, retail prices barely moved, suggesting that the market wasn’t willing to budge on pricing, despite lower inventories.
But the market today is a little different because we crave the product much more.
However, if prices do go up, it won’t be because farmers are making more money, since they typically lock themselves into unbending contracts for their crops before the growing season even starts. And many farmers affected by weather will have crop insurance.
Processors may need to pay more since they might have to purchase product from other sources that are normally more expensive. But processors have infinite ways to hedge against abnormal weather patterns and will get the products they need to manufacture the fries and chips we buy one way or another.
Price increases may well happen in food distribution and retail as the result of strong demand. In 2018, retail frozen potato sales increased by 7.1 per cent in Canada and 2019 could be an even better year. Potatoes requiring some preparation at home have also seen significant sales increases, exceeding seven per cent in recent years.
That may explain why retailers are charging much more for the product. Since 2018, potato retail prices have increased dramatically.
But consumers haven’t been spooked – at least not yet. They could, however, start walking away from the product if they think it’s too expensive. That may mean processors will reduce the number of frozen fries you get in a bag for the same price. This ‘skrinkflation’ has a funny way of keeping products on store shelves without upsetting consumers.
The rules are different in food service and we shouldn’t expect price changes there. Charging more for a side staple like potatoes is always more challenging for restauranteurs and fast-food operators. Potatoes are no steak, fish or pasta.
But you may see some food service operators shrink portion sizes for the same price, as in retail. This is quite easy to do with fries, chips and smaller baked potatoes. Vigilant consumers will likely notice, but most of us won’t think twice before digging in.
Canada is only the 18th largest potato producer in the world but we take our potatoes seriously. We won’t run out of potatoes any time soon and they’ll remain quite affordable.
So keep calm and eat your fries.
Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.