P.E.I. potato marketers have few options to replace lost U.S. sales
'It's really difficult to redirect extra product to a market that already has sufficient supply'
Marketers of P.E.I. potatoes say they have very few options to replace the sales they are losing since the closure of the U.S. border because of the discovery of the potato wart fungus in two fields on Prince Edward Island.
The P.E.I. Potato Board says fresh potato sales to the U.S. are worth about $120 million a year, and so the export ban is costing the Island economy about $2 million a week.
At Red Isle Produce in Charlottetown, Bill Enserink has a staff of eight who would usually be spending their days filling orders, with more than 90 per cent of the potatoes heading to the United States.
"We have a fairly extensive list of U.S. customers that are reeling right now because it's hard to fill the void. It's hard for them to pivot and go in a different direction and find supply elsewhere," Enserink said.
"We have a significant logistics issue right now in North America, and finding trucks is not easy. And when you have to start sourcing product from a completely different area, it makes it really difficult for the customers."
The potatoes from Red Isle Produce are usually headed down the eastern seaboard, from Maine to Florida, and into Puerto Rico as well.
Enserink said looking for other markets in Canada is not a great option for his company, which usually does most of its business south of the border.
It's not going to move extra potatoes by dropping the price.— Bill Enserink
"There's existing people selling to existing customers into those Canadian markets," Enserink said.
"Plus there's locally grown product to in those markets, so it's really difficult to redirect extra product to a market that already has sufficient supply."
Concerns about price
Enserink said a promotional campaign in other parts of Canada could help generate sales, but comes with some challenges.
"It's possible, but logistics is the thing. We don't have a big lane of traffic that can take product west of Ontario," Enserink said.
"We could do it, but to move the volume that we're shipping now into the U.S. would be impossible."
Enserink said there are some concerns that a surplus of potatoes will have an impact on price, driving it down.
"It's not going to move any extra potatoes by slashing the prices," Enserink said.
"All it will do is change who is selling them, but it certainly wouldn't be helpful for the industry to slash prices."
'We're scrambling'
EarthFresh Foods, based in Burlington, Ont., is also feeling the impact of the border closure. It is also a partner in East Point Produce on P.E.I.
President and CEO Tom Hughes says the company does $20 to $25 million a year in sales to the U.S., and another $20 to $25 million in Canada.
"We're basically trying to cover our U.S. orders for our U.S. customers from other parts of Canada, and from parts of the U.S.A. So we're scrambling," Hughes said.
"With the trucking and logistics issues throughout North America right now, this is not the time to scramble, so it's got these challenges."
Hughes said it will be "very difficult" to find other markets for P.E.I. potatoes, because it has been a great year for growing potatoes on the east coast, as well as in Ontario and Quebec.
"It's challenging to fit the product that was supposed to go to the U.S. into that Canadian market without upsetting the balance in Canada," Hughes said.
"An oversupply of a few percentage points can bring the market down drastically. So this is a major concern at this point as to what Canada is going to do, and how it's going to affect the growers in all the other provinces."
It's challenging to fit the product that was supposed to go to the U.S. into that Canadian market without upsetting the balance in Canada.— Tom Hughes
Personal connection
Hughes said as a part owner of East Point Produce on P.E.I., the issue hits personally as well as economically.
"It's very close to our heart. We know the families very well. We're on edge every day," Hughes said.
"Last year, we did 80 million pounds with East Point. So it's it's a very large shipping point for us and essential to our distribution network."
Hughes said he would like to see the border re-opened as quickly as possible, under a new management plan, or a tweak of the existing plan.
"Worst case scenario is that they cannot get a management plan in place for the season, and that we have to put all these potatoes into the Canadian market and that market crashes," Hughes said.
"Because then it would affect not just the P.E.I. growers, but all the other growers across Canada. We don't want to lose these family farms because of this whole P.E.I. wart situation."
Back at Red Isle Produce, Bill Enserink said his American customers will already be making arrangements to get potatoes elsewhere, likely from the western United States.
"They'll try to start loading more railcars to come from the west to the east, and they can take three to four weeks to arrive," Enserink said.
"Once they start arriving, there's a built-up inventory in the pipeline on the way to those customers."
"The volume of potatoes, if we don't keep those going every day, every week, the inventory builds and you can never recover those sales," Enserink said.
"You can't get those trucks back. You can't get those orders back, they're just gone. If people don't have the potatoes they want on the store shelf, I guess they'll eat something else, right?"
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