Potato losses hurt more than just farmers, processors

For the Basin Business Journal | October 16, 2020 1:00 AM

MOSES LAKE — It’s been a difficult year for Washington’s potato farmers, with growers and potato processors losing an estimated $900 million in sales — both domestic and exports — and $170 million in income, according to a report prepared by Washington State University’s IMPACT Center and commissioned by the Washington Potato Commission.

The report, authored by Timothy Nadreau, a researcher at the IMPACT Center, and Suzette Galinato, the center’s assistant director, found that demand for potatoes from food processors fell by roughly 50 percent by April 2020, “when processors put the brakes on production, a result of nationwide restaurant closures and suspension of professional and collegiate athletics.”

With the production halt, potato processors returned 200,000 tons of potatoes harvested in 2019 to farmers, who had to sell them for cattle feed or give them away to families and food banks, further depressing the retail prices of fresh and frozen potatoes, Nadreau and Galinato wrote.

Nadreau and Galinato found that Washington potato farmers have reduced planted potato acreage in 2020 by around 13 percent, or around 21,000 acres. According to data cited in the report, farmers planted 165,000 acres of potatoes statewide in 2019.

Nadreau told the Basin Business Journal that much of that acreage was planted in corn, a crop that won’t earn farmers what potatoes could in a normal year.

“They will not let that land sit idle; they will put it to the next best use. Which is typically corn,” he said.

Nadreau and Galinato also looked at how the decline in potato demand affected not only farmers and processors, but other parts of the state economy as well. According to their report, business-to-business deals by farmers and potato processors fell by $671 million as a result of the pandemic closures, leading to a fall in income for those who sell goods and services (such as seeds, equipment and maintenance) of $240 million.

In addition, incomes for farm and processing plant workers fell by $201 million — meaning those laborers and their families had significantly less money to spend throughout the economy.

Nadreau and Galinato also conclude that the lost productivity and value to farmers and processors as well their suppliers and workers cost state, county and local governments $54 million in lost revenue — $35 million in sales taxes, $14 million in property taxes and $5 million in corporate and “other taxes.”

“We found this report to be very beneficial to quantify the economic damage from COVID-19 to the state’s potato economy,” said Matt Harris, director of governmental affairs for the Potato Commission. “It provides key statistics that show just how important potatoes are to our state’s economy and that the value they bring goes far beyond each individual farm.”

Nadreau echoes that, and believes the report shows how far a single economic decision by one industry will reverberate throughout an economy.

“I hope that members of the legislature understand that ag markets extend beyond the ag industry itself,” he told the Basin Business Journal. “It extends to implement dealers, chemical makers, and household income, which affects retail sales, how much people can spend at Walmart.”

Charles H. Featherstone can be reached at cfeatherstone@columbiabasinherald.com.