This year’s low market prices for fresh potatoes may force processors to provide incentives to some Idaho growers in 2024, an economist says.

Open-market prices for fresh potatoes have been below the cost of production recently, partly because of the bigger crop in 2023.

“Especially with those low prices, processors are going to have to incentivize some acres this next year,” Pat Hatzenbuehler, a University of Idaho Extension crop economics specialist, said at a UI Ag Outlook forum Dec. 14 in Nampa.

Farm production costs will be another key factor in establishing contract prices for potatoes grown in 2024 for processing, he said.

Costs “seem to be declining to some degree, but maybe not all that much as we’re entering the new year,” Hatzenbuehler said. Growers should continue to update their figures, as it is crucial that processors “know what it actually costs to grow potatoes going into the new year.”

Prices for Idaho fresh potatoes spiked in August 2022 due to two straight years of lower production that shrank stocks. For the January-August period, prices this year were higher than those of 2021 and 2022, he said. Prices since September have been lower compared to 2021 and 2022.

Given the solid 2023 crop — planted acres and yields increased — Hatzenbuehler said he expects a January-April price of $12 to $20 per hundredweight compared to $27-30 a year earlier.

Idaho potato cash receipts were a bit higher in 2023 than 2022 due to higher contract prices, and higher open-market prices for most of 2023, he said.

Next year, keeping revenue around 2023 levels will require a focus on handling and storage practices, and training, Hatzenbuehler said.

Potato demand components include processors, the fresh market, storage stocks and exports. Demand is mostly stable over time, so price is primarily driven by production factors, he said.

Processing of fries, chips and other products accounts for about 66% of U.S. production. Exports, 2-3% of production, “are not a large source of demand, but have been increasing in recent years,” Hatzenbuehler said.

Nationally, potatoes held in storage as of Dec. 1 increased by 10% from a year earlier, according to a Dec. 15 release from USDA’s National Agricultural Statistics Service. Indicated season-to-date disappearance was up 6%.