Source: UNIV OF IDAHO submitted to NRP
ANALYSIS OF ECONOMIC FORCES AFFECTING THE POTATO INDUSTRY
Sponsoring Institution
National Institute of Food and Agriculture
Project Status
COMPLETE
Funding Source
Reporting Frequency
Annual
Accession No.
0200325
Grant No.
(N/A)
Cumulative Award Amt.
(N/A)
Proposal No.
(N/A)
Multistate No.
(N/A)
Project Start Date
Jul 1, 2004
Project End Date
Jun 30, 2010
Grant Year
(N/A)
Program Code
[(N/A)]- (N/A)
Recipient Organization
UNIV OF IDAHO
875 PERIMETER DRIVE
MOSCOW,ID 83844-9803
Performing Department
AGRI ECONOMICS & RURAL SOCIOL
Non Technical Summary
Some powerful market forces affect the competitive position of the Idaho potato industry in the global economy. The purpose of this study is to learn more about the impacts of consumer demand, plant variety protection, currency exchange rates and biotechnology on the potato industry.
Animal Health Component
100%
Research Effort Categories
Basic
(N/A)
Applied
100%
Developmental
(N/A)
Classification

Knowledge Area (KA)Subject of Investigation (SOI)Field of Science (FOS)Percent
60313103010100%
Knowledge Area
603 - Market Economics;

Subject Of Investigation
1310 - Potato;

Field Of Science
3010 - Economics;
Goals / Objectives
The project objectives are to analyze the impacts of the following on the competitiveness of Idaho and US potatoes in the global market: consumer demand shifts, plant variety protection (PVP), currency exchange rates and biotechnology.
Project Methods
US frozen fry consumption will be modeled to determine if the market has gone beyond the maturity stage into the decline stage of the product life cycle. Fitting the data to functions such as the logistic growth curve will help estimate the turning point between stages. Second, econometric models of the US frozen fry markets will be updated to discover taste & preference variables. Expenditures in restaurants that do not serve fries and consumption of trans/saturated fats are two possible variables. PVP analysis will consist of an econometric analysis of price differences for proprietary varieties, if data becomes available. If not, two other approaches will be used. First, an apple price model will be developed to estimate the proprietary price premiums in that industry as an example of what might happen in the potato industry. Second, an econometric analysis of Yukon Gold potato prices will be conducted. Although Yukon Gold is not a proprietary variety, it is a new yellow type with a retail label. Since PVP licensing arrangements differ among land grant universities, a survey of those that develop potato varieties will shed light on current financial agreements. Regarding erosion of the Idaho premium in the fresh market, a large multi-state potato shipper will be approached about providing data for a hedonic pricing model. With this data, researchers could estimate the influence of type of buyer, region of shipment, state of origin, type of pack and variety on fresh potato prices. The model could also quantify the erosion of Idaho price premiums. Analysis of currency exchange rates will focus on the Canadian dollar. Historical data on the US/Canada exchange rate will be collected and graphed to determine trends and cycles. Canadian potato growing and processing costs will be analyzed to determine which costs are affected by input purchases in the US. Also, Canadian potato plantings will be modeled to determine the relative impacts of changes in supply shifters as well as lagged price. The model will help estimate changes in Canadian production and trade in response to currency-induced changes in price. Regarding biotechnology the development of new and modified GM potato varieties will be monitored. As the new products become available, researchers will use partial budgets to analyze economic impacts on individual potato growers. Ex-ante models will be developed to estimate aggregate costs and benefits of the GM potatoes. A survey of GM-food attitudes among people attending biotechnology short courses conducted by Michigan State University will also be conducted. The developing-country scientists, educators, journalists, government officials and business executives who attend could shed light on the forces that influence societal acceptance of GM foods in developing countries.

Progress 07/01/04 to 06/30/10

Outputs
OUTPUTS: I disseminated the results of this project to the potato industries in Idaho, the US and in other countries. I made oral presentations at academic and potato industry meetings. I also wrote about the results in trade journals, including monthly columns I write for Spudman magazine int he US and Aardappelwereld (Potato World) magazine in The Netherlands. I also disseminated results in two African countries as a volunteer in the USDA Farmer-to-Farmer program. PARTICIPANTS: Collaborating organizations include the Idaho Potato Commission, the US Potato Board and the NAtional Potato Council. I also worked with potato processors Lamb Weston and Simplot. TARGET AUDIENCES: The target audience is the potato industry. PROJECT MODIFICATIONS: Not relevant to this project.

Impacts
I did not have the resources or expertise to conduct a formal project evaluation. Anecdotal evidence, from potato industry feedback, suggests that people in the potato industry used the results to help make business decisions.

Publications

  • Guenthner, Joseph,F. 2010. Past, present and future of world potato markets. Potato Journal (India), 37(3)1-8.
  • Greenway, Gina A., Joseph F. Guenthner, Larry D. Makus and Mark J. Pavek. 2010. Fresh potato and meat preferences by US region. Journal of Food Distribution Research, 41(2): 12-25.
  • Guenthner, Joseph F. 2010. Introduction and consumption. In: Commercial Potato Production in North America, W. H. Bohl and S. B. Johnson, Editors. The Potato Association of America.
  • Guenthner, Joseph F. 2010. Marketing and economics. In: Commercial Potato Production in North America, W. H. Bohl and S. B. Johnson, Editors. The Potato Association of America.


Progress 01/01/09 to 12/31/09

Outputs
OUTPUTS: I presented results at international meetings in China and Africa as well as domestic potato industry meetings in Colorado, Idaho and Wisconsin. I also published results in one US potato trade journal - Spudman - and one international potato trade journal - Aarappelwereld (Potato World) in The Netherlands. PARTICIPANTS: Graduate student Gina Greenway and Dr Jen Miller of the Northwest Coalition for Alternatives to Pesticides worked on the organic potato project. TARGET AUDIENCES: People involved in the potato industry inclding growers, fresh packers and processors. PROJECT MODIFICATIONS: Not relevant to this project.

Impacts
We have been conducting research on markets for organic potatoes and genetically-modified potatoes. Results have been disseminated at industry meetings. Graduate student Gina Greenway won the Outstanding Graduate Student Presentation Award at the annual meeting of the Potato Association of America for her paper on organic potato markets.

Publications

  • Two articles about GM potatoes have been submitted to biotechnology journals. 2010
  • Articles about organic potato markets have been submitted to the American Journal for Potato Research and the Journal for Food Distribution Research. 2010


Progress 01/01/08 to 12/31/08

Outputs
OUTPUTS: I presented research results at three international meetings, three regional meetings and four state meetings. I also wrote about results in columns I publish in one US potato trade journal -- Spudman and international trade journal -- Aardappelwereld (Potato World). PARTICIPANTS: Graduate student Gina Greenway and Dr Jen Miller of the Northwest Coalition for Alternatives to Pesticides worked on the organic potato project. TARGET AUDIENCES: People involved in the potato industry, including, growers, fresh packers and prcessors. PROJECT MODIFICATIONS: None

Impacts
We have been conducting research on organic potato marketing and economics. Results have been desimminated at grower meetings. Surveys of potato industry people who attended workshops and field days confirm that they found the information helpful in their operations.

Publications

  • Guenthner, Joseph F. Past, Present and Future of World Potato Markets, Proceedings of the Global Potato Conference, Delhi, India, December 2008.


Progress 01/01/07 to 12/31/07

Outputs
OUTPUTS: I wrote a monthly column in two potato industry magazines -- Spudman and Aarappelwereld (Potato World), whcih is published in the Netherlands. Most of these articles deal with the issues covered in this Hatch project. I also presented results of my work at international conferences in Egypt and Michigan as well as the National Potato Council's Annual Seed Potato Seminar and the Idaho Potato Conference. PARTICIPANTS: Northwest Coalition for Alternatives to Pesticides

Impacts
I was one of the presenters in a potato grower workshop regarding organic potato production and marketing. We asked participants to fill out a workshop survey. Results from the 68 participants who completed the survey are: - Average knowledge increased 0.9 points on a 5-point scale (2.7 to 3.6) - 46 of 68 respondents showed a knowledge level increase of at least 1 point (68% of respondents) - 16 of 19 farmers & farm managers had considered growing organic - 12 of 19 farmers & farm managers plan to make (or modify) their marketing & production plans for organic potatoes - 19 of 27 crop advisors plan to make (or modify) their marketing & production plans for organic potatoes - 49 of 68 respondents want more information on developing their marketing & production plans for organic potatoes (72% of respondents)

Publications

  • Guenthner, Joseph F and R Thomas Schotzko. Economics of Potato Plant Health. Book chapter in: Potato Health Management, Dennis A Johnson, Editor. The American Phytopathological Society, St Paul, Minnesota, 2007.
  • Taylor, Garth, Paul Patterson, Joe Guenthner and Lindy Widner. Contribution of the Potato Industry to the Idaho Economy. CIS 1143, College of Agricultural and Life Sciences, University of Idaho, Moscow, Idaho, July 2007.
  • Guenthner, Joe, Keith Esplin, Jennifer Miller and Gina Greenway. Organic Potato Markets. Potato Growers of Idaho, Blackfoot, Idaho, July 2007


Progress 01/01/06 to 12/31/06

Outputs
The US potato industry is in a period of declining domestic demand. Although the US Potato Board, the Idaho Potato Commission and other entities are trying to expand potato demand, competing products and market forces have dampended it. One possible bright spot is the demand for organic potatoes. Fresh produce demand has grown rapidly and some analysts have estimated a growth of 20% per year. With grant funding I began a study of organic potato demand. Efforts began late in 2006, but preliminary analysis suggests that organic potato dmeand, though currently small may increase soon.

Impacts
With improved market information I think that the number of Idaho potato growers who grow organic will increase. I also predict that Idaho organic potato plantings will increased from the 200 to 300 acres in recent years.

Publications

  • Debees, Mohamed Abd El-Khalik and Joseph F. Guenthner. GATT-WTO Creates Trade Opportunities for Egyptian Agribusiness, The Journal of International Food & Agribusiness Marketing, 2005, Vol 19, Issue 1.


Progress 01/01/05 to 12/31/05

Outputs
US potato growers are gaining market power through consolidation and intellectual property rights. These two market forces, as well as shifting consumer demand and currency exchange rates, will continue to impact the US potato industry. The development of United Fresh Potato Growers of Idaho, a grower/shipper marketing cooperative, became a factor in the 2005-06 market because of its supply control programs. Future research will attempt to quantify the impacts of the major market forces.

Impacts
Each link of the US potato marketing chain will face threats and opportunities as market forces change. This research could provide information to potato growers and marketers that would enable them to improve their chances of making profitable decisions.

Publications

  • Guenthner, Joseph F. Gaining Market Power Through Grower Consolidation, Intellectual Property Rights and Human Capital, Farm Credit Horizons: Perspectives on the American Food, Fiber and Beverage Industry. 2005
  • Salaiz, A. Thomas, Stephen L. Love, Paul E. Patterson and Joseph F. Guenthner. Economic Performance of Two New Potato Varieties Using a Fresh Market Consignment-Packing Model, American Journal of Potato Research, 2005: 82:147-153


Progress 01/01/04 to 12/31/04

Outputs
Significant economic benefits in lesser developed countires were projected for a genetically-modified potato that is resistant to potato tuber moth. Although the GM potato is not produced commercially it has been field tested in gypt, South Africa and other lesser developed countries. A tuber moth problem has been found to be present and becoming more serious in the US potato industry.

Impacts
Estimates of economic benefits may help policy makers in their decisions regarding acceptance of GM food products in both developing and developed countries. In 2004 I was an instructor in three short courses on agricultural biotechnology conducted at Michigan State University for participants from developing countries. My session dealt with societal acceptance of new technology and could help participants become involved in GM policiy development in their countries.

Publications

  • Guenthner, Joseph F. A A Araji and Karim Maredia. Benefits of public investment in potato biotechnology for lesser developed countries, Journal of Applied Biotechnology, Food Science and Policy, 2004:1(4)