Posted: Thursday, June 14, 2012 11:00 AM
Growers resist having to revamp budgets for increase
By JOHN O'CONNELL
BURLEY -- Members of the Southern Idaho Potato Cooperative asked the Idaho Potato Commission in a June 12 advisory vote to take a middle-ground approach rather than enacting a proposed 2.5 cents per hundredweight fee increase for the current crop year.
The processed industry growers with SIPCO endorsed a penny increase, provided that it be delayed until next season. Each penny assessed generates roughly $1 million.
In 2007, the industry and the state Legislature authorized an increase in IPC's fee cap from 10 cents per hundredweight to 15 cents. The commission opted to increase its fee to 12.5 cents and would need approval only by its own board to take the remainder now.
SIPCO member Jim Tiede, an American Falls grower and IPC chairman, emphasized IPC is merely seeking feedback on the idea and will consider all input before setting its budget in mid-July. The Idaho Grower Shippers Association has already endorsed the full increase. The Idaho Association of Commerce & Industry will also weigh in.
Some SIPCO growers dislike that they could face an increase after already completing their budgets. Growers of spuds for processing incur 60 percent of the IPC fee, and processors pay the remaining 40 percent.
"I don't think it's fair to expect my fry customer to assume extra costs in a product they don't choose to brand. I'm against a penny or whatever. All of that money comes right out of the margin," said Aberdeen grower Paul Behrend, adding he's disappointed by the timing of the discussion.
Aberdeen grower Kim Wahlen added, "I think a penny is more palatable. Two and a half cents seems a little bit out of touch. A lot has changed since the Legislature passed that."
IPC supporters at the meeting stressed the organization's costs have risen significantly.
"We've had a tremendous amount of increased costs in advertising. You just can't buy the same ad you could five years ago for the same amount of money," Tiede said.
Tiede said IPC invests about $1 million in supporting research, and government grants are dwindling. He also believes IPC's efforts to grow trade in Mexico will pay dividends to the state's growers. Tiede stressed IPC dues cover grower memberships in the National Potato Council, which lobbies lawmakers in Washington, D.C.
"I think I get my value out of the research dollars and export work," Tiede said.
Doug Gross, a Wilder grower who's term as SIPCO president expired at the meeting, said much of the extra funding would be used on advertising into target markets, which "doesn't necessarily translate into a benefit to the processed grower."
Tiede responded that processed growers have to take a leap of faith that advertising builds strong fresh prices, which translate into better contracts with processors.
Jeff Harper, an IPC board member from Mountain Home, said IPC gets a strong return on investment, but he worries a steep fee increase could put Idaho growers at a disadvantage with growers in Washington, who pay 4 cents to their commission, and Oregon, who pay 4.5 cents for processed spuds and 5 cents for fresh spuds.