Andy Nelson, Markets EditorA late December report from the U.S. Department of Agriculture has added another perspective on the current drama surrounding the Salt Lake City-based United Potato Growers of America.
On Dec. 30, the USDA’s National Agricultural Statistics Service released its Agricultural Prices report, which reported that the December price of potatoes, while up from November, was more than a dollar lower per cwt. than a year ago at the same time.
It wasn’t the Christmas present or New Year’s greeting spud grower-shippers were expecting, and it’s just the latest in a series of headaches they’re seeking a cure for.
The organization’s whole reason for being is to rein in acreage to buoy markets, but on Nov. 30, a USDA report revealed that U.S. fall production rose 5% from 2010.
Not surprisingly, a mid-December USDA report found that about 250 million cwt. of potatoes had yet to be shipped from the top 13 producing states on Dec. 1, 4% more than the year before.
Minus a big, unexpected surge in demand, it was therefore no surprise to learn that spuds averaged $8.86 per cwt. in December, down from $9.94 in December 2010.
All potential causes for concern, even if connecting the dots between acreage, supply and price is easier said than done.
Also in December, those USDA numbers quickly were swallowed up by the two larger dramas facing United Potato: the sudden departure of its leader and a judge’s ruling that could threaten the very foundation of the organization.
In the first week of December, Jerry Wright, United Potato’s first chief executive officer, returned to the top job, succeeding Lee Frankel.
The circumstances of Frankel’s departure remain murky. Dave Warsh, United Potato’s board chairman, praised Frankel but said “I don’t know to characterize” the terms of his departure.
A nondisclosure agreement prevents Frankel from commenting.
Meanwhile, on the very day Wright took the reins from Frankel, a judge in Idaho dealt a potentially serious blow to United Potato’s very existence.
In a midtrial ruling in a case involving United Potato and several of its member companies, U.S. District Court judge Lynn Winmill ruled that the Capper-Volstead Act does not protect United Potato Growers of America from charges it illegally reduced the supply of potatoes in order to raise prices.
United Potato has argued that its practice of limiting U.S. potato acreage in order to strengthen markets is protected under the Capper-Volstead Act, which provides agricultural cooperatives limited exemption from federal antitrust laws.
Wright and Randon Wilson, a Salt Lake City-based attorney who has helped found several agricultural co-ops, including United Potato, and who provides outside counsel to the co-op, were quick to point out that Winmill’s opinion did not settle the case, but only came in response to United Potato’s motion to dismiss.
They were confident the judge’s mind would be changed on the issue before trial’s end.
That remains to be seen. What isn’t in doubt is that United Potato, which got off to such a great start after its creation in 2005, faces a much less certain future.
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