January 19 2007, 12:23

Did the storages lose money on potato?

The companies-owners of the storages loaded with potato will probably bear significant losses this year. The price difference for potato purchase in the fall and potato sales in winter-spring period was more than 200% in the season 2005/06. This circumstance resulted in the exited purchase activeness of the wholesale companies in the fall 2006. The harvest has not realized the expectations, so the potato shipments were purchased for rather high prices (up to $0.29/kg).

The quantity of the market supplies has significantly increased in the period of the active harvesting of potato. However, the quality of potato was not high, in this regard the vendors started to reconsider the sales prices downwards. It is worth to mention that the present situation was described as the most probable in the forecast of vegetable production and prices done by the Agricultural Marketing Project during the harvest period in September. Analyzing the supply and demand factors, the AMP specialists concluded that the price for the potato sold out of the storages can be lower than the purchase price for this product. The present day situation confirms this assumption.

At the present moment the specialists are trying to forecast the further price change on potato market. The thing is, potato is not stored quite well in the non-specialized storages which leads to some losses and the quality deterioration. At the same time, this fact stimulates the supply growth on market; it does not let the prices grow. Just the owners of the quality produce are able to insignificantly increase the prices. So, we can assume that the potato market will be characterized by the price steadiness in the nearest future. The price increase is possible only in the segment of the quality produce, but these changes won't be significant. Most companies will hardly be able to pay back the expenses for potato storage this year.